Document:

f8k101011ex10iv_redrock.htm

Exhibit 10.4

 

 

	October 10, 2011	$700,000

 

 

ASSUMPTION OF NOTE AND AMENDED SECURED PROMISSORY NOTE

 

WHEREAS, on April 20, 2011, RED ROCK PICTURES HOLDINGS, INC. executed a certain Promissory Note, (the “Original Note”), a copy of which is attached hereto as Exhibit A, in the face amount of Six Hundred Fifty Thousand Dollars ($650,000) plus interest thereon at the rate of Fifteen Percent (15%) per annum;

 

FOR VALUE RECEIVED, REVOLUTION OILS, LLC, aka RED ROCK DIRECT LLC,  (“Borrower”) hereby assume, without recourse to the Original Note, and release from liability thereon and indemnify RED ROCK PICTURES HOLDINGS, INC., and hereby promise to pay to CRISNIC FUND, SA, a Costa Rican company (“Lender”), or registered assigns (each, a “Party,” and collectively, the “Parties”), the principal amount of  Seven Hundred Thousand Dollars ($700,000) plus interest at the rate of Fifteen Percent (15%) per annum on any unpaid principal and accrued interest not repaid at maturity (this “Note”).  In the event that Lender elects to advance additional funds, such additional funds plus a Twenty-Five Percent (25%) cash return, shall be added to the principal amount of this Note.

 

This Note amends and supersedes any and all former Notes between the Parties.

 

1.   Definitions.  For the purposes hereof, in addition to the terms defined elsewhere in this Note, capitalized terms not otherwise defined herein shall have the meanings set forth in the Agreement.

 

2.   Interest Payments.  Interest shall be compounded and all payments shall be applied to interest before principal.

 

3.   Maturity Date.  The principal amount and any accrued and unpaid interest shall be due and payable as set forth herein, but in no event later than June 30, 2012, at which time the entire balance of principal and any accrued and unpaid interest shall be all due and payable.

 

4.   Payments; Prepayment.

 

4.1   Payments made by or on behalf of Borrower and received by Lender pursuant to the terms hereof shall be applied in the following manner:  (i) first, to the payment of all expenses, charges, costs and fees incurred by or payable to Lender and for which Borrower is obligated pursuant to the terms hereof; (ii) second, to the payment of all interest accrued to the date of such payment; and (iii) third, to the repayment of principal.

 

4.2   Payments of principal and accrued interest shall be paid in the following manner:  Forty Percent (40%) of all “Adjusted Gross Proceeds” received by Borrower (“Lender’s Participation”)”). As used herein,  “Adjusted Gross Proceeds”  shall mean any proceeds received by Borrower directly or indirectly from any activity, including but not limited to the proceeds from: not limited to proceeds from (i) the distribution and exploitation of the Debtor’s direct response television commercial (hosted by Suzanne Somers) (the “Infomercial”), the book currently entitled The Anti-Aging Miracle by Dr. James William Forsythe, M.D., (the “Somers Project”), and any and all supplements sold as described in the Infomercial, in any outlet worldwide, less costs directly related to production of the Infomercial (excluding Executive Producer fees) and costs incurred to purchase media, cost of goods, talent and product royalties, product shipping costs, customer service, telemarketing, credit card fees, return and charge backs (“Costs”);  (ii) any and all proceeds derived therefrom, including any  health supplements sold as described in the Somers Project, (iii) the feature length film entitled “Endless Bummer”, (iv) the book currently entitled Sleep and Grow Young  by Dr. James William Forsythe, M.D, and (v) the Management Agreement with Mike Flynt (collectively, the “Assets”). Payments made to Lender shall be made pursuant to the terms and condition of Section 8 below and shall continue until such time as the entire principal and all accrued interest on this Note have been paid in full.

 

  

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4.3   Borrower may prepay this Note in full at any time without penalty or premium.

 

4.4   Lender shall credit, against Borrowers obligation under the Note, 100%  of all monies received from Office Supply Line for the cancellation of its stock in Red Rock Pictures Holdings, Inc., as well as any proceeds its receives from the sale of Red Rock Pictures Holdings, Inc. stock or any monies its receives from the sale of any equity interest Lender may receive in Office Supply Line as a result of the transaction contemplated under the related Share Exchange Agreement.

 

5.   Registration of Transfers and Exchanges.

 

5.1   Different Denominations.  This Note is exchangeable for an equal aggregate principal amount of notes of different authorized denominations, as requested by Lender surrendering the same.  No service charge will be payable for such registration of transfer or exchange.

 

5.2   Reliance on Note Register.  Prior to due presentment for transfer to Borrower of this Note, Borrower and any agent of Borrower may treat the person in whose name this Note is duly registered upon the records maintained by Borrower for that purpose (the “Note Register”) as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether or not this Note is overdue, and neither Borrower nor any such agent shall be affected by notice to the contrary.

 

6.   Events of Default; Remedies.

 

Each of the following shall constitute an event of default (“Event of Default”):

 

6.1   Nonpayment.  The nonpayment, when due, of any installment of interest or principal owing under this Note, or the nonpayment, when due, of any other amount payable to the Lender under this Note or the Agreement.

 

6.2   Breach.  The failure by Borrower to perform timely or to observe any agreement contained in the Agreement or this Note, which failure or default is not cured or corrected within fifteen (15) days of the date of written notice from Lender to Borrower.

 

6.3   Liens.  All or any significant portion of the assets of Borrower shall become subject to any Lien other than Permitted Liens.

 

6.4   Representations and Warranties.  Any representation or warranty in the Agreement or this Note is false or erroneous in any material respect at the time of the making thereof.

 

6.5   Other Debt.  The default in payment or acceleration of the maturity of any debt of Borrower other than this Note.

 

  

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6.6   Adverse Change.  The occurrence of a material adverse change in the financial condition of Borrower.

 

6.7   Merger; Sale of Assets.  Borrower shall sell all or substantially all of its assets or effect any merger or consolidation in which it is not the surviving corporation.

 

7.           Remedies upon Event of Default.  If any Event of Default occurs, including the failure to make any payments from Adjusted Gross Proceeds, Lender shall have any and all rights and remedies that may be available to it hereunder, and/or at law or in equity.  Without limiting the generality of the foregoing, the entire unpaid principal amount and accrued and unpaid interest shall become, at Lender’s election, immediately due and payable in cash.  In connection with such acceleration described herein, Lender need not provide, and Borrower hereby waives, any presentment, demand, protest or other notice of any kind, and Lender may immediately and without expiration of any grace period to enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law.  Such acceleration may be rescinded and annulled by Lender at any time prior to payment hereunder and Lender shall have all rights as a Lender of the Note until such time, if any, as Lender receives full payment pursuant to this Section.  No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereonFor the avoidance of doubt, in no event shall Reno Rolle or Todd Wiseman be held personally liable or accountable to Lender or Red Rock Pictures Holdings, Inc. for any indebtedness, liability and or obligations evidenced by or incurred under the terms of this Assumption of Note and Amended Secured Promissory Note and the related Share Exchange Agreement, the Assumed and Amended Security Agreement, the Asset Assignment Agreement and or any other agreements made an entered into in connection with the same.

 

8.   Accounting.

 

8.1   Reporting: Lender will receive media and telemarketing daily reports via email directly from the suppliers that Borrower chooses to contract for the exploitation of the assets. Borrower will instruct the participating supplier to include Lender on their daily or weekly email reports, as the case maybe. Lender will receive confirmation of the identity of the suppliers via email prior to the beginning of the exploitation of each and every asset.

 

8.2   Remittance and Reporting: Within 24 hours of Red Rock Direct or any other operating entity receiving any payment, Borrower shall: (i) pay all of Lender’s Participation payable to Lender hereunder on sales made during such period and (ii) deliver to Lender a detailed written statement itemizing such sales and setting forth its calculations of Lender’s Participation thereon.

 

8.3   Records and Audit Rights: Borrower shall keep complete and accurate records of all sales that are subject to payment of Lender’s Participation hereunder. Lender may cause such records to be audited at any time during any calendar quarter during the term of this Agreement to verify Lender’s Participation paid and payable hereunder. Each such audit shall require at least ten business days prior written notice to Borrower and shall take place during the hours of 9:00 a.m. to 5:00 p.m., Monday through Friday, at the offices of Borrower and shall be at Lender’s sole expense; provided, however, that if any such audit shall show underpayment of royalties due hereunder by more than 10% of the total Lender’s Participation due, then Borrower shall bear one-half of the cost of such audit (up to a maximum payment of $3,000) and shall promptly pay all Lender’s Participation determined by such audit to be due. Notwithstanding anything herein to the contrary, the calculation and payment of royalties for each fiscal year of shall be deemed final and shall not be subject to further review 30 days after the end of such fiscal year.

 

  

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8.4   Lender’s Right to Access to Revenue Records.  Upon request by the Lender and/or Lender’s Auditor, Borrower shall provide, by email or download, complete “back-up” documentation for all revenue received, including all pertinent corporate books, journals, ledgers and licensee “accounting files.”  Upon request by Lender and/or Lender’s Auditor, Borrower shall provide, in Los Angeles, California, complete bookeeping and “back-up” documentation for all revenue received by Red Rock Direct in every territory, including all corporate books, journals, and ledgers and accounting files.  Upon request by Lender and/or Lender’s Auditor, Borrower shall provide complete bookeeping and “back-up” documentation for all revenue received in all such territories.

 

8.5   Audit Rights.  Notwithstanding any other provision to the contrary in this contract, Lender shall have the right to audit Borrower at any reasonable time, and use the services of any Certified Public Accountant as Lender’s Auditor.  Lender’s Auditor may render opinions to Lender, on a confidential basis, concerning compliance or non-compliance with any aspect of this contract, including compliance with custom and practice, usage of trade, and the covenant of good faith and fair dealing.  Borrower shall place no restrictions on the opinions to be rendered by Lender’s Auditor.

 

8.6   Self-Dealing.  Borrower shall identify and disclose all self-dealing transactions on any transaction described hereinabove.  A self-dealing transaction is one involving Borrower and any subsidiary, parent, sibling, or affiliated person or entity.

 

8.7   Information Access to Accounts:  Lender shall have Internet access to information on all bank accounts maintained by the Borrower.

 

8.8   Establishment of Joint Bank Account:  The Parties shall establish a joint account (the “Joint Account”) at a bank agreed to Borrower, Lender, and SLC Promotions, Inc. f/s/o Suzanne Somers (the “Somers Project Parties”), into which all revenues from the sale of products from the Somers Project (“Products”)  shall be deposited and from which all Costs shall be paid.  None of the Somers Project Parties shall have the authority to write any check or withdraw funds from the Joint Account unless such check is signed or withdrawal is authorized, as the case may be, by an authorized representative of Borrower, Lender and SLC Promotions, Inc.; provided, however, that in the event it becomes necessary to process a payment to a third party on an expedited timeline that could not be reasonably expected to be met in compliance with the requirements of this section, then Lender and Borrower shall use commercially reasonable efforts to coordinate a wire transfer of requisite funds to process such payment in a timely manner.  In connection with Borrower’s fulfillment of orders for the Products, Borrower shall direct all customers to remit payments for the Products to the Joint Account.  Any letter of instruction to the bank shall be irrevocable and countersigned by Lender.

 

9.   Indemnification

 

9.1   Indemnification.  REVOLUTION OILS, LLC, aka RED ROCK DIRECT LLC, (“Indemnifying Party”) agrees to indemnify and hold harmless RED ROCK PICTURES HOLDINGS, INC., and CRISNIC FUND, S.A.  (“Indemnified Party”) and its officers, directors and agents from and against any and all losses, claims, damages and liabilities whatsoever, arising from the liability or debt created by the Original Note. For the avoidance of doubt, in no event shall Reno Rolle or Todd Wiseman be held personally liable for any indebtedness and or obligations evidenced by or incurred under the terms of this Assumption of Note and Amended Secured Promissory Note and or any other agreements made an entered into in connection with the same.

 

  

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9.1   Indemnification Procedures.  In case any proceeding shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section, the Indemnified Party shall promptly notify the Indemnifying Party in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent (and only to the extent) that the Indemnifying Party is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (a) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel; or (b) in the reasonable judgment of such Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties (including in the case of Borrower, all of its officers, directors and controlling persons) and that all such fees and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for the Indemnified Parties, the Indemnified Parties shall designate such firm in writing to the Indemnifying Party.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

 

9.2   Contribution.  To the extent any indemnification by an Indemnifying Party is prohibited or limited by law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for which he, she or it would otherwise be liable under this Section 6 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where a Party would not have been liable for indemnification under this Section 6 and (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning used in the Securities Act) shall be entitled to contribution from any Party who was not guilty of such fraudulent misrepresentation

 

10.   Miscellaneous.

 

10.1   Notices.  All notices, requests, demands and other communications (collectively, “Notices”) given pursuant to this Agreement shall be in writing, and shall be delivered by personal service, courier, facsimile transmission, email transmission of a pdf formatted data file or by United States first class, registered or certified mail, addressed to the following addresses:

 

  

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If to Borrower:

 

Revolution Oils, LLC

Aka Red Rock Direct LLC

6019 Olivas Park Drive, Suite C

Ventura, CA  93003

Attention:  Reno Rolle

Email:                                              

Facsimile:                                              

 

If to Lender:

 

Crisnic Fund, SA

In care of Lexperts, SA

ConHotel Office Center

Office 5 Sabana Norte

San Jose, Costa Rica

Email:                                            

Facsimile:                                              

 

Any Notice, other than a Notice sent by registered or certified mail, shall be effective when received; a Notice sent by registered or certified mail, postage prepaid return receipt requested, shall be effective on the earlier of when received or the third day following deposit in the United States mail (or on the seventh day if sent to or from an address outside the United States).  Any Party may from time to time change its address for further Notices hereunder by giving notice to the other Party in the manner prescribed in this Section.

 

10.2   Governing Law.  This Note shall be construed in accordance with the laws of the state of California without giving effect to the principles of conflicts of law thereof.

 

10.3   Captions.  The various captions of this Note are for reference only and shall not be considered or referred to in resolving questions of interpretation of this Note.

 

10.4    Absolute Obligation.  Borrower agrees that  its liabilities under this Note are absolute and unconditional without regard to the liability of Lender, and Borrower hereby waives the right to interpose any setoff of any nature or description whatsoever in connection with Lender’s enforcement of its rights under this Note.  This Note is a direct obligation of the Borrower.

 

10.5   Lost or Mutilated Note.  If this Note shall be mutilated, lost, stolen or destroyed, Borrower shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof (including reasonable indemnity), reasonably satisfactory to Borrower.

 

10.6   Waiver.  Any waiver by Lender of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note.

 

  

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The failure of Lender to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive Lender of the right thereafter to insist upon strict adherence to that term or any other term of this Note.  Any waiver by Lender must be in writing.

 

10.7   Severability.  If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Party or circumstance, it shall nevertheless remain applicable to all other Parties and circumstances.  

 

10.8   Usury.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.  Borrower covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive Borrower from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Note, and Borrower (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to Lender, but will suffer and permit the execution of every such power as though no such law has been enacted.

 

10.9   Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a business day, such payment shall be made on the next succeeding business day.

 

10.10   Entire Agreement.  The Agreement, the Note and the Security Agreement contain the sole and entire agreement and understanding of the Parties with respect to the entire subject matter of this Note, and any and all prior discussions, negotiations, commitments and understandings, whether oral or otherwise, related to the subject matter of this Note are hereby merged herein.

 

10.11   Time of Essence.  Time is of the essence in performing the obligations hereunder.

 

10.12   Costs of Collection.  Borrower promises to pay all costs and expenses of collection or enforcement of this Note, including, without limitation, reasonable attorneys’ fees and disbursements, incurred by Lender on account of such collection or enforcement, whether or not suit is filed hereon.  All such costs or expenses incurred or paid by Lender for such purposes shall bear interest at the rate of Ten Percent (10%) per annum from the date incurred or paid by Lender to the date of repayment by Borrower.

 

10.13   Disputes.  In the event any dispute arises between the Parties with regard to this Note, it shall be resolved by a Court of competent jurisdiction in Los Angeles County, California.  The prevailing Party shall be awarded reasonable attorneys’ fees.

 

  

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IN WITNESS WHEREOF, Borrower has caused this Note to be duly executed by a duly authorized officer as of the date first indicated above.

 

 

	 	BORROWER	 
	 	 	 
	 	REVOLUTION OILS, LLC	 
	 	aka RED ROCK DIRECT LLC	 
	 	 	 	 
	 	
By: 

	/s/ 	 
	 	 	Name:  Reno Rolle	 
	 	 	Title:    Member	 
	 	 	 	 

 

	 	
By: 

	/s/ 	 
	 	 	Name:  Todd Weisman	 
	 	 	Title:    Member	 
	 	 	 	 

 

LENDER

 

Crisnic Fund, S.A. hereby confirms and agrees to

to the provisions of this ASSUMPTION OF

NOTE AND AMENDED SECURED PROMISSORY

NOTE as of the first date written above and hereby releases

Red Rock Holdings Pictures, Inc. from the

Original Note:

 

	CRISNIC FUND, S.A.	 
	 	 	 
	
By: 

	/s/ 	 
	 	Name:  Tony Gentile	 
	 	Title:    President	 
	 	 	 

 

Acknowledgement  and Consent

Red Rock Pictures Holdings, Inc. hereby confirms and agrees to

the provisions of this ASSUMPTION OF

NOTE AND AMENDED SECURED PROMISSORY

NOTE:

 

 

	Red Rock Pictures Holdings Inc.	 
	 	 	 
	
By: 

	/s/ 	 
	 	Name:  Tony Gentile	 
	 	Title:    Chief Executive Officer	 
	 	 	 

 

 

 

8f8k101011ex10v_redrock.htm

Exhibit 10.5

 

ASSUMED AND AMENDED SECURITY AGREEMENT

 

THIS ASSUMED AND AMENDED SECURITY AGREEMENT (hereinafter, this “Agreement”), is made and entered into as of the 10th day of October, 2011, by and between REVOLUTION OILS, LLC, aka RED ROCK DIRECT LLC, (“Debtor”) who assumes all of the Obligations of RED ROCK PICTURES HOLDINGS INC., a Nevada corporation  (“Red Rock”), of that certain Security Agreement dated April 20, 2011, between RED ROCK PICTURES HOLDINGS, INC. and CRISNIC FUND, S.A., a Costa Rican company (hereinafter “Secured Party”), in conjunction with that certain Secured Promissory Note (hereinafter “Note”) dated and executed concurrently herewith, which memorializes a loan from Secured Party, being assumed by Debtor.

 

NOW THEREFORE, in consideration of the loan by Secured Party, the mutual promises contained herein, and other valuable consideration, Debtor, by this instrument, grants a security interest in and to the Collateral described in detail on Exhibit A attached hereto, for the duration of the term of the Note, on the following terms and conditions.

 

I. DEFINITIONS

 

As used in this Agreement:

 

	
a.  

	
“Collateral” means assets described in Exhibit A and all related present and future property and assets of the Debtor, receivables and their proceeds, all inventory of the Collateral and their proceeds and all equipment and its proceeds.

 

	
b.  

	
“Debtor” means the owner of the Collateral.

 

	
c.  

	
“Indebtedness” means Debtor’s Obligations, Obligations representing the purchase price of property other than accounts payable arising in connection with the purchase of inventory on terms customary in the trade, and Obligations under leases that would be capitalized in accordance with generally accepted accounting principles.

 

	
d.  

	
“Lien” means any security interest, mortgage, pledge, lien, attachment, claim, charge, encumbrance, agreement retaining title, or lessor’s interest covering the Collateral.

 

	
e.  

	
“Obligations” means existing and future Indebtedness and liability of Debtor to Secured Party, including attorneys’ fees incurred by Secured Party in enforcing this Agreement or collecting payment under it.

 

	
f.  

	
“Potential Default” means an event or omission that would be a default under this Agreement or any other document evidencing or creating security for the Obligation, except for the passage of time or the giving of notice.

 

II. GRANT OF SECURITY INTEREST / RELEASE OF RED ROCK

 

Debtor grants Secured Party a security interest in the Collateral to secure payment of the Obligations.  Secured Party hereby releases Red Rock from its security interest in Red Rock pursuant to that certain Security Agreement dated April 20, 2011, between Red Rock and Secured Party.

 

  

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III. DEBTOR’S COVENANTS

 

Debtor promises:

 

	
a.  

	
To pay the Obligations to Secured Party when they are due;

 

	
b.  

	
To pay all expenses, including attorneys’ fees, incurred by Secured Party in the perfection, preservation, realization, enforcement, and exercise of its rights under this Agreement;

 

	
c.  

	
To indemnify Secured Party against loss of any kind, including reasonable attorneys’ fees, caused to Secured Party by reason of its interest in the Collateral;

 

	
d.  

	
To conduct Debtor’s business efficiently and without voluntary interruption;

 

	
e.  

	
To preserve all rights, privileges, and franchises held by Debtor’s business;

 

	
f.  

	
To keep Debtor’s business property in good repair;

 

	
g.  

	
To pay all taxes when due;

 

	
h.  

	
To give Secured Party notice of any litigation that may have a material adverse effect on the business;

 

	
i.  

	
Not to change the name or place of business, or to use a fictitious business name, without first obtaining the agreement of Secured Party in writing;

 

	
j.  

	
Not to sell, lease, transfer, or otherwise dispose of the Collateral;

 

	
k.  

	
Not to permit Liens on the Collateral, except existing Liens, current tax Liens, and purchase-money Liens;

 

	
l.  

	
Not to use the Collateral for any unlawful purpose or in any way that would void any effective insurance;

 

	
m.  

	
To permit Secured Party, its representatives, and its agents to inspect the Collateral at any time, and to make copies of records pertaining to it, at reasonable times at Secured Party’s request;

 

	
n.  

	
To perform all acts necessary to maintain, preserve, and protect the Collateral;

 

	
o.  

	
Not to move the Collateral from the locations where it is now situated without first obtaining Secured Party’s agreement in writing;

 

	
p.  

	
To notify Secured Party promptly in writing of any default, Potential Default, or any development that might have a material adverse effect on the Collateral;

 

	
q.  

	
To execute and deliver to Secured Party all financing statements and other documents that Secured Party requests, in order to maintain a first perfected security interest in the Collateral;

 

  

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r.  

	
To furnish Secured Party the reports relating to the Collateral at Secured Party’s request;

 

	
s.  

	
To receive and use reasonable diligence in collecting the proceeds, and to deliver the proceeds required to be delivered by this Agreement promptly to Secured Party;

 

	
t.  

	
Not to commingle the proceeds with other property or proceeds;

 

	
u.  

	
To keep complete and accurate records of the proceeds, in accordance with generally accepted accounting principles; and

 

	
v.  

	
To provide any service and perform any other acts necessary to keep the Collateral free and clear of defenses, rights of set-off, and counterclaims.

 

IV. APPOINTMENT OF ATTORNEY-IN-FACT

 

Debtor hereby appoints Reno Rolle or any other person whom Secured Party may designate, as Debtor’s attorney-in-fact, with the following powers:

 

	
a.  

	
To perform any of Debtor’s Obligations under this Agreement in Debtor’s name or otherwise;

 

	
b.  

	
To give notice of Debtor’s right to payment, to enforce that right, and to make extension agreements with respect to it;

 

	
c.  

	
To release persons liable on rights to payment, to compromise disputes with those persons, and to surrender security, all as Secured Party determines in its sole discretion when acting in good faith based on information known to it when it acts;

 

	
d.  

	
To prepare and file financing statements, continuation statements, statements of assignment, termination statements, and the like, as necessary to perfect, protect, preserve or release Secured Party’s interest in the Collateral;

 

	
e.  

	
To endorse Debtor’s name on instruments, documents, or other forms of payment or security that come into Secured Party’s possession;

 

	
f.  

	
To take cash in payment of Obligations;

 

	
g.  

	
To verify information concerning rights to payment by inquiry in its own name or in a fictitious name; and

 

	
h.  

	
To prepare, execute, and deliver insurance forms; to adjust insurance claims; to receive payment under insurance claims; and to apply such payment to reduce Debtor’s Obligation.

 

V. REPRESENTATIONS OF DEBTOR

 

Debtor covenants, warrants, and represents as follows:

 

  

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a.  

	
Debtor is a limited liability company duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization, and has all necessary authority to conduct its business wherever it is conducted.

 

	
b.  

	
Debtor has been authorized to execute and deliver this Agreement.  The Agreement is a valid and binding Obligation of Debtor.  The Agreement creates a perfected, first priority security interest enforceable against the Collateral in which Debtor now has rights, and will create a perfected, first priority security interest enforceable against the Collateral in which Debtor later acquires rights, when Debtor acquires those rights.

 

	
c.  

	
Neither the execution and delivery of this Agreement, nor the taking of any action in compliance with it, will (1) violate or breach any law, regulation, rule, order, or judicial action binding on Debtor, any agreement to which Debtor is a party, Debtor’s articles of organization or bylaws; or (2) result in the creation of a Lien against the Collateral except that created by this Agreement.

 

	
d.  

	
No default or Potential Default exists.

 

	
e.  

	
Debtor owns and has possession of the Collateral, subject only to those Liens and adverse claims identified in the schedule attached as Exhibit A.

 

VI. TERMINATION OF THIS AGREEMENT

 

This Agreement will continue in effect even though from time to time there may be no outstanding Obligations or commitments under this Agreement.  The Agreement will terminate when (a) Debtor completes performance of all Obligations to Secured Party, including without limitation the repayment of all Indebtedness by Debtor to Secured Party; (b) Secured Party has no commitment that could give rise to an obligation; and (c) Debtor has notified Secured Party in writing of the termination.

 

VII. DEFAULT

 

Debtor will be in default under this Agreement if:

 

	
a.  

	
Debtor fails to pay any installment on the Note when due, or its entire Indebtedness to Secured Party when due, at stated maturity, on accelerated maturity, or otherwise;

 

	
b.  

	
Debtor fails to make any remittances required by this Agreement;

 

	
c.  

	
Debtor commits any breach of this Agreement, or any present or future rider or supplement to this Agreement, or any other agreement between Debtor and Secured Party evidencing the Obligation or securing it;

 

	
d.  

	
Any warranty, representation, or statement, made by or on behalf of Debtor in or with respect to the Agreement, is false;

 

	
e.  

	
The Collateral is lost, stolen, or damaged;

 

	
f.  

	
There is a seizure or attachment of, or a levy on, the Collateral; or

 

  

4

  

 

	
g.  

	
Debtor ceases operations, is dissolved, terminates its existence, does or fails to do anything that allows Obligations to become due before their stated maturity, or becomes insolvent or unable to meet its debts as they mature.

 

VIII. EVENT OF DEFAULT

 

When an event of default occurs, Secured Party may:

 

	
a.  

	
Declare the Obligations immediately due and payable without demand, presentment, protest, or notice to Debtor, all of which Debtor expressly waives;

 

	
b.  

	
Terminate any obligation to make future advances;

 

	
c.  

	
Exercise all rights and remedies available to a secured creditor after default, including but not limited to the rights and remedies of secured creditors under the California Uniform Commercial Code; and/or

 

	
d.  

	
Perform any of Debtor’s Obligations under this Agreement for Debtor’s account.  Any money expended or Obligations incurred in doing so, including reasonable attorneys’ fees and interest at the highest rate permitted by law, will be charged to Debtor and added to the Obligation secured by this Agreement.

 

	
e.  

	
Foreclose on the Collateral, by seizure and disposition of the Collateral.  Debtor must:

 

	 	
(1) Assemble the Collateral and make it and all records relating to it available to Secured Party as Secured Party directs.

 

	 	
(2) Allow Secured Party, its representatives, and its agents to enter the premises where all or any part of the Collateral, the records, or both may be, and remove any or all of it.

 

	
f.  

	
For the avoidance of doubt, In no event shall Reno Rolle or Todd Wiseman be held personally liable or accountable to the Secured Party for any indebtedness, liability and or obligations evidenced by or incurred under the terms of this Assumed and Amended Security Agreement and the related Share Exchange Agreement, the Asset Assignment Agreement, the Assumption of Note and Amended Secured Promissory Note and or any other agreements made an entered into in connection with the same.

 

IX. NOTICES

 

Notices under this Agreement are considered to be served three (3) days after they are deposited by international courier, fees prepaid, addressed to the Debtor at 6019 Olivas Park Drive, Suite C, Ventura, CA  93003.

 

X. MISCELLANEOUS PROVISIONS

 

	
a.  

	
Debtor will pay all costs and expenses of collection, including reasonable attorneys’ fees.

 

  

5

  

 

	
b.  

	
No waiver by Secured Party of any breach or default will be a waiver of any breach or default occurring later.  A waiver will be valid only if it is in writing and signed by Secured Party.

 

	
c.  

	
Debtor’s representations and warranties made in this Agreement will survive its execution, delivery, and termination.

 

	
d.  

	
This Agreement will bind and benefit the successors and assignees of the Parties, but Debtor may not assign its rights under the Agreement without Secured Party’s prior written consent.

 

	
e.  

	
This contract will be governed by the laws of the state of California, without regard to the application of principles of conflict of laws.

 

	
f.  

	
This Agreement is the entire agreement, and supersedes any prior agreement or understandings, between Secured Party and Debtor relating to the Collateral.

 

	
g.  

	
In the event any dispute surrounding this Agreement shall arise between the Parties, it shall be resolved by binding arbitration in the Republic of Costa Rica.  The language for any such arbitration proceeding shall be English.

 

IN WITNESS WHEREOF, Debtor and Secured Party have caused this Assumed and Amended Security Agreement to be duly executed by a duly authorized officer as of the date first indicated above.

 

	DEBTOR	 	 	SECURED PARTY
	 
	REVOLUTION OILS, LLC	 	 	CRISNIC FUND, SA
	aka RED ROCK DIRECT LLC	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	By:	
/s/ 

	 
	 	
Attorney-in-Fact

	 	 	
Anthony Gentile

	 
	 	
Title 

	 	 	
President

	 

 

  

6

  

EXHIBIT A

 

Any and all present and future assets and property of REVOLUTION OILS, LLC, aka RED ROCK DIRECT, LLC; (i) any and all property, plant and equipment, any inventory,  including but not limited to goods now or hereafter held for sale or lease or furnished or to be furnished under a contract of service or that are raw materials, work in progress or materials used or consumed in a business or possession, or finished goods; (ii) all goods now or hereafter intended to be used in any business of the Debtor ( and which are not inventory) including but not limited to, fixtures, equipment, machinery, vehicles and other tangible personal property, whether described herein or not; (iii) all debts, demands and choses in action, which are now due and owing or accruing due or which may hereafter become due, owing or accruing to the Debtor; (iv) all chattel paper now or hereafter owned by the Debtor; (v) all warehouse receipts, bills of lading, and other documents of title, whether negotiable or non negotiable, now or hereafter owned by the Debtor; (vi)  with respect to all Debtor’s personal property, all books, accounts, invoices, letters, papers, documents, and other records in any form evidencing or relating thereto, and all contracts, securities, instruments and other rights or benefits in respect thereof; (vii) all shares, stock, warrants, bonds, debentures, debenture stock or other securities now or hereafter owned by the Debtor; (viii) with respect to all personal property owned by Debtor, all substitutions and replacements, thereof, increases, additions and accessions thereto and any interest of the Debtor therein; (ix) Debtor’s direct response television commercial (hosted by Suzanne Somers) and book currently entitled The Anti-Aging Miracle by Dr. James William Forsythe, M.D., H.M.D (the “Somers Project”), and any and all proceeds derived therefrom, including any health supplement sales in  connection therewith; (x) The feature length film entitled “Endless Bummer”; (xi) the book currently entitled Sleep and Grow Young  by Dr. James William Forsythe, M.D; (xii) the Management Agreement with Mike Flynt; and (xiii) with respect to all personal property of the Debtor, property in any form or fixtures derived directly or indirectly from any dealing with such property, that indemnifies or compensates for such property destroyed or damaged.

 

 

 

 

 

 

7

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