Exhibit 10.3

SECURITY AGREEMENT

THIS SECURITY AGREEMENT (the “Agreement”) is entered into as of October 29,
2019, by and among GALAXY NEXT GENERATION, INC. (the “Company”), a Nevada
corporation, INTERLOCK CONCEPTS INC. (“Interlock”), organized under the laws of
the State of Utah corporation,  ELHERT SOLUTIONS GROUP (“Elhert”), organized
under the laws of the State of Utah and GALAXY MS, INC. (“MS”), a Nevada
corporation are collectively referred to as the “Guarantors,” and together with
the Company, the “Grantors”) in favor of YA II PN, LTD. (the “Secured Party”), a
Cayman Island exempted company.

WHEREAS, in connection with the Securities Purchase Agreement by and among the
Company and the Secured Party of even date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue to the Secured Party
(i) an aggregate original principal amount of $1,500,000 of senior secured
convertible debentures (the “Convertible Debentures”), which shall be
convertible into shares of the Company’s Common Stock (the “Conversion Shares”);
and (ii) a warrant (the “Warrant”) to be exercisable to acquire additional
shares of Common Stock (the “Warrants Shares”) initially in that number of
shares of Common Stock set forth in the Securities Purchase Agreement;

WHEREAS, each of the Guarantors (other than the Company) has executed and
delivered a Global Guaranty dated the date hereof (the “Guaranty”) in favor of
the Secured Party, with respect to the Company’s obligations under the
Securities Purchase Agreement, the Convertible Debentures, and the Transaction
Documents (as defined below); and

WHEREAS, each of the Guarantors shall receive a direct benefit from the Secured
Party entering into the Securities Purchase Agreement, the Convertible
Debentures, and the Transaction Documents; and

WHEREAS, it is a condition precedent to the Secured Party purchasing the
Convertible Debentures and Warrant pursuant to the Securities Purchase Agreement
that the Grantor shall have executed and delivered to the Secured Party this
Agreement providing for the grant to the Secured Party of a security interest in
all personal property of the Grantor to secure all of the Company's obligations
under the “Transaction Documents” (as defined in the Securities Purchase
Agreement) (the “Transaction Documents”);

NOW, THEREFORE, in consideration of the promises and the mutual covenants herein
contained, and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:

-1-

 

ARTICLE 1.

DEFINITIONS AND INTERPRETATIONS

1.1 Recitals.

The above recitals are true and correct and are incorporated herein, in their
entirety, by this reference.

1.2 Interpretations.

Nothing herein expressed or implied is intended or shall be construed to confer
upon any person other than the Secured Party any right, remedy or claim under or
by reason hereof.

1.3 Definitions.

(a) To the extent used in this Agreement and not defined herein, terms defined
in the UCC shall have the meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined) ascribed to such terms
in the UCC.  To the extent the definition of any category or type of Collateral
is expanded by any amendment, modification or revision to the UCC, such expanded
definition will apply automatically as of the date of such amendment,
modification or revision.

(b) As used in this Agreement, the following terms shall have the meanings
indicated below (such meanings to be equally applicable to both the singular and
plural forms of such terms):

“Collateral” has the meaning set forth in Section 2.1.

“Event of Default” shall mean (i) any Grantor defaulting in any of its
obligations under this Agreement; or (ii) the occurrence of a default or event
of default under the Securities Purchase Agreement, the Convertible Debenture,
the Global Guaranty Agreement or any other Transaction Document.

“GAAP” shall mean generally accepted accounting principles in the United States
of America.

-2-

 

“Indemnified Person” shall have the meaning given in Section 8.8.

“Intellectual Property” shall mean all present and future trade secrets,
know-how and other proprietary information; trademarks, trademark applications,
internet domain names, service marks, trade dress, trade names, business names,
designs, logos, slogans (and all translations, adaptations, derivations and
combinations of the foregoing) indicia and other source and/or business
identifiers, and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
copyrights and copyright applications; (including copyrights for computer
programs) and all tangible and intangible property embodying the copyrights,
unpatented inventions (whether or not patentable); patents and patent
applications; industrial design applications and registered industrial designs;
license agreements related to any of the foregoing and income therefrom; books,
records, writings, computer tapes or disks, flow diagrams, specification sheets,
computer software, source codes, object codes, executable code, data, databases
and other physical manifestations, embodiments or incorporations of any of the
foregoing; all other intellectual property; and all common law and other rights
throughout the world in and to all of the foregoing.  Schedule 4 attached hereto
sets forth all patent, trademark and copyright registrations and applications of
any Grantor (as such Schedule may be amended, modified or supplemented from time
to time).

“Lien” has the meaning set forth in Section 4.2.

“Material Adverse Effect” shall mean any material and adverse effect as
determined by the Secured Party in its reasonable discretion upon (a) any
Grantor’s assets, business, operations, properties or condition, financial or
otherwise; (b) any Grantor’s ability to make payment as and when due of all or
any part of the Obligations; or (c) the Collateral.

“Obligations” shall mean and include any and all debts, liabilities,
obligations, covenants and duties owing by any Grantor to the Secured Party, now
existing or hereafter arising of every nature, type, and description, whether
liquidated, unliquidated, primary, secondary, secured, unsecured, direct,
indirect, absolute, or contingent, and whether or not evidenced by a note,
guaranty or other instrument, and any amendments, extensions, renewals or
increases thereof, including, without limitation, all those under (i) the
Securities Purchase Agreement, (ii) the Notes; (iii) the Global Guaranty
Agreement, (iv) any agreement or document related to the Securities Purchase
Agreement, the Convertible Debenture, the Global Guaranty Agreement, or any
other Transaction Document; or (iii) any other or related documents, and
including any interest accruing thereon after insolvency, reorganization or like
proceeding relating to any Grantor, whether or not a claim for post-petition
interest is allowed in such proceeding, and all costs and expenses of the
Secured Party incurred in the enforcement, collection or otherwise in connection
with any of the foregoing, including, but not limited to, reasonable attorneys’
fees and expenses and all obligations of any Grantor to the Secured Party to
perform acts or refrain from taking any action.

“Real Estate” means all leases and all land, together with the buildings,
structures, parking areas, and other improvements thereon, now or hereafter
owned by any Grantor, including all easements, rights-of-way, and similar rights
relating thereto and all leases, tenancies, and occupancies thereof.  

“UCC” or “Uniform Commercial Code” means the Uniform Commercial Code as in
effect from time to time in the State of Washington; provided, however, that if
a term is defined in Article 9 of the Uniform Commercial Code differently than
in another Article thereof, the term shall have the meaning set forth in Article
9 of the UCC; provided further that, if by reason of mandatory provisions of
law, perfection, or the effect of perfection or non-perfection, of a security
interest in any Collateral or the availability of any remedy hereunder is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than State of Washington, “Uniform Commercial Code” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy, as the case may be.

-3-

 

ARTICLE 2.

SECURITY INTEREST

2.1 Grant of Security Interest.

(a) As security for the payment or performance in full of the Obligations, each
Grantor hereby pledges to the Secured Party, its successors and assigns, and
hereby grants to the Secured Party, its successors and assigns, a security
interest in and to all assets and personal property of each Grantor, wherever
located and whether now or hereinafter existing and whether now owned or
hereafter acquired, of every kind and description, tangible or intangible,
including without limitation, all Goods, Inventory, Equipment, Fixtures,
Instruments, Documents, Accounts, Contracts and Contract Rights, Chattel Paper,
Money, Letters of Credit and Letter-of-Credit Rights, Commercial Tort Claims,
Securities and all other Investment Property, General Intangibles, Farm
Products, all books and records and information relating to any of the
foregoing, all Supporting obligations, and any and all Proceeds and products of
any and all of the foregoing, and as more particularly described on Exhibit A
attached hereto, excluding any “intent-to-use” trademark application filed
pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, prior to the filing
of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an
“Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with
respect thereto (“ITU Applications”), to the extent that, and during the period,
if any, in which, the grant of a security interest therein would impair the
validity or enforceability of any registration that issues from such ITU
Applications under applicable federal law (it being understood that after such
period such ITU Applications shall be automatically subject to the security
interest granted herein and deemed to be included in the Collateral)
(collectively, the “Collateral”)

(b) Simultaneously with the execution and delivery of this Agreement, each
Grantor shall make, execute, acknowledge, file, record and deliver to the
Secured Party such documents, instruments, and agreements, including, without
limitation, financing statements, mortgages, certificates, affidavits and forms
as may, in the Secured Party’s reasonable judgment, be necessary to effectuate,
complete or perfect, or to continue and preserve, the security interest of the
Secured Party in the Collateral.

(c) In the event that any Grantor obtains title to any Real Estate, each Grantor
shall promptly execute and deliver an original mortgage, deed of trust, or other
instrument in a form and substance acceptable to the Secured Party in all
respects sufficient to provide the Secured party with a perfected first priority
lien on such Real Estate.  

2.2 No Assumption of Liability.

The security interest in the Collateral is granted as security only and shall
not subject the Secured Party to, or in any way alter or modify any obligation
or liability of any Grantor with respect to or arising out of the Collateral.

-4-

 

ARTICLE 3.

ATTORNEY-IN-FACT; PERFORMANCE

3.1 Secured Party Appointed Attorney-In-Fact.

Each Grantor hereby appoints the Secured Party as its attorney-in-fact, with
full authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, from time to time in the Secured Party’s discretion to
take any action and to execute any instrument which the Secured Party may
reasonably deem necessary to accomplish the purposes of this Agreement or for
the purpose of perfecting, confirming, continuing, enforcing or protecting the
security interest in the Collateral, including, without limitation, to (a) file
one or more financing statements, continuation statements, filings with the
United States Patent and Trademark Office or United States Copyright Office (or
any successor office) or other documents; (b) receive and collect all
instruments made payable to any Grantor representing any payments in respect of
the Collateral or any part thereof and to give full discharge for the same; (c)
demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or
realize on the Collateral as and when the Secured Party may determine, and (d)
to execute and complete in the name of one or more Grantor such documents and
forms as may be necessary to transfer any domain names and related content to
the Secured Party or its designee, including without limitation, completing and
submitting online forms in the name of each Grantor and taking all actions
necessary in connection therewith.  To facilitate collection, the Secured Party
may notify account debtors and obligors on any Collateral to make payments
directly to the Secured Party.  The foregoing power of attorney is a power
coupled with an interest and shall be irrevocable until all Obligations are paid
and performed in full.  Each Grantor agrees that the powers conferred on the
Secured Party hereunder are solely to protect the Secured Party’s interests in
the Collateral and shall not impose any duty upon the Secured Party to exercise
any such powers.

3.2 Secured Party May Perform.

If any Grantor fails to perform any agreement contained herein, the Secured
Party, at its option, may itself perform, or cause performance of, such
agreement, and the expenses of the Secured Party incurred in connection
therewith shall be included in the Obligations secured hereby and payable by any
Grantor under Section 8.4.

ARTICLE 4.

REPRESENTATIONS AND WARRANTIES

4.1 Authorization: Enforceability.

Each of the parties hereto represents and warrants that it has taken all action
necessary to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby; and upon execution and delivery, this
Agreement shall constitute a valid and binding obligation of the respective
party, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors’ rights or by the principles governing the
availability of equitable remedies.

-5-

 

4.2 Ownership of Collateral; Priority of Security Interest.

Each Grantor represents and warrants that it is the legal and beneficial owner
of the Collateral free and clear of any lien, security interest, option or other
charge or encumbrance (each, a “Lien”) except for the Permitted Liens.  Except
for the Permitted Liens, (i) the security interest granted to the Secured Party
hereunder shall be a first priority security interest subject to no other Liens,
and (ii) no financing statement covering any of the Collateral or any proceeds
thereof is on file in any public office.  

4.3 Location of Collateral.  

The Collateral is or will be kept at the address(es) of each Grantor set forth
on Schedule 4.3 attached hereto. Unless otherwise provided herein, no Grantor
will remove any Collateral from such locations without the prior written consent
of the Secured Party.

4.4 Location, State of Incorporation and Name of Grantor.

Each Grantor’s principal place of business; state of incorporation, organization
or formation; organization id; and exact legal name is set forth on Schedule 4.4
attached hereto.  

4.5 Solvency.  

Each Grantor is able to pay its debts as they mature, has capital sufficient to
carry on its business, and the fair present saleable value of its assets,
calculated on a going concern basis, is in excess of the amount of its
liabilities.

ARTICLE 5.

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

5.1 Method of Realizing Upon the Collateral: Other Remedies.

-6-

 

If any Event of Default shall have occurred and be continuing:

(a) The Secured Party may exercise in respect of the Collateral, in addition to
any other rights and remedies provided for herein or otherwise available to it,
all of the rights and remedies of a secured party upon default under the UCC
(whether or not the UCC applies to the affected Collateral), and also may (i)
take absolute control of the Collateral, including, without limitation, transfer
into the Secured Party’s name or into the name of its nominee or nominees (to
the extent the Secured Party has not theretofore done so) and thereafter
receive, for the benefit of the Secured Party, all payments made thereon, give
all consents, waivers and ratifications in respect thereof and otherwise act
with respect thereto as though it were the outright owner thereof, (ii) require
each Grantor to assemble all or part of the Collateral as directed by the
Secured Party and make it available to the Secured Party at a place or places to
be designated by the Secured Party that is reasonably convenient to both
parties, and the Secured Party may enter into and occupy any premises owned or
leased by any Grantor where the Collateral or any part thereof is located or
assembled for a reasonable period in order to effectuate the Secured Party’s
rights and remedies hereunder or under law, without obligation to any Grantor in
respect of such occupation, and (iii) without notice except as specified below
and without any obligation to prepare or process the Collateral for sale, (A)
sell the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Secured Party’s offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable and/or (B) lease,
license or dispose of the Collateral or any part thereof upon such terms as the
Secured Party may deem commercially reasonable. Each Grantor agrees that, to the
extent notice of sale or any other disposition of the Collateral shall be
required by law, at least ten (10) days’ notice to each Grantor of the time and
place of any public sale or the time after which any private sale or other
disposition of the Collateral is to be made shall constitute reasonable
notification. The Secured Party shall not be obligated to make any sale or other
disposition of any Collateral regardless of notice of sale having been given.
The Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Each
Grantor hereby waives any claims against the Secured Party arising by reason of
the fact that the price at which the Collateral may have been sold at a private
sale was less than the price which might have been obtained at a public sale or
was less than the aggregate amount of the Obligations, even if the Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree, and waives all rights that each Grantor may have to require that
all or any part of such Collateral be marshaled upon any sale (public or
private) thereof. Each Grantor hereby acknowledges that (i) any such sale of the
Collateral by the Secured Party may be made without warranty, (ii) the Secured
Party may specifically disclaim any warranties of title, possession, quiet
enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii)
above shall not adversely affect the commercial reasonableness of any such sale
of Collateral.  In connection with such exercise of rights, the Secured Party
shall have an irrevocable non-exclusive, royalty free license to use the
Intellectual Property, which shall include a right for the Secured Party to
grant one or more non-exclusive sublicenses to use the Intellectual Property.

(b) Any cash held by the Secured Party as Collateral and all cash proceeds
received by the Secured Party in respect of any sale of or collection from, or
other realization upon, all or any part of the Collateral may be applied (after
payment of any amounts payable to the Secured Party pursuant to Section 8.4
hereof) by the Secured Party against, all or any part of the Obligations in such
order as the Secured Party shall elect. Any surplus of such cash or cash
proceeds held by the Secured Party and remaining after the indefeasible payment
in full in cash of all of the Obligations shall be paid over to whomsoever shall
be lawfully entitled to receive the same or as a court of competent jurisdiction
shall direct.

-7-

 

(c) In the event that the proceeds of any such sale, collection or realization
are insufficient to pay all amounts to which the Secured Party is legally
entitled, each Grantor shall be liable for the deficiency, together with
interest thereon at the rate specified in the Convertible Debenture for interest
on overdue principal thereof or such other rate as shall be fixed by applicable
law, together with the costs of collection and the reasonable fees, costs,
expenses and other client charges of any attorneys employed by the Secured Party
to collect such deficiency.

(d) Each Grantor hereby acknowledges that if the Secured Party complies with any
applicable state, provincial, or federal law requirements in connection with a
disposition of the Collateral, such compliance will not adversely affect the
commercial reasonableness of any sale or other disposition of the Collateral.

(e) The Secured Party shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the
Collateral) for, or other assurances of payment of, the Obligations or any of
them or to resort to such collateral security or other assurances of payment in
any particular order, and all of the Secured Party’s rights hereunder and in
respect of such collateral security and other assurances of payment shall be
cumulative and in addition to all other rights, however existing or arising. To
the extent permitted by applicable law, each Grantor hereby agrees that it will
not invoke any law relating to the marshaling of collateral which might cause
delay in or impede the enforcement of the Secured Party’s rights under this
Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent permitted by applicable law, each Grantor hereby irrevocably waives
the benefits of all such laws.

5.2 Duties Regarding Collateral.

The Secured Party shall have no duty as to the collection or protection of the
Collateral or any income thereon or as to the preservation of any rights
pertaining thereto, beyond the safe custody and reasonable care of any of the
Collateral actually in the Secured Party’s possession.

ARTICLE 6.

AFFIRMATIVE COVENANTS

So long as any of the Obligations shall remain outstanding, unless the Secured
Party shall otherwise consent in writing:

-8-

 

6.1 Existence, Properties, Etc.

Each Grantor (a) shall do, or cause to be done, all things, or proceed with due
diligence with any actions or courses of action, that may be reasonably
necessary (i) to maintain each Grantor’s due organization, valid existence and
good standing under the laws of its state of incorporation, and (ii) to preserve
and keep in full force and effect all qualifications, licenses and registrations
in those jurisdictions in which the failure to do so could have a Material
Adverse Effect; and (b) shall not do, or cause to be done, any act impairing
each Grantor’s corporate power or authority (i) to carry on each Grantor’s
business as now conducted, and (ii) to execute or deliver this Agreement or any
other agreement or document delivered in connection herewith, including, without
limitation, the Convertible Debenture to which it is or will be a party, or
perform any of its obligations hereunder or thereunder.

6.2 Maintenance of Books and Records: Inspection.

Each Grantor shall maintain its books, accounts and records in accordance with
GAAP, and permit the Secured Party, its officers and employees and any
professionals designated by the Secured Party in writing, at any time during
normal business hours and upon reasonable notice to visit and inspect any of its
properties, corporate books and financial records, and to discuss its accounts,
affairs and finances with any employee, officer or director thereof (it being
agreed that, unless an Event of Default shall have occurred and be continuing,
there shall be no more than two (2) such visits and inspections in any fiscal
year).

6.3 Maintenance and Insurance.

(a) Each Grantor shall maintain or cause to be maintained, at its own expense,
all of its material assets and properties in good working order and condition,
ordinary wear and tear excepted, making all necessary repairs thereto and
renewals and replacements thereof.

(b) Each Grantor shall maintain or cause to be maintained, at their own expense,
insurance in form, substance and amounts (including deductibles), which each
Grantor deems reasonably necessary to each Grantor’s business, (i) adequate to
insure all assets and properties of each Grantor of a character usually insured
by persons engaged in the same or similar business against loss or damage
resulting from fire or other risks included in an extended coverage policy; (ii)
against public liability and other tort claims that may be incurred by each
Grantor; (iii) as may be required by the Convertible Debenture and/or applicable
law and (iv) as may be reasonably requested by Secured Party, all with
financially sound and reputable insurers.

-9-

 

6.4 Contracts and Other Collateral.

Each Grantor shall perform all of its obligations under or with respect to each
instrument, receivable, contract and other intangible included in the Collateral
to which any Grantor is now or hereafter will be party on a timely basis and in
the manner therein required, including, without limitation, this Agreement,
except to the extent the failure to so perform such obligations would not
reasonably be expected to have a Material Adverse Effect.

6.5 Defense of Collateral, Etc.

Each Grantor shall defend and enforce (a) its right, title and interest in and
to any part of the Collateral; and (b) if not included within the Collateral,
those assets and properties whose loss would reasonably be expected to have a
Material Adverse Effect, each against all manner of claims and demands on a
timely basis to the full extent permitted by applicable law (other than any such
claims and demands by holders of Permitted Liens).

6.6 Taxes and Assessments.

Each Grantor shall (a) file all material tax returns and appropriate schedules
thereto that are required to be filed under applicable law, prior to the date of
delinquency (taking into account any extensions of the original due date), (b)
pay and discharge all material taxes, assessments and governmental charges or
levies imposed upon any Grantor, upon its income and profits or upon any
properties belonging to it, prior to the date on which penalties attach thereto,
and (c) pay all material taxes, assessments and governmental charges or levies
that, if unpaid, might become a lien or charge upon any of its properties;
provided, however, that any Grantor in good faith may contest any such tax,
assessment, governmental charge or levy described in the foregoing clauses (b)
and (c) so long as appropriate reserves are maintained with respect thereto if
and to the extent required by GAAP.

6.7 Compliance with Law and Other Agreements.

Each Grantor shall maintain its business operations and property owned or used
in connection therewith in compliance with (a) all applicable federal, state and
local laws, regulations and ordinances governing such business operations and
the use and ownership of such property, and (b) all agreements, licenses,
franchises, indentures and mortgages to which any Grantor is a party or by which
any Grantor or any of its properties is bound, except where the failure to so
comply would not reasonably be expected to have a Material Adverse Effect.

-10-

 

6.8 Notice of Default.

Each Grantor will immediately notify the Secured Party of any event causing a
substantial loss or diminution in the value of all or any material part of the
Collateral and the amount or an estimate of the amount of such loss or
diminution. Each Grantor shall promptly notify the Secured Party of any
condition or event which constitutes, or would constitute with the passage of
time or giving of notice or both, an Event of Default, and promptly inform the
Secured Party of any events or changes in the financial condition of any Grantor
occurring since the date of the last financial statement of each Grantor
delivered to the Secured Party, which individually or cumulatively when viewed
in light of prior financial statements, which might reasonably be expected to
have a Material Adverse Effect on the business operations or financial condition
of any Grantor.

6.9 Notice of Litigation.

Each Grantor shall give notice, in writing, to the Secured Party of (a) any
actions, suits or proceedings wherein the amount at issue is in excess of
$50,000, instituted by any person against any Grantor, or affecting any of the
assets of any Grantor, and (b) any dispute, not resolved within fifteen (15)
days of the commencement thereof, between any Grantor on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be
expected to have a Material Adverse Effect on the business operations or
financial condition of any Grantor.

6.10 Changes to Identity.

Each Grantor will (a) give the Secured Party at least 30 days’ prior written
notice of any change in any Grantor’s name, identity or organizational
structure, (b) maintain its jurisdiction of incorporation, organization or
formation as set forth on Schedule 4.4 attached hereto, (c) immediately notify
the Secured Party upon obtaining an organizational identification number, if on
the date hereof any Grantor did not have such identification number.

6.11 Perfection of Security Interests.

-11-

 

(a) Financing Statements.  Each Grantor hereby irrevocably authorize the Secured
Party, at the sole cost and expense of each Grantor, at any time and from time
to time to file in any filing office in any jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all
assets of each Grantor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC of such jurisdiction, or (ii) as being of an equal or lesser scope or
with greater detail, and (b) contain any other information required by Part 5 of
Article 9 of the UCC for the sufficiency or filing office acceptance of any
financing statement or amendment, including (i) whether each Grantor is an
organization, the type of organization and any organization identification
number issued to any Grantor, and (ii) in the case of a financing statement
filed as a fixture filing, a sufficient description of real property to which
the Collateral relates.  Each Grantor agrees to furnish any such information to
the Secured Party promptly upon request.  Each Grantor also ratifies its
authorization for the Secured Party to have filed in any jurisdiction any
initial financing statements or amendments thereto if filed prior to the date
hereof.  Each Grantor acknowledges that it is not authorized to file any
financing statement or amendment or termination statement with respect to any
financing statement without the prior written consent of the Secured Party and
agree that they will not do so without the prior written consent of the Secured
Party.  Each Grantor acknowledges and agrees that this Agreement constitutes an
authenticated record.

(b) Possession.  Each Grantor (i) shall have possession of the Collateral,
except where expressly otherwise provided in this Agreement or where the Secured
Party chooses to perfect its security interest by possession in addition to the
filing of a financing statement; and (ii) will, where the Collateral is in the
possession of a third party, join with the Secured Party in notifying the third
party of the Secured Party’s security interest and obtaining an acknowledgment
from the third party that it is holding the Collateral for the benefit of the
Secured Party.

(c) Control.  Each Grantor will cooperate with the Secured Party in obtaining
control with respect to the Collateral consisting of (i) Investment Property,
(ii) Letters of Credit and Letter-of-Credit Rights and (iii) electronic Chattel
Paper.

(d) Marking of Chattel Paper.  Each Grantor will not create any Chattel Paper
without placing a legend on the Chattel Paper acceptable to the Secured Party
indicating that the Secured Party has a security interest in the Chattel Paper.

6.12 Notice of Commercial Tort Claims. If any Grantor shall at any time acquire
a Commercial Tort Claim, each Grantor shall immediately notify the Secured Party
in a writing signed by such Grantor which shall (a) provide brief details of
said claim and (b) grant to the Secured Party a security interest in said claim
and in the proceeds thereof, all upon the terms of this Agreement, in such form
and substance satisfactory to the Secured Party.

6.13 Licenses.

(a) Each Grantor shall (i) promptly and faithfully observe and perform all of
the material terms, covenants, conditions and provisions of the material License
Agreements to be observed and performed by it, at the times set forth therein,
if any, (ii) not do, permit, suffer or refrain from doing anything that could
reasonably be expected to result in a default under or breach of any of the
terms of any material License Agreement, (iii) not cancel, surrender, modify,
amend, waive or release any material License Agreement in any material respect
or any term, provision or right of the licensee thereunder in any material
respect, or consent to or permit to occur any of the foregoing; except, that
Grantor may cancel, surrender or release any material License Agreement in the
ordinary course of the respective businesses of Grantor; provided, that, Grantor
shall give Secured Party not less than thirty (30) days prior written notice of
their intention to so cancel, surrender and release any such material License
Agreement, (iv) give Secured Party prompt written notice of any material License
Agreement entered into by any Grantor after the date hereof, together with a
true, correct and complete copy thereof and such other information with respect
thereto as Secured Party may request, (v) give Secured Party prompt written
notice of any material breach of any obligation, or any default, by any party
under any material License Agreement, and deliver to Secured Party (promptly
upon the receipt thereof by any Grantor in the case of a notice to any Grantor,
and concurrently with the sending thereof in the case of a notice from each
Grantor) a copy of each notice of default and every other notice and other
communication received or delivered by each Grantor in connection with any
material License Agreement which relates to the right of any Grantor to continue
to use the property subject to such License Agreement, and (vi) furnish to
Secured Party, promptly upon the request of Secured Party, such information and
evidence as Secured Party may require from time to time concerning the
observance, performance and compliance by each Grantor or the other party or
parties thereto with the terms, covenants or provisions of any material License
Agreement.

-12-

 

(b) Each Grantor will exercise any option to renew or extend the term of each
material License Agreement in such manner as will cause the term of such
material License Agreement to be effectively renewed or extended for the period
provided by such option and give prompt written notice thereof to Secured Party
or give Secured Party prior written notice that any Grantor does not intend to
renew or extend the term of any such material License Agreement or that the term
thereof shall otherwise be expiring, not less than sixty (60) days prior to the
date of any such non-renewal or expiration.  In the event of the failure of any
Grantor to extend or renew any material License Agreement, Secured Party shall
have, and is hereby granted, the irrevocable right and authority, at its option,
to renew or extend the term of such material License Agreement, whether in its
own name and behalf, or in the name and behalf of a designee or nominee of
Secured Party or in the name and behalf of Grantor, as Secured Party shall
determine at any time that an Event of Default shall exist or have occurred and
be continuing.  Secured Party may, but shall not be required to, perform any or
all of such obligations of any Grantor under any of the License Agreements,
including, but not limited to, the payment of any or all sums due from any
Grantor thereunder.  Any sums so paid by Secured Party shall constitute part of
the Obligations.

ARTICLE 7.

NEGATIVE COVENANTS

So long as any of the Obligations shall remain outstanding, unless the Secured
Party shall otherwise consent in writing, each Grantor covenants and agrees that
it shall not:

7.1 Transfers; Liens and Encumbrances.

(a) Sell, assign (by operation of law or otherwise), lease, license, exchange or
otherwise transfer or dispose of any of the Collateral, except each Grantor may
(i) sell or dispose of Inventory in the ordinary course of business, and (ii)
sell or dispose of assets such Grantor has determined, in good faith, not to be
useful in the conduct of its business, and (iii) sell or dispose of accounts in
the course of collection in the ordinary course of business consistent with past
practice.

(b) Directly or indirectly make, create, incur, assume or permit to exist any
Lien in, to or against any part of the Collateral other than Permitted Liens.

(c) Each Grantor covenants and agrees that they will not, without the express
written consent of the Secured Party, grant any license (whether exclusive or
non-exclusive) to use the Intellectual Property to any party other than another
Grantor, except that prior to the occurrence of an Event of Default, each
Grantor may, in the ordinary course of business, grant non-exclusive licenses to
use the Intellectual Property to unrelated third parties which are customers of
any Grantor in connection with arms-length transactions, provided that such
non-exclusive licenses do not impair the value of the Intellectual Property.  To
the extent that any Grantor wishes to seek the Secured Party’s consent to the
granting of a license to use Intellectual Property other than as expressly
permitted above, then such Grantor shall provide the Secured Party with a
written request for such consent, which request shall be accompanied by a copy
of the proposed license and any documents, instruments, and agreements related
thereto or to be entered into in connection with such license, and such other
information regarding the proposed license as the Secured Party may require.
 The Secured Party shall endeavor to respond to such request within ten (10)
days of its receipt of such request, provided, however, that if the Secured
Party does not reply within such ten (10) day period, then such request shall be
deemed to have been denied by the Secured Party.  Further, the Secured Party
shall not have been deemed to have consented to any proposed license unless the
Secured Party has provided such consent in a writing executed by a duly
authorized representative of the Secured Party and delivered to such Grantor.
 The decision by the Secured Party on whether to grant or withhold its consent
to a proposed license shall be made by the Secured Party in its sole and
exclusive discretion, and the Secured Party shall have no obligation whatsoever
to consent to any proposed license.

7.2 Restriction on Redemption and Cash Dividends

Directly or indirectly, redeem, repurchase or declare or pay any cash dividend
or distribution on its capital stock without the prior express written consent
of the Secured Party.

7.3 Places of Business.

Change its state of organization or its principal place of business without the
written consent of the Secured Party.

-13-

 

ARTICLE 8.

MISCELLANEOUS

8.1 Notices.

Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered upon:  (i) receipt, when delivered personally, (ii) 1
Business Day after deposit with an overnight courier service with next day
delivery specified, in each case, properly addressed to the party to receive the
same, or  (iii) receipt, when sent by electronic mail (provided that the
electronic mail transmission is not returned in error or the sender is not
otherwise notified of any error in transmission. The addresses and e­mail
addresses for such communications shall be:

If to the Company or any Guarantor, to:

Galaxy Next Generation, Inc.

 

286 Big A Road

 

Toccoa, GA 30577

 

Attention:  Magen McGahee

Telephone: (706) 491-6893

 

Email: magen@galaxynext.com

 

Galaxy MS

286 Big A Road

Toccoa, GA 30577

Attention: Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

 

 

Interlock Concepts

286 Big A Road

Toccoa, GA 30577

Attention:  Magen McGahee

Telephone:  (706) 491-6893

Email:  magen@galaxynext.com

Elhert Solutions Group

286 Big A Road

Toccoa, GA 30577

Attention: Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

With a copy to:

 

 

Jones & Haley, P.C.

 

750 Hammond Drive

Building 12-100

Atlanta, GA 30328

Attention: Richard W. Jones

Telephone: (770) 804-0500

Email: jones@corplaw.net

-14-

 

If to the Secured Party:

YA II PN, Ltd.

 

1012 Springfield Avenue

 

Mountainside, NJ  07092

 

Attention:Mark Angelo

 

Telephone:(201) 536-5114

Email:mangelo@yorkvilleadvisors.com

 

 

 

With a copy to:

David Gonzalez, Esq.

 

1012 Springfield Avenue

 

Mountainside, NJ  07092

 

Telephone:(201) 536-5109

 

Email:  dgonzalez@yorkvilleadvisors.com

 

or at such other address and/or electronic email address and/or to the attention
of such other person as the recipient party has specified by written notice
given to each other party 3 Business Days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of such
notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender’s computer containing the time, date,
recipient’s electronic mail address and the text of such electronic mail or
(iii) provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by electronic mail or receipt
from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.

8.2 Security Interest Absolute.  All rights of the Secured Party hereunder, the
security interest in the Collateral and all obligations of each Grantor
hereunder shall be absolute and unconditional irrespective of (a) any lack of
validity or enforceability of the Convertible Debenture, any agreement with
respect to any of the Obligations or any other agreement or instrument relating
to any of the foregoing, (b) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Convertible
Debenture, or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or
waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, (d) the existence of any claim,
set-off or other right which any Grantor may have at any time against any other
Grantor or the Secured Party, whether in connection herewith or any unrelated
transaction.

8.3 Severability.

If any provision of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall attach only to such provision and shall not
in any manner affect or render invalid or unenforceable any other severable
provision of this Agreement, and this Agreement shall be carried out as if any
such invalid or unenforceable provision were not contained herein.

8.4 Expenses.

In the event of an Event of Default, each Grantor will jointly and severally pay
to the Secured Party the amount of any and all reasonable out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, which the
Secured Party may incur in connection with: (i) the custody or preservation of,
or the sale, collection from, or other realization upon, any of the Collateral;
(ii) the exercise or enforcement of any of the rights of the Secured Party
hereunder or (iii) the failure by any Grantor to perform or observe any of the
provisions hereof.  

-15-

 

8.5 Waivers, Amendments, Etc.

The Secured Party’s delay or failure at any time or times hereafter to require
strict performance by each Grantor of any undertakings, agreements or covenants
shall not waive, affect, or diminish any right of the Secured Party under this
Agreement to demand strict compliance and performance herewith. Any waiver by
the Secured Party of any Event of Default shall not waive or affect any other
Event of Default, whether such Event of Default is prior or subsequent thereto
and whether of the same or a different type. None of the undertakings,
agreements and covenants of each Grantor contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party, nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party in the case of any such waiver, and signed by the Secured Party
and each Grantor in the case of any such amendment, change or modification.

8.6 Continuing Security Interest.  This Agreement shall create a continuing
security interest in the Collateral and shall: (i) remain in full force and
effect so long as any of the Obligations shall remain outstanding; (ii) be
binding upon each Grantor and its successors and assigns; and (iii) inure to the
benefit of the Secured Party and its successors and assigns. Upon the payment or
satisfaction in full of the Obligations, this Agreement and the security
interest created hereby shall terminate, and, in connection therewith, each
Grantor shall be entitled to the return, at its expense, of such of the
Collateral as shall not have been sold in accordance with this Agreement or
otherwise applied pursuant to the terms hereof and the Secured Party shall
deliver to each Grantor such documents as such Grantor shall reasonably request
to evidence such termination.

8.7 Independent Representation.

Each party hereto acknowledges and agrees that it has received or has had the
opportunity to receive independent legal counsel of its own choice and that it
has been sufficiently apprised of its rights and responsibilities with regard to
the substance of this Agreement.

8.8 Indemnification.

-16-

 

Each Grantor jointly and severally hereby covenants and agrees to indemnify,
defend and hold harmless the Secured Party and its investment manager, and each
of the foregoing parties’ respective agents, servants, attorneys, advisors,
officers, directors, employees, affiliates, partners, members, managers,
predecessors, successors, and assigns (each an “Indemnified Person”) of, to, and
from any loss, judgment, liability, claim, cause of action, or demand, and all
costs and expenses (including reasonable attorneys’ fees) which may be incurred,
suffered, made, brought, threatened, or instituted by or against any person
indemnified hereby for any reason whatsoever on account of, arising out of, or
in any way relating to the actions or inactions of any Grantor, including
without limitation (i) any matter, fact, event, or act or omission relating to
the Collateral, and/or any Grantor’s maintenance and management of the
Collateral, including any damage to the Collateral or claims threatened or
brought against the Secured Party with respect to the Collateral and/or any of
any Grantor’s acts and/or omissions in connection with the same, (ii) claims
threatened or brought by one or more third parties against any Grantor, or any
of its affiliates or subsidiaries, (iii) claims threatened or brought by any
party against the Secured Party, or any of its affiliates concerning or arising
from the actions or inactions of any of any Grantor, the Collateral, and the
Convertible Debenture, this Agreement, or otherwise; and/or (iv) this Agreement.
 The Secured Party may defend any such claim, cause of action, or demand at the
sole cost and expense of any Grantor, with counsel designated by the Secured
Party and to the exclusion of any Grantor, or the Secured Party may call upon
each Grantor to defend such action at each Grantor’s sole cost and expense.  the
Secured Party may, in the Secured Party’s sole and exclusive discretion, adjust,
settle, or compromise any such claim, cause of action, or demand made upon the
Secured Party, and each Grantor shall jointly and severally indemnify the
Secured Party for any such amount so adjusted, settled, or compromised, as well
as all costs and expenses (including attorneys’ fees) incurred in connection
therewith.  

8.9 Applicable Law: Jurisdiction.

This Agreement shall be governed by and interpreted in accordance with the laws
of the State of New Jersey without regard to the principles of conflict of laws.
The parties further agree that any action between them shall be heard in the
State of New Jersey, and expressly consent to the jurisdiction and venue of the
Superior Court for the State of New Jersey sitting in Union County New Jersey
and federal courts for the District of New Jersey sitting in Newark New Jersey
for the adjudication of any civil action asserted pursuant to this Paragraph,
provided, however, that nothing herein shall prevent the Secured Party from
enforcing its rights and remedies (including, without limitation, by filing a
civil action) with respect to the Collateral and/or any Grantor in any other
jurisdiction in which the Collateral and/or any Grantor may be located.

8.10 Non-Interference.  

From and after the occurrence of an Event of Default, each Grantor agrees:

(a) Not to interfere with the exercise by the Secured Party of any of its rights
and remedies under this Agreement, the Convertible Debenture, and/or applicable
law;  

(b) They shall not seek to distrain or otherwise hinder, delay, or impair the
Secured Party’s efforts to realize upon any Collateral or otherwise to enforce
its rights and remedies pursuant to this Agreement, the Convertible Debenture,
and/or applicable law, and shall at all times cooperate with the Secured Party’s
exercise of its rights and remedies under this Agreement, the Convertible
Debenture, and/or applicable law; and

(c) The provisions of this Section shall be specifically enforceable by the
Secured Party.

-17-

 

8.11 Automatic Stay.  

Each Grantor agrees that upon the filing of any Petition for Relief by or
against any Grantor under the United States Bankruptcy Code, the Secured Party
shall be entitled to immediate and complete relief from the automatic stay with
respect to any Grantor, and Secured Party shall be permitted to proceed to
protect and enforce its rights and remedies under applicable law.  Each Grantor
hereby expressly assents to, and covenants and agrees not to oppose, any motion
filed by the Secured Party seeking relief from the automatic stay.  Each Grantor
further hereby expressly WAIVES the protections afforded under Section 362 of
the United States Bankruptcy Code with respect to the Secured Party.

8.12 Credit Bidding.  

Each Grantor hereby expressly acknowledges and agrees, in further consideration
for the Secured Party entering into this Agreement, that the Secured Party shall
be permitted to credit bid the Obligations at any auction and/or sale, including
without limitation, at any auction and/or other sale conducted under or in
connection with any of the sections or chapters of the United States Bankruptcy
Code.  Each Grantor hereby further acknowledge and agree that this provision is
a material inducement to the Secured Party entering into this Agreement, and
each Grantor has been represented by experienced counsel in connection with
entering into this Agreement.  The Secured Party, in turn, acknowledges that
this paragraph shall not be construed as a restriction or prohibition on
Grantor’s respective rights to file any voluntary petition or make application
for or seek relief or protection under the United States Bankruptcy Code.

8.13 Waiver of Jury Trial.

AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO MAKE FINANCIAL ACCOMMODATIONS
TO THE COMPANIES OR ANY GRANTOR, EACH GRANTOR HEREBY WAIVES, TO THE FULLEST
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER
DOCUMENTS RELATED TO THIS TRANSACTION.

8.14 Right of Set Off.

Each Grantor hereby grants to the Secured Party, a lien, security interest and
right of setoff as security for all liabilities and obligations to the Secured
Party, whether now existing or hereafter arising, upon and against all deposits,
credits, collateral and property, now or hereafter in the possession, custody,
safekeeping or control of the Secured Party or any of its affiliates, or any
entity under the control of the Secured Party, or in transit to any of them. At
any time, without demand or notice, the Secured Party may set off the same or
any part thereof and apply the same to any liability or obligation of each
Grantor even though unmatured and regardless of the adequacy of any other
collateral securing the Obligations.  ANY AND ALL RIGHTS TO REQUIRE THE SECURED
PARTY TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL
WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH
RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF EACH GRANTOR, ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

8.15 Liability of Grantor.  

Notwithstanding any provision herein or in any other Loan Instrument, each
Grantor is and shall be liable for any and all Obligations (whether any such
Obligation is specified as an obligation of any Grantor).

-18-

 

8.16 Waiver of Claims.  

Each Grantor acknowledges and agrees that they have no offsets, defenses,
claims, or counterclaims against the Secured Party or its officers, directors,
employees, attorneys, representatives, parents, affiliates, predecessors,
successors, or assigns with respect to the Collateral, the Convertible
Debenture, the Obligations, or otherwise, and that if any Grantor now has, or
ever did have, any offsets, defenses, claims, or counterclaims against the
Secured Party or its officers, directors, employees, attorneys, representatives,
affiliates, predecessors, successors, or assigns, whether known or unknown, at
law or in equity, from the beginning of the world through this date and through
the time of execution of this Agreement, all of them are hereby expressly
WAIVED, and each Grantor hereby RELEASES the Secured Party and its officers,
directors, employees, attorneys, representatives, affiliates, predecessors,
successors, and assigns from any liability therefor.

8.17 Counterparts; Facsimile Signatures.  

This Agreement may be executed and delivered by exchange of facsimile signatures
of the Secured Party and each Grantor, and those signatures need not be affixed
to the same copy.  This Agreement may be executed in any number of counterparts.

8.18 Entire Agreement.

This Agreement and the other documents or agreements delivered in connection
herewith contain the entire understanding among the parties and supersede any
prior agreement or understanding among them with respect to the subject matter
hereof.

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

-19-

 

IN WITNESS WHEREOF, the parties hereto have executed this Security Agreement as
of the date first above written.

COMPANY:

GALAXY NEXT GENERATION, INC., a Nevada corporation

By: /s/ Gary Lecroy

Name: Gary Lecroy

Title:   President

 

GUARANTORS:

 

GALAXY MS, a Nevada corporation

INTERLOCK CONCEPTS, Organized under the laws of the State of Utah  

By: /s/ Gary Lecroy

Name: Gary Lecroy

Title:   President

 

ELHERT SOLUTIONS GROUP, Organized under the laws of the State of Utah  

By: /s/ Gary Lecroy

Name: Gary Lecroy

Title:   President

-20-

 

IN WITNESS WHEREOF, the parties hereto have executed this Global Security
Agreement as of the date first above written.

 

SECURED PARTY:

 

YA II PN, LTD.

 

By: Yorkville Advisors Global, LP
Its: Investment Manager

 

By:Yorkville Advisors Global II, LLC
Its: General Partner

 

By: /s/ David Gonzalez

Name: David Gonzalez

Title: Member

 

-21-

 

Exhibit A
(DEFINITION OF COLLATERAL)

For the purpose of securing prompt and complete payment and performance by each
Grantor of all of the Obligations, each Grantor unconditionally and irrevocably
hereby grants to the Secured Party a continuing security interest in and to, and
lien upon, the following “Collateral” of each Grantor (all capitalized terms
used herein and not defined in the Agreement shall have the respective meanings
ascribed thereto in the UCC):

All personal property of each Grantor, wherever located and whether now or
hereinafter existing and whether now owned or hereafter acquired, of every kind
and description, tangible or intangible, including without limitation, all:

1. Goods;

2.  Inventory, including, without limitation, all goods, merchandise and other
personal property which are held for sale or lease, or are furnished or to be
furnished under any contract of service or are raw materials, work-in-process,
supplies or materials used or consumed in each Grantor’s business, and all
products thereof, and all substitutions, replacements, additions or accessions
therefor and thereto; and any cash or non-cash Proceeds of all of the foregoing;

3. Equipment, including, without limitation, all machinery, equipment,
furniture, parts, tools and dies, of every kind and description, of each Grantor
(including automotive equipment and motor vehicles), now owned or hereafter
acquired by each Grantor, and used or acquired for use in the business of each
Grantor, together with all accessions thereto and all substitutions and
replacements thereof and parts therefor and all cash or non-cash Proceeds of the
foregoing;

4.Fixtures, including, without limitation, all goods which are so related to
particular real estate that an interest in them arises under real estate law and
all accessions thereto, replacements thereof and substitutions therefor,
including, but not limited to, plumbing, heating and lighting apparatus,
mantels, floor coverings, furniture, furnishings, draperies, screens, storm
windows and doors, awnings, shrubbery, plants, boilers, tanks, machinery,
stoves, gas and electric ranges, wall cabinets, appliances, furnaces, dynamos,
motors, elevators and elevator machinery, radiators, blinds and all laundry,
refrigerating, gas, electric, ventilating, air-refrigerating, air-conditioning,
incinerating and sprinkling and other fire prevention or extinguishing equipment
of whatsoever kind and nature and any replacements, accessions and additions
thereto, Proceeds thereof and substitutions therefor;

5.Instruments (including promissory notes);

-22-

 

6.Documents;

7.Accounts, including, without limitation, all Contract Rights and accounts
receivable, health-care-insurance receivables, and license fees; any other
obligations or indebtedness owed to each Grantor from whatever source arising;
all rights of each Grantor to receive any payments in money or kind; all
guarantees of Accounts and security therefor; all cash or non-cash Proceeds of
all of the foregoing; all of the right, title and interest of each Grantor in
and with respect to the goods, services or other property which gave rise to or
which secure any of the accounts and insurance policies and proceeds relating
thereto, and all of the rights of each Grantor as an unpaid seller of goods or
services, including, without limitation the rights of stoppage in transit,
replevin, reclamation and resale and all of the foregoing, whether now existing
or hereafter created or acquired;

8.  Contracts and Contract Rights, including, to the extent not included in the
definition of Accounts, all rights to payment or performance under a contract
not yet earned by performance and not evidenced by an Instrument or Chattel
Paper;

9. Chattel Paper (whether tangible or electronic);

10. Money, cash and cash equivalents;

11. Letters of Credit and Letter-of-Credit Rights (whether or not the Letter of
Credit is evidenced by a writing);

12. Commercial Tort Claims – None;

13. Securities Accounts, Security Entitlements, Securities, Financial Assets and
all other Investment Property, including, without limitation, all ownership or
membership interests in any subsidiaries or affiliates (whether or not
controlled by any Grantor);

14. General Intangibles, including, without limitation, all Payment Intangibles
and Intellectual Property (excluding ITU Applications), tax refunds and other
claims of any Grantor against any governmental authority, and all choses in
action, insurance proceeds, goodwill customer lists, formulae, permits, research
and literary rights, and franchises.

15. Farm Products;

16. All books and records and information (including all ledger sheets, files,
computer programs, tapes and related data processing software) evidencing an
interest in or relating to any of the foregoing and/or to the operation of each
Grantor’s business, and all rights of access to such books and records, and
information, and all property in which such books and records, and information
are stored, recorded and maintained.

17. To the extent not already included above, all Supporting Obligations, and
any and all cash and non-cash Proceeds, products, accessions, and/or
replacements of any of the foregoing, including proceeds of insurance covering
any or all of the foregoing.

-23-

 

SCHEDULE 4

Intellectual Property of any Grantor

Galaxy Next Generation, Inc.

· Overlay Software Provisional Application for Android - An Interactive Touch
Screen Panel and Methods for Collaborating on an Interactive Touch Screen Panel

 

Interlock Concepts

 

ATTORNEY REF. NO.

TITLE

MATTER TYPE

COUNTRY

STATUS

DATE FILED

APPLICATION NUMBER

88792.0009

Audio Visual Integration Device

Prov

US

Expired

Apr 5, 2017

62/482103

88792.0012

Audio Visual Integration Device

Utility

US

Pending/
Published

Apr 5, 2018

15/946586

88792.0014

Device Pairing Using Sound Waves

Utility

US

Pending

Jan 22, 2019

16/254469

88792.0015

Assistive Listening System that Uses Sound Waves for Device Pairing

Utility

US

Pending

Jan 22, 2019

16/254497

88792.0016

Panic Alerts Using Ultrasonic Sound Waves

Utility

US

Pending

Jan 22, 2019

16/254511

88792.0017

Audio/Visual Device With Central Control, Assistive Listening, Or A Screen

Utility

US

Pending

Jun 12, 2019

16/439292

 

· Design of Phoenix Intercom System

 

-24-

 

SCHEDULE 4.3

(Addresses)

Galaxy Next Generation, Inc.

286 Big A Road

Toccoa, GA 30577

Attention:  Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

 

Galaxy MS

286 Big A Road

Toccoa, GA 30577

Attention:  Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

 

Interlock Concepts

286 Big A Road

Toccoa, GA 30577

Attention:  Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

 

Elhert Solutions Group

286 Big A Road

Toccoa, GA 30577

Attention:  Magen McGahee

Telephone: (706) 491-6893

Email: magen@galaxynext.com

-25-

 

SCHEDULE 4.4

(Location, State of Incorporation, Name)

Galaxy Next Generation, Inc.

286 Big A Road

Toccoa, GA 30577

Incorporated in Nevada

Galaxy MS

286 Big A Road

Toccoa, GA 30577

Incorporated in Nevada

Interlock Concepts

286 Big A Road

Toccoa, GA 30577

Incorporated in Utah

Elhert Solutions Group

286 Big A Road

Toccoa, GA 30577

Incorporated in Utah

 

-26-