SECURITY AGREEMENT
Agreement made this 24th day of February, 1999, between RIMSHOT, LLC. a
Utah Limited Liability Company and ▇▇▇ ▇▇▇▇ (herein referred to as "Debtor"),
and NACO INDUSTRIES, INC. a Utah Corporation (herein referred to as "Secured
Party").
In consideration of the mutual covenants and promises herein contained,
Debtor and Secured Party agree:
SECTION ONE
CREATION OF SECURITY INTEREST
Debtor hereby assigns and transfers to Secured Party a security interest
in the following described personal property (herein referred to as
"Collateral"): All equipment, machinery, leasehold improvements, inventory,
accounts, general intangibles, instruments, investment property and proceeds
now owned or hereafter acquired.
SECTION TWO
RIGHT OF SALE
The possession by Debtor of inventory shall be for purposes of retail
sale in the ordinary course of business. All risk of loss or destruction of
inventory is to be borne by Debtor, while the inventory is under the direct
control and possession of Debtor. Debtor may sell, at retail in the ordinary
course of business, any of inventory or any part thereof.
SECTION THREE
DISPOSITION OF PROCEEDS
Any and all cash proceeds of any retail sale permitted by Section Two shall
be fully accounted for by Debtor.
SECTION FOUR
PROTECTION OF COLLATERAL
Secured Party shall have the right to inspect collateral at any
reasonable time during the term of this Security Agreement. Debtor shall not
transfer or otherwise dispose of collateral, except as provided in Section
Two.
SECTION FIVE
DEFAULT
Occurrence of any of the following events shall constitute a default
under this Security Agreement:
1. The failure of Debtor promptly to pay the indebtedness hereunder
according to the attached Assumption and Indemnification Agreement.
2. The failure of Debtor promptly to perform or comply with any of the
terms, provisions, or conditions of this Security Agreement.
3. The institution of a proceeding in bankruptcy, insolvency,
receivership, or reorganization by or against Debtor or the property of
Debtor.
4. The liquidation in any way of the business of Debtor.
5. A determination by Secured Party that it is insecure or inventory
or any part thereof is in danger of loss, misuse, seizure, or confiscation.
SECTION SIX
REMEDIES
On default hereunder, Secured Party may take immediate possession of
inventory, including any attachments or accessories thereto, without demand
or further notice and without legal process. For this purpose and in
furtherance thereof, Debtor shall, if Secured Party so requests, assemble
collateral and make it available to Secured Party at a reasonably convenient
place designated by Secured Party, and Secured Party shall have the right,
and is hereby authorized and empowered by Debtor, to enter the premises where
collateral is located and remove it. In the event of repossession of
inventory, Secured Party shall have such rights and remedies as are provided
and permitted by the Uniform Commercial Code.
SECTION SEVEN
SEVERABILITY
Any provision of this Security Agreement prohibited by law shall be
ineffective to the extent of such prohibition without invalidating the
remaining provisions hereof.
SECTION EIGHT
BINDING EFFECT OF OBLIGATION
No transfer, renewal, extension, or assignment of this Security
Agreement or any interest hereunder and no loss, damage, or destruction of
inventory shall release Debtor from the obligation secured under this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Security Agreement at
RIMSHOT, the day and year first above written.
DEBTOR:
RIMSHOT, LLC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇, INDIVIDUALLY
SECURED PARTY:
NACO INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇
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President