chlo_ex1012.htm


    Exhibit 10.12

     

     

    
      Security
Agreement

       

      Agreement
made as of this 23rd day of May 2001, between Valusales.com, Inc., a Florida
Corporation of 4101 Ravenswood Road, Fort Lauderdale, Broward County,
Florida  33312, referred to as debtor, and David Aubel, of 1802-102 N.
University Drive, Suite 289, Plantation., Broward County, Florida 33322,
..referred to as secured party.

       

      In
consideration of the following mutual covenants, secured party agrees to lend
..and debtor agrees to borrow the sum or sums of money described below, referred
to as the obligation, and debtor grants to secured party a security interest in
the property described below, referred to as collateral, on the following terms
and conditions:

       

      Section
One.

       

      Obligation

       

      The
obligation shall consist of the following, evidenced by demand promissory notes
in a form satisfactory to secured party:

       

      1.1. The
initial advance to debtor of US$172,821.80 represented by a Promissory Note
dated May 23, 2001.

       

      1.2.
Future advances to debtor made in accordance with the following
terms:

       

      a.
Insofar as debtor may request and secured party may be willing in its discretion
to make additional loans secured by collateral, advances may be made to debtor
by secured party In such sums as secured party may elect) but in no event in
excess of the outstanding loan value of collateral.

       

      b. The
outstanding loan value of collateral shall be a value computed as Seventy-Five
percent (75%) of the cost or market value, whichever is lower, of all collateral
owned. by debtor and encumbered by the security interest of secured party at the
time of computation of such loan value. Percentages may be revised by secured
party at its discretion.

       

      1.3. All
sums owed by debtor to secured party under any renewals or extensions of this
agreement or the note or notes executed under this security
agreement.

       

      1.4. Any
and all other liabilities of debtor to secured party, direct or indirect,
absolute ~r contingent, due or to become due, presently existing or arising
after the effective date of this security agreement.

       

      Section
Two.

       

      Collateral

       

      2. 1.
Debtor grants to secured party a security interest in the collateral pursuant to
Article 9 of the Florida Uniform Commercial Code, to secure full performance by
debtor of the duties and obligations set forth in this security
agreement.

       

      2.2.
Collateral consists of the following:

       

      a. The
inventory of debtor, including all goods, merchandise, raw materi.als, goods in
process, finished goods, and other tangible personalty now owned or acquired
after the effective date of this security agreement and held for sale or lease,
furnished or to be furnished under contracts of service, or used or consumed in
the business of debtor.

       

      b.
Accounts receivable and other proceeds resulting from sale of
inventory.

       

      c. Any
and all equipment, machinery, furnishings, and supplies utilized in the conduct
of the debtor's business.

       

      d. Such
additional security as secured party may demand under the terms of this security
agreement.

       

      Section
Three.

       

      Financing
Statements

       

      Debtor
warrants and covenants that no financing statement covering any of the
collateral or any proceeds of such collateral is on file in any public office.
At the request of secured party, debtor will join in executing one or more
financing statements pursuant to Article 9 of the Florida Uniform Commercial
Code in form satisfactory to secured party, and debtor will pay the costs of
filing such statement or statements wherever filing is deemed necessary or
desirable by secured party.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
Four.

       

      Location
of Debtor and Collateral

       

      4.1. The
principal place of business of debtor within the state is 4101 Ravenswood Road,
Fort Lauderdale, Broward County, Florida 33312. Debtor shall immediately notify
secured party in writing of any change in or discontinuance of the place of
business of debtor as noted in this security agreement.

       

      4.2. The
office at which debtor keeps its records concerning the accounts resulting from
sale of collateral is at 4101 Ravenswood Road, Fort Lauderdale, Broward County,
Florida 33312, and such location shall be considered to be the chief place of
business of debtor for purposes of this security agreement. Debtor shall
immediately notify secured party in writing of any change in the location of
such records.

       

      4.3.
Collateral shall be kept at 4101 Ravenswood Road, Fort Lauderdale, Broward
County, Florida 33312. Debtor shall notify secured party promptly of any change
in the location of collateral within the State of Florida. Debtor shall not
remove any of the collateral from the State of Florida without the prior written
consent of secured party.

       

      Section
Five.

       

      Possession
and Use of Collateral

       

      Until
default, debtor shall have the right to possess and to use the collateral in the
ordinary course of business, and debtor may use or consume any raw materials or
supplies necessary to the normal operation of its business.

       

      Section
Six.

       

      Sale of
Collateral

       

      Debtor
shall have the power to sell in the ordinary course of its business the
following types of collateral and no other: Inventory. Debtor shall have no
power to sell and shall not offer or attempt to sell or otherwise dispose of any
other types of collateral without the specific written consent of secured party.
For purposes of this security agreement, sale in the ordinary course of business
of debtor shall not include a transfer or disposition in satisfaction, in whole
or in part, of an existing indebtedness.

       

      Section
Seven.

       

      Proceeds

       

      At any
time at the request of secured party, debtor shall de1iver to secured
party:

       

      7.1
Promptly after they are prepared, lists or copies of all accounts representing
proceeds of the sale of collateral

       

      7.2.
Within 10 days of receipt thereof, all proceeds of collateral sold, including
proceeds of the accounts described in this security agreement, received by
debtor, in the exact form in which they are received.

       

      7.3.
Secured party in its discretion may apply cash proceeds to payment of any
obligation secured by this security agreement, or may release such cash proceeds
to debtor for use in operation of the business of debtor without waiving the
right of secured party to retain subsequent proceeds.

       

      Section
Eight.

       

      Assignment
of Accounts

       

      At the
request of secured party, debtor shall assign or indorse accounts to secured
party, and thereafter secured party shall have full power to collect,
compromise, indorse, sell, or otherwise deal with such accounts in its own name
or that of debtor.

       

      Section
Nine.

       

      Rights of
Debtor in Collateral

       

      Debtor
warrants and covenants that debtor is the owner of all collateral free from any
adverse liens, security interests, or encumbrances, except for the security
interest granted in this security agreement. Debtor shall defend the collateral
against any claims and demands of all persons at any time claiming the
collateral or any interest in the collateral.

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
Ten.

       

      Protection
of Collateral

       

      10.1.
Debtor shall keep all collateral in good order and repair and shall note waste
or destroy the collateral or any part of such collateral.

       

      10.2.
Debtor shall notify secured party immediately of any event resulting in Loss or
depreciation in the loan value of collateral and the amount of such loss Of
depreciation, which amount shall be reflected immediately in the outstanding
loan value under this security agreement.

       

      10.3.
Secured party may examine and inspect the collateral at any time wherever such
collateral is located. Debtor shall at all times maintain accurate books and
records in form satisfactory to secured party relating to the possession and
sale of collateral and the proceeds of such collateral, and secured party may)
on request, examine the records of debtor for any purpose consistent with the
terms of this security agreement.

       

      Section
Eleven.

       

      Taxes or
Encumbrances; Reimbursement

       

      Debtor
shall pay promptly when due all taxes, assessments) liens, or encumbrances
levied on or against collateral or for its use or operation whether by
governmental action or under this security agreement or pursuant to any note or
notes evidencing the obligation. At its option, secured party may discharge any
such encumbrance at any time Levied or placed on collateral and may pay for the
maintenance and preservation of collateral. Debtor shall reimburse secured party
on demand for any such payment made or expense incurred, all of which shall be
included in the obligation.

       

      Section
Twelve.

       

      Amount of
Col1ateral

       

      Debtor
shall at all times maintain inventory in such amount that the indebtedness owing
by debtor to secured party shall not at any time exceed the loan value described
above in Section One of this security agreement. If at any time such
indebtedness does exceed the loan value, at the discretion of secured party and
on its demand, debtor shall either reduce the indebtedness or transfer
additional security to secured party in form and amount satisfactory to secured
party.

       

      Section
Thirteen.

       

      Risk of
Loss; Insurance

       

      The risk
of loss of collateral shall be on debtor at all times. Debtor shall have and
maintain at all times policies of insurance with respect to all collateral
against fire (including extended coverage), theft, and all such other risks as
secured party may require, including, in the case of mobile goods, collision
coverage. Such policies of insurance shall contain such terms, be in such form,
continue for such periods, and be written by such companies as are deemed
satisfactory by secured party. All such policies of insurance shall be indorsed
with the standard mortgagee clause for the benefit of secured party. Debtor
shall furnish secured party on demand with certificates or other evidence deemed
satisfactory by secured party of compliance with the provisions of this section.
Secured party may act as agent for debtor in obtaining and canceling such
insurance or adjusting and settling losses under such insurance.

       

      Section
Fourteen.

       

      Default

       

      Debtor
shall be in default under this security agreement on the happening of any of the
following events or conditions:

       

      14.1.
Loss, theft, damage, destruction, sale, or encumbrance of collateral, or any
levy thereon, or seizure or attachment of collateral.

       

      14.2. Any
failure by debtor to pay or perform the obligation, or the occurrence of any
event accelerating the maturity of the obligation or any note or notes
evidencing the obligation.

       

      14.3.
Material falsity when made of any warranty, representation, or statement made or
furnished to secured party by or on behalf of debtor.

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      14.4. Any
failure by debtor to perform any covenant in this security agreement, or any
action by debtor inconsistent with or in violation of the terms of this security
agreement or that endangers the safety or integrity of collateral or of the
security interest of secured party.

       

      14.5.
Death, dissolution, termination of existence, insolvency, business failure,
appointment of a receiver for any part of the collateral, assignment for the
benefit of creditors, or the commencement of any proceedings under any
bankruptcy or insolvency laws by or against debtor or any guarantor or surety
for debtor.

       

      Section
Fifteen.

       

      Remedies

       

      15.1. On
any default and at any time after any such default, secured party may declare an
obligations secured by this security agreement immediately due and payable and
shall have the remedies of a secured party under Article 9 of the Florida
Uniform Commercial Code,

       

      15.2.
Secured party may require debtor to assemble the collateral and make it
available to secured party at a place to be designated by secured party that is
reasonably convenient to both parties. Secured party may enter the premises of
debtor for the purpose of peaceful1y exercising the rights of secured party
under this security agreement.

       

      15.3.
Unless collateral is perishable or threatens to decline rapidly in value or is
of a type customarily sold on a recognized market, secured party will give
debtor reasonable notice of the time and place of any public sale of collateral
or of the time after which any private sale or any other intended disposition of
collateral is to be made, at which private sale secured party may purchase
collateral. The requirements of reasonable notice shall be met if such notice is
mailed postage prepaid to the address of debtor shown in this security agreement
at least 15 days before the time of the sale or other disposition.

       

      15.4.
Expenses of retaking, holding, preparing for sale, selling, or the like shall
include reasonable attorneys fees and legal expenses incurred by secured party,
all of which shall become part of the obligation after default and may be
recovered by disposition of collateral.

       

      15.5.
Debtor shall be liable for any deficiency remaining due on the obligation after
disposition of collateral by secured party on default of debtor. Secured party
shall be liable to debtor for any excess remaining after the obligation is fully
satisfied.

       

      Section
Sixteen.

       

      Waiver

       

      No waiver
by secured party of any default under this security agreement shall operate as a
waiver of any other default or of a similar default on a future
occasion.

       

      Section
Seventeen.

       

      Choice of
Law

       

      Debtor
and secured party agree and designate Article 9 of the Florida Uniform
Commercial Code and other applicable laws of the State of Florida as the law to
be applied in the construction of the validity of this security
agreement.

       

      Section
Eighteen.

       

      Binding
Effect

       

      All
rights of secured party under this security agreement shall inure to the benefit
of its successors and assigns; and all obligations of debtor shall be binding on
the heirs, executors, administrators, successors, and assigns of debtor. If
there is more than one debtor, their obligations under this security agreement
shall be joint and several.

       

      Section
Nineteen.

       

      Entire
Agreement

       

      This
security agreement shall become effective when it is signed by debtor and.
together with the evidence of the obligation, shall constitute the entire
agreement by and between debtor and secured party.

       

      


      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
Twenty

       

      Miscellaneous

       

      The
Parties hereby agree to cooperate, execute and deliver any and all documents
reasonably deemed necessary to effectuate the intent and the terms and
conditions of this Agreement. Each party reciprocally agrees to promptly and
duly execute and deliver to the other such further documents and assurances and
take such further action as may from time to time be reasonably requested in
order to more effectively carry out the intent and purpose of this Agreement and
to establish and protect the rights and remedies created or intended to be
created in favor of the other party hereunder.

       

      This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute but one and the
same instrument. Facsimile signatures shall constitute original
signatures.

       

      Each
party has reviewed and participated in the formation of this Agreement and,
accordingly, any rule or construction to the effect that ambiguities be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement.

       

      Time is
of the absolute essence with respect to the parties performance of this
Agreement.

       

      Each
individual executing this Agreement on behalf of each party represents and
warrants that he is duly authorized to execute and deliver this Agreement on
behalf of said part, in accordance with a duly adopted resolution of the Board
of Directors of said party or in accordance with the bylaws of said party, and
that this Agreement is binding upon said party in accordance with its
terms.

       

      Executed
at Fort Lauderdale, Broward County, Florida on the date first above
written.

       

      
        	
                Signed,
      sealed and delivered

                
                   

                

                 

                
                   

                

                 

              	
                VlaueSales.com,
      Inc.

                a
      Florida corporation

                 

                 

                By:
      /s/ Jeffrey Harrell

              
	 
      	
                Jeffrey
      Harrell, President

              
	 	 
	 
      	 
      
	
                Signed,
      sealed and delivered

                 

              	
                David
      Aubel

                By:
      /s/ David Aubel