SECURITY AGREEMENT
Exhibit
10.3
For and in consideration of Secured
Party extending credit to Debtor , Gen2Media Corporation, a Nevada
Corporation, ("Debtor"), whose address is 0000 Xxxxxxxxx Xx.,
Xxxxxxx, Xx. 00000, agrees with _________________________________ ("Secured
Party"), whose address is _______________________________________________ as
follows:
I. CREATION OF SECURITY
INTEREST. Debtor grants to Secured Party a security interest
in all assets of Debtor, tangible or intangible, now owned or hereafter
acquired, including, without limitation, that collateral more fully described in
Section II below, to secure the performance and payment of the obligations of
Debtor described under the Convertible Secured Promissory Note and Loan
Agreement executed by the parties of even date herewith, and any and all other
indebtedness and liabilities of Debtor to Secured Party of whatsoever kind or
nature, due or to become due, absolute or contingent, now existing or later
created, including, but not limited to, principal, interest, future advances
made by Secured Party to Debtor, expenses, court costs, and fees, including
attorney's fees, paid or incurred by Secured Party in connection with any of its
pre-suit, pre-judgment, and post-judgment efforts and activities intended to
effect collection of any indebtedness or the enforcement of any of Secured
Party's rights, whether under this Security Agreement, or
otherwise.
II. COLLATERAL.
A. COLLATERAL: The
collateral of this Security Agreement is:
(1) All
of the Debtor's inventory and all other items held by the Debtor for sale, and
all additions and accessions thereto, and all of the Debtor's inventory of like
kinds or types, whenever acquired, whether by way of replacement, substitution,
addition, or otherwise, and accessions thereto, and all proceeds from the sale
or other disposition of the inventory; and
(2) All
of the Debtor's furniture, fixtures and equipment, whether presently owned,
acquired contemporaneously with or pursuant to this Security Agreement, or
acquired at any time subsequent to this Security Agreement by the Debtor, and
all replacements, substitutions, additions ,and accessions thereto, and all
proceeds of its or their sale or other disposition; and
(3) All
of the Debtor's contract rights and accounts receivable, whether now existing or
hereinafter arising, and all proceeds therefrom.
(4) All
patents, trademarks, patents pending, software code or other intellectual
property of any kind or nature, including any future enhancements or replacement
of same.
(5) All
other assets of the Debtor, of any kind or nature, now owned, or hereafter
acquired, including any enhancements or replacements thereof, wherever
located.
B. For
the purposes of this Security Agreement, proceeds include whatever is received
upon the sale, exchange, collection or other disposition of collateral or
proceeds. Additionally, the proceeds include both cash proceeds, for
example, money, checks, deposit accounts and the like, and all other non-cash
proceeds.
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III. DEBTOR'S
OBLIGATIONS.
A. INDEBTEDNESS. This
Security Agreement covers, but is not limited to, the obligations created by
Debtor as Maker of that certain Secured Convertible Promissory Note and Loan
Agreement (The Note) of even date herewith. Debtor agrees to abide by and to
fully perform all obligations of Maker under the Note, (all being referred to
below as the “obligations”). Debtor agrees that a breach of any such
obligations shall be a breach of this Security Agreement.
B. ADDITIONAL OBLIGATIONS OF
DEBTOR.
(1) Debtor
will not:
(a) permit
any of the collateral to be levied upon under legal process; nor
(b) sell,
transfer, lease, or otherwise dispose of any of the collateral or any interest
therein, or offer so to do without the prior written consent of Secured Party
except that, so long as Debtor is not in default on any obligation to the
Secured Party, Debtor may sell inventory in the ordinary course of Debtor’s
business; nor
(c) permit
anything to be done that may impair the value of any of the collateral or the
security intended to be afforded by this Agreement.
(2) Debtor
will:
(a) promptly
pay when due all taxes and assessments upon the collateral or for its use or
operation or evidencing the liabilities, or any of them, secured by this
Agreement; and
(b) execute
or procure, alone or with Secured Party, any Financing Statement or
other document, and pay all connected costs necessary to protect the security
interest granted by this Security Agreement against the rights or interests of
third persons; and
(c) at
all times keep accurate and complete records for the collateral;
and
(d) pay
all transportation and storage charges on the collateral, and pay all rents, if
any, for the use of the premises on which any of the collateral is kept;
and
(e) defend
the collateral against all claims and demands of any and all persons at any time
claiming any interest therein which is in derogation of Secured Party’s security
interest; and
(f) at
all times maintain or stock all equipment and inventory at the home
corporate office of Debtor; and
(g) in
the event of default, at Debtor’s expense following a request by Secured Party,
provide Secured Party with a quarterly audit of Debtor's inventory, which audit,
at Secured Party’s option, must be made by companies or individuals
who are unrelated to and independent of Debtor; and
(h) within
ten (10) days following a request from the Secured Party, account fully and
faithfully to Secured Party for the proceeds in whatever form received from the
disposition in any manner of any of the collateral; and
(i) pay
Secured Party for all attorney’s fees, court costs, and expenses paid or
incurred by Secured Party in connection with the collection of any indebtedness
owed by the Debtor to the Secured Party; the maintenance, preservation, taking
possession, or the realization upon disposition of any collateral covered by
this Security Agreement, or the enforcement of any of Secured Party's rights,
whether under this Security Agreement or otherwise.
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IV. SECURED PARTY'S RIGHTS AND
REMEDIES.
A. RIGHTS EXCLUSIVE OF DEBTOR'S
DEFAULT. Secured Party may:
(1) Enter
upon Debtor's premises at any reasonable time, upon prior written notice, to
inspect the Debtor's books and records pertaining to the collateral without
disruption of the Debtor’s business, and Debtor will assist Secured Party in
whatever way necessary to make any inspection; and
(2) By
any employee or employees, Secured Party may designate, execute, sign, endorse,
transfer or deliver in the name of the Debtor, certificates of origin,
applications or certificates of title, financing statements, or any other
documents necessary to evidence, perfect, or realize upon the security interest
and obligations of this Security Agreement.
B. UPON DEBTOR'S
DEFAULT.
(1) Secured
Party will have all of the rights and remedies provided by the Uniform
Commercial Code in effect in the State of Florida at the date of execution of
this Agreement; and
(2) In
addition to, or in conjunction with, those rights and remedies, Secured Party
may:
(a) Require
Debtor to assemble the collateral, to make it available to Secured Party at a
place Secured Party designates which is mutually convenient, and to allow
Secured Party to take possession or dispose of the collateral.
(b) At
its option, discharge taxes, liens, public charges or security interests or
other encumbrances at any time levied or placed on the collateral; remedy or
secure any default of Debtor under the terms hereof or under the terms of a
lease, rental agreement or other document which in any way pertains to or
affects Debtor's title to or interest in any of the collateral without waiving
the defaults remedied; and pay for the maintenance and preservation of the
collateral. Debtor agrees to reimburse Secured Party, on demand, for
any payment made or any expense incurred by Secured Party, pursuant to the
foregoing authorization, together with interest thereon at the rate of eighteen
per cent (18%) per annum.
(c) Secured
Party and its agents are authorized to enter into or upon any premises where the
collateral may be located for the purpose of taking possession of
it.
(d) Notify
an account debtor or obligor on any instrument which constitutes proceeds of the
collateral to make payments directly to Secured Party, regardless of whether the
Debtor was theretofore making collections on the collateral;
and
V. FURTHER
AGREEMENTS.
A. DEBTOR'S AGREEMENTS AND
AFFIRMATIONS. Debtor agrees and affirms that:
(1) The
information supplied in statements made by Debtor in any financial, credit, or
accounting statement or application for credit prior to or pursuant to this
Security Agreement, is or will be true and correct; and
(2) Debtor
waives any right under Florida Statutes, Section 679.507(1) to recover damages
against the Secured Party for the Secured Party's failure to proceed in
accordance with Chapter 679, Florida Statutes, unless the Debtor, within five
(5) days after receiving notice of the intended disposition of the collateral,
sends written notice to the Secured Party of the Debtor's objection to the
proposed disposition, specifies his objections to the intended disposition, and
sets forth an alternative method of disposition acceptable to the
Debtor. The failure to conduct any sale in accordance with the
Debtor's proposed disposition will not render the disposition by the Secured
Party commercially unreasonable. Further, if the Debtor's proposed
disposition requires the expenditure of any additional funds, the Debtor must
provide those funds in cash or in cash equivalent to the Secured Party at the
time of sending Debtor’s objection, and Debtor must also reimburse the Secured
Party for any expenditures ultimately incurred by Secured Party in connection
with the Debtor’s proposed disposition, including a reasonable attorney's fee,
if any.
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B. MUTUAL
AGREEMENTS.
(1) "Debtor"
and "Secured Party," as used in this Security Agreement, include the heirs,
executors or administrators, successors or assigns of those
parties. If more than one "Debtor" is named herein, each such
individual or entity is jointly and severally obligated pursuant to this
Agreement, and the term, "Debtor," shall be deemed to include all signatories
hereto designated as "Debtor."
(2) If
this Agreement is not dated when executed by the Debtor, the Secured Party is
authorized, without notice to the Debtor, to date this
Agreement. This Agreement will become effective as of its
date.
(3) Written
notice mailed to Debtor fifteen (15) days prior to the date of public sale of
the collateral or prior to the date after which private sale of the collateral
will be made, will constitute reasonable notice.
(4) Secured
Party and Debtor WAIVE any right to
trial by jury, and any venue privilege, and consents that any action against
Debtor may be brought in any court of competent jurisdiction located in Orange
County, Florida.
(5) No
delay or omission on the part of Secured Party in exercising any right or remedy
will operate as a waiver thereof, and no single or partial exercise by Secured
Party of any right or remedy will preclude any other or further exercise thereof
or the exercise of any other right or remedy.
(6) Time
is of the essence of this Agreement. The provisions of this Agreement are
cumulative and in addition to the provisions of any note or other instrument
secured by this Agreement.
(7) This
Agreement has been delivered in the State of Florida and will be construed in
accordance with the laws of Florida. Whenever possible, each
provision of this Agreement will be interpreted to be effective and valid under
applicable law. If any provision of this Agreement is prohibited by
or invalid under applicable law, the provision will be ineffective only to the
extent of the prohibition or invalidity without invalidating the remainder of
the provision or the remaining provisions of this Agreement.
(8) This
Agreement is an integrated writing and cannot be changed by conduct or spoken
words, but only by a writing signed by the party to be charged.
(9) All
notices, requests, demands and other communications will be in writing, and will
be deemed to have been duly given if delivered or mailed, first class - postage
prepaid, if to either Secured Party at the address shown on page 1, or at such
other address as it may have furnished to the Debtor in writing, or if to the
Debtor, at the address shown on page 1, or at such other address as Debtor may
have furnished to the Secured Party in writing.
(11) A
sale of the collateral by Secured Party, if held upon the following terms and
conditions, is commercially reasonable: A public sale held after
fifteen (15) days notice to the Debtor, the sale to be for cash to be paid at
the time of sale or within two (2) hours after the time of sale. If
the high bidder does not produce cash within the allotted time period, the next
highest bidder with cash may be awarded the bid. The sale may take
place at the office of the Secured Party, although the collateral is not located
there, provided that the collateral is available for inspection at least
twenty-four (24) hours before the sale, or the sale may be held at the location
of the collateral. The sale may be conducted at any time between 9:00
a.m. and 5:00 p.m. The Secured Party will not be obligated to
advertise the sale in any fashion, except to advertise the sale once in a
newspaper of general circulation where the Secured Party's office, or the
equipment, is located. The Secured Party will not be obligated to
expend any funds in the repair, refurbishment or clean-up of the collateral
before any sale, and the collateral may be sold “AS IS, WHERE IS."
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DATED at Orlando (City), Orange County,
Florida, this ______ day of _______________________, 2009.
DEBTOR
ACKNOWLEDGES RECEIPT OF A COPY OF THIS SECURITY AGREEMENT.
| “DEBTOR” | |||
| Gen2Media Corporation | |||
|
|
By:
|
/s/ | |
| (Signature) | |||
| (Print name of signatory) | |||
| As its: | |||
|
(Print
title)
|
|||
| “SECURED PARTY” | |||
| BY: | |||
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