Security Agreement (Page 3 of 7) in pdf

Debtor Litigation. Debtor shall notify Secured Party within five (5) days if Debtor becomes involved in any litigation, or

other legal proceedings before the court, tribunal or governmental body, or received notice of intent to hold a claim against

Debtor, from any entity, in which any potential recovery against Debtor may exceed Two Thousand Dollars ($2,000.00).

4) Reimbursement of Expenses. At the option of Secured Party, Secured Party may discharge taxes, liens, and interest, or perform

or cause to be performed for and on behalf of the Debtor any actions and conditions, obligations, or covenants that the Debtor

has failed or refused to perform, and may pay for the repair, maintenance, and preservation, of the Collateral. All sums to be

expended, including but not limited to attorney's fees, court costs, agent's fees, or commissions, or any other costs or expenses,

shall bear interest from the date of payment at the rate of eighteen percent (18%) per annum or, if lower, the highest rate permitted

by applicable law, and shall be payable at the place designated at the Secured Party’s address designated below and shall be

secured by this Agreement.

5) Events of Default.

The Debtor shall be in default under this Agreement on the occurrence of any of the following events or

conditions (each an “Event of Default”):

a) Default in the payment or performance of any note, obligation, covenant, or liability secured by this Agreement.

b) Any warranty, representation, or statement made or furnished to Secured Party by or on behalf of the Debtor proves to have

been false in any material respect when made or furnished.

c) Failure to perform any of Debtor’s obligations under this Agreement;

d) Any event that results in the acceleration of the maturity of the indebtedness of the Debtor to others under any indenture,

agreement, or undertaking.

e) Loss, theft, substantial damage, destruction, sale, or encumbrance to or of any of the Collateral, or the making of a levy,

seizure, or attachment of or on the Collateral.

Secured Party’s reasonable belief that the prospect of payment of any indebtedness secured by this Agreement or the

performance of this Agreement is impaired.

g) The termination of the Debtor's existence, whether by means of dissolution, merger, consolidation or otherwise, the Debtor's

insolvency or business failure, the appointment of a receiver for any part of the Collateral, any assignment for the benefit of

creditors, or the commencement of any proceeding under any bankruptcy or insolvency law by or against the Debtor or any

guarantor or surety for the Debtor.

6) Remedies.

a) On Debtor's default, Secured Party, at its option and without demand on or notice to Debtor, may do any one or more of the

following:

Declare all Liabilities immediately due and payable, and interest shall accrue on the Liabilities at the rate of eighteen

percent (18%) per annum, or if lower, the highest rate permitted by applicable law.

ii) Remove the Collateral from the premises of the Debtor, wherever it may be found, and for purposes of removal and

possession, Secured Party or its representatives and agents, may enter into any premises of the Debtor, without legal

process, and Debtor hereby waives and releases Secured Party, its representatives and agents, of and from any and all

claims in connection with or arising from such entry and repossession.

iii) Demand, and Debtor shall deliver, possession and control of the Collateral together with all products and proceeds

thereof and records pertaining thereto, and, if requested, Debtor shall:

(1) Assemble the Collateral and make it available to Secured Party at any convenient place designated by Secured

Party;

(2) Make and deliver any and all endorsements or assignments necessary to enabled Secured Party to make collection

thereon; and

(3) Deposit daily all cash received in a bank account designated for that purpose by and under sole control of Secured

Party.

It is agreed that Secured Party will not have adequate remedy at law if Debtor does not assemble and make the

Collateral available to Secured Party as aforesaid, and, accordingly, that Debtor’s obligation to do so shall be

specifically enforceable.

iv) Notify all account Debtors of the Debtor to make payment of such accounts directly to Secured Party, and Secured

Party may endorse the name of Debtor on any checks, notes or other documents received in payment of an account.

Secured Party further has the right to sue for, take judgment or compromise such accounts, and to sell the same at

public sale.

v) Dispose of Collateral in such manner pursuant to such code as Secured Party may determine, whether or not Collateral

is present at the time and place of such disposition, at any place specified in the applicable Uniform Commercial Code as

Secured Party may determine. Reasonable prior notice of the disposition of Collateral shall be ten (10) days, and

Secured Party shall apply proceeds therefrom to the Liabilities in such order as Secured Party in its discretion may

determine and in accordance with the Code. Debtor further agrees to pay Secured Party any deficiency if proceeds

from the disposition of Collateral are not sufficient to satisfy the Liabilities.

b) Debtor shall pay all expenses and reimburse Secured Party for any expenditures, including but not limited to costs of

collecting the Liabilities, reasonable attorneys’ fees and legal expenses, in connection with any exercise by Secured Party of

its rights and remedies hereunder. Such cost and expenses shall be Liabilities secured by this Agreement.

Security Agreement Page 3

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