Document:

Exhibit 10.2

 

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT
is made and entered into as of December 26, 2018, by and between APPLIANCESMART HOLDINGS LLC, a Nevada limited liability company
("Debtor"), and APPLIANCE RECYCLING CENTERS OF AMERICA, INC., a Minnesota corporation ("Secured Party"),
whose addresses are set forth below.

 

RECITALS

 

A.       Debtor
is indebted to Secured Party pursuant to the terms of that certain Amended and Restated Secured Promissory Note dated as of December
26, 2018 ("Note").

 

B.       Debtor
has agreed to grant Secured Party a security interest in certain assets to secure, among other things, Debtor's obligations under
the Note.

 

NOW, THEREFORE,
in consideration of the credit extended under the Note and for the purpose of securing Debtor's obligations to Secured Party under
the Note, the parties agree as follows:

 

1.       Grant
of Security Interest:  Collateral.   To secure the Secured Obligations described in Section 2, the
Debtor hereby grants to the Secured Party a security interest ("Security Interest") in the property described
on Exhibit A attached hereto ("Collateral").

 

2.       Secured
Obligations.  The following obligations are secured by this Agreement (collectively referred to as the "Secured
Obligations"):

 

(a)       All
obligations of Debtor to Secured Party under the Note;

 

(b)       Any
and all sums advanced by the Secured Party in order to preserve the Collateral or to perfect its security interest in the Collateral;
and

 

(c)       Upon
the occurrence and continuation of an Event of Default (as defined below), all reasonable expenses, including attorneys' fees and
court costs, incurred by the Secured Party in (i) any proceeding to enforce the collection of the Secured Obligations, (ii) retaking,
holding or otherwise disposing of or realizing on the Collateral, or (iii) the exercise of any of its rights under this Agreement
or applicable law.

 

3.       Debtor's
Representations, Warranties and Covenants. Debtor represents, warrants and covenants that:

 

(a)       Debtor
has title to the Collateral, free of all liens and encumbrances, except the Security Interest created hereby, as the same may hereafter
be amended from time to time. Debtor has full corporate power and authority to execute this Security Agreement, to perform Debtor's
obligations hereunder, and to subject the Collateral to the Security Interest created hereby.

 

(b)       Debtor
will, at any time or times hereafter, execute such financing statements and other instruments and perform such other acts as the
Secured Party may reasonably request in order to establish, maintain, perfect and enforce Secured Party's valid and perfected Security
Interest in the Collateral and its rights under this Agreement.

 

(c)       Except
in the ordinary course of Debtor's business, Debtor will not sell, transfer, lease, hypothecate, pledge or otherwise dispose of
any of its rights or interests in the Collateral without the prior written consent of the Secured Party.

 

(d)       Debtor
will keep the Collateral in good condition, ordinary wear and tear excepted, and insured against such risks and in such amounts
consistent with Debtor's past practice, with Secured Party to be named loss payee on all insurance on the Collateral. From time
to time Debtor shall furnish to Secured Party, upon request, appropriate evidence of the carrying of such insurance.

 

(e)       Debtor
will use the Collateral in a lawful manner consistent with this agreement and with the terms and conditions of any policy of insurance
thereon.

 

 

 

    	 	1	 

     

    

 

(f)       Following
the occurrence of an Event of Default, the Secured Party, in the name of the Debtor, shall have the authority but shall not be
obligated to take any action which the Secured Party may deem necessary or desirable in order to realize on the Collateral.

 

(g)       Debtor
will forward directly to the Secured Party any and all written material notices, agreements, or documents of any kind or nature
received by Debtor on account of any of the Collateral.

 

4.Events of
Default.The occurrence of any of the following events shall constitute an "Event of Default" under this
Security Agreement:

 

(a)       The
occurrence of an event of default under the terms of any of the Secured Obligations, including, without limitation, nonpayment
of any of the Secured Obligations when due, whether by acceleration or otherwise;

 

(b)       The
nonperformance of any covenant, or material breach of any representation or warranty, made by Debtor in the Note or this Agreement;

 

(c)       Except
in the ordinary course of Debtor's business, the sale, lease or other disposition of Debtor's interests or rights in the Collateral;

 

(d)       Without
the prior consent of Secured Party, the creation of any encumbrance upon the Collateral or the making of any levy, judicial seizure
or attachment thereof or thereon; or

 

(e)       The
appointment of a receiver for any part of the property of Debtor, the making by Debtor of an assignment for the benefit of creditors
or the initiation by or against Debtor of any proceeding under the Federal Bankruptcy Code or any state insolvency law.

 

5.       Remedies
Upon Event of Default.  Upon the occurrence of an Event of Default and for so long as such Event of Default is continuing,
in addition to all the rights and remedies provided under applicable law, the Secured Party may at its option and without demand
and upon written notice to Debtor, declare all or any part of the unmatured Secured Obligations immediately due and payable, and
the Secured Party may exercise, in addition to the rights and remedies granted hereby, all rights and remedies of a secured party
under the Uniform Commercial Code or any other applicable law. The Secured Party may, at its option, dispose of the Collateral
by public or private sale if Secured Party has given notice to Debtor of the intended disposition in accordance with the provisions
of Section 6 hereof and the Uniform Commercial Code and other applicable law. The Debtor agrees, upon Secured Party's request,
to use commercially reasonable efforts to cooperate with the Secured Party and do all things reasonably necessary to enable Secured
Party to sell the Collateral in compliance with all applicable laws and regulations. Debtor shall pay to Secured Party any deficiency
remaining after such application and any excess proceeds of such sale shall be paid over by Secured Party to Debtor. The bringing
of an action or an entry of judgment against the Debtor shall not bar the Secured Party's right to repossess any or all of the
Collateral.

 

6.       Miscellaneous.
This Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly
in a writing signed by Secured Party. A waiver signed by Secured Party shall be effective only in the specific instance and for
the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of Secured Party's
rights or remedies. All rights and remedies of Secured Party shall be cumulative and may be exercised singularly or concurrently,
at Secured Party's option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to Debtor shall be deemed sufficiently given if delivered
or mailed by registered or certified mail, postage prepaid, or, except to the extent required by applicable law, sent by facsimile
or electronic mail to Debtor at its address set forth below or at the most recent address shown on Secured Party's records. Notices
sent by facsimile shall be deemed to have been given when sent, and notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient. All required notices
to Debtor pertaining to any intended disposition of Collateral or other actions shall be deemed timely if given 10 days prior to
the action described in the notice. Secured Party's duty of care with respect to Collateral in its possession (as imposed by law)
shall be deemed fulfilled if Secured Party exercises reasonable care in physically safekeeping such Collateral. Debtor will reimburse
Secured Party for all expenses (including reasonable attorneys' fees and legal expenses) incurred by Secured Party in the protection,
defense, or enforcement of the Security Interest, including expenses incurred in any litigation or bankruptcy or insolvency proceedings.
This Agreement shall be binding upon and inure to the benefit of Debtor and Secured Party and their respective heirs, representatives,
successors and assigns and shall take effect when signed by Debtor and delivered to Secured Party. Except to the extent otherwise
required by law, this Agreement shall be governed by the internal laws of Minnesota and, unless the context otherwise requires,
all terms used herein which are defined in the Uniform Commercial Code, as in effect in Minnesota, shall have the meanings therein
stated. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be given effect, and this Agreement shall be construed
as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations
and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation
and payment of the Secured Obligations.

 

 

[Signatures on following page]

 

 

 

    	 	2	 

     

    

 

	
         

        ADDRESSES:

         

         

        325 E. Warm Springs Road

        Suite 102

        Las Vegas, NV 89119

        Attention: Jon Isaac

         

         

        with a copy to:

         

        Live Ventures Incorporated

        325 E. Warm Springs Road, Suite 102

        Las Vegas, NV 89119

        Attn: Michael J. Stein, Esq.

        Email: mstein@liveventures.com

         

         

         

         

         

         

         

         

        175 Jackson Avenue North

        Suite 102

        Minneapolis, MN 55343

        Attention: Tony Isaac
	
         

        DEBTOR:

         

        APPLIANCESMART HOLDINGS LLC, a Nevada limited
        liability company

         

        By: Live Ventures Incorporated, its sole
        member

         

        By: /s/ Jon Isaac

        Name: Jon Isaac

        Title: President and CEO

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

        SECURED PARTY:

         

        APPLIANCE RECYCLING CENTERS OF AMERICA,
        INC., a Minnesota corporation

         

         

        By: /s/ Tony Isaac

        Name: Tony Isaac

        Title: Chief Executive Officer

         

         

 

 

 

    	 	3	 

     

    

 

Exhibit A

 

Description of Collateral

 

All of the personal
property and Fixtures of the Debtor, including without limitation the following, whether now owned or hereafter arising or acquired:

 

(a)             
Accounts, including all other rights and interests (including all liens and security interests) that the Debtor may at any
time have by law or agreement against any Account Debtor or other obligor obligated to make any such payment or against any of
the property of such Account Debtor or other obligor;

 

(b)            
Equipment and Fixtures, including all accessories, parts and other property at any time affixed thereto or used in connection
therewith and all substitutions and replacements thereof;

 

(c)             
Inventory, including goods that are returned, repossessed, stopped in transit or which otherwise come into the possession
of the Debtor;

 

(d)            
General Intangibles, including payment intangibles, inventions, designs, patents, patent applications, design patents, design
patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, rights to indemnification, rights under warranties, all domain names, together with
all contracts, agreements, licenses and registrations relating to such domain names, and Commercial Tort Claims, if any;

 

(e)             
Chattel Paper, Instruments and Documents;

 

(f)             
Investment Property;

 

(g)            
Deposit Accounts;

 

(h)            
Letter-of-Credit rights;

 

(i)              
Supporting Obligations;

 

(j)              
Intellectual Property Collateral;

 

(k)            
books, correspondence, credit files, records, invoices, manuals, service records and programs, other papers and documents,
computer records, runs, software, systems, procedures, disks, tapes and other storage media relating to any of the Collateral,
including any of the foregoing in the possession or control of any service, consultant, or outside vendor; and

 

(l)              
Proceeds, including all policies, claims to payment under, and proceeds of any and all insurance policies payable to the
Debtor, or on behalf of the Debtor's property, whether or not such policies are issued to or owned by the Debtor and whether or
not the Bank is named as loss payee or additional insured, including any credit insurance.

 

 

    	 	4Exhibit 10.3

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT
is made and entered into as of December 26, 2018, by and between APPLIANCESMART, INC., a Minnesota corporation ("Debtor")
and APPLIANCE RECYCLING CENTERS OF AMERICA, INC., a Minnesota corporation ("Secured Party") whose addresses are
set forth below.

 

RECITALS

 

A.       APPLIANCESMART
HOLDINGS, LLC, a Nevada limited liability company ("Holdings"), is indebted to Secured Party pursuant to the terms
of that certain Amended and Restated Secured Promissory Note dated as of December 26, 2018 issued by Holdings in favor of Secured
Party ("Note"). Debtor guaranteed the repayment of Holdings' obligations under the Note pursuant to that certain
Agreement and Guaranty by Debtor in favor of Secured Party dated as of December 26, 2018 (the "Guaranty"). Debtor
is a wholly-owned subsidiary of Holdings.

 

B.       Debtor
has agreed to grant Secured Party a security interest in certain assets to secure, among other things, Debtor's obligations under
the Guaranty.

 

NOW, THEREFORE,
in consideration of the credit extended under the Note and for the purpose of securing Debtor's obligations to Secured Party under
the Guaranty, the parties agree as follows:

 

1.       Grant
of Security Interest:  Collateral.  To secure the Secured Obligations described in Section 2, the
Debtor hereby grants to the Secured Party a security interest ("Security Interest") in the property described
on Exhibit A attached hereto ("Collateral").

 

2.       Secured
Obligations.  The following obligations are secured by this Agreement (collectively referred to as the "Secured
Obligations"):

 

(a)       All
obligations of Holdings under the Note and all obligations of Debtor to Secured Party under the Guaranty;

 

(b)       Any
and all sums advanced by the Secured Party in order to preserve the Collateral or to perfect its security interest in the Collateral;
and

 

(c)       Upon
the occurrence and during the continuation of an Event of Default (as defined below), all reasonable expenses, including attorneys'
fees and court costs, incurred by the Secured Party in (i) any proceeding to enforce the collection of the Secured Obligations,
(ii) retaking, holding or otherwise disposing of or realizing on the Collateral, or (iii) the exercise of any of its rights under
this Agreement or applicable law.

 

3.       Debtor's
Representations, Warranties and Covenants. Debtor represents, warrants and covenants that:

 

(a)       Debtor
has title to the Collateral, free of all liens and encumbrances, except the Security Interest created hereby, as the same may hereafter
be amended from time to time. Debtor has full corporate power and authority to execute this Security Agreement, to perform Debtor's
obligations hereunder and to subject the Collateral to the Security Interest created hereby.

 

(b)       Debtor
will, at any time or times hereafter, execute such financing statements and other instruments and perform such other acts as the
Secured Party may reasonably request in order to establish, maintain, perfect and enforce Secured Party's valid and perfected Security
Interest in the Collateral and its rights under this Agreement.

 

(c)       Except
in the ordinary course of Debtor's business, Debtor will not sell, transfer, lease, hypothecate, pledge or otherwise dispose of
any of its rights or interests in the Collateral without the prior written consent of the Secured Party.

 

 

 

    	 	1	 

     

    

 

(d)       Debtor
will keep the Collateral in good condition, ordinary wear and tear excepted, and insured against such risks and in such amounts
consistent with Debtor's past practice, with Secured Party to be named loss payee on all insurance on the Collateral. From time
to time Debtor shall furnish to Secured Party, upon request, appropriate evidence of the carrying of such insurance.

 

(e)       Debtor
will use the Collateral in a lawful manner consistent with this agreement and with the terms and conditions of any policy of insurance
thereon.

 

(f)       Following
the occurrence of an Event of Default, the Secured Party, in the name of the Debtor, shall have the authority but shall not be
obligated to take any action which the Secured Party may deem necessary or desirable in order to realize on the Collateral.

 

(g)       Debtor
will forward directly to the Secured Party any and all written material notices, agreements or documents of any kind or nature
received by Debtor on account of any of the Collateral.

 

4.Events of
Default.The occurrence of any of the following events shall constitute an "Event of Default" under this
Security Agreement:

 

(a)       The
occurrence of an event of default under the terms of any of the Secured Obligations, including, without limitation, nonpayment
of any of the Secured Obligations when due, whether by acceleration or otherwise;

 

(b)       The
nonperformance of any covenant, or material breach of any representation or warranty, made by Debtor in the Note or this Agreement;

 

(c)       Except
in the ordinary course of Debtor's business, the sale, lease or other disposition of Debtor's interests or rights in the Collateral;

 

(d)       Without
the prior consent of Secured Party, the creation of any encumbrance upon the Collateral or the making of any levy, judicial seizure
or attachment thereof or thereon; or

 

(e)       The
appointment of a receiver for any part of the property of Debtor, the making by Debtor of an assignment for the benefit of creditors
or the initiation by or against Debtor of any proceeding under the Federal Bankruptcy Code or any state insolvency law.

 

5.       Remedies
Upon Event of Default.  Upon the occurrence of an Event of Default for so long as such Event of Default is continuing,
in addition to all the rights and remedies provided under applicable law, the Secured Party may at its option and without demand
and upon written notice to Debtor, declare all or any part of the unmatured Secured Obligations immediately due and payable, and
the Secured Party may exercise, in addition to the rights and remedies granted hereby, all rights and remedies of a secured party
under the Uniform Commercial Code or any other applicable law. The Secured Party may, at its option, dispose of the Collateral
by public or private sale if Secured Party has given notice to Debtor of the intended disposition in accordance with the provisions
of Section 6 hereof and the Uniform Commercial Code and other applicable law. The Debtor agrees, upon Secured Party's request,
to use commercially reasonable efforts to cooperate with the Secured Party and do all things reasonably necessary to enable Secured
Party to sell the Collateral in compliance with all applicable laws and regulations. Debtor shall pay to Secured Party any deficiency
remaining after such application and any excess proceeds of such sale shall be paid over by Secured Party to Debtor. The bringing
of an action or an entry of judgment against the Debtor shall not bar the Secured Party's right to repossess any or all of the
Collateral.

 

6.       Miscellaneous.
This Agreement can be waived, modified, amended, terminated or discharged, and the Security Interest can be released, only explicitly
in a writing signed by Secured Party. A waiver signed by Secured Party shall be effective only in the specific instance and for
the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of Secured Party's
rights or remedies. All rights and remedies of Secured Party shall be cumulative and may be exercised singularly or concurrently,
at Secured Party's option, and the exercise or enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to Debtor shall be deemed sufficiently given if delivered
or mailed by registered or certified mail, postage prepaid, or, except to the extent required by applicable law, sent by facsimile
or electronic mail, to Debtor at its address set forth below or at the most recent address shown on Secured Party's records. Notices
sent by facsimile shall be deemed to have been given when sent, and notices and other communications sent to an e-mail address
shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient. All required notices
to Debtor pertaining to any intended disposition of Collateral or other actions shall be deemed timely if given 10 days prior to
the action described in the notice. Secured Party's duty of care with respect to Collateral in its possession (as imposed by law)
shall be deemed fulfilled if Secured Party exercises reasonable care in physically safekeeping such Collateral. Debtor will reimburse
Secured Party for all expenses (including reasonable attorneys' fees and legal expenses) incurred by Secured Party in the protection,
defense, or enforcement of the Security Interest, including expenses incurred in any litigation or bankruptcy or insolvency proceedings.
This Agreement shall be binding upon and inure to the benefit of Debtor and Secured Party and their respective heirs, representatives,
successors and assigns and shall take effect when signed by Debtor and delivered to Secured Party. Except to the extent otherwise
required by law, this Agreement shall be governed by the internal laws of Minnesota and, unless the context otherwise requires,
all terms used herein which are defined in the Uniform Commercial Code, as in effect in Minnesota, shall have the meanings therein
stated. If any provision or application of this Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be given effect, and this Agreement shall be construed
as if the unlawful or unenforceable provision or application had never been contained herein or prescribed hereby. All representations
and warranties contained in this Agreement shall survive the execution, delivery and performance of this Agreement and the creation
and payment of the Secured Obligations.

 

 

[Signatures on following page]

 

 

 

    	 	2	 

     

    

 

	
         

        ADDRESSES:

         

         

        325 E. Warm Springs Road

        Suite 102

        Las Vegas, NV 89119

        Attention: Jon Isaac

         

         

        with a copy to:

         

        Live Ventures Incorporated

        325 E. Warm Springs Road, Suite 102

        Las Vegas, NV 89119

        Attn: Michael J. Stein, Esq.

        Email: mstein@liveventures.com

         

         

         

         

         

         

         

         

         

        175 Jackson Avenue North

        Suite 102

        Minneapolis, MN 55343

        Attention: Tony Isaac
	
         

        DEBTOR:

         

        APPLIANCESMART INC., a Minnesota corporation

         

         

        By: /s/ Jianne Demeroutis

        Name: Jianne Demeroutis

        Title: President

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

         

        SECURED PARTY:

         

        APPLIANCE RECYCLING CENTERS OF AMERICA,
        INC., a Minnesota corporation

         

         

        By: /s/ Tony Isaac

        Name: Tony Isaac

        Title: Chief Executive Officer

         

         

         

         

 

 

 

 

    	 	3	 

     

    

Exhibit A

 

Description of Collateral

 

All of the personal
property and Fixtures of the Debtor, including without limitation the following, whether now owned or hereafter arising or acquired:

 

(a)             
Accounts, including all other rights and interests (including all liens and security interests) that the Debtor may at any
time have by law or agreement against any Account Debtor or other obligor obligated to make any such payment or against any of
the property of such Account Debtor or other obligor;

 

(b)            
Equipment and Fixtures, including all accessories, parts and other property at any time affixed thereto or used in connection
therewith and all substitutions and replacements thereof;

 

(c)             
Inventory, including goods that are returned, repossessed, stopped in transit or which otherwise come into the possession
of the Debtor;

 

(d)            
General Intangibles, including payment intangibles, inventions, designs, patents, patent applications, design patents, design
patent applications, trademarks, trademark applications, trade names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, rights to indemnification, rights under warranties, all domain names, together with
all contracts, agreements, licenses and registrations relating to such domain names, and Commercial Tort Claims, if any;

 

(e)             
Chattel Paper, Instruments and Documents;

 

(f)             
Investment Property;

 

(g)            
Deposit Accounts;

 

(h)            
Letter-of-Credit rights;

 

(i)              
Supporting Obligations;

 

(j)              
Intellectual Property Collateral;

 

(k)            
books, correspondence, credit files, records, invoices, manuals, service records and programs, other papers and documents,
computer records, runs, software, systems, procedures, disks, tapes and other storage media relating to any of the Collateral,
including any of the foregoing in the possession or control of any service, consultant, or outside vendor; and

 

(l)              
Proceeds, including all policies, claims to payment under, and proceeds of any and all insurance policies payable to the
Debtor, or on behalf of the Debtor's property, whether or not such policies are issued to or owned by the Debtor and whether or
not the Bank is named as loss payee or additional insured, including any credit insurance.

 

 

 

    	 	4

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