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EXHIBIT
10.11
SECURITY AGREEMENT
This
Security Agreement (this " Agreement
") is made as of APRIL 7, 2008, by and among Secured Financial
Network, Inc., a Nevada corporation (“Debtor”),
VPS Virtual Payment Solutions, Inc. a
Florida corporation and wholly-owned subsidiary of
Debtor (“VPS,” and together with Debtor
“Obligors”) and Commercial Holding, AG
(“Secured Party”).
BACKGROUND:
A. Secured
Party and Debtor has entered into that certain Credit and Loan
Agreement of even date herewith (the “Loan
Agreement”), and VPS will receive a direct benefit from
any loans provided to Debtor under the Loan
Agreement.
B. As
a condition to making any loans under the Loan Agreement,
Secured Party requires the Obligors to grant to Secured Party
a security interest in the Collateral (as defined
below).
AGREEMENTS:
In consideration of the
premises herein contained and other good and valuable
consideration, the receipt and sufficiency of which are
hereby acknowledged, Obligors hereby agree with the Secured
Party as follows:
1.
Certain Definitions .
Unless otherwise defined herein, or the context hereof otherwise
requires, each term defined in the Texas Uniform Commercial Code ("
UCC ") is used
in this Agreement with the same meaning; provided ,
that if any definition given a term in Chapter 9 of the UCC
conflicts with the definition given that term in any other chapter
of the UCC, the Chapter 9 definition shall prevail. Capitalized
terms otherwise used but not otherwise defined in this Agreement
shall have the meanings attributed to such terms in the Loan
Agreement (as defined below). As used herein, the following terms
have the meanings indicated:
" Collateral
" has the meaning set forth in Section 3.
" Copyrights
License " means any and all rights now owned or
hereafter acquired by VPS under any written agreement
granting any right to use any Copyright or Copyright
registration.
" Copyrights
" means all of the following now owned or hereafter adopted
or acquired by VPS: (a) all copyrights and General
Intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and
all applications in connection therewith, including all
registrations, recordings and applications in the United
States Copyright Office or in any similar office or agency of
the United States, any state or territory thereof, or any
other country or any political subdivision thereof, and (b)
all reissues, extensions or renewals thereof.
" Default
" means the occurrence of any Event of Default.
" Notes "
means any promissory notes issued pursuant to the Loan
Agreement (as amended, modified, supplemented, or restated
from time to time).
" General
Intangibles " means all "general intangibles," as such
term is defined in the UCC, now owned or hereafter acquired
by VPS, including (i) all Intellectual Property Rights, (ii)
all tax refunds, (iii) all licenses, permits, concessions and
authorizations, and (iv) all insurance policies.
" Indebtedness
" means (a) all indebtedness, obligations and liabilities of
Debtor to the Secured Party under the Note, the Loan
Agreement, this Agreement, and the other Loan Documents, (b)
all indebtedness, obligations and liabilities to the Secured
Party under the Notes, (c) interest accruing on, and
attorneys' fees, court costs, and other costs of collection
incurred in the collection or enforcement of any of the
indebtedness, obligations and liabilities described in
clauses (a) and (b) above, and (d) any and all renewals and
extensions of, or amendments to, any of the indebtedness,
obligations and liabilities described in clauses (a), (b) and
(c) above.
" Intellectual
Property Right " means (a) any Patent, Patent License,
Copyright, Copyright License, Trademark, Trademark License,
customer list, trade secret or other intellectual property
right or proprietary information, (b) all registrations and
applications to register any such Patent, Copyright,
Trademark or other intellectual property right with any
governmental authority and all renewals and extensions
thereof, and (c) the goodwill of the business associated with
or relating to any such Trademark or other intellectual
property right.
" Lien "
means any lien, mortgage, security interest, charge, or
encumbrance of any kind, including, without limitation, the
rights of a vendor, lessor, or similar party under any
conditional sales agreement or other title retention
agreement or lease substantially equivalent thereto, any
production payment, and any other right of or arrangement
with any creditor to have his claim satisfied out of any
property or assets, or the proceeds therefrom, prior to the
general creditors of the owner thereof.
" Loan
Agreement " is defined in the Background section of
this Agreement, and includes any amendment, modification,
supplement or restatement thereof, made from time to
time.
" Loan
Documents " means this Agreement, the Loan Agreement,
the Notes, any UCC financing statements and all other
documents and instruments heretofore, now or hereafter
evidencing, describing, guaranteeing or securing the
Indebtedness contemplated hereby or in the Loan Agreement or
delivered in connection with this Agreement.
" Patent
License " means rights under any written agreement now
owned or hereafter acquired by VPS granting any right with
respect to any invention on which a Patent is in
existence.
" Patents
" means all of the following in which VPS now holds or
hereafter acquires any interest: (a) all letters patent of
the United States or of any other country, all registrations
and recordings thereof, and all applications for letters
patent of the United States or of any other country,
including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar
office or agency of the United States, any State, or any
other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
" Person "
shall mean any natural person, corporation, unincorporated
organization, trust, joint-stock company, joint venture,
association, company, limited or general partnership, any
government, or any agency or political subdivision of any
government.
" Security
Interest " means the security interest granted and the
pledge and assignment made under Article 2.
" Trademark
License " means rights under any written agreement now
owned or hereafter acquired by Debtor granting any right to
use any Trademark.
" Trademarks
" means all of the following now owned or hereafter existing
or adopted or acquired by VPS: (a) all trademarks, trade
names, corporate names, business names, trade styles, service
marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or
appear, designs and general intangibles of like nature
(whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection
therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office
or in any similar office or agency of the United States, any
state or territory thereof, or any other country or any
political subdivision thereof, (b) all reissues, extensions
or renewals thereof, and (c) all goodwill associated with or
symbolized by any of the foregoing.
" Tribunal
" means any court or governmental department, commission,
board, bureau, agency or instrumentality of the United States
or of any state, commonwealth, nation, territory, possession,
county, parish or municipality, whether now or hereafter
constituted or existing.
2.
Security Interest . In
order to secure the full and complete payment and performance of
the Indebtedness when due, Debtor hereby grants to Secured Party,
for its benefit and the ratable benefit of the Secured Party, a
security interest in the Collateral and pledges and assigns the
Collateral to Secured Party, all upon and subject to the terms and
conditions of this Agreement, the Loan Agreement, and the Notes.
Such Security Interest is granted and the pledge and assignment are
made as security only and shall not subject Secured Party to, or
transfer or in any way affect or modify, any obligation of Debtor
with respect to any of the Collateral or any transaction involving
or giving rise thereto.
3.
Collateral . As used
herein, the term " Collateral "
means (a) all of Debtor’s equity interest in and to VPS, and
(b) all of the assets and property of VPS whether now owned or
hereinafter acquired by Debtor, including but not limited to the
following items and types of property:
3.1 all
documents and instruments in the name of VPS.
3.2 all
accounts, General Intangibles, chattel paper, commercial tort
claims, deposit accounts, goods, investment property, letters
of credit, letter-of-credit rights, money, as-extracted
collateral, and instruments however evidenced or acquired, or
in which VPS now has or hereafter acquires any rights (or any
successor or assign of such obligors).
3.3 all
of Debtor's fixtures, equipment and inventory and all parts
thereof and all accessions, additions, attachments,
improvements, substitutions, and replacements thereto and
therefor.
3.4 all
rights to use any software installed on the equipment and
inventory identified in Section 3.3.
3.5 all
cash and noncash proceeds and other rights arising from or by
virtue of, or from the voluntary or involuntary sale or other
disposition of, or collections with respect to, or other
claims against any other Person or entity with respect to, all
or any part of the foregoing Collateral.
3.6 all
books and records concerning any of the Collateral.
4.
Representations and
Warranties . Obligors jointly and severally represent and
warrant to Secured Party that:
4.1 debtor
is a corporation organized and existing in the State of Nevada
and VPS
is a corporation organized and existing in the State of
Florida.
4.2 obligors’
place of business and chief executive office is where each
Obligor is entitled to receive notices hereunder; and the
present and foreseeable location of VPS' books and records
concerning any of the Collateral is at 1180 SW 36th Ave.,
Suite 204 Pompano Beach, Fl 33069 (but the failure
of such description to be accurate or complete shall not
impair the Security Interest in such Collateral); and all such
books, records, and Collateral are in VPS' possession except
for inventory leased to VPS’ customers in the ordinary
course of business.
4.3
the delivery at any time by an Obligor to Secured Party of
Collateral or of additional specific descriptions of certain
Collateral shall constitute a representation and warranty by
Obligors to Secured Party that the representations and
warranties of this Article are true and correct with respect
to each item of such Collateral.
5.
Certain Covenants .
Until the Indebtedness is paid and performed in full, Obligors each
covenant and agree with Secured Party that Obligors
will:
5.1 maintain,
at the place where Debtor is entitled to receive notices under
the Loan Agreement, and permit representatives of any Secured
Party at any time during normal business hours to inspect and
make abstracts from such records, and furnish to Secured
Party, at such intervals as Secured Party may reasonably
request, such documents, lists, descriptions, certificates and
other information as may be necessary or proper to keep
Secured Party informed with respect to the identity, location,
status, condition and value of the Collateral.
5.2 promptly
notify Secured Party of any material claim, action, or
proceeding affecting title to all or any portion of the
Collateral or the Security Interest and, at the request of a
Secured Party, appear in and defend, at Obligors’
expense, any such action or proceeding, except with respect to
Permitted Liens. Promptly notify Secured Party of
any material change in any fact or circumstances represented
or warranted by Obligors with respect to any of the Collateral
or the Indebtedness.
5.3 not
sell or otherwise dispose of, or permit the sale or
disposition of, any of the Collateral, except inventory sold
or abandoned in the ordinary course of business. Not create,
incur or suffer or permit to be created or incurred or to
exist any charge or Lien upon or against any of the
Collateral, except for Permitted Liens.
5.4 after
the occurrence and during the continuation of a Default, hold
in trust for Secured Party, as property of Secured Party, all
collections and proceeds of, or payments made in respect of,
all Collateral at any time received by Obligors and
immediately deliver same to Secured Party; provided that
Secured Party at its option permits Obligors to retain such
collections and proceeds of, or payments made in respect of,
all Collateral.
5.5 at
Obligors' expense and Secured Party's request, before or
after a Default, file or cause to be filed such applications
and take such other actions as Secured Party may reasonably
request to obtain the consent or approval of any Tribunal to
the Secured Party's rights hereunder, including, without
limitation, the right to sell all the Collateral upon a
Default without additional consent or approval from such
Tribunal.
5.6 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 create, evidence, perfect, continue and preserve
the priority of the Security Interest.
5.7 keep
Collateral that is inventory or equipment in good repair,
working order, and condition, normal wear and tear
excepted.
5.8 keep
the Collateral insured, in accordance with the past practices
of the business prior to the Closing date, with financially
sound and reputable insurance companies, and in at least such
reasonable amounts and against at least such normal risks as
are usually insured against in the same general area by
companies of established repute engaged in the same or
similar businesses.
5.9 not
cause or permit any change to be made in any Obligors’
name, identity or corporate structure, or any change to be
made to any Obligors’ jurisdiction of organization or
the address of its chief executive office, unless such
Obligor shall have first (1) notified Secured Party of such
change at least thirty (30) days prior to the effective date
of such change, and (2) taken all action requested by Secured
Party for the purpose of further confirming and protecting
Secured Party' security interests and rights under this
Agreement and the perfection and priority
thereof. In any notice furnished pursuant to this
subsection, each Obligor will expressly state that the notice
is required by this Agreement and contains facts that may
require additional filings of financing statements or other
notices for the purposes of continuing perfection of Secured
Party's security interest in the Collateral.
5.10 the
Obligors authorizes the Secured Party to file at any time and
from time to time any financing statement, amendments thereto
and continuation statements relating to the Collateral that
Secured Party deems necessary to maintain a perfected
first-priority security interest in the Collateral, subject
to Permitted Liens. Obligors shall, at their own expense,
make, execute, endorse, acknowledge, file and deliver to
Secured Party from time to time such financing statements,
lists, descriptions and designations of its
Collateral,
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