SECURITY AGREEMENT
In consideration of an extension of credit made by Solpower
Corporation, a Nevada corporation ("Creditor"), to [name of Licensee]
("Debtor"), evidenced by a promissory note (the "Note") in the principal sum of
* Dollars ($*) dated ____________, 199___, and to secure:
a. the timely payment of all amounts due under the Note and any other
sums advanced or credit extended by Creditor to Debtor; and
b. the performance by Debtor of all the covenants herein contained or
contained in any other agreement between Debtor and Creditor,
Debtor grants to Creditor (the secured party), pursuant to the ________________
Uniform Commercial Code, a security interest in all of the following property of
Debtor:
1. Any property of Debtor, whether Debtor owns it now or acquires it in
the future, which is in your possession (this includes, but is not limited to,
property given to you for safekeeping, collection, or exchange, and all
dividends an distributions from the property);
2. The property described below, together with all parts, accessories,
repairs, improvements and accessions to the property, and all proceeds and
products from the property, and all replacements, substitutions, and additions
to the property.
[___] INVENTORY:
All inventory wherever it is located which Debtor owns now or may own in
the future, that Debtor sells or leases, or that has been or will be
supplied under contracts of service, or that are raw materials, work in
progress, or materials used or consumed in Debtor's business.
[___] EQUIPMENT:
All equipment that Debtor owns now or may own in the future including,
but not limited to, all machinery, vehicles, furniture, fixtures,
manufacturing equipment, farm machinery and equipment, shop equipment,
office and recordkeeping equipment, and parts and tools. Any equipment
described in a list or schedule that I give to you will also be included
in the secured property, but such a list is not necessary for a valid
security interest in Debtor's equipment.
[___] FARM PRODUCTS:
All farm products that Debtor owns now or may own in the future
including, but not limited to:
(a) All poultry and livestock and their young, along with their
products and produce;
(b) All crops, annual or perennial, and all products of the
crops; and
(c) All feed, seed, fertilizer, medicines, and other supplies
used or produced in Debtor's farming operations.
[___] ACCOUNTS, INSTRUMENTS, DOCUMENTS, CHATTEL PAPER AND OTHER RIGHTS TO
PAYMENT:
All rights Debtor has now or may have in the future to the payment of
money including, but not limited to:
(a) Payment for goods sold or leased or for services rendered,
whether or not Debtor has earned the payment by
performance; and
(b) Rights to payment arising out of all present and future
debt instruments, chattel paper and loans and obligations
receivable.
The above include any rights and interests (including all liens and
security interests) that Debtor may have by law or agreement against any account
debtor or obligor of Debtor.
[___] GENERAL INTANGIBLES:
All general intangibles Debtor owns now or may own in the future
including, but not limited to, tax refunds, applications for patents,
patents, copyrights, trademarks, trade secrets, good will, trade names,
customer lists, permits and franchises, and the right to use Debtor's
name.
[___] ADDITIONAL PROPERTY:
Described as follows: see Exhibit A.
All of the above-described property shall be referred to collectively as the
"Collateral." The security interest of Creditor in the Collateral shall attach
immediately upon the signing of this Agreement, or, with respect to after
acquired property, as soon as Debtor acquires rights therein.
1. WARRANTIES AND REPRESENTATIONS. Debtor warrants and represents
that:
a. Debtor has, or upon acquisition will have, title to all of the
Collateral, and no other person, entity or government has or purports to
have, or upon acquisition will have, any right, title, encumbrance or
adverse claim or lien in or to any of the Collateral.
a. LOCATION OF COLLATERAL: The Collateral will be kept at the
following address:
-------------------------------------------------------------------------
(Number and Street) (City) (County) (State)
which location shall be called the "Property."
a. Debtor has authority to enter into this Agreement without the
consent of any other party.
a. Any person signing this Agreement on Debtor's behalf has been
duly authorized to sign it as Debtor's representative.
a. Except for the financing statement signed by Debtor to perfect
the security interest in the Collateral in favor of Creditor, no
financing statement covering the Collateral or any portion thereof is on
file in any public office and Debtor agrees not to sign or authorize the
filing of any additional financing statements in favor of any person or
entity, other than Creditor, as long as any portion of the indebtedness
evidenced by the Note remains unpaid.
1. COVENANTS AND AGREEMENTS.
a. Debtor shall pay when due all of Debtor's indebtedness to
Creditor, and shall repay immediately on demand all expenses (including
reasonable attorneys' fees, legal expenses and costs, and the cost of
filing financing statements and any renewals or extensions thereof)
incurred by Creditor under this Agreement or under any other instrument
securing payment of the Note, with interest at the rate of ten percent
per year from the date of the expenditure.
a. Any replacements, renewals or additional personal property
hereafter acquired by Debtor shall immediately and automatically (without
action by Creditor or Debtor) become subject to this Agreement. Upon
demand of Creditor, Debtor, in order to further confirm the same, shall
sign a new or amended security agreement.
2
a. Debtor shall not commence or permit the continuation of, any
proceeding in bankruptcy, receivership or similar proceedings, or commit
any act of bankruptcy or make any assignment for benefit of creditors or
become insolvent.
a. Debtor shall not remove or permit the removal of the Collateral
or any part thereof (including renewals, replacements and other
after-acquired property) from the Property without the prior written
permission of Creditor, provided that obsolete and worn out articles may
be removed concurrently with the replacement or renewal thereof with
property of at least equal value and of equal usefulness.
a. Debtor shall not sell, contract to sell, lease, encumber or
dispose of the Collateral (or any part thereof) without the prior written
consent of Creditor; provided, however, Debtor may sell or dispose of
portions of the Collateral in the ordinary course of business of Debtor.
a. Debtor shall keep the Collateral in good condition and repair
and permit no waste thereof and will permit Creditor from time to time to
inspect the same and will replace any worn out or obsolete Collateral
with property satisfactory to Creditor, at Creditor's option. Debtor
shall not allow the value of the Collateral to be impaired.
a. Debtor shall pay when due all taxes, assessments, charges,
liens or encumbrances now or hereafter affecting the Collateral.
a. Debtor, at Debtor's own expense, shall appear in and defend any
action or proceeding that may affect Creditor's security interest in or
Debtor's title to the Collateral.
a. If Debtor fails to make any payment or perform any act herein
agreed to be made or performed, Creditor may pay or perform the same, and
in that event Debtor shall reimburse Creditor in full for all payments,
expenses and costs thereby incurred, with interest thereon at the rate of
ten percent per annum. Creditor shall be the sole judge of the validity
of any adverse claims, taxes, assessments, charges or encumbrances, and
the amount to be paid in satisfaction thereof, and of the necessity for,
and of the time and manner of, doing all things herein authorized to be
done, provided Creditor shall be under no obligation to do any such acts
or to make any of such payments.
a. The inclusion as Collateral herein of any personal property
that may now be or hereafter become affixed or in any manner attached to
the Property shall not prevent the Collateral from being subject to the
lien of any deed of trust on the Property given to Creditor by Debtor. If
the Collateral includes any appliances, equipment, fixture or other items
that are also covered by a deed of trust, any sale held either under the
deed of trust or under this Agreement pursuant to the Arizona Uniform
Commercial Code, shall conclusively bar the rights of Debtor in such
items.
a. Debtor hereby assigns to Creditor all rents and income from the
Collateral subject to the right of Debtor to collect and retain the same
before any default hereunder.
a. Debtor shall immediately advise Creditor in writing of any
change of address of Debtor.
a. Debtor shall keep the Collateral free from all liens,
encumbrances and security interests (other than those created or
expressly permitted by this Agreement).
a. Debtor shall not permit the Collateral to be used in violation
of any applicable law, regulation or policy of insurance.
1. INSURANCE. Debtor shall keep the Collateral and Creditor's
interest therein insured under policies with such provisions, for such amounts
and by such insurers as shall be satisfactory to Creditor from time to time, and
shall furnish evidence on demand of Creditor of such insurance satisfactory to
Creditor. Creditor shall be named as a loss payee on all insurance policies. The
Collateral shall at all times be insured in an amount not less
3
than its full replacement value and against hazards and in such form and in such
amounts and with such companies as Creditor may from time to time require and
will deliver the policies or appropriate certificates to Creditor on Creditor's
demand. Debtor assigns (and directs any insurer to pay) to Creditor the proceeds
of all such insurance and any premium refund and authorizes Creditor to endorse
in the name of Debtor any unpaid balance of the Note, whether or not due, and/or
to restoration of the Collateral, returning any excess to Debtor. Creditor is
authorized, in the name of Debtor or otherwise, to make, adjust, settle claims
under and/or cancel any insurance on the Collateral.
1. INSPECTION OF COLLATERAL. Creditor is authorized to examine the
Collateral wherever located at any reasonable time or times. Debtor shall assist
Creditor in making any inspection.
1. MAINTENANCE OF SECURITY INTEREST. Debtor shall pay all expenses
and, upon request of Creditor, take any action reasonably deemed advisable by
Creditor to preserve and protect the Collateral or to establish, determine
priority of, perfect, continue perfection, terminate and/or enforce Creditor's
interest in the Collateral or Creditor's rights under this Agreement.
1. DEFAULT. The occurrence of one or more of the following shall
constitute a default hereunder:
a. any warranty or representation made by Debtor to Creditor is
false;
a. any covenant herein or in the Note is breached;
a. the priority of the security interest of the Creditor in the
Collateral is impaired;
a. the Collateral is levied on, seized, or attached;
a. there is any default in the payment when due of interest or
principal of the indebtedness secured hereby;
a. there is any default by Debtor under the terms of any other
agreement between Debtor and Creditor;
a. Debtor, a shareholder of Debtor (if Debtor is a corporation), a
partner of Debtor (if Debtor is a partnership), a member of Debtor (if
Debtor is a limited liability company) dies, ceases to exist, makes an
assignment for the benefit of creditors, becomes insolvent or the subject
of bankruptcy or insolvency proceedings.
1. REMEDIES. Debtor agrees that in the event of a default hereunder
by Debtor, Creditor may, in addition to any remedies provided by law and to the
extent permitted by law:
a. Incur expenses, including reasonable attorneys' fees, legal
expenses and costs appropriate to the exercise of any right or power
under this Agreement. Debtor shall reimburse Creditor in full for all
such expenses incurred with interest thereon at the rate of ten percent
per year.
a. Make any payment agreed to be made by Debtor and perform any
obligation of Debtor hereunder, without, however, any obligation so to
do.
a. Declare without notice that the entire indebtedness secured
hereby is immediately due and payable.
a. Take possession of the Collateral and render it usable, or
repair or renovate the Collateral, without, however, any obligation so to
do, and enter upon the real property where the Collateral may be located
for that purpose; control, manage, rent and lease the Collateral, either
separately or in conjunction with the Property; collect all rents and
income from the Collateral and apply the same to reimburse Creditor for
any costs or expenses incurred hereunder and to the payment or
performance of
4
Debtor's obligations hereunder, and apply the balance first to interest
and then to principal of the indebtedness secured hereby.
a. Secure the appointment of a receiver for the Collateral.
Creditor shall not exercise any remedies provided for herein until the
expiration of any notice and grace periods given to Debtor under Arizona law.
1. POST DEFAULT RIGHTS OF CREDITOR. With respect to Creditor's rights
and remedies following a default by Debtor, the following shall apply:
a. Creditor may require Debtor to assemble the Collateral and to
make it available to Creditor at any convenient place designated by
Creditor in the county where it is authorized herein to be located.
a. Written notice, when required by law, sent to any address of
Debtor in this Agreement at least ten calendar days (not counting the day
of sending) before the date of a proposed disposition of the Collateral
is reasonable notice.
a. Debtor shall reimburse Creditor for any expense incurred by
Creditor in protecting or enforcing Creditor's rights under this
Agreement, including without limitation, reasonable attorneys' fees and
legal expenses and all expenses of taking possession, holding, preparing
for disposition, and disposing of the Collateral. After deduction of such
expenses, Creditor may apply the proceeds of disposition to the amount
due under the Note in such order and amounts as Creditor elects.
a. Creditor may permit Debtor to remedy any default without
waiving the default so remedied, and Creditor may waive any default
without waiving any other subsequent or prior default by Debtor.
1. CONSTRUCTION OF AGREEMENT.
a. Creditor has no duty to protect, insure or realize upon the
Collateral. Debtor releases Creditor from any liability for any act or
omission relating to the Note, the Collateral, and this Agreement, except
Creditor's willful misconduct.
a. Debtor shall not assert against any assignee of Creditor's
rights under this Agreement or the Note any claim or defense Debtor may
have against Creditor.
a. Debtor grants Creditor, as further security for the Note, a
security interest and lien in any credit balance and other money now or
hereafter owed Debtor by Creditor or any assignee of Creditor and, in
addition, agrees that Creditor may, without prior notice or demand,
charge against any such credit balance or other money any amount owing
upon the Note, whether due or not.
a. This Agreement may be amended only by a written Agreement
signed by all of the parties.
nn. This Agreement shall be construed under the laws of the State
of Arizona. The proper venue for any proceeding related to this Agreement
shall be Maricopa County, Arizona, and the parties waive any right to
object to the venue.
a. Time is of the essence of this Agreement.
a. Creditor's acceptance of partial or delinquent payments or
Creditor's exercise of any right or remedy, shall not constitute a waiver
of any right of Creditor or constitute a modification of this Agreement
or of the Note. The taking of this Agreement shall not waive or impair
any other security Creditor may have or
5
hereafter acquire for the payment of the indebtedness secured hereby, nor
shall the taking of any such additional security waive or impair this
Agreement. Creditor may resort to any security Creditor may have in any
order Creditor may deem proper, and notwithstanding any additional
security, Creditor shall retain Creditor's right of setoff against
Debtor.
a. This Agreement shall inure to the benefit of Creditor's heirs,
legatees, devisees, administrators, executors, successors and assigns and
shall bind Debtor's heirs, legatees, devisees, administrators, executors,
successors and assigns.
a. The release of the security interest in any or all of the
Collateral shall not affect the liability of the Debtor on the
indebtedness secured hereby.
a. The pleading of the statute of limitations to any demand for
the performance of any obligations secured hereby is hereby waived.
IN WITNESS WHEREOF, this Security Agreement has been duly signed by
Debtor or Debtor's authorized representative to be effective as of the date
first written above.
[add signature blocks for Debtor and Secured Party]
6
