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Exhibit 10.12
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "Agreement") is made and entered
into as of
this 20th day of December, 2007, by and between Beacon
Enterprise Solutions
Group Inc., an Indiana corporation (the "Buyer"), and RFK
Communications, LLC
("RFK"), a Kentucky limited liability company.
R E C I T A L S
A. The Buyer and RFK have executed an Asset Purchase Agreement
dated
October 15, 2007 (the "Purchase Agreement"), pursuant to which
the Buyer has
agreed to purchase substantially all of the assets of RFK and
has issued Secured
Promissory Note (the "Secured Note") in partial payment
therefor. The Purchase
Agreement and the Secured Note are referred to herein as the
"Related
Agreements." Capitalized terms used herein but which are not
otherwise defined
shall have the meanings given to them in the Purchase
Agreement.
B. As a condition to RFK's consummation of the transactions
contemplated
by the Purchase Agreement, the Buyer has agreed to grant to RFK
a security
interest in the Collateral (as defined in Section 2) to secure
the Buyer's
obligations pursuant to the terms of the Secured Notes.
A G R E E M E N T
In consideration of the foregoing recitals and the mutual
covenants
and agreements contained in this Agreement, the parties,
intending to be legally
bound, agree as follows:
1. Obligations Secured. This Agreement secures the payment by
Buyer of its
obligations to RFK under the Secured Notes issued to RFK. The
security interest
granted hereby shall not extend to any other obligations of the
Buyer to RFK or
its affiliates and shall terminate upon the payment in full,
release,
cancellation or satisfaction of the Secured Notes.
2. Grant of Security Interest. Buyer grants to RFK a security
interest in
the contracts and accounts representing the carrier revenue
stream acquired from
RFK under the Purchase Agreement and in any additional carrier
commissions
generated by the Buyer (the "Collateral"), as described in more
detail on
Schedule 1 attached hereto.
3. Buyer's Warranties and Representations. Buyer warrants and
represents
that:
(a) Except for the security interest granted above and any
security
interest granted pursuant to bank or other institutional
financing under which
the assets of the Buyer become subject (collectively, "Permitted
Encumbrances"),
the Collateral is free from and will be kept free from all
liens, claims,
security interests, and encumbrances;
(b) except as filed in connection with any Permitted
Encumbrance, no
financing statement covering the Collateral or any proceeds is
on file in favor
of anyone other
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than Secured Parties, but if such other financing statement is
on file, it will
be terminated or subordinated.
4. Buyer's Agreements. The Buyer agrees:
(a) to defend at the Buyer's own cost any action, proceeding,
or
claim affecting the Collateral;
(b) to pay reasonable attorneys' fees and other expenses
incurred by
the Collateral Agent (as defined in Section 9) in enforcing the
rights of RFK
against the Buyer under this Agreement;
(c) to pay promptly all taxes, assessments, license fees and
other
public or private charges when levied or assessed against the
Collateral or this
Agreement, and this obligation shall survive the termination of
this Agreement;
(d) that if a certificate of title shall be required or
permitted by
law, at the request of the Collateral Agent, the Buyer shall
obtain such
certificate with respect to the Collateral, showing the security
interest of RFK
and do everything necessary or expedient to preserve or perfect
the security
interest of RFK;
(e) that the Buyer will not misuse, fail to keep in good
repair,
secrete, or without the prior written consent of the Collateral
Agent, and
notwithstanding RFK's claim to proceeds, sell, rent, lend,
encumber or transfer
any of the Collateral other than sales of inventory in the
ordinary course of
the Buyer's business;
(f) that the Collateral Agent or his or her designees may enter
upon
the Buyer's premises or wherever the Collateral may be located
at any reasonable
time to inspect the Collateral, and Buyer's books and records
pertaining to the
Collateral, and the Buyer shall assist RFK in making such
inspection; and
(g) that the security interest granted by the Buyer to RFK
shall
continue to be effective so long as there are any obligations
owed to RFK under
the Secured Notes.
5. Events of Default; Acceleration. The following are events of
default
under this Agreement which will allow the Collateral Agent to
take such action
under this Agreement as it, he or she deems necessary:
(a) the Buyer materially breaches any warranty or provision of
this
Agreement;
(b) the Buyer becomes insolvent or ceases to do business as a
going
concern; and
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(c) an "Event of Default" (as defined in the Secured Notes)
shall
have occurred and be continuing under any of the Secured
Notes.
6. Remedies After Default. Upon the occurrence of any event of
default,
RFK shall have all rights, privileges, powers and remedies of a
secured party
under the Uniform Commercial Code and any other applicable laws,
including
without limitation, the right to contact all persons obligated
to the Buyer on
any account and to instruct such person to deliver all payments
directly to RFK,
which rights, privileges, powers and remedies may be exercised
with the consent
of the Collateral Agent.
The Collateral Agent will give the Buyer reasonable notice of
the
time and place of any public sale of the Collateral or of the
time after which
any private sale or any other intended disposition of the
Collateral is to be
made. Unless otherwise provided by law, the requirement of
reasonable notice
shall be met if such notice is mailed, postage prepaid, to the
address of the
Buyer shown herein at least ten (10) calendar days before the
time of the sale
or disposition. The Buyer shall pay to the Collateral Agent all
expenses
incurred by the Collateral Agent, directly or indirectly, in the
enforcement of
this Agreement, including expenses of collection, retaking,
holding, preparing
for sale, selling and the like and shall include reasonable
attorneys' fees and
other legal expenses. The Buyer understands that RFK's rights
are cumulative and
not alternative.
7. Waiver of Defaults; Agreement Inclusive. The Collateral Agent
may in
its, his or her sole discretion waive a default, or cure, at the
Buyer's
expense, a default. Any such waiver in a particular instance or
of a particular
default shall not be a waiver of other defaults or the same kind
of default at
another time. No modification or change in this Agreement or any
related note,
instrument or agreement shall bind RFK unless in writing signed
by RFK. No oral
agreement shall be binding.
8. Financing Statements; Expenses. The Buyer authorizes the
Collateral
Agent to file one or more financing statements with respect to
the Collateral.
At the request of the Collateral Agent, the Buyer will execute
any agreements or
documents, in form satisfactory to the Collateral Agent which
the Collateral
Agent may deem necessary or advisable to establish and maintain
a perfected
security interest in the Collateral, and will pay the cost of
filing or
recording the same in all public offices deemed necessary or
advisable by the
Collateral Agent.
9. Collateral Agent. RFK HEREBY ELECTS AND APPOINTS RICHARD C.
MILLS TO
ACT AS THE EXCLUSIVE AGENT ("COLLATERAL AGENT") FOR EACH OF RFK
FOR THE PURPOSES
OF (A) EXERCISING THE RIGHTS AND REMEDIES OF RFK UNDER THIS
AGREEMENT, (B)
RECEIVING AND MANAGING THE COLLATERAL INCLUDING THE EXECUTION OF
ALL
INSTRUMENTS, THE MAKING OF ALL FILINGS AND CONTINUATION
STATEMENTS AND SIMILAR
INSTRUMENTS IN ANY APPLICABLE JURISDICTION AND THE TAKING OF ALL
ACTIONS, AS
SHALL, IN THE REASONABLE JUDGMENT OF THE COLLATERAL AGENT, BE
NECESSARY TO
CONTINUE THE EFFECTIVENESS, FOR THE BENEFIT OF RFK, AS SECURITY
FOR THE
RESPECTIVE OBLIGATIONS VALID, PERFECTED LIENS ON ALL OF THE
COLLATERAL, AND (C)
RECEIVING NOTICES AND OTHER COMMUNICATIONS
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FROM THE BUYER AND PROVIDING NOTICES TO RFK, ALL UPON THE TERMS
AND SUBJECT TO
THE CONDITIONS SET FORTH HEREIN. THE COLLATERAL AGENT MAY BE
REMOVED, AND A NEW
COLLATERAL AGENT ELECTED, BY THE WRITTEN CONSENT OF RFK.
10. Miscellaneous.
(a) Entire Agreement; Amendments and Waivers. This Agreement,
the
Purchase Agreement and each of the Related Agreements constitute
the full and
entire understanding and agreement among the parties with regard
to the subjects
hereof and thereof, and no party shall be liable or bound to any
other party in
any manner by any warranties, representations, or covenants,
except as
specifically set forth herein or therein. Any term of this
Agreement may be
amended and the observance of any term of this Agreement may be
waived (either
generally or in a particular instance and either retroactively
or
prospectively), only with the written consent of the Company and
RFK. Any
amendment or waiver effected in accordance with this paragraph
shall be binding
upon each Secured Party.
(b) Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the Commonwealth of
Kentucky, without
giving effect to principles of conflict of laws.
(c) Successors and Assigns. Each of the terms, provisions
and
obligations of this Agreement shall be binding upon, shall inure
to the benefit
of, and shall be enforceable by the parties and their respective
legal
representatives, successors and permitted assigns.
(d) Counterparts. This Agreement may be executed in one or
more
counterparts, each of which shall be deemed an original, but all
of which
together shall constitute a single agreement.
(e) Assignment. RFK may not assign this Agreement, or assign
the
rights or delegate its duties hereunder, without the prior
written consent of
the Buyer.
(f) Notices. All notices, requests, demands and other
communications
made by a party to another party under this Agreement shall be
provided to such
other party in the manner set forth in Section 10.7 of the
Purchase Agreement.
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