SECURITYAGREEMENT (the "Agreement")
Exhibit 10.3
(the
"Agreement")
| Secured
Party: 0000
X. Xxxx, Xxxxx 000
Xx
Xxxx, Xx Xxxx Xxxxxx, XX 00000
(hereinafter
referred to as "Secured
Party")
|
Debtor:
0000
X. Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000
Xxxxxxxxx,
Xxxxxxxx Xxxxxx, XX 00000
(hereinafter
referred to as
"Debtor")
|
1. For value
received, Debtor hereby grants to Secured Party a security interest in the
following collateral ("Collateral"), as the term is hereafter
defined:
All the
tangible and intangible assets of Verecloud, Inc., a Nevada corporation, now or
hereafter acquired, including but not limited to the: (i) inventory; (ii)
fixtures; (iii) equipment; (iv) accounts receivable; (v) intellectual property
(including, without limitation, (a) all patents, patent applications, patent
disclosures and inventions (whether or not patentable and whether or not reduced
to practice), (b) all trademarks, service marks, trade dress, trade names, and
corporate names and all the goodwill and quality control standards associated
therewith, (c) all registered and unregistered statutory and common law
copyrights, (d) all registrations, applications and renewals for any of the
foregoing, (e) all trade secrets, confidential information, ideas, formulae,
compositions, know-how, manufacturing and production processes and techniques,
research and development information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data, financial, business and
marketing plans, and customer and supplier lists and related information, (f)
all other proprietary rights (including, without limitation, all computer
software and documentation and all license agreements and sublicense agreements
to and from third parties relating to any of the foregoing), (g) all copies and
tangible embodiments of the foregoing in whatever form or medium, (h) all
damages and payments for past, present and future infringements of the
foregoing, (i) all royalties and income due with respect to the foregoing, and
(j) the right to xxx and recover for past, present and future infringements of
the foregoing), (vi) goodwill; and (vii) value as a going concern.
The
Collateral, as hereinafter defined, is to be used in business other than farming
operations.
2. The
property described or referred to in Paragraph 1 above, now owned or hereafter
acquired by Debtor, together with the invoices and profits received therefrom,
accessions, attachments, additions to, substitutes and replacements for,
improvements of such property and all property described above, whether now
existing or hereafter made, including the proceeds of all such property
described above, and the insurance payable by reason of loss or damage thereto,
and all proceeds of any policy of insurance required thereon by Secured Party,
including premium refunds, is collectively referred to hereinbefore and
hereinafter as the "Collateral."
3. The
Collateral as described hereinabove is located at Debtor's business address 0000
X. Xxxxxxxxx Xxxxx Xxxx., Xxxxx 000, Xxxxxxxxx, Xxxxxxxx Xxxxxx, XX
00000.
4. The
security interest granted by this Agreement shall secure the payment and
performance of Debtor's Obligations, as the term is hereinafter defined, to
Secured Party. The term "Obligations," as used herein
means: (i) all indebtedness of Debtor to Secured Party now or hereafter
existing, including, without limitation, the indebtedness evidenced by that one
certain Revolving Credit Note of even date herewith in the maximum principal
amount of $1,564,000.00 (the "Note"), executed by Debtor, and payable to the
order of Secured Party, together with any and all renewals and extensions of the
same, or any part thereof; and (ii) all indebtedness and liabilities of Debtor
to Secured Party at any time arising under the terms of the Loan Agreement of
even date herewith by and between Secured Party and Debtor ("Loan Agreement") or under
the terms hereof.
5. Debtor
hereby grants to Secured Party a continuing lien upon any and all moneys,
securities and other property of Debtor and the proceeds thereof, now or
hereafter held or received by or in transit to, Secured Party from or for
Debtor, whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposits (general or special), certificates
of deposit, and credits of Debtor with, and any and all claims of the Debtor
against Secured Party, at any time existing. Upon the occurrence of a default,
as the term is hereafter defined, Secured Party is hereby authorized at any time
and from time to time, to setoff, appropriate and apply any or all items
hereinabove referred to against the Obligations whether under this Agreement, or
otherwise, and whether now existing or hereafter arising. Secured Party shall
give notice thereof to Debtor promptly after taking any such
action.
6. Debtor
represents and warrants that: (i) Debtor is the owner of the Collateral and it
is in Debtor's possession at the location specified above; (ii) the Collateral
is not being purchased or used for primarily personal, family or household use;
(iii) the name of Debtor as it appears at the top of this Agreement is Debtor's
name as it appears in its certificate of formation; (iv) Debtor's name as it
appears at the top of this Agreement is not the assumed or business name of
Debtor unless otherwise indicated; (v) Debtor and the officer, manager or member
who may be executing this Agreement on behalf of Debtor, has authority to
execute and deliver this Agreement; (vi) the statements above concerning the
location of Debtor's place of business (or chief executive office), residence,
mailing address and use and location of the Collateral are true and correct;
(vii) except for any prior financing statement from Debtor in favor of Lender
and as otherwise consented to in writing by Lender, no financing statement
covering the Collateral or any part thereof has been made, and no security
interest, other than the one herein created, has attached or been perfected in
the Collateral or in any part thereof; (viii) no dispute, right of setoff,
counterclaim or defenses exist with respect to any part of the Collateral; and
(ix) all statements in the documents pertaining to this transaction provided or
to be provided by Debtor to Secured Party are true and correct.
7. So long
as any part of the Obligations remain unpaid or unperformed, Debtor covenants
and agrees to: (i) use or otherwise hold the Collateral with reasonable care,
skill and caution; (ii) keep the Collateral properly sheltered and not permit it
to be damaged or injured; (iii) pay, before delinquent, all taxes and other
assessments lawfully levied against the Collateral; (iv) from time to time
promptly execute and deliver to Secured Party all such other assignments,
certificates, supplemental documents, and financing statements and do all other
acts or things as Secured Party may reasonably request in order to more fully
evidence and perfect the security interest herein created; (v) punctually and
properly perform all of Debtor's covenants, duties and liabilities under this
Agreement and any other security agreement, collateral pledge agreement or
contract of any kind now or hereafter existing as security for or in connection
with payment of the Obligations, or any part thereof; (vi) pay the Obligations
in accordance with the terms of the Note or other documents evidencing the
Obligations, or any part thereof; (vii) promptly furnish Secured Party with any
information or documents which Secured Party may reasonably request concerning
the Collateral; (viii) allow Secured Party to inspect the Collateral and all
records of Debtor relating thereto or to the Obligations, and to make and take
away copies of such records; (ix) promptly notify Secured Party of any change
(other than a change requiring advance notice provided for herein) in any fact
or circumstances warranted or represented by Debtor in this Agreement or in any
other document furnished by Debtor to Secured Party in connection with the
Collateral or the Obligations; (x) give prior written notice to Secured Party of
any change in Debtor's place of business or chief executive office, such notice
to be given not less than fifteen (15) days before such change is made and to
specify the address, county and state to which Debtor is moving; (xi) promptly
notify Secured Party of any claim, action or proceeding affecting title to the
Collateral or any part thereof or the security interest granted herein, and, at
the request of Secured Party, appear in and defend, at Debtor's expense, any
such action or proceeding; (xii) except as otherwise provided in any note or
other instrument evidencing the Obligations, promptly, after being requested by
Secured Party, pay to Secured Party all amounts actually incurred by Secured
Party as court costs and/or attorney's fees incurred by Secured Party in
enforcing this Agreement and the security interest granted herein and the
reasonable costs actually expended for repossession, storing, preparing for
sale, or selling any of the Collateral; and (xiii) promptly furnish Secured
Party with financial statements of Debtor upon request of Secured Party in form
and content satisfactory to Secured Party.
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8. So long
as any part of the Obligations remain unpaid or unperformed, Debtor covenants
and agrees that, without the prior written consent of Secured Party, Debtor will
not: (i) lease, sell, assign, furnish under any contract of service, transfer or
otherwise dispose of the Collateral, or any part thereof, other than in the
ordinary course of business; (ii) create any other security interest in, or
otherwise encumber the Collateral or any part thereof or permit the same to be
or become subject to any lien, attachment, execution, sequestration or other
legal or equitable process, or any encumbrance of any kind or character, except
the security interest herein created and any prior security interests in favor
of Lender; (iii) allow the Collateral or any part thereof to become an accession
to other goods, other than in the ordinary course of business; (iv) allow the
Collateral or any part thereof to be affixed or attached to any real estate; or
(v) cause or permit the Collateral to be removed from the location specified
above other than in the ordinary course of business. Debtor further covenants
not to use the Collateral or permit the same to be used for any unlawful purpose
or in any manner inconsistent with the provisions or requirements of any policy
of insurance thereon. Should any covenant, duty or agreement of Debtor fail to
be performed in accordance with its terms hereunder, Secured Party may, but
shall never be obligated to perform or attempt to perform such covenant, duty or
agreement on behalf of Debtor, and any amount expended by Secured Party in such
performance shall become a part of the Obligations, and, at the request of
Secured Party, Debtor agrees to promptly pay such amount to Secured
Party.
9. In the
event of Debtor's default with respect to payment of any of the Obligations,
each person, firm or corporation obligated to make any payment to Debtor with
respect to any part of the Collateral (hereafter referred to as the "Account
Debtor") is hereby authorized and directed by Debtor to make payment directly to
Secured Party upon notice from Secured Party giving the Account Debtor notice of
this assignment and directing the Account Debtor to make payment directly to
Secured Party. The receipt of Secured Party to any Account Debtor shall be a
full and complete release, discharge and acquittance to such person, firm or
corporation to the extent of any amount so paid to Secured Party. Secured Party
is authorized and empowered on behalf of Debtor, to endorse the name of Debtor
upon any check, draft or other instrument payable to Debtor evidencing payment
upon the Collateral, or any part thereof, and to receive and apply the proceeds
therefrom in accordance with the terms hereof. All payments received by Debtor
or Secured Party with respect to the Collateral or any part thereof, at Secured
Party's option, shall be deposited in a special account by Secured Party in the
name of Debtor styled "Cash Collateral Account" and shall be applied by Secured
Party as provided in Paragraph 12 hereof. The security interest created herein
shall cover all funds in the Cash Collateral Account to secure payment of the
Obligations.
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If any
Account Debtor of all or any part of the Collateral fails or refuses to make
payment thereof when due, Secured Party is authorized, in its discretion, either
in its own name or in the name of Debtor, to take such action, including,
without limitation, the institution of legal action as Secured Party shall deem
appropriate for the collection of the Collateral and any proceeds thereof with
respect to which a delinquency exists. Regardless of any other provision hereof,
however, Secured Party shall never be liable for its failure to collect, or for
its failure to exercise diligence in the collection of any of the Collateral or
any proceeds thereof, nor shall it be under any duty whatever to anyone except
to account for the funds that it shall actually receive hereunder. Furthermore,
Secured Party shall have no duty to fix or preserve the rights against prior
parties to the Collateral.
10. Debtor
further covenants and agrees to keep the Collateral insured in such amounts,
against such risks and with such insurers as Secured Party may require. All such
policies of insurance shall be written for the benefit of Secured Party and
Debtor, as their interest may appear, including, without limitation, the
designation of Secured Party as the loss payee and as an additional insured, and
shall provide for at least twenty (20) days' prior written notice of
cancellation to Secured Party. At the request of Secured Party, Debtor shall
promptly furnish to Secured Party evidence of such insurance in form and content
satisfactory to Secured Party. If Debtor fails to perform or observe any
applicable covenants as to insurance on the Collateral contained or referred to
herein, Secured Party may at its option obtain insurance on only Secured Party's
interest in the Collateral with any premium thereby paid by Secured Party to
become a part of the Obligations and to bear interest at a rate equal to the
rate the loan contract will produce over its full term if each scheduled payment
is paid on the date due, such rate to be charged from the date Secured Party
advances funds to pay such premium until the amount of such premium is paid by
Debtor to Secured Party. In the event Secured Party maintains such substitute
insurance, the additional premium for such insurance shall be due and payable by
Debtor to Secured Party in accordance with specific written notification
delivered to Debtor by Secured Party or sent by Secured Party to Debtor. The
obligation of Debtor to pay any such additional premium and any interest
accruing thereon shall be secured by and entitled to all of the benefits of this
Agreement. In the event Debtor should subsequently provide Secured Party with
satisfactory evidence of maintenance by Debtor of required insurance, such
substitute insurance obtained by Secured Party shall be cancelled, and
appropriate adjustments and/or refunds shall be made by Secured Party in favor
of Debtor. Debtor hereby grants Secured Party a security interest in any refunds
of unearned premiums in connection with any cancellation, adjustment or
termination of any policy of insurance required by Secured Party and in all
proceeds of such insurance and hereby appoints Secured Party its
attorney-in-fact to endorse any check, or document that may be payable to Debtor
in order to collect such refunds or proceeds. Any such sums collected by Secured
Party shall be credited, except to the extent applied to the purchase by Secured
Party of similar insurance, to any amounts then owing on the Obligations, and
the balance, if any, shall be promptly refunded to Debtor.
11. The term
"default" as used herein, means the occurrence of an "Event of Default" under
the Loan Agreement.
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12. Upon the
occurrence of a default, in addition to any and all other rights and remedies
which Secured Party may then have hereunder or under the Colorado version of the
Uniform Commercial Code, as amended (hereafter called "Code") or other
applicable laws or agreements, Secured Party at its option may: (i) declare the
entire unpaid balance of principal of and all unpaid, accrued interest on any
one or more of the Obligations immediately due and payable, without notice of
any kind, including but not limited to, notice of intent to accelerate and
notice of acceleration, demand, or presentment, which are hereby waived, except
as otherwise expressly provided herein; (ii) require Debtor to assemble the
Collateral and deliver it to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to both parties; (iii) render
unusable any equipment which may be part of the Collateral; (iv) reduce its
claim to judgment, foreclose or otherwise enforce its security interest in all
or any part of the Collateral by any available judicial or non-judicial
procedure; (v) after notifications, if any, provided for in Paragraph 11 hereof,
sell, lease, or otherwise dispose of, at the office of Secured Party, on the
premises of Debtor or elsewhere, as chosen by Secured Party, all or any part of
the Collateral, in its then condition or following any commercially reasonable
preparation or processing, and any such sale or other disposition may be as a
unit or in parcels by public or private proceedings, and by way of one or more
contracts (it being agreed that the sale of any part of the Collateral shall not
exhaust Secured Party's power of sale, but sales may be made from time to time
until all of the Collateral has been sold or until the Obligations have been
paid in full), and at any such sale it shall not be necessary to exhibit the
Collateral; (vi) at Secured Party's discretion, retain the Collateral in
satisfaction of the Note or any other notes or other documents evidencing the
Obligations whenever the circumstances are such that Secured Party is entitled
to do so under the Code; (vii) apply by appropriate judicial proceedings for
appointment of a receiver for the Collateral or any part thereof and Debtor
hereby consents to any appointment; and/or (viii) buy the Collateral at any
public sale or private sale as permitted by the Code and/or applicable law.
Secured Party shall be entitled to apply the proceeds of any sale or other
disposition of the Collateral in the following order: first to the payment of
all of its reasonable expenses actually incurred in collecting such proceeds,
including the reasonable costs actually expended for repossessing, foreclosing,
storing, preparing for sale or selling the Collateral, including reasonable
attorney's fees and legal expenses incurred by Secured Party in collection and
next toward payment of the balance of the Obligations in such order and manner
as Secured Party in its discretion may deem advisable. Secured Party shall
account to Debtor for any surplus. If the proceeds are not sufficient to pay the
Obligations in full, Debtor shall remain liable for any deficiency.
In the
event of a default hereunder, in addition to all other remedies available to
Secured Party, Secured Party shall have the right to enter upon the premises
where the Collateral is located, take possession of the Collateral and remove
the same with or without judicial process (if such taking without judicial
process can be done lawfully and without breach of the peace), and Debtor does
hereby expressly waive any right to any notice, legal process or judicial
hearing prior to such taking of possession by Secured Party. Debtor understands
that the right to prior notice and hearing is a valuable right and agrees to the
waiver thereof as a part of the consideration for and as an inducement to
Secured Party to extend credit now or hereafter to Debtor.
13. Reasonable
notification of the time and place of any public sale of the Collateral or
reasonable notification of the time after which any private sale or other
intended disposition of the Collateral is to be made shall be sent to Debtor and
to any other person entitled under the Code to notice; provided, that if the
Collateral is perishable, threatens to decline speedily in value, or is of a
type customarily sold on a recognized market, Secured Party may sell or
otherwise dispose of the Collateral without notifications, advertisement or
other notice of any kind. It is agreed that notice mailed or given not less than
ten (10) calendar days prior to the taking of the action to which the notice
relates is reasonable notification and notice for the purposes of this Paragraph
13.
14. Should
any part of the Collateral come into the possession of Secured Party, whether
before or after default, Secured Party may use or operate the Collateral for the
purpose of preserving it or its value pursuant to the order of a court of
appropriate jurisdiction or in accordance with any other rights held by Secured
Party in respect of the Collateral. Debtor covenants to promptly reimburse and
pay to Secured Party, at Secured Party's request, the amount of all reasonable
expenses incurred by Secured Party in connection with its custody, preservation,
use or operation of the Collateral and all such expenses shall be a part of the
Obligations. It is agreed, however, that the risk of accidental loss or damage
to the Collateral is on Debtor, and Secured Party shall have no liability
whatever for failure to obtain or maintain insurance or to determine whether any
insurance ever in force is adequate as to amount or as to the risk
insured.
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15. All
rights and remedies of Secured Party hereunder are cumulative of each other and
of every other right or remedy which Secured Party may otherwise have at law or
in equity or under any other contract or document for the enforcement of the
security interest created herein or the collection of any one or more of the
Obligations, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies. The failure of Secured Party at any time to assert or exercise any
rights granted by this Agreement shall not render the Secured Party liable to
any person concerned herein or deprive Secured Party of any rights granted
herein. All rights of Secured Party hereunder may be assigned or transferred in
whole or in part by Secured Party, as they deem advisable, and the rights of
Secured Party hereunder shall inure to the benefit of its successors and
assigns. All obligations of Debtor hereunder shall bind the heirs, legal
representatives, successors and assigns of Debtor.
16. Should
any part of the Obligations be payable in installments, the acceptance by
Secured Party at any time and from time to time of part payment of the aggregate
amount of all installments then matured shall not be deemed to be a waiver of
the default then existing. No waiver by Secured Party of any default shall be
deemed to be a waiver of any other subsequent default, nor shall any such waiver
by Secured Party be deemed to be a continuing waiver. No delay or omission by
Secured Party in exercising any right or power hereunder, or under any other
documents executed by Debtor as security for or in connection with one or more
of the Obligations, shall impair any such right or power or be construed as a
waiver thereof or any acquiescence therein, nor shall any single or partial
exercise of any such right or power preclude other or further exercise thereof,
or the exercise of any other right or power of Secured Party hereunder or under
such other documents.
17. If the
Obligations or any part thereof are given in renewal or extension or applied
toward the payment of indebtedness secured by a pledge, security agreement or
other lien, Secured Party shall be, and is hereby, subrogated to all of the
rights, titles, security interests and other liens securing the indebtedness so
renewed, extended or paid.
18. Consistent
with the provisions of the Note, no provision of this Agreement, the Note and/or
any other note, instrument or document executed by Debtor evidencing one or more
of the Obligations is intended to or shall require or permit the holder to take,
receive, collect, contract for or reserve, directly or indirectly, in money,
goods or things in action, or in any other way, any greater interest, sum or
value in excess of the maximum rate of interest permitted by the law in effect
in the State of Colorado, federal law, or the governing laws of any other
applicable jurisdiction, at the applicable date.
19. This
Agreement shall be not severable or divisible in any way but, it is specifically
agreed that, if any provision should be invalid, the invalidity shall not affect
the validity of the remainder of this Agreement. Secured Party and Debtor agree
that the validity of this Agreement and all agreements and documents executed in
connection with this Agreement shall, to the extent possible be governed by the
laws of the State of Colorado.
20. All
written notices permitted or required to be given pursuant to this Agreement
shall be effective if mailed or delivered to the party at the address shown at
the top of this Agreement or at such other address previously designated in
writing by a party hereto.
21. A carbon,
photographic or other reproduction of this Agreement or of any financing
statement executed in connection with this transaction may be filed as a
financing statement with any filing officer authorized to accept such filings
under the Uniform Commercial Code as adopted in Colorado or any other state in
the United States.
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22.
Upon satisfaction of all obligations due from Debtor to Secured Party under the
Note, Loan Agreement and all other instruments and/or documents securing the
same, and upon written notification from Debtor to Secured Party that Debtor has
terminated its right to request further advances, Debtor shall have the right to
terminate the Loan Agreement, the Note and this Security Agreement and receive
from Secured Party a release of any and all liens and security interests held by
Secured Party and securing the repayment of the obligations. Upon such
termination and satisfaction of all such conditions, Debtor may also file a
termination statement for any financing statements filed pursuant to this
Security Agreement.
Executed
to be effective June 10, 2010.
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Secured
Party:
TMG HOLDINGS
COLORADO, LLC,
a Texas limited liability company
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Debtor:
a Nevada corporation
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| By: |
/s/
Xxxxx X. Xxxxxxxx
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By: |
/s/
Xxxx Xxxxxxx
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| Name: | Xxxxx X. Xxxxxxxx | Name: | Xxxx Xxxxxxx | |||
| Its: | President | Its: | Chief Operating Officer | |||
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