Exhibit 10.4

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT (the “Security Agreement”) dated as of June 30, 2015,
but made effective as of December 7, 2015, is executed by and among GROW
SOLUTIONS, INC., a Delaware corporation, ONE LOVE GARDEN SUPPLY, a Colorado
limited liability company (each of the foregoing sometimes individually referred
to as a “Debtor” and all such entities sometimes hereinafter collectively
referred to as “Debtors”), with the Debtors having their chief executive offices
located at 35 5th Avenue, 24th Floor, New York, NY 10017, and TCA Global Credit
Master Fund, LP (the “Secured Party”).

 

R E C I T A L S:

 

WHEREAS, pursuant to a Credit Agreement dated of even date herewith (the “Credit
Agreement”) by and between GROW SOLUTIONS HOLDINGS, INC., a Nevada corporation
(the “Company”), additional Credit Parties, and the Secured Party, the Company
desires to borrow funds and obtain financial accommodations from Secured Party
(such financial accommodations hereinafter referred to as the “Loan”); and

 

WHEREAS, in order to induce Secured Party to enter into the Loan with the
Company, each of the Debtors, each being a wholly-owned Subsidiary of the
Company, has entered into and executed a Guaranty Agreement dated of even date
herewith in favor of Secured Party (the “Guaranty Agreement”); and

 

WHEREAS, in order to induce the Secured Party make the Loan, and to secure each
Debtor’s liabilities and obligations under the Guaranty Agreement, each Debtor
has agreed to execute and deliver to the Secured Party this Agreement for the
benefit of the Secured Party;

 

NOW, THEREFORE, in consideration of the credit extended now and in the future by
Secured Party to the Company and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Debtors and Secured
Party hereby agree as follows:

 

A G R E E M E N T S:

 

1             DEFINITIONS.

 

1.1          Defined Terms. Capitalized terms used but not otherwise defined in
this Security Agreement (including the Recitals) shall have the meanings
ascribed to them in the Credit Agreement. For the purposes of this Security
Agreement, the following capitalized words and phrases shall have the meanings
set forth below.

 

(a)           “Capital Securities” shall mean, with respect to any Person, all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person’s capital, whether now outstanding
or issued or acquired after the date hereof, including common shares, preferred
shares, membership interests in a limited liability company, limited or general
partnership interests in a partnership or any other equivalent of such ownership
interest.

 

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(b)           “Collateral” shall have the meaning set forth in Section 2.1
hereof.

 

(c)           “Obligor” shall mean, collectively, each of the Debtors, or any
other party liable with respect to the Obligations.

 

(d)           “Organizational Identification Number” means, with respect to each
Debtor, the organizational identification number assigned to such Debtor by the
applicable governmental unit or agency of the jurisdiction of organization of
such Debtor, if any.

 

(e)           “Taxes” shall mean any and all present and future taxes, duties,
levies, imposts, deductions, assessments, charges or withholdings, and any and
all liabilities (including interest and penalties and other additions to taxes)
with respect to the foregoing.

 

(f)           “Unmatured Event of Default” shall mean any event which, with the
giving of notice, the passage of time or both, would constitute an Event of
Default.

 

1.2           Other Terms Defined in UCC. All other capitalized words and
phrases used herein and not otherwise specifically defined herein or in the
Credit Agreement shall have the respective meanings assigned to such terms in
the UCC, to the extent the same are used or defined therein.

 

1.3          Other Interpretive Provisions.

 

(a)           The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms. Whenever the context so
requires, the neuter gender includes the masculine and feminine, the single
number includes the plural, and vice versa, and in particular the word “Debtor”
or “Debtors” shall be so construed.

 

(b)           Section and Schedule references are to this Security Agreement
unless otherwise specified. The words “hereof”, “herein” and “hereunder” and
words of similar import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement

 

(c)           The term “including” (or words of similar import) is not limiting,
and means “including, without limitation”.

 

(d)           In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words “to”
and “until” each mean “to but excluding”, and the word “through” means “to and
including”.

 

(e)           Unless otherwise expressly provided herein: (i) references to
agreements (including this Security Agreement and the other Loan Documents) and
other contractual instruments shall be deemed to include all subsequent
amendments, restatements, supplements and other modifications thereto, but only
to the extent such amendments, restatements, supplements and other modifications
are not prohibited by the terms of any Loan Document; and (ii) references to any
statute or regulation shall be construed as including all statutory and
regulatory provisions amending, replacing, supplementing or interpreting such
statute or regulation.

 

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(f)           To the extent any of the provisions of the other Loan Documents
are inconsistent with the terms of this Security Agreement, the provisions of
this Security Agreement shall govern.

 

(g)           This Security Agreement and the other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
each shall be performed in accordance with its terms.

 

(h)           The term “Debtor” or “Debtors” shall refer to each Debtor
individually, and to all Debtors, collectively, in each case as the context may
so require, it being the intent of the parties under this Agreement that all of
the terms, conditions, provisions and representations hereof shall, to the
greatest extent possible, apply equally to each Debtor, as if each term,
covenant, provision and representation was separately made herein by each
Debtor.

 

2             SECURITY FOR THE OBLIGATIONS.

 

2.1           Security for Obligations. As security for the payment and
performance of the Obligations, each Debtor does hereby pledge, assign,
transfer, deliver and grant to Secured Party, for its own benefit and as agent
for its Affiliates, a continuing and unconditional first priority security
interest in and to any and all property of each such Debtor, of any kind or
description, tangible or intangible, wheresoever located and whether now
existing or hereafter arising or acquired, including the following (all of which
property for each Debtor, along with the products and proceeds therefrom, are
individually and collectively referred to as the “Collateral”):

 

(a)          all property of, or for the account of, each Debtor now or
hereafter coming into the possession, control or custody of, or in transit to,
Secured Party or any agent or bailee for Secured Party or any parent, affiliate
or subsidiary of Secured Party or any participant with Secured Party in the
Obligations (whether for safekeeping, deposit, collection, custody, pledge,
transmission or otherwise), including all cash, earnings, dividends, interest,
or other rights in connection therewith and the products and proceeds therefrom,
including the proceeds of insurance thereon; and

 

(b)          the additional property of each Debtor, whether now existing or
hereafter arising or acquired, and wherever now or hereafter located, together
with all additions and accessions thereto, substitutions, betterments and
replacements therefor, products and Proceeds therefrom, and all of each Debtor’s
books and records and recorded data relating thereto (regardless of the medium
of recording or storage), together with all of each Debtor's right, title and
interest in and to all computer software required to utilize, create, maintain
and process any such records or data on electronic media, identified and set
forth as follows:

 

(i)          All Accounts and all goods whose sale, lease or other disposition
by each Debtor has given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, each Debtor, or rejected or refused by any
Customer;

 

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(ii)          All Inventory, including raw materials, work-in-process and
finished goods;

 

(iii)         All goods (other than Inventory), including embedded software,
Equipment, vehicles, furniture and Fixtures;

 

(iv)         All Software and computer programs;

 

(v)          All Securities, Investment Property, Financial Assets and Deposit
Accounts, specifically including the Lock Box Account, and all funds at any time
deposited therewith, and all funds and amounts reserved or held back by any
Payment Processing Companies;

 

(vi)          All As-Extracted Collateral, Commodity Accounts, Commodity
Contracts, and Farm Products;

 

(vii)          All Chattel Paper, Electronic Chattel Paper, Instruments,
Documents, Letter of Credit Rights, all proceeds of letters of credit,
Health-Care-Insurance Receivables, Supporting Obligations, notes secured by real
estate, Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and

 

(viii)      All real estate property owned by each Debtor and the interest of
each Debtor in fixtures related to such real property;

 

(ix)         All Proceeds (whether Cash Proceeds or Non-cash Proceeds) of the
foregoing property, including all insurance policies and proceeds of insurance
payable by reason of loss or damage to the foregoing property, including
unearned premiums, and of eminent domain or condemnation awards.

 

2.2           Possession and Transfer of Collateral. Until an Event of Default
has occurred, but subject to Secured Party’s rights under the Credit Agreement
(specifically with respect to Secured Party’s rights to use and apply money in
the Lock Box Account) each Debtor shall be entitled to possession and use of the
Collateral (other than Instruments or Documents (including Tangible Chattel
Paper and Investment Property consisting of certificated securities) and other
Collateral required to be delivered to Secured Party pursuant to this Section
2). The cancellation or surrender of any promissory note evidencing an
Obligation, upon payment or otherwise, shall not affect the right of Secured
Party to retain the Collateral for any other of the Obligations, except upon
payment in full of the Obligations. No Debtor shall sell, assign (by operation
of law or otherwise), license, lease or otherwise dispose of, or grant any
option with respect to any of the Collateral, except as permitted pursuant to
the Credit Agreement.

 

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2.3           Financing Statements. Each Debtor authorizes Secured Party to
prepare and file such financing statements, amendments and other documents and
do such acts as Secured Party deems necessary in order to establish and maintain
valid, attached and perfected, first priority security interests in the
Collateral in favor of Secured Party, for its own benefit and as agent for its
Affiliates, free and clear of all Liens and claims and rights of third parties
whatsoever, except Permitted Liens. Each Debtor hereby irrevocably authorizes
Secured Party at any time, and from time to time, to file in any jurisdiction
any initial financing statements and amendments thereto that: (a) indicate the
Collateral: (i) is comprised of all assets of such Debtor (or words of similar
effect), regardless of whether any particular asset comprising a part of the
Collateral falls within the scope of Article 9 of the UCC of the jurisdiction
wherein such financing statement or amendment is filed; or (ii) as being of an
equal or lesser scope or within greater detail as the grant of the security
interest set forth herein; and (b) contain any other information required by
Section 5 of Article 9 of the UCC of the jurisdiction wherein such financing
statement or amendment is filed regarding the sufficiency or filing office
acceptance of any financing statement or amendment, including: (A) whether each
Debtor is an organization, the type of organization and any Organizational
Identification Number issued to each Debtor; and (B) in the case of a financing
statement filed as a fixture filing or indicating Collateral as as-extracted
collateral or timber to be cut, a sufficient description of the real property to
which the Collateral relates. Each Debtor agrees to furnish any such information
to Secured Party promptly upon request. In addition, each Debtor shall make
appropriate entries on its books and records disclosing the security interests
of Secured Party, for its own benefit and as agent for its Affiliates, in the
Collateral. Each Debtor hereby agrees that a photogenic or other reproduction of
this Security Agreement is sufficient for filing as a financing statement and
each Debtor authorizes Secured Party to file this Security Agreement as a
financing statement in any jurisdiction.

 

2.4           Preservation of the Collateral. Secured Party may, but is not
required to, take such actions from time to time as Secured Party deems
appropriate to maintain or protect the Collateral. Secured Party shall have
exercised reasonable care in the custody and preservation of the Collateral if
Secured Party takes such action as any Debtor shall reasonably request in
writing which is not inconsistent with Secured Party’s status as a secured
party, but the failure of Secured Party to comply with any such request shall
not be deemed a failure to exercise reasonable care; provided, however, Secured
Party’s responsibility for the safekeeping of the Collateral shall: (i) be
deemed reasonable if such Collateral is accorded treatment substantially equal
to that which Secured Party accords its own property; and (ii) not extend to
matters beyond the control of Secured Party, including acts of God, war,
insurrection, riot or governmental actions. In addition, any failure of Secured
Party to preserve or protect any rights with respect to the Collateral against
prior or third parties, or to do any act with respect to preservation of the
Collateral, not so requested by a Debtor, shall not be deemed a failure to
exercise reasonable care in the custody or preservation of the Collateral. Each
Debtor shall have the sole responsibility for taking such action as may be
necessary, from time to time, to preserve all rights of each Debtor and Secured
Party in the applicable Collateral against prior or third parties. Without
limiting the generality of the foregoing, where Collateral consists, in whole or
in part, of Capital Securities, each Debtor represents to, and covenants with,
Secured Party that each Debtor has made arrangements for keeping informed of
changes or potential changes affecting the Capital Securities (including rights
to convert or subscribe, payment of dividends, reorganization or other
exchanges, tender offers and voting rights), and each Debtor agrees that Secured
Party shall have no responsibility or liability for informing any Debtor of any
such or other changes or potential changes or for taking any action or omitting
to take any action with respect thereto.

 

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2.5          Other Actions as to any and all Collateral. Each Debtor further
agrees to take any other action reasonably requested by Secured Party to ensure
the attachment, perfection and first priority of, and the ability of Secured
Party to enforce, the security interest of Secured Party, for its own benefit
and as agent for its Affiliates, in any and all of the Collateral, including:
(i) causing Secured Party’s name to be noted as secured party on any certificate
of title for a titled good if such notation is a condition to attachment,
perfection or priority of, or ability of the bank to enforce, the security
interest of Secured Party, for its own benefit and as agent for its Affiliates,
in such Collateral; (ii) complying with any provision of any statute, regulation
or treaty of the United States as to any material portion of the Collateral as
soon as possible but not more than forty-five (45) days after such request if
compliance with such provision is a condition to attachment, perfection or
priority of, or ability of Secured Party to enforce, the security interest of
Secured Party, for its own benefit and as agent for its Affiliates, in such
Collateral; (iii) obtaining governmental and other third party consents and
approvals, including, without limitation, any consent of any licensor, lessor or
other Person with authority or control over or an interest in any material
portion of the Collateral as soon as possible but not more than forty-five (45)
days after such request; (iv) obtaining waivers from mortgagees and landlords in
form and substance reasonably satisfactory to Secured Party which affect any
material portion of the Collateral as soon as possible but not more than
forty-five (45) days after such request; and (v) taking all actions required by
the UCC in effect from time to time or by other law, as applicable in any
relevant UCC jurisdiction, or by other law as applicable in any foreign
jurisdiction. Each Debtor further agrees to indemnify and hold Secured Party
harmless against claims of any Persons not a party to this Security Agreement
concerning disputes arising over the Collateral, except to the extent resulting
from the gross negligence or willful misconduct of Secured Party or its
Affiliates.

 

2.6           Collateral in the Possession of a Warehouseman or Bailee. If any
material portion of the Collateral at any time is in the possession of a
warehouseman or bailee, each Debtor shall promptly notify Secured Party thereof,
and, as soon as possible, but not more than forty-five (45) days later, shall
obtain a Collateral Access Agreement in form and substance reasonably
satisfactory to Secured Party from such warehouseman or bailee.

 

2.7           Letter-of-Credit Rights. If any Debtor at any time is a
beneficiary under a letter of credit now or hereafter issued in favor of such
Debtor, such Debtor shall promptly notify Secured Party thereof and, at the
request and option of Secured Party, such Debtor shall, pursuant to an agreement
in form and substance reasonably satisfactory to Secured Party, either: (i)
arrange for the issuer and any confirmer of such letter of credit to consent to
an assignment to Secured Party, for its own benefit and as agent for its
Affiliates, of the proceeds of any drawing under the letter of credit; or (ii)
arrange for Secured Party, for its own benefit and as agent for its Affiliates,
to become the transferee beneficiary of the letter of credit, with Secured Party
agreeing, in each case, that the proceeds of any drawing under the letter to
credit are to be applied as provided in the Credit Agreement.

 

2.8           Commercial Tort Claims. If any Debtor shall at any time hold or
acquire a Commercial Tort Claim, such Debtor shall promptly notify Secured Party
in writing signed by such Debtor of the details thereof and grant to Secured
Party, for its own benefit and as agent for its Affiliates, in such written
notice or other written instrument, a security interest therein and in the
proceeds thereof, all upon the terms of this Security Agreement, in each case in
form and substance reasonably satisfactory to Secured Party, and shall execute
any amendments hereto deemed reasonably necessary by Secured Party to perfect
the security interest of Secured Party, for its own benefit and as agent for its
Affiliates, in such Commercial Tort Claim.

 

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2.9           Electronic Chattel Paper and Transferable Records. If any Debtor
at any time holds or acquires an interest in any electronic chattel paper or any
“transferable record”, as that term is defined in Section 201 of the federal
Electronic Signatures in Global and National Commerce Act, or in Section 16 of
the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, such Debtor shall promptly notify Secured Party thereof and, at
the request of Secured Party, shall take such action as Secured Party may
reasonably request to vest in Secured Party control under Section 9-105 of the
UCC of such electronic chattel paper or control under Section 201 of the federal
Electronic Signatures in Global and National Commerce Act or, as the case may
be, Section 16 of the Uniform Electronic Transactions Act, as so in effect in
such jurisdiction, of such transferable record. Secured Party agrees with each
Debtor that Secured Party will arrange, pursuant to procedures reasonably
satisfactory to Secured Party and so long as such procedures will not result in
Secured Party’s loss of control, for such Debtor to make alterations to the
electronic chattel paper or transferable record permitted under Section 9-105 of
the UCC or, as the case may be, Section 201 of the federal Electronic Signatures
in Global and National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act, for a party in control to make without loss of control.

 

2.10         Additional Requirements on Collateral. Each Debtor shall fully
cooperate with Secured Party to obtain and keep in effect one or more control
agreements in Deposit Accounts, Electronic Chattel Paper, Investment Property
and Letter-of-Credit Rights Collateral. Such control agreements shall only be
required if, in the reasonable discretion of the Secured Party, the nature of
the Collateral requires any such control agreements in order for the Secured
Party to perfect its security interests in any Collateral as granted hereunder,
and in such event, each Debtor shall promptly provide any such control
agreements upon request from the Secured Party. In addition, each Debtor, at the
Debtor’s expense, shall promptly: (A) execute all notices of security interest
for each relevant type of Software and other General Intangibles in forms
suitable for filing with any United States or foreign office handling the
registration or filing of patents, trademarks, copyrights and other intellectual
property and any successor office or agency thereto; and (B) take all
commercially reasonable steps in any hearing, suit, action, or other proceeding
before any such office or any similar office or agency in any other country or
any political subdivision thereof, to diligently prosecute or maintain, as
applicable, each application and registration of any Software, General
Intangibles or any other intellectual property rights and assets that are part
of the Collateral, including filing of renewals, affidavits of use, affidavits
of incontestability and opposition, interference and cancellation proceedings.

 

3             REPRESENTATIONS AND WARRANTIES.

 

Each Debtor makes the following representations and warranties to Secured Party:

 

3.1           Debtor Organization and Name. Each Debtor is a corporation,
limited liability company, or other legally recognized form of entity, as
applicable, duly organized, existing and in good standing under the laws of its
State of organization, with full and adequate power to carry on and conduct its
business as presently conducted. Each Debtor is duly licensed or qualified in
all foreign jurisdictions wherein the nature of its activities requires such
qualification or licensing. Each Debtor’s Organizational Identification Number
is set forth in the Credit Agreement. The exact legal name of each Debtor is as
set forth in the first paragraph of this Security Agreement, and no Debtor
currently conducts, nor has it during the last five (5) years conducted,
business under any other name or trade name.

 

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3.2           Authorization. Each Debtor has full right, power and authority to
enter into this Security Agreement and to perform all of its duties and
obligations under this Security Agreement. The execution and delivery of this
Security Agreement and the other Loan Documents will not, nor will the
observance or performance of any of the matters and things herein or therein set
forth, violate or contravene any provision of law or of the articles of
incorporation, by-laws, operating agreement or other governing documents, as
applicable, of each Debtor. All necessary and appropriate action has been taken
on the part of each Debtor to authorize the execution and delivery of this
Security Agreement.

 

3.3           Validity and Binding Nature. This Security Agreement is the legal,
valid and binding obligation of each Debtor, enforceable against each Debtor in
accordance with its terms, subject to bankruptcy, insolvency and similar laws
affecting the enforceability of creditors' rights generally and to general
principles of equity.

 

3.4           Consent; Absence of Breach. The execution, delivery and
performance of this Security Agreement and any other documents or instruments to
be executed and delivered by each Debtor in connection herewith, do not and will
not: (a) require any consent, approval, authorization, or filings with, notice
to or other act by or in respect of, any governmental authority or any other
Person (other than filings or notices pursuant to federal or state securities
laws or other than any consent or approval which has been obtained and is in
full force and effect); (b) conflict with: (i) any provision of law or any
applicable regulation, order, writ, injunction or decree of any court or
governmental authority; (ii) the articles of incorporation, bylaws, operating
agreement, or other organic or governance document applicable to each Debtor; or
(iii) any agreement, indenture, instrument or other document, or any judgment,
order or decree, which is binding upon each applicable Debtor or any of its
properties or assets; or (c) require, or result in, the creation or imposition
of any Lien on any asset of any Debtor, other than Liens in favor of Secured
Party created pursuant to this Security Agreement and Permitted Liens.

 

3.5           Ownership of Collateral; Liens. Each Debtor is the sole owner of
all the Collateral applicable to such Debtor, free and clear of all Liens,
charges and claims (including infringement claims with respect to patents,
trademarks, service marks, copyrights and other intellectual property rights),
other than Permitted Liens.

 

3.6            Adverse Circumstances. No condition, circumstance, event,
agreement, document, instrument, restriction, litigation or proceeding (or
threatened litigation or proceeding or basis therefor) exists which: (i) would
have a Material Adverse Effect upon any Debtor; or (ii) would constitute an
Event of Default or an Unmatured Event of Default.

 

3.7           Security Interest. This Security Agreement creates a valid
security interest in favor of Secured Party in the Collateral and, when properly
perfected by filing in the appropriate jurisdictions, or by possession or
control of such Collateral by Secured Party or delivery of such Collateral to
Secured Party, shall constitute a valid, perfected, first-priority security
interest in such Collateral.

 

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3.8           Place of Business. The principal place of business and books and
records of each Debtor is set forth in the preamble to this Security Agreement,
and the location of all Collateral, if other than at such principal place of
business, is as set forth on Schedule 3.8 attached hereto and made a part
hereof, and each Debtor shall promptly notify Secured Party of any change in
such locations. No Debtor will remove or permit the Collateral to be removed
from such locations without the prior written consent of Secured Party, except
as permitted pursuant to the Credit Agreement.

 

3.9           Complete Information. This Security Agreement and all financial
statements, schedules, certificates, confirmations, agreements, contracts, and
other materials and information heretofore or contemporaneously herewith
furnished in writing by any Debtor to Secured Party for purposes of, or in
connection with, this Security Agreement and the transactions contemplated
hereby is, and all written information hereafter furnished by or on behalf of
any Debtor to Secured Party pursuant hereto or in connection herewith will be,
true and accurate in every material respect on the date as of which such
information is dated or certified, and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading in light of the circumstances under which made (it
being recognized by Secured Party that any projections and forecasts provided by
any Debtor are based on good faith estimates and assumptions believed by Debtors
to be reasonable as of the date of the applicable projections or assumptions and
that actual results during the period or periods covered by any such projections
and forecasts may differ from projected or forecasted results).

 

4             REMEDIES.

 

Upon the occurrence of any default in the payment or performance of any of the
covenants, conditions and agreements contained in this Security Agreement or any
other Event of Default, including any Event of Default under the Guaranty
Agreement, Secured Party shall have all rights, powers and remedies set forth in
this Security Agreement or the other Loan Documents or in any other written
agreement or instrument relating to any of the Obligations or any security
therefor, as a secured party under the UCC or as otherwise provided at law or in
equity. Without limiting the generality of the foregoing, Secured Party may, at
its option upon the occurrence of an Event of Default, declare its commitments
to the Company to be terminated and all Obligations to be immediately due and
payable, or, if provided in the Loan Documents, all commitments of Secured Party
to Debtors shall immediately terminate and all Obligations shall be
automatically due and payable, all without demand, notice or further action of
any kind required on the part of Secured Party. Each Debtor hereby waives any
and all presentment, demand, notice of dishonor, protest, and all other notices
and demands in connection with the enforcement of Secured Party’s rights under
the Loan Documents, and hereby consents to, and waives notice of release, with
or without consideration, of any Collateral, notwithstanding anything contained
herein or in the Loan Documents to the contrary. In addition to the foregoing:

 

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4.1           Possession and Assembly of Collateral. Secured Party may, without
notice, demand or the initiation of legal process of any kind, take possession
of any or all of the Collateral (in addition to Collateral of which Secured
Party already has possession), wherever it may be found, and for that purpose
may pursue the same wherever it may be found, and may at any time enter into any
of Debtors’ premises where any of the Collateral may be or is supposed to be,
and search for, take possession of, remove, keep and store any of the Collateral
until the same shall be sold or otherwise disposed of and Secured Party shall
have the right to store and conduct a sale of the same in any of Debtors’
premises without cost to Secured Party. At Secured Party’s request, each Debtor
will, at such Debtor’s sole expense, assemble the Collateral and make it
available to Secured Party at a place or places to be designated by Secured
Party which is reasonably convenient to Secured Party and Debtors.

 

4.2           Sale of Collateral. Secured Party may sell any or all of the
Collateral at public or private sale, upon such terms and conditions as Secured
Party may deem proper, and Secured Party may purchase any or all of the
Collateral at any such sale. Each Debtor acknowledges that Secured Party may be
unable to effect a public sale of all or any portion of the Collateral because
of certain legal and/or practical restrictions and provisions which may be
applicable to the Collateral and, therefore, may be compelled to resort to one
or more private sales to a restricted group of offerees and purchasers. Each
Debtor consents to any such private sale so made even though at places and upon
terms less favorable than if the Collateral were sold at public sale. Secured
Party shall have no obligation to clean-up or otherwise prepare the Collateral
for sale. Secured Party may apply the net proceeds, after deducting all costs,
expenses, attorneys’ and paralegals’ fees incurred or paid at any time in the
collection, protection and sale of the Collateral and the Obligations, to the
payment of the Obligations, returning the excess proceeds, if any, to Debtors.
Debtors shall remain liable for any amount remaining unpaid after such
application, with interest at the Default Rate. Any notification of intended
disposition of the Collateral required by law shall be conclusively deemed
reasonably and properly given if given by Secured Party at least ten (10)
calendar days before the date of such disposition. Each Debtor hereby confirms,
approves and ratifies all acts and deeds of Secured Party relating to the
foregoing, and each part thereof, and expressly waives any and all claims of any
nature, kind or description which it has or may hereafter have against Secured
Party or its representatives, by reason of taking, selling or collecting any
portion of the Collateral. Each Debtor consents to releases of the Collateral at
any time (including prior to default) and to sales of the Collateral in groups,
parcels or portions, or as an entirety, as Secured Party shall deem appropriate.
Each Debtor expressly absolves Secured Party from any loss or decline in market
value of any Collateral by reason of delay in the enforcement or assertion or
non-enforcement of any rights or remedies under this Security Agreement.

 

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4.3           Standards for Exercising Remedies. To the extent that applicable
law imposes duties on Secured Party to exercise remedies in a commercially
reasonable manner, each Debtor acknowledges and agrees that it is not
commercially unreasonable for Secured Party: (i) to incur expenses deemed
necessary by Secured Party to prepare Collateral for disposition or otherwise to
complete raw material or work-in-process into finished goods or other finished
products for disposition; (ii) to fail to obtain third party consents for access
to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of; (iii) to fail to
exercise collection remedies against Customers or other Persons obligated on
Collateral or to remove liens or encumbrances on or any adverse claims against
Collateral; (iv) to exercise collection remedies against Customers and other
Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists; (v) to advertise dispositions of
Collateral through publications or media of general circulation, whether or not
the Collateral is of a specialized nature; (vi) to contact other Persons,
whether or not in the same business as Debtors, for expressions of interest in
acquiring all or any portion of the Collateral; (vii) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether or
not the Collateral is of a specialized nature; (viii) to dispose of Collateral
by utilizing internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets; (ix) to dispose of assets in
wholesale rather than retail markets; (x) to disclaim disposition warranties,
including any warranties of title; (xi) to purchase insurance or credit
enhancements to insure Secured Party against risks of loss, collection or
disposition of Collateral or to provide to Secured Party a guaranteed return
from the collection or disposition of Collateral; or (xii) to the extent deemed
appropriate by Secured Party, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist Secured Party
in the collection or disposition of any of the Collateral. Each Debtor
acknowledges that the purpose of this section is to provide non-exhaustive
indications of what actions or omissions by Secured Party would not be
commercially unreasonable in Secured Party’s exercise of remedies against the
Collateral and that other actions or omissions by Secured Party shall not be
deemed commercially unreasonable solely on account of not being indicated in
this Section. Without limitation upon the foregoing, nothing contained in this
Section shall be construed to grant any rights to Debtors or to impose any
duties on Secured Party that would not have been granted or imposed by this
Security Agreement or by applicable law in the absence of this Section.

 

4.4           UCC and Offset Rights. Secured Party may exercise, from time to
time, any and all rights and remedies available to it under the UCC or under any
other applicable law in addition to, and not in lieu of, any rights and remedies
expressly granted in this Security Agreement or in any other agreements between
any Obligor and Secured Party, and may, without demand or notice of any kind,
appropriate and apply toward the payment of such of the Obligations, whether
matured or unmatured, including costs of collection and attorneys’ and
paralegals’ fees and costs, and in such order of application as Secured Party
may, from time to time, elect, any indebtedness of Secured Party to any Obligor,
however created or arising, including balances, credits, deposits, accounts or
moneys of such Obligor in the possession, control or custody of, or in transit
to Secured Party. Each Debtor, on behalf of itself and any Obligor, hereby
waives the benefit of any law that would otherwise restrict or limit Secured
Party in the exercise of its right, which is hereby acknowledged, to appropriate
at any time hereafter any such indebtedness owing from Secured Party to any
Obligor.

 

4.5           Additional Remedies. Upon the occurrence of an Event of Default,
Secured Party shall have the right and power to:

 

(a)           instruct any Debtor, at its own expense, to notify any parties
obligated on any of the Collateral, including any Customers and Payment
Processing Companies, to make payment directly to Secured Party of any amounts
due or to become due thereunder, or Secured Party may directly notify such
obligors of the security interest of Secured Party, and/or of the assignment to
Secured Party of the Collateral and direct such obligors to make payment to
Secured Party of any amounts due or to become due with respect thereto, and
thereafter, collect any such amounts due on the Collateral directly from such
Persons obligated thereon;

 

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(b)           enforce collection of any of the Collateral, including any
Accounts, by suit or otherwise, or make any compromise or settlement with
respect to any of the Collateral, or surrender, release or exchange all or any
part thereof, or compromise, extend or renew for any period (whether or not
longer than the original period) any indebtedness thereunder;

 

(c)           take possession or control of any proceeds and products of any of
the Collateral, including the proceeds of insurance thereon;

 

(d)           extend, renew or modify for one or more periods (whether or not
longer than the original period) the Obligations or any obligation of any nature
of any other obligor with respect to the Obligations;

 

(e)           grant releases, compromises or indulgences with respect to the
Obligations, any extension or renewal of any of the Obligations, any security
therefor, or to any other obligor with respect to the Obligations;

 

(f)           transfer the whole or any part of Capital Securities which may
constitute Collateral into the name of Secured Party or Secured Party’s nominee
without disclosing, if Secured Party so desires, that such Capital Securities so
transferred are subject to the security interest of Secured Party, and any
corporation, association, or any of the managers or trustees of any trust
issuing any of such Capital Securities, or any transfer agent, shall not be
bound to inquire, in the event that Secured Party or such nominee makes any
further transfer of such Capital Securities, or any portion thereof, as to
whether Secured Party or such nominee has the right to make such further
transfer, and shall not be liable for transferring the same;

 

(g)           vote the Collateral;

 

(h)           make an election with respect to the Collateral under Section 1111
of the Bankruptcy Code or take action under Section 364 or any other section of
Bankruptcy Code; provided, however, that any such action of Secured Party as set
forth herein shall not, in any manner whatsoever, impair or affect the liability
of Debtors hereunder, nor prejudice, waive, nor be construed to impair, affect,
prejudice or waive Secured Party’s rights and remedies at law, in equity or by
statute, nor release, discharge, nor be construed to release or discharge,
Debtors, any Debtor or other Person liable to Secured Party for the Obligations;
and

 

(i)           at any time, and from time to time, accept additions to, releases,
reductions, exchanges or substitution of the Collateral, without in any way
altering, impairing, diminishing or affecting the provisions of this Security
Agreement, the Loan Documents, or any of the other Obligations, or Secured
Party’s rights hereunder, under the Obligations.

 

Each Debtor hereby ratifies and confirms whatever Secured Party may do with
respect to the Collateral and agrees that Secured Party shall not be liable for
any error of judgment or mistakes of fact or law with respect to actions taken
in connection with the Collateral.

 

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4.6           Attorney-in-Fact. Each Debtor hereby irrevocably makes,
constitutes and appoints Secured Party (and any officer of Secured Party or any
Person designated by Secured Party for that purpose) as such Debtor’s true and
lawful proxy and attorney-in-fact (and agent-in-fact) in Debtor’s name, place
and stead, with full power of substitution, to: (i) take such actions as are
permitted in this Security Agreement; (ii) execute such financing statements and
other documents and to do such other acts as Secured Party may require to
perfect and preserve Secured Party’s security interest in, and to enforce such
interests in the Collateral; and (iii) upon the occurrence of an Event of
Default, carry out any remedy provided for in this Security Agreement, the
Credit Agreement or through law or equity, including endorsing such Debtor’s
name to checks, drafts, instruments and other items of payment, and proceeds of
the Collateral, executing change of address forms with the postmaster of the
United States Post Office serving the address of such Debtor, changing the
address of such Debtor to that of Secured Party, opening all envelopes addressed
to such Debtor and applying any payments contained therein to the Obligations,
and changing any merchant accounts or instructions to Payment Processing
Companies regarding any credit/debit card payments from Customers. Each Debtor
hereby acknowledges that the constitution and appointment of such proxy and
attorney-in-fact are coupled with an interest and are irrevocable. Each Debtor
hereby ratifies and confirms all that such attorney-in-fact may do or cause to
be done by virtue of any provision of this Security Agreement.

 

4.7           No Marshaling. Secured Party shall not be required to marshal any
present or future collateral security (including this Security 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. To the extent that it lawfully may, each Debtor 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 Secured Party’s rights
under this Security 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 that it lawfully may, each Debtor hereby
irrevocably waives the benefits of all such laws.

 

4.8           No Waiver. No Event of Default shall be waived by Secured Party
except in writing. No failure or delay on the part of Secured Party in
exercising any right, power or remedy hereunder shall operate as a waiver of the
exercise of the same or any other right at any other time; nor shall any single
or partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder. There shall be no obligation on the part of Secured Party to exercise
any remedy available to Secured Party in any order. The remedies provided for
herein are cumulative and not exclusive of any remedies provided at law or in
equity. Each Debtor agrees that in the event that such Debtor fails to perform,
observe or discharge any of its Obligations or liabilities under this Security
Agreement or any other agreements with Secured Party, no remedy of law will
provide adequate relief to Secured Party, and further agrees that Secured Party
shall be entitled to temporary and permanent injunctive relief in any such case
without the necessity of proving actual damages.

 

4.9            Application of Proceeds. Secured Party will, within three (3)
Business Days after receipt of cash or solvent credits from collection of items
of payment, proceeds of Collateral or any other source, apply the whole or any
part thereof against the Obligations secured hereby. Secured Party shall further
have the exclusive right to determine how, when and what application of such
payments and such credits shall be made on the Obligations, and such
determination shall be conclusive upon Debtors. Any proceeds of any disposition
by Secured Party of all or any part of the Collateral may be first applied by
Secured Party to the payment of expenses incurred by Secured Party in connection
with the Collateral, including reasonable attorneys’ fees and legal expenses and
costs as provided for in Section 5.13 hereof.

 

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5           MISCELLANEOUS.

 

5.1           Entire Agreement. This Security Agreement and the other Loan
Documents: (i) are valid, binding and enforceable against Debtors and Secured
Party in accordance with their respective provisions and no conditions exist as
to their legal effectiveness; (ii) constitute the entire agreement between the
parties with respect to the subject matter hereof and thereof; and (iii) are the
final expression of the intentions of Debtors, the Company and Secured Party. No
promises, either expressed or implied, exist between any Debtor and Secured
Party, unless contained herein or therein. This Security Agreement, together
with the other Loan Documents, supersedes all negotiations, representations,
warranties, commitments, term sheets, discussions, negotiations, offers or
contracts (of any kind or nature, whether oral or written) prior to or
contemporaneous with the execution hereof with respect to any matter, directly
or indirectly related to the terms of this Security Agreement and the other Loan
Documents. This Security Agreement and the other Loan Documents are the result
of negotiations between Secured Party and Debtors and have been reviewed (or
have had the opportunity to be reviewed) by counsel to all such parties, and are
the products of all parties. Accordingly, this Security Agreement and the other
Loan Documents shall not be construed more strictly against Secured Party merely
because of Secured Party's involvement in their preparation.

 

5.2           Amendments; Waivers. No delay on the part of Secured Party in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by Secured Party of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy. No amendment, modification or waiver of, or consent with
respect to, any provision of this Security Agreement or the other Loan Documents
shall in any event be effective unless the same shall be in writing and
acknowledged by Secured Party, and then any such amendment, modification, waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

5.3           WAIVER OF DEFENSES. EACH DEBTOR WAIVES EVERY PRESENT AND FUTURE
DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH SUCH DEBTOR MAY NOW HAVE
OR HEREAFTER MAY HAVE TO ANY ACTION BY SECURED PARTY IN ENFORCING THIS SECURITY
AGREEMENT. PROVIDED SECURED PARTY ACTS IN GOOD FAITH, EACH DEBTOR RATIFIES AND
CONFIRMS WHATEVER SECURED PARTY MAY DO PURSUANT TO THE TERMS OF THIS SECURITY
AGREEMENT. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING
ANY FINANCIAL ACCOMMODATION TO DEBTORS.

 

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5.4           MANDATORY FORUM SELECTION.  TO INDUCE SECURED PARTY TO MAKE
CERTAIN FINANCIAL ACCOMODATIONS TO DEBTORS, EACH DEBTOR IRREVOCABLY AGREES THAT
ANY DISPUTE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR
INDIRECTLY, THIS AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR
INCIDENTAL TO THIS AGREEMENT ANY OTHER LOAN DOCUMENT, OR THE COLLATERAL (WHETHER
OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO
THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE AND/OR FEDERAL COURTS LOCATED
IN BROWARD COUNTY, FLORIDA; PROVIDED, HOWEVER, SECURED PARTY MAY, AT SECURED
PARTY’S SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION.  THIS
PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY
AND INTERPRETED CONSISTENT WITH FLORIDA LAW. EACH DEBTOR HEREBY CONSENTS TO THE
EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS
IN SAID COUNTY (OR TO ANY OTHER JURISDICTION OR VENUE, IF SECURED PARTY SO
ELECTS), AND EACH WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS. EACH
DEBTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO A DEBTOR, AS APPLICABLE, AS SET FORTH HEREIN IN THE
MANNER PROVIDED BY APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE.

 

5.5           WAIVER OF JURY TRIAL. EACH DEBTOR AND SECURED PARTY, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE IRREVOCABLY, ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
SECURITY AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH
ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH
SECURED PARTY AND ANY DEBTOR ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY GRANTING ANY FINANCIAL
ACCOMMODATION TO DEBTORS.

 

5.6           Assignability. Secured Party, without consent from or notice to
anyone, may at any time assign Secured Party’s rights in this Security
Agreement, the other Loan Documents, the Obligations, or any part thereof and
transfer Secured Party’s rights in any or all of the Collateral, and Secured
Party thereafter shall be relieved from all liability with respect to such
Collateral. This Security Agreement shall be binding upon Secured Party and
Debtors and their respective legal representatives and successors. All
references herein to any Debtor shall be deemed to include any successors,
whether immediate or remote. In the case of a joint venture or partnership, the
term “Debtor” or “Debtors” shall be deemed to include all joint venturers or
partners thereof, who shall be jointly and severally liable hereunder.

 

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5.7           Binding Effect. This Security Agreement shall become effective
upon execution by Debtors and Secured Party, and shall bind the Debtors and
Secured Party, and their respective successors and permitted assigns.

 

5.8           Governing Law. Except in the case of the Mandatory Forum Selection
Clause in Section 5.4 above, which clause shall be governed and interpreted in
accordance with Florida law, this Agreement shall be delivered and accepted in
and shall be deemed to be a contract made under and governed by the internal
laws of the State of Nevada, and for all purposes shall be construed in
accordance with the laws of such State, without giving effect to the choice of
law provisions of such State.

 

5.9           Enforceability. Wherever possible, each provision of this Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Security Agreement shall be
prohibited by, unenforceable or invalid under any jurisdiction, such provision
shall as to such jurisdiction, be severable and be ineffective to the extent of
such prohibition or invalidity, without invalidating the remaining provisions of
this Security Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

 

5.10         Time of Essence. Time is of the essence in making payments of all
amounts due Secured Party under the Loan Documents and in the performance and
observance by Debtors of each covenant, agreement, provision and term of this
Security Agreement and the other Loan Documents.

 

5.11         Counterparts; Facsimile Signatures. This Security Agreement may be
executed in any number of counterparts and by the different parties hereto on
separate counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same Security Agreement. Receipt of an executed signature page to this Security
Agreement by facsimile or other electronic transmission shall constitute
effective delivery thereof. Electronic records of executed Loan Documents
maintained by Secured Party shall be deemed to be originals thereof.

 

5.12         Notices. Except as otherwise provided herein, each Debtor waives
all notices and demands in connection with the enforcement of Secured Party’s
rights hereunder. All notices, requests, demands and other communications
provided for hereunder shall be made in accordance with the terms of the Credit
Agreement, and each of the Debtors agrees and acknowledges that notice to each
of them may be sent and delivered to the Company, as required under the Credit
Agreement, and such notice to the Company shall be deemed valid and effective
notice to Debtors hereunder.

 

 16 

 

 

5.13         Costs, Fees and Expenses. Debtors shall pay or reimburse Secured
Party for all reasonable costs, fees and expenses incurred by Secured Party or
for which Secured Party becomes obligated in connection with the enforcement of
this Security Agreement, including search fees, costs and expenses and
attorneys’ fees, costs and time charges of counsel to Secured Party and all
taxes payable in connection with this Security Agreement. In furtherance of the
foregoing, Debtors shall pay any and all stamp and other taxes, UCC search fees,
filing fees and other costs and expenses in connection with the execution and
delivery of this Security Agreement and the other Loan Documents to be delivered
hereunder, and agrees to save and hold Secured Party harmless from and against
any and all liabilities with respect to or resulting from any delay in paying or
omission to pay such costs and expenses. That portion of the Obligations
consisting of costs, expenses or advances to be reimbursed by Debtors to Secured
Party pursuant to this Security Agreement or the other Loan Documents which are
not paid on or prior to the date hereof shall be payable by Debtors to Secured
Party on demand. If at any time or times hereafter Secured Party: (a) employs
counsel for advice or other representation: (i) with respect to this Security
Agreement or the other Loan Documents; (ii) to represent Secured Party in any
litigation, contest, dispute, suit or proceeding or to commence, defend, or
intervene or to take any other action in or with respect to any litigation,
contest, dispute, suit, or proceeding (whether instituted by Secured Party, any
Debtor, or any other Person) in any way or respect relating to this Security
Agreement; or (iii) to enforce any rights of Secured Party against any Debtor or
any other Person under of this Security Agreement; (b) takes any action to
protect, collect, sell, liquidate, or otherwise dispose of any of the
Collateral; and/or (c) attempts to or enforces any of Secured Party’s rights or
remedies under this Security Agreement, the costs and expenses incurred by
Secured Party in any manner or way with respect to the foregoing, shall be part
of the Obligations, payable by Debtors to Secured Party on demand.

 

5.14         Termination. This Security Agreement and the Liens and security
interests granted hereunder shall not terminate until the termination of the
Credit Agreement and the commitments to make Loans thereunder and the full and
complete performance and satisfaction and payment in full of all the Obligations
(other than contingent indemnification obligations to the extent no claim giving
rise thereto has been asserted). Upon termination of this Security Agreement,
Secured Party shall also deliver to Debtors (at the sole expense of Debtors)
such UCC termination statements, certificates for terminating the liens on the
Motor Vehicles (if any) and such other documentation, without recourse, warranty
or representation whatsoever, as shall be reasonably requested by Debtors to
effect the termination and release of the Liens and security interests in favor
of Secured Party affecting the Collateral; provided, however, to the extent any
such terminations or releases require Secured Party to expend any sums in
terminating or releasing any such Liens, Secured Party may refrain from
terminating or releasing such Liens unless and until Debtors pay to Secured
Party the estimated cost, as reasonably determined by Secured Party, of
effectuating such terminations or releases.

 

5.15         Reinstatement.  This Security Agreement shall remain in full force
and effect and continue to be effective should any petition be filed by or
against any Debtor for liquidation or reorganization, should any Debtor become
insolvent or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part of any
Debtor’s assets, and shall continue to be effective or be reinstated, as the
case may be, if at any time payment and performance of the Obligations, or any
part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or
must otherwise be restored or returned by any obligee of the Obligations,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all
as though such payment or performance had not been made.  In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Obligations shall be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.

 

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5.16         Increase in Obligations. It is the intent of the parties to secure
payment of the Obligations, as the amount of such Obligations may increase from
time to time in accordance with the terms and provisions of the Loan Documents,
and all of the Obligations, as so increased from time to time, shall be and are
secured hereby. Upon the execution hereof, Debtors shall pay any and all
documentary stamp taxes and/or other charges required to be paid in connection
with the execution and enforcement of the Loan Documents, and if, as and to the
extent the Obligations are increased from time to time in accordance with the
terms and provisions of the Loan Documents, then Debtors shall immediately pay
any additional documentary stamp taxes or other charges in connection therewith.

 

5.17         Joint and Several Liability. The liability of all Debtors hereunder
for the Obligations, or for the performance of any other term, condition,
covenant or agreement of any Debtor hereunder, shall be joint and several as
between all Debtors.

  

[Signatures on the following page]

  

 18 

 

 

IN WITNESS WHEREOF, Debtors and Secured Party have executed this Security
Agreement as of the date first above written.

 

Debtors:

 

GROW SOLUTIONS, INC.,   ONE LOVE GARDEN SUPPLY,   a Delaware corporation       a
Colorado limited liability company           By:   By: Name:   Name: Title:  
Title:

 

STATE OF ____________           )

SS.

COUNTY OF ____________           )

 

The foregoing instrument was acknowledged before me this ___ day of ___________,
2015 by _________________, who is the _________________ of each of the above
named entities. He/She is personally known to me or has produced
__________________________ as identification.

 

 

My Commission Expires:                     Notary Public           Name of
Notary typed or printed

 

 19 

 

 

IN WITNESS WHEREOF, Debtors and Secured Party have executed this Security
Agreement as of the date first above written.

 

  Agreed and accepted:         Secured Party:         TCA GLOBAL CREDIT MASTER
FUND, LP         By: TCA Global Credit Fund GP, Ltd.   Its: General Partner    
    By:       Robert Press, Director

 

 20 

 

 

Schedule 3.8

 

Collateral Locations/Places of Business

 

35 5th Avenue, 24th Floor, New York, NY 10017

 

 

21