EXHIBIT 10.3

 

SECURITY AGREEMENT dated as of October 3, 2016 (as amended, supplemented or
otherwise modified from time to time, this “Agreement”), among RMR Aggregates,
Inc., a Colorado corporation (the “Company”) and Central Valley Administrators
Inc., a Nevada corporation (the “Purchaser”). Each capitalized term used but not
defined herein shall have the meaning assigned thereto in the Note Purchase
Agreement; provided that each term defined in the Nevada UCC (as defined herein)
and not defined in this Agreement shall have the meaning specified in the Nevada
UCC.

 

Reference is made to the Note Purchase Agreement dated as of the date hereof
(the “Note Purchase Agreement”), entered into by and among the Company, the
Purchaser and RMR Industrials, Inc., a Nevada corporation (“RMRI”). The Company
is willing to execute and deliver this Agreement in order to induce the
Purchaser to purchase the Note.

 

Accordingly, the parties hereto agree as follows:

 

1.1         Defined Terms.

 

“Excluded Assets” means (a) all leasehold interests in real property, (b) any
governmental licenses or state or local franchises, charters or authorizations,
(c) any asset if, to the extent and for so long as the grant of a lien thereon
to secure the Secured Obligations is prohibited by any requirements of law or
would require consent or approval of any governmental authority, and (d) any
lease, license or other agreement or any property subject thereto (including
pursuant to a purchase money security interest or similar arrangement).

 

“Nevada UCC” means the Uniform Commercial Code as from time to time in effect in
the State of Nevada; provided, however, that, at any time, if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Purchaser’s security interest in any item or portion of the Collateral is
governed by the Uniform Commercial Code or similar law as in effect in a
jurisdiction other than the State of Nevada, the term “UCC” shall mean the
Uniform Commercial Code as in effect, at such time, in such other jurisdiction
for purposes of the provisions hereof relating to such perfection or priority
and for purposes of definitions relating to such provisions.

 

“Secured Obligations” means the due and punctual payment by the Company of the
Principal Amount plus all accrued interest under the terms of the Note.

 

1.2         Security Interest.

 

(a)          As security for the payment and performance in full of the Secured
Obligations, the Company hereby grants to the Purchaser, its successors and
permitted assigns, a security interest (the “Security Interest”) in all the
Company’s right, title and interest in, to and under any and all of the
following assets now owned or at any time hereafter acquired by the Company or
in which the Company now has or at any time in the future may acquire any right,
title or interest (collectively, the “Collateral”):

 

(i)          all Accounts;

 

(ii)         all Chattel Paper;

 

(iii)        all Deposit Accounts;

 

(iv)        all Documents;

 

(v)         all Equipment;

 

(vi)        all General Intangibles;

 

 

 

 

(vii)       all Instruments;

 

(viii)      all Inventory;

 

(ix)         all Investment Property;

 

(x)          all Letter-of-Credit Rights;

 

(xi)         all Commercial Tort Claims;

 

(xii)        all books and records pertaining to the Collateral; and

 

(xiii)       to the extent not otherwise included, all Proceeds and products of
any and all of the foregoing and all collateral security and guarantees given by
any Person with respect to any of the foregoing;

 

provided that in no event shall the Security Interest attach to any Excluded
Assets (for the avoidance of doubt, it being understood that the term
“Collateral” shall not include any Excluded Asset).

 

(b)          On the date hereof, the Company shall cause UCC-1 financing
statements substantially in the form attached hereto as Exhibit A to be filed
with the California Secretary of State and with the appropriate authorities in
Colorado to perfect the liens intended to be created by this Agreement (the
“Financing Statements”). The parties hereto hereby irrevocably authorize the
Purchaser at any time and from time to time to file in any relevant jurisdiction
any other financing statements with respect to the Collateral or any part
thereof and amendments thereto that describe the collateral covered thereby in
any manner that the Purchaser reasonably determines is necessary to ensure the
perfection and continuation of the security interest in the Collateral granted
under this Agreement, including indicating the Collateral as “all assets” of the
Company or words of similar effect. The Company shall also enter into customary
mortgages granting a lien in favor of the Purchaser on any fee-owned real
property of the Company that is owned as of the date hereof to secure the
Secured Obligations (it being understood that any such mortgages will be entered
into on a post-closing basis within 120 days of the date hereof (or such later
date as the Purchaser may reasonably agree)). The Company shall further take
such additional perfection actions as may be reasonably requested by Purchaser
as Purchaser may determine are required to perfect the liens intended to be
created by this Agreement.

 

1.3           Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that the filings described in Section
1.2(b), are sufficient to create for the Purchaser valid and perfected security
interests in the Collateral and that such perfected security interests have a
first priority claim on the Collateral.

 

1.4           Remedies upon Event of Default. If an Event of Default shall have
occurred and is continuing and the Purchaser shall have notified the Company of
its intent to exercise its rights under the Note Purchase Agreement, the Company
agrees to make available, on demand, each item of Collateral to the Purchaser or
any Person designated by the Purchaser, and it is agreed that the Purchaser
shall have the right, with or without legal process and with or without demand
for performance but with notice (which need not be prior notice), to take
possession of the Collateral and without liability for trespass to enter any
premises where the Collateral may be located for the purpose of taking
possession of or removing the Collateral and, generally, to exercise any and all
rights afforded to a secured party under the Uniform Commercial Code or other
applicable law.

 

1.5           Notices. All communications and notices hereunder shall (except as
otherwise expressly permitted herein) be in writing and shall be given as
provided in Section 10.6 of the Note Purchase Agreement.

 

 

 

 

1.6          Waivers; Amendment.

 

(a)          No failure or delay by the Purchaser in exercising any right or
power hereunder or under any other Loan Document shall operate as a waiver
thereof nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Purchaser hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Company therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section 1.5, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given.

 

(b)          Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Purchaser and the Company.

 

1.7           Termination or Release.

 

(a)          This Agreement, the Security Interest and all other security
interests granted hereby shall automatically terminate when the Secured
Obligations have been paid in full in accordance with the terms of the Note
Purchase Agreement.

 

(b)          In connection with any termination or release pursuant to paragraph
(a) of this Section, the Purchaser shall execute and deliver to the Company all
documents that the Company shall reasonably request to evidence such termination
or release. Any execution and delivery of documents by the Purchaser pursuant to
this Section shall be without recourse to or warranty by the Purchaser.

 

1.8           Governing Law. This Agreement and the other Loan Documents and all
actions arising out of or in connection with the Loan Documents shall be
governed by and construed in accordance with the laws of the State of Nevada,
without regard to the conflicts of law provisions thereof. The parties hereto
irrevocably submit to the exclusive jurisdiction of any state or federal court
sitting in the County of Clark, the State of Nevada, over any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents.

 

1.9           WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

[Signature Pages Follow]

 

 

 

 

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

 

  CENTRAL VALLEY ADMINISTRATORS INC., as the Purchaser       By: /s/ Richard
Merkin   Name: Richard Merkin   Title: President

 

  RMR AGGREGATES, INC., as the Company       By: /s/ Chad Brownstein   Name:
Chad Brownstein   Title: Chief Executive Officer