Exhibit 10.3

 
SECURITY AGREEMENT
 
 

 
 
This SECURITY AGREEMENT is made on this 18 day of June, 2008 between
 
 
Epazz, Inc. (Debtor), and Arthur A. Goes , (Secured Party).
 
 
SECURITY INTEREST. Debtor grants to Secured Party a security interest in all
inventory, equipment, appliances, furnishings and fixtures, stock certificates
and intellectual property now or hereafter owned by the companies known as Desk
Flex, Inc and Professional Resource Management, Inc., located at 50 N. Brockway
Suite 3-5, Palatine, IL 60067 (Premises) or used in connection therewith and in
which Debtor now has or hereafter acquires any right as well as the proceeds
therefrom. As additional collateral, Debtor assigns to Secured Party, a security
interest in all of its right, title, and interest to any trademarks, trade
names, contract rights, and leasehold interests in which Debtor now has or
hereafter acquires. The Security Interest shall secure the payment and
performance of Debtor's promissory note of even date herewith in the principal
amount of two hundred thousand dollars ($200,000) and the payment and
performance of all other liabilities and obligations of Debtor to Secured Party
of every kind and description, direct or indirect, absolute or contingent, due
or to become due now existing or hereafter arising.   Schedule A identifies the
collateral as it exists as of the date of this Agreement.
 
 
COVENANTS. Debtor hereby warrants and covenants:
 
 
The collateral will be kept at 50 N. Brockway Suite 3-5 Palatine, IL 6067 ; and
that the collateral will not be removed from the Premises other than in the
ordinary course of business, except the stock certificates will be kept in
escrow by at Pinderski and Pinderski LTD 115 W. Colfax, Palatine, IL 60067.
 
 
The Debtor's place of business is 50 N. Brockway Suite 3-5, Palatine, IL 60067,
and Debtor will immediately notify Secured Party in writing of any change in or
discontinuance of Debtor's place of business.
 
 
The parties intend that the collateral is and will at all times remain personal
property despite the fact and irrespective of the manner in which it is attached
to realty.
 
 
The Debtor will not sell, dispose, or otherwise transfer the collateral or any
interest therein without the prior written consent of Secured Party, and the
Debtor shall keep the collateral free from unpaid charges (including rent),
taxes, and liens.
 
 
The Debtor shall execute alone or with Secured Party any Financing Statement or
other document or procure any document, and Secured Party shall pay the cost of
filing the same in all public offices wherever filing is deemed by Secured Party
to be necessary.
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
 
 
 
 
Debtor shall maintain insurance under the same policies currently in effect, at
all times with respect to all collateral against risks of fire, theft, and other
such risks and in such amounts as Secured Party may require. The policies shall
be payable to both the Secured Party and the Debtor as their interests appear
and shall provide for ten (10) days written notice of cancellation to Secured
Party.
 
 
The Debtor shall make all repairs, replacements, additions, and improvements
necessary to maintain any equipment in good working order and condition. At its
option, Secured Party may discharge taxes, liens, or other encumbrances at any
time levied or placed on the collateral, may pay rent or insurance due on the
collateral and may pay for the maintenance and preservation of the collateral.
 
 
Debtor agrees to reimburse Secured Party on demand for any payment made, or any
expense incurred by Secured Party pursuant to the foregoing authorization.
 
 
DEFAULT. The Debtor shall be in default under this Agreement upon the happening
of any of the following:
 
 
Any material misrepresentation in connection with this Agreement on the part of
the Debtor.
 
 
Any non compliance with or non performance of the Debtor's obligations under the
Note or this Agreement.
 
 
Any assignment for the benefit of creditors, or an attachment or receivership of
assets not dissolved within thirty days, or the institution of Bankruptcy
proceedings, whether voluntary or involuntary, which is not dismissed within
thirty days from the date on which it is filed.
 
 
Upon default and at any time thereafter, Secured Party may declare all
obligations secured hereby immediately due and payable and shall have the
remedies of a Secured Party under the Uniform Commercial Code. Secured Party may
require the Debtor to make it available to Secured Party at a place that is
mutually convenient. No waiver by Secured Party of any default shall operate as
a waiver of any other default or of the same default on a future occasion. This
Agreement shall inure to the benefit of and obligate the heirs, executors,
administrators, successors, and assigns of the parties.
 
/s/ Shaun Passley
06/18/08
Debtor
Date
/s/ Arthur A. Goes
06/18/08
Secured Party
Date

 
 
 
 
 
 

--------------------------------------------------------------------------------