This is a Security Agreement (the
“Security Agreement”) between Steel Vault Corporation,
a Delaware corporation (“Debtor”), and the holder of
the Note (defined below) signatory hereto (the “Secured
Party”), and is dated as of June 4, 2009.
Debtor has issued a Secured Convertible
Promissory Note to the Secured Party in the aggregate principal
amount of $500,000.00 (the “Note”). This Security
Agreement secures the Note.
Accordingly, in consideration of the mutual
covenants and agreements set forth below, the parties agree as
follows:
1. Grant of Security Interest. For
good and valuable consideration received, the sufficiency of which
is hereby acknowledged and agreed, in order to secure payment of
(collectively, the “Liabilities”): (a) the Note;
(b) all costs and expenses, including attorneys’ fees,
incurred in collecting amounts due under the Note following an
Event of Default; (c) all costs and expenses, including
attorney’s fees, incurred in connection with realizing upon
the value of the security provided by this Security Agreement
following an Event of Default; and (d) all other liabilities
and obligations of Debtor to the Secured Party, however and
whenever incurred or evidenced, whether primary, secondary, direct,
indirect, absolute, contingent, sole, joint, or several, arising
prior to the date of this Security Agreement or in connection
herewith, or which may be hereafter contracted or acquired, or
incurred directly or indirectly in respect thereof, and all
extensions or renewals thereof; Debtor grants to the Secured Party
a lien and security interest in all of Debtor’s accounts
receivable, chattel paper, instruments, documents, inventory,
equipment, general intangibles, intellectual property, investment
property, and all other tangible and intangible property of Debtor,
whether now owned or existing or hereafter acquired or arising,
wherever located, and all cash and non-cash proceeds and products
thereof (collectively, the “Collateral”). This security
interest shall also attach to all replacements and proceeds of the
Collateral.
2.
Assurances; Covenants. Debtor hereby agrees that:
a. Except for the security interest granted to
Blue Moon Energy Partners LLC, a Florida limited liability company
(the “Subordinated Creditor”), the security interest
granted to the Secured Party by this Security Agreement and any
security interested granted to purchasers of notes in a subsequent
offering issued by Debtor in an aggregate amount not to exceed
$200,000, which notes would be pari passu with the Note (the
“Permitted Pari Passu Notes”): (i) the Collateral
is and will be free of all liens and security interests of every
kind and nature, except as may have been the result of actions of
the Secured Party; (ii) Debtor will not assign, transfer,
sell, convey, hypothecate, pledge, or in any other way dispose of
or encumber the Collateral while this Security Agreement is in
effect; and (iii) Debtor will warrant and defend the
Collateral and the Secured Party’s security interest against
the claims and demands of all persons.
b. Except for the Permitted Pari Passu
Notes, Debtor will not, without the prior written consent of the
Secured Party, borrow from anyone on the security of the
Collateral, or otherwise permit any liens, encumbrances, security
interests, or adverse claims against the Collateral, and will not
permit the Collateral to be levied upon under any legal
process.
c. Debtor authorizes the Secured Party to
file financing statements, including amendments or continuations
thereof, describing the Collateral, and from time to time at the
request of the Secured Party, will execute such other documents,
and will do such other acts and things, all as the Secured Party
may reasonably request, to establish and maintain a valid perfected
security interest in the Collateral and to enable the Secured Party
to enforce its rights and remedies hereunder with respect to the
Collateral.
3 . Representations and Warranties.
Debtor represents and warrants to the Secured Party as
follows:
a. Debtor is a corporation duly organized,
validly existing, and in good standing and active status under the
laws of the state of Delaware;
b. Debtor has all requisite power to own
and operate its properties and to carry on its business as now
being conducted, and has all necessary rights to conduct its
business;
c. Debtor has the power, authority, and
legal right to execute and deliver this Security Agreement, and to
perform its obligations hereunder, and has taken all action
necessary to authorize the execution, delivery, and performance of
this Security Agreement and to authorize the transactions
contemplated hereby;
d. The execution, delivery, and performance
by Debtor of this Security Agreement will not (i) contravene,
conflict with, result in the breach of, or constitute a violation
of or default under the organizational documents of Debtor, any
applicable law, rule, regulation, judgment, order, writ,
injunction, or decree of any court or governmental authority, or
any agreement or instrument to which Debtor is a party or by which
Debtor or its property may be bound or affected, or (ii) result in
the creation of any lien, charge, or encumbrance upon any property
or assets of Debtor pursuant to any of the foregoing, except the
liens created by this Security Agreement;
e. This Security Agreement constitutes a
legal, valid, and binding agreement enforceable against Debtor and
the Collateral in accordance with its terms and, without limiting
the foregoing, this Security Agreement grants the Secured Party a
valid, perfected security interest in the Collateral;
and
f. Debtor is the owner of the Collateral
free and clear of all liens, encumbrances, security interests, and
adverse claims whatsoever, except for the security interest granted
to the Subordinated Creditor and in respect of the security
interest granted in this Security Agreement.
2
4. Default. Each of the following
shall, after receipt by Debtor of written notice from the Secured
Party and after a cure period of five (5) business days with
respect to Section 4a. below, and thirty (30) days with
respect to Sections 4b. through 4d. below, constitute an event
of default under this Security Agreement (each, an “Event of
Default”):
a. The occurrence of a default under the
Note, or a breach of the assurances set forth in Section 2 of
this Security Agreement, or any other Liability is not paid when
due (and such nonpayment continues beyond the expiration of any
applicable grace or cure period);
b. Any representation or warranty made by
any Debtor under this Security Agreement or any report,
certificate, financial statement, or other information provided by
Debtor to the Secured Party in connection herewith is false or
misleading in any material respect when made or deemed made;
and
c. Debtor fails to fully and promptly
perform when due any agreement or covenant under this Security
Agreement or any related document (and such failure continues
beyond the expiration of any applicable grace or cure
period).
In the event
that Debtor substantially cures such default within the applicable
cure period, such default shall not constitute an Event of
Default.
5. Remedies
upon the occurrence of an Event of a Default.
a. Upon the occurrence and continuance of
an Event of Default under this Security Agreement, the
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