Document:

Exhibit 10.16

 

SECURITY AGREEMENT

DOCUMENT SA-03222012

 

This SECURITY AGREEMENT is made on this
22nd day of March, 2012 between Focus Gold Corporation, a Nevada corporation (the “Company” or the “Debtor”),
and JMJ Financial, its Principal, or its Assignees (the “Secured Party”).

 

	Loan Number	Secured Convertible Promissory Note Document A-03222012
	 	 
	Debtor(s):	
        Focus Gold Corporation

        

	 	 
	Borrower:	Focus Gold Corporation
	 	 
	Secured Party:	JMJ Financial / Its Principal, or Its Assignees
	 	 
	Date:	March 22, 2012
	 	 
	Note Amount	$2,110,000 (two million one hundred ten thousand US dollars)

 

 

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The parties hereto hereby agree as follows:

 

1.Definitions.
Unless otherwise specified, all terms used in this Agreement will have the meanings ascribed to them under the Official Text of
the Uniform Commercial Code, as it may be amended from time to time (“UCC”).

 

(a)“Collateral”
means 25% of Debtor’s investment property and general intangibles respecting ownership and/or other equity interests in each
Focus Celtic Gold Corporation, including, without limitation, the shares of capital stock and the other equity interests of Focus
Celtic Gold Corporation (the “Pledged Securities”), , and all certificates representing such shares and/or equity interests
and, in each case, all rights, options, warrants, stock, other securities and/or equity interests that may hereafter be received,
receivable or distributed in respect of, or exchanged for, any of the foregoing and all rights arising under or in connection with
the Pledged Securities, including, but not limited to, all dividends, interest and cash.

 

2.Obligations
Secured. This Agreement secures the payment and performance of: (a) all obligations under a note of even date herewith, with
the loan number set forth above made by Borrower payable to the Secured Party, in the amount set forth above (the “Note”),
including all costs and expenses (including reasonable attorney’s fees), incurred by Secured Party in the administration
and collection of the loan evidenced by the Note; (b) all costs and expenses (including reasonable attorney’s fees), incurred
by Secured Party in the protection, maintenance and enforcement of the security interest hereby granted; (c) all obligations of
Debtor in any other agreement relating to the Note; (d) any modifications, renewals, refinancings, or extensions of the foregoing
obligations; and (e) all other liabilities and obligations of Debtor to Secured Party of every kind and description, direct or
indirect, absolute or contingent, due or to become due now existing or hereafter arising. The Note and all other obligations secured
hereby are collectively called the “Obligations.”

 

3.Grant of Security
Interest. As an inducement for the Secured Party to extend the loan evidenced by the Note and to
secure the complete and timely payment, performance and discharge in full, as the case may be, of all of the Obligations, the Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the Secured Party a security interest in and to, and
a lien upon and a right of set-off against all of their respective right, title and interest of whatsoever kind and nature in and
to, the Collateral, except that the security interest in the Pledged Securities shall expire on March 22, 2013.

 

4.Restrictions
on Collateral Transfer. Debtor may not sell, lease, license or otherwise transfer (including by granting security interests,
liens, or other encumbrances in) all or any part of the Collateral or Debtor’s interest in the Collateral without Secured
Party’s written or electronically communicated approval.

 

5.Maintenance
and Location of Collateral; Inspection; Insurance. Debtor must promptly notify Secured Party by written or electronic communication
of any change in location of the Collateral, specifying the new location. Debtor hereby grants to Secured Party the right to inspect
the Collateral at all reasonable times and upon reasonable notice.

 

6.Changes to
Debtor’s Legal Structure, Place of Business, Jurisdiction of Organization, or Name. Debtor must notify Secured Party
by written or electronic communication not less than 30 days before taking any of the following actions: (a) changing or reorganizing
the type of organization or form under which it does business; (b) moving, changing its place of business or adding a place of
business; (c) changing its jurisdiction of organization; or (d) changing its name. Debtor will pay for the preparation and filing
of all documents Secured Party deems necessary to maintain, perfect and continue the perfection of Secured Party’s security
interest in the event of any such change.

 

7.Perfection
of Security Interest.

 

(a)Debtor
consents, without further notice, to Secured Party’s filing or recording of any documents necessary to perfect, continue,
amend or terminate its security interest. Upon request of Secured Party, Debtor must sign or otherwise authenticate all documents
that Secured Party deems necessary at any time to allow Secured Party to acquire, perfect, continue or amend its security interest
in the Collateral. Debtor will pay the filing and recording costs of any documents relating to Secured Party’s security interest.
Debtor ratifies all previous filings and recordings, including financing statements and notations on certificates of title.

 

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(b)At
any time and from time to time that any Collateral consists of instruments, certificated securities or other items that require
or permit possession by the secured party to perfect the security interest created hereby, the
Debtor shall deliver such Collateral to the Secured Party.

 

(c)If
there is any investment property or deposit account included as Collateral that can be perfected by “control” through
an account control agreement, Debtor shall cause such an account control agreement, in form and substance in each case satisfactory
to the Secured Party, to be entered into and delivered to the Secured Party.

 

(d)Debtor
hereby authorizes the Secured Party to file one or more financing statements under the UCC with respect to the security interests
with the proper filing and recording agencies in any jurisdiction deemed proper by it. Debtor shall promptly execute and deliver
to the Secured Party such further deeds, mortgages, assignments, security agreements, financing statements or other instruments,
documents, certificates and assurances and take such further action as the Secured Party may from time to time request and may
in its sole discretion deem necessary to perfect, protect or enforce the Secured Party’s security interest in the Collateral.

 

8.Default.
The following events constitute a default under this Agreement: (a) Debtor fails to pay, perform or otherwise comply with any provision
of this Agreement, the Note, or any other agreement related to the Note or this Agreement; (b) Debtor makes any materially false
representation, warranty or certification in, or in connection with, this Agreement, the Note, or any other agreement related to
the Note or this Agreement; (c) Another secured party or judgment creditor exercises its rights against the Collateral; or (d)
An event defined as a “default” under the Obligations occurs.

 

9.Rights
and Remedies Upon Default. 

 

(a)Upon
default and at any time thereafter, the Secured Party shall have the right to exercise all of the remedies
conferred hereunder and under the Note, and the Secured Party shall have all the rights and remedies of a secured party under the
UCC. Without limitation, the Secured Party shall have the following rights and powers:

 

(i)The
Secured Party shall have the right to take possession of the Collateral and, for that purpose, enter, with the aid and assistance
of any person, any premises where the Collateral, or any part thereof, is or may be placed and remove the same, and Debtor shall
assemble the Collateral and make it available to the Secured Party at places which the Secured Party shall reasonably select, whether
at Debtor's premises or elsewhere, and make available to the Secured Party, without rent, all of Debtor’s respective premises
and facilities for the purpose of the Secured Party taking possession of, removing or putting the Collateral in saleable or disposable
form.

 

(ii)Upon
notice to the Debtor by Secured Party, all rights of Debtor to exercise the voting and other consensual rights that it would otherwise
be entitled to exercise and all rights of Debtor to receive the dividends and interest which it would otherwise be authorized to
receive and retain, shall cease. Upon such notice, Secured Party shall have the right to receive
any interest, cash dividends or other payments on the Collateral and, at the option of Secured Party, to exercise in such Secured
Party’s discretion all voting rights pertaining thereto. Without limiting the generality of the foregoing, Secured Party
shall have the right (but not the obligation) to exercise all rights with respect to the Collateral as if it were the sole and
absolute owner thereof, including, without limitation, to vote and/or to exchange, at its sole discretion, any or all of the Collateral
in connection with a merger, reorganization, consolidation, recapitalization or other readjustment concerning or involving the
Collateral or Debtor or any of its direct or indirect subsidiaries.

 

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(iii)The
Secured Party shall have the right to assign, sell, lease or otherwise dispose of and deliver all or any part of the Collateral,
at public or private sale or otherwise, either with or without special conditions or stipulations, for cash or on credit or for
future delivery, in such parcel or parcels and at such time or times and at such place or places, and upon such terms and conditions
as the Secured Party may deem commercially reasonable, all without (except as shall be required by applicable statute and cannot
be waived) advertisement or demand upon or notice to Debtor or right of redemption of Debtor, which are hereby expressly waived.
Upon each such sale, lease, assignment or other transfer of Collateral, the Secured Party may, unless prohibited by applicable
law which cannot be waived, purchase all or any part of the Collateral being sold, free from and discharged of all trusts, claims,
right of redemption and equities of Debtor, which are hereby waived and released.

 

(iv)The
Secured Party shall have the right (but not the obligation) to notify any account debtors and any obligors under instruments or
accounts to make payments directly to the Secured Party and to enforce the Debtor’s rights against such account debtors and
obligors.

 

(v)The
Secured Party may (but is not obligated to) direct any financial intermediary or any other person or entity holding any investment
property to transfer the same to the Secured Party or its designee.

 

(b)Debtor
waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party’s
rights and remedies hereunder, including, without limitation, its right following a default to take immediate possession of the
Collateral and to exercise its rights and remedies with respect thereto.

 

10.Security
Interests Absolute. All rights of the Secured Party and all obligations of the Debtor hereunder, shall be absolute and unconditional,
irrespective of: (a) any lack of validity or enforceability of this Agreement, the Note or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the time, manner or place of payment or performance of,
or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from
the Note or any other agreement entered into in connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to departure from any other collateral for, or any guarantee,
or any other security, for all or any of the Obligations; (d) any action by the Secured Party to obtain, adjust, settle and cancel
in its sole discretion any insurance claims or matters made or arising in connection with the Collateral; or (e) any other circumstance
which might otherwise constitute any legal or equitable defense available to Debtor, or a discharge of all or any part of the security
interests granted hereby. Until the Obligations shall have been paid and performed in full, the rights of the Secured Party shall
continue even if the Obligations are barred for any reason, including, without limitation, the running of the statute of limitations
or bankruptcy. Debtor expressly waives presentment, protest, notice of protest, demand, notice of nonpayment and demand for performance.
In the event that at any time any transfer of any Collateral or any payment received by the Secured Party hereunder shall be deemed
by final order of a court of competent jurisdiction to have been a voidable preference or fraudulent conveyance under the bankruptcy
or insolvency laws of the United States, or shall be deemed to be otherwise due to any party other than the Secured Party, then,
in any such event, Debtor’s obligations hereunder shall survive cancellation of this Agreement, and shall not be discharged
or satisfied by any prior payment thereof and/or cancellation of this Agreement, but shall remain a valid and binding obligation
enforceable in accordance with the terms and provisions hereof. Debtor waives all right to require the Secured Party to proceed
against any other person or entity or to apply any Collateral that the Secured Party may hold at any time, or to marshal assets,
or to pursue any other remedy. Debtor waives any defense arising by reason of the application of the statute of limitations to
any obligation secured hereby.

 

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11.Power of
Attorney; Further Assurances.

 

(a)Debtor
authorizes the Secured Party, and does hereby make, constitute and appoint the Secured Party and its officers, agents, successors
or assigns with full power of substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in the name of
the Secured Party or Debtor, to, after the occurrence and during the continuance of a default, (i) endorse any note, checks, drafts,
money orders or other instruments of payment (including payments payable under or in respect of any policy of insurance) in respect
of the Collateral that may come into possession of the Secured Party; (ii) to sign and endorse any financing statement pursuant
to the UCC or any invoice, freight or express bill, bill of lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents relating to the Collateral; (iii) to pay or discharge
taxes, liens, security interests or other encumbrances at any time levied or placed on or threatened against the Collateral; (iv)
to demand, collect, receipt for, compromise, settle and sue for monies due in respect of the Collateral; and (v) generally, at
the option of the Secured Party, and at the expense of the Debtor, at any time, or from time to time, to execute and deliver any
and all documents and instruments and to do all acts and things which the Secured Party deems necessary to protect, preserve and
realize upon the Collateral and the security interests granted therein in order to effect the intent of this Agreement and the
Note all as fully and effectually as the Debtor might or could do; and Debtor hereby ratifies all that said attorney shall lawfully
do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable for the term
of this Agreement and thereafter as long as any of the Obligations shall be outstanding. The designation set forth herein shall
be deemed to amend and supersede any inconsistent provision in the organizational documents or other documents or agreements to
which Debtor is subject or to which Debtor is a party.

 

(b)On
a continuing basis, Debtor will make, execute, acknowledge, deliver, file and record, as the case may be, with the proper filing
and recording agencies in any jurisdiction all such instruments, and take all such action as may reasonably be deemed necessary
or advisable, or as reasonably requested by the Secured Party, to perfect the security interests granted hereunder and otherwise
to carry out the intent and purposes of this Agreement, or for assuring and confirming to the Secured Party the grant or perfection
of a perfected security interest in all the Collateral under the UCC.

 

(c)Debtor
hereby irrevocably appoints the Secured Party as such Debtor’s attorney-in-fact, with full authority in the place and instead
of such Debtor and in the name of such Debtor, from time to time in the Secured Party’s discretion, to take any action and
to execute any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes of this Agreement,
including the filing, in its sole discretion, of one or more financing or continuation statements and amendments thereto, relative
to any of the Collateral without the signature of Debtor where permitted by law, and ratifies all such actions taken by the Secured
Party. This power of attorney is coupled with an interest and shall be irrevocable for the term of this Agreement and thereafter
as long as any of the Obligations shall be outstanding.

 

12.Costs
and Expenses. Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses incurred in connection with any filing
required hereunder, including without limitation, any financing statements pursuant to the UCC, continuation statements, partial
releases and/or termination statements related thereto or any expenses of any searches reasonably required by the Secured Party.
Debtor shall also pay all other claims and charges that in the reasonable opinion of the Secured
Party are reasonably likely to prejudice, imperil or otherwise affect the Collateral or the security interests therein. Debtor
will also, upon demand, pay to the Secured Party the amount of any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Secured Party may incur in connection with the creation, perfection,
protection, satisfaction, foreclosure, collection or enforcement of the security interest and the preparation, administration,
continuance, amendment or enforcement of this Agreement and pay to the Secured Party the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts and agents, which the Secured Party may incur in connection
with (i) the enforcement of this Agreement, (ii) the custody or preservation of, or the sale of, collection from, or other realization
upon, any of the Collateral, or (iii) the exercise or enforcement of any of the rights of the Secured Party under the Note. Until
so paid, any fees payable hereunder shall be added to the principal amount of the Note and shall bear interest at the default rate
provided therein.

 

13.Debtor’s
Certifications. Debtor certifies that: (a) its Name (or Names) as stated above is correct; (b) all Collateral is owned or titled
in the Debtor’s name and not in the name of any other organization or individual; (c) Debtor has the legal authority to grant
the security interest in the Collateral; (d) Debtor’s ownership in or title to the Collateral is free of all adverse claims,
liens, or security interests (unless expressly permitted by Secured Party); (e) none of the Obligations are or will be primarily
for personal, family or household purposes; (f) none of the Collateral is or will be used, or has been or will be bought primarily
for personal, family or household purposes; and (g) Debtor has read and understands the meaning and effect of all terms of this
Agreement.

 

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14.Miscellaneous.

 

(a)No
course of dealing between Debtor and the Secured Party, nor any failure to exercise, nor any delay in exercising, on the part of
the Secured Party, any right, power or privilege hereunder or under the Note shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.

 

(b)All
of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Note or by
any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

(c)This
Agreement, together with the exhibits and schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into this Agreement and the exhibits and schedules hereto.

 

(d)If
any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

 

(e)No
waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

(f)This
Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Debtor may
not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Secured Party (other
than by merger). The Secured Party may assign any or all of its rights under this Agreement to any person to whom it assigns or
transfers any Obligations, provided such transferee agrees in writing to be bound, with respect to the transferred Obligations,
by the provisions of this Agreement that apply to the “Secured Party.”

 

(g)Each
party shall take such further action and execute and deliver such further documents as may be necessary or appropriate in order
to carry out the provisions and purposes of this Agreement.

 

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(h)Except
to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, all questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of Florida, without regard to the principles of conflicts of law thereof. Except to the extent mandatorily
governed by the jurisdiction or situs where the Collateral is located, Debtor agrees that all proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and the Note (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively
in the state courts of Florida or in the federal courts located in Miami-Dade County, in the State of Florida.
Except to the extent mandatorily governed by the jurisdiction or situs where the Collateral is located, Debtor hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts located in Miami-Dade County, in the State of Florida
for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject
to the jurisdiction of any such court or that such proceeding is improper. In the event of any action or proceeding by Secured
Party against Debtor, and only by Secured Party against Debtor, service of copies of summons and/or complaint and/or any other
process which may be served in any such action or proceeding may be made by Secured Party via U.S. Mail, overnight delivery service
such as FedEx or UPS, email, fax, or process server, or by mailing or otherwise delivering a copy of such process to Debtor at
its last known address or to its last known attorney set forth in its most recent SEC filing.  Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(i)This
Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. Delivery of this Agreement may be effected by email.

 

 

IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of this 22nd day of March, 2012.

 

 

 

 

DEBTORS:

 

 

FOCUS GOLD CORPORATION

 

By: /s/Grant R. White                       

Grant R. White

Chief Executive Officer

 

 

 

 

 

SECURED PARTY:

 

 

/s/ Justin Keener                      

Justin Keener

JMJ Financial / Its Principal

 

 

 

 

 

 

 

 

 

 

 

 

[Security Agreement Signature Page]

    	7Exhibit 10.17

 

 

Additional Default Provisions

 

Default.
The following are events of default under the Note, the Warrant, and any other document related to the transactions contemplated
by Securities Purchase Agreement Document SPA-03222012: (i) the Borrower shall fail to pay any principal under the Note when due
and payable (or payable by conversion) thereunder; or (ii) the Borrower shall fail to pay any interest or any other amount under
the Note when due and payable (or payable by conversion) thereunder; or (iii) the Company shall fail to pay any amount under the
Warrant when due and payable (or payable upon exercise) thereunder; or (iv) the Company shall fail to honor its obligations under
the Securities Purchase Agreement or any other document related to the Securities Purchase Agreement; or (v) a receiver, trustee
or other similar official shall be appointed over the Borrower or a material part of its assets and such appointment shall remain
uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60) days; or (vi) the Borrower shall become
insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable
grace periods, if any; or (vii) the Borrower shall make a general assignment for the benefit
of creditors; or (viii) the Borrower shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic
or foreign); or (ix) an involuntary proceeding shall be commenced or filed against the Borrower; or (x) the Borrower shall fail
to apply to DTC within 15 days of the closing of the transactions contemplated by SPA-03222012 to be permitted to transfer its
shares by DWAC/FAST or to reapply to DTC after a reasonable period of time at the request of the Purchaser if the initial application
is not accepted; or (xi) the Borrower shall lose its status as “DTC Eligible”; or the borrower’s shareholders
shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System;
or (xii) the Borrower shall become late or delinquent in its filing requirements as a fully-reporting issuer registered with the
Securities & Exchange Commission.

 

 

COMPANY / BORROWER: 

 

FOCUS GOLD CORPORATION

 

 

By: /s/Grant R. White                         

Grant R. White

Chief Executive Officer

 

 

 

 

LENDER/HOLDER:

 

 

/s/ Justin Keener                       

/s/ Justin Keener

JMJ Financial / Its Principal

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