SECURITY AGREEMENT
Exhibit 10.1
THIS
SECURITY AGREEMENT made as of this 3rd
day of April 2018,
by and between BREKFORD TRAFFIC SAFETY, INC.
(“BTS” or “Debtor”)), a Delaware
corporation, and CEDARVIEW OPPORTUNITIES MASTER FUND, LP, a
Delaware limited partnership, with an office located at Xxx Xxxx
Xxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 (the
“Creditor”).
1.
DEFINITIONS.
(a)
“Liability” or “liabilities” includes all
liabilities (primary, secondary, direct, contingent, sole, joint or
several) due or to become due, or that are now or may be hereafter
contracted or acquired, under the Obligations (as hereinafter
defined) of Debtor to the Creditor, both before and after any
bankruptcy of the Debtor.
(b)
“Proceeds” means whatever is received when Collateral
is sold, exchanged, leased, collected or otherwise disposed of and
includes the account arising when the right to payment is earned
under a contract.
(c)
“Security Interest” means a lien or other interest in
Collateral which secures payment of a Liability or performance of
an Obligation.
(d)
“Collateral” means all of the Debtor’s right,
title and interest in and to all of the following property and
interests in property (collectively, the “Assets”),
whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located:
(i) All
present and future rights of Debtor to payment for goods sold and
delivered or leased or for services rendered, which are not
evidenced by instruments or chattel paper, and whether or not
earned by performance (hereafter collectively referred to as
“Accounts”);
(ii) All
present and future contract rights, general intangibles (including,
without limitation, tax and duty refunds, registered and
unregistered patents, trademarks, service marks, copyrights, trade
names, applications for the foregoing, trade secrets, goodwill,
processes, drawings, blueprints, customer lists, licenses, whether
as licensor or licensee, chooses in action and other claims and
existing and future leasehold interests in equipment, real estate
and fixtures), chattel paper, documents, instruments, securities,
letters of credit, bankers' acceptances, guaranties and all other
intellectual property rights of any kind;
(iii)
All
present and future monies, securities, credit balances,
deposits,
deposit
accounts, investment property and other property of Debtor now or
hereafter held or received by or in transit to Debtor or their
affiliates and all present and future liens, security interests,
rights, remedies, title and interest in, to and in respect of the
Collateral;
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(iv) All
of Debtor's now owned and hereafter acquired equipment, machinery,
computers and computer hardware and software (whether owned or
licensed), vehicles, tools, furniture, fixtures, all attachments,
accessions and property now or hereafter affixed thereto or used in
connection therewith, and substitutions and replacements thereof,
wherever located and any and all licenses or similar rights
necessary for the operation of any of the
foregoing;
(e) “Note” means the Promissory Note
of Debtor to Creditor of even date herewith in the aggregate
principal amount of Two Million ($2,000,000) Dollars.
(f)
“Obligations” means the Note, the Security Agreement
and all related agreements.
2.
SECURITY INTEREST.
(a)
As security for the payment in full of principal, interest and
performance of the Note, the Security Agreement, any related
documents and all other liabilities and obligations of Debtor to
the Creditor, Debtor hereby grants to the Creditor a first Security
Interest in the Collateral and all proceeds arising therefrom and
any and all products of the Collateral.
(b)
Debtor represents that it is the sole lawful owner of the
Collateral attributable to it, free and clear of any liens and
encumbrances which have not been previously disclosed in writing to
the Creditor, and has the right and power to pledge, sell, assign
and transfer absolute title thereto to the Creditor and that no
financing statement covering the Collateral, other than the
Creditor’s and the financing statement which has been
delivered to Creditor has been filed with respect to any
Collateral.
(c)
Debtor agrees that, the Security Interest shall be a first priority
security interest in the Collateral, senior and prior in payment to
all other indebtedness and obligations of Debtor to third
parties.
(d)
The security interest granted to creditor under this Agreement
shall not terminate unless and until (i) all Obligations have been
fully paid or performed; (ii) all obligations of all parties under
any related documents have been discharged, satisfied or released;
and (iii) Debtor has reimbursed Creditor for any expenses of
returning the property and filing any termination statements and
other instruments as are required to be filed under applicable
law.
3.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR.
(a)
Representations,
Warranties and Covenants of the Debtor. Debtor represents
and warrants to, and covenants with, the Creditor as
follows:
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(i) Debtor
has rights in and the power to transfer the Collateral in which it
purports to grant a security interest pursuant to Section 3 hereof and no Lien
exists or will exist upon such Collateral at any time except listed
on Schedule I.
(ii) This
Agreement is effective to create in favor of the Creditor a valid
security interest in and Lien upon all of Debtor’s right,
title and interest in and to the Collateral, and upon the filing of
appropriate Uniform Commercial Code financing statements in the
jurisdictions listed on Schedule II attached hereto,
such security interest will be a duly perfected first priority
security interest in all of the Collateral
4.
USE OF COLLATERAL.
Until
the occurrence of an Event of Default as defined in Section 6
below, Debtor may use the Collateral in any lawful
manner.
5.
INSURANCE.
Debtor
shall maintain insurance with financially sound and reputable
insurance companies or associations in such amounts and covering
such risks as are usually carried by persons or companies engaged
in similar businesses and owning similar properties doing business
in the same general industry in which the Debtor operates. Copies
of certificates of such insurance shall be furnished to Creditor
from time to time upon Creditor’ reasonable
request.
6.
DEFAULT.
Each
of the following shall constitute an Event of Default
hereunder:
(a)
any
Event of Default (as defined in the Note, the Security Agreement
and the related documents);
(b)
if
the Debtor shall or shall attempt to (a) remove or allow removal of
the Collateral from the locations, inside or outside the United
States, where the Debtor now conducts its business, (b) sell (other
than in the ordinary course of Debtor’s business), encumber
or otherwise dispose of the Collateral or any interest therein, (c)
conceal, hire out or let the Collateral, (d) misuse or abuse the
Collateral, or (e) use or allow the use of the Collateral in
connection with any undertaking prohibited by law, except where any
of the foregoing may not have any material adverse impact on the
Collateral;
(c)
if
the Collateral shall be attached, levied upon, seized in any legal
proceedings, or held by virtue of any lien or distress, other than
mechanic’s liens or such other liens which shall not be
material;
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(d)
if
the Debtor shall fail to pay promptly all taxes and assessments
upon the Collateral or the use thereof, except for those taxes and
assessments which are being contested in good faith by appropriate
proceedings and with respect to which Debtor shall have set aside
on its books adequate reserves with respect to such taxes and
assessments as are required by GAAP;
(e)
if
Creditor with reasonable cause determine that their interest in the
Collateral is in jeopardy;
(f)
if
the Debtor shall fail to keep the Collateral suitably
insured;
(g)
if
the Debtor shall breach any of the covenants, agreements or
representations contained herein or in the Note;
(h)
if
Debtor allows any inferior lien to be placed against the Collateral
(other than statutory tax liens not satisfied within thirty (30)
days except that inferior liens shall be permitted provided there
is an intercreditor agreement satisfactory to Creditor;
and
(i)
if
any judgment, lien, attachment or execution is entered or issued
against the Collateral, except where any of the foregoing may not
have any material adverse impact on the Collateral.
Upon
the occurrence of any one or more of the foregoing Events of
Default, in addition to any rights which may exist under and
pursuant to the Note or the Security Agreement, (1) all Liabilities
shall, at the sole option of Creditor, become immediately due and
payable, and (2) the Debtor agrees upon demand of Creditor to
deliver the Collateral to or for the benefit of the Creditor, or
the Creditor may, with or without legal process, and with or
without previous notice or demand for performance, enter any
premises wherein the Collateral may be, and take possession of the
same, together with anything therein; and the Creditor may make
disposition of the Collateral subject to any and all applicable
provisions of law. If the Collateral is sold at public sale, the
Creditor may purchase the Collateral at such sale. The Creditor,
provided they have sent the statutory notice of default, may retain
from the proceeds of such sale all reasonable costs incurred in
such taking and sale and also, all sums then owing by the Debtor,
and any amounts in excess of such sums resulting from any such sale
shall be promptly paid to the Debtor.
7.
GENERAL AGREEMENTS.
(a)
Debtor hereby authorizes the Creditor to file financing statements
under the UCC and any amendments thereto or extensions thereof
without the signature of Debtor.
(b)
The Creditor shall not be deemed to have waived any of their rights
hereunder or under any other agreement, instrument or paper signed
by the Debtor unless such waiver is in writing
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and signed by Creditor. No delay or omission on the part of
the Creditor in exercising any right shall operate as a waiver
thereof or of any other right. A waiver upon any one occasion shall
not be construed as a bar or a waiver of any right or remedy on any
future occasion. All of the rights and remedies of the Creditor,
whether evidenced hereby or by the Note or other instrument or
paper, shall be cumulative and counterparts may be exercised singly
or concurrently.
8.
EXECUTION BY CREDITOR.
This
Agreement shall take effect immediately upon execution by the
Debtor, and the execution hereof by the Creditor shall not be
required as a condition to the effectiveness of this Agreement. The
provision for execution of this Agreement by the Creditor is only
for purposes of filing this Agreement as a security agreement under
the UCC, if execution hereof by the Creditor is required for
purposes of such.
9.
CONTINUING SECURITY INTEREST; ASSIGNMENT.
This
Security Agreement shall create a continuing security interest in
the Collateral and shall remain in full force and effect until the
payment in full of the Liabilities and such time as the Note shall
not remain outstanding. If at any time or times, by sale,
assignment, negotiation, pledge or otherwise, the Creditor shall
transfer any Liability or Liabilities, which Creditor shall at all
times be free to do (subject to applicable securities laws), such
transfer shall carry with it the Creditor’ rights, powers and
remedies under this Security Agreement with respect to the
Liability transferred, and the transferee shall become vested with
such rights and remedies whether or not they are specifically
referred to in the transfer, unless, and then only to the extent,
that the terms of such transfer otherwise provide. If and to the
extent Creditor retain any other Liability or Liabilities, the
Creditor shall continue to have the rights, powers and remedies
herein set forth with respect thereto.
10.
MISCELLANEOUS.
This
Security Agreement shall be binding upon Debtor, its successors and
assigns, and shall inure to the benefit of the Creditor and their
respective heirs, legal representative, successors and assigns.
Debtor shall not assign this Security Agreement except with the
express written consent of the Creditor. No amendment or waiver of
any provision of this Security Agreement, nor consent to any
departure by Debtor herefrom, shall in any event be effective
unless the same shall be in writing and signed by the Creditor, and
then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. This
Security Agreement and the rights and obligations of the Creditor
and Debtor hereunder shall be governed by and construed in
accordance with the substantive laws of the State of New York,
except only to the extent that the validity or perfection of the
Security Interest hereunder, or remedies hereunder, in respect of
any particular Collateral are governed by the laws of a
jurisdiction other than the State of New York, and as further set
forth in the Note.
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All
notices, requests, claims, demands and other communications between
the parties shall be in writing. All such notices shall be given
either (i) by delivery in person (ii) by nationally recognized next
day courier service, or (iii) by electronic mail to the address of
the party specified in this agreement or such other address as any
party may specify in writing. All notices shall be effective upon
the earlier of (i) the day of delivery in person or the day of
delivery in the case of delivery by courier or (ii) on the date any
electronic mailing.
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If to
the Lender:
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CEDARVIEW OPPORTUNITIES MASTER FUND L.P.
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ADDRESS
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TEL.#
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Email :
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with a
copy to:
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LAW OFFICE OF XXXX X. XXXX
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000
Xxxxxxx Xxxxxx, Xxxxx 0000
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Xxx
Xxxx, Xxx Xxxx 00000
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Email:
Xxxxx@xxxxxxx.xxx
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If to
the Borrower:
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BREKFORD TRAFFIC SAFETY, INC.
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00000
Xxxxxxxxx Xxxxx Xxxxx, Xxxxx 000
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Xxxxxxxxx,
XX 00000
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Tel:
(000) 000-0000
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Attn:
Xxxxxxx X. Xxxxxxxx
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EVP,
General Counsel
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with a
copy to:
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SICHENZIA
XXXX XXXXXXX XXXXXX LLP
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1185
Avenue of the Americas
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New
York, NY 1003
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Attn:
Xxxxxx X. Xxxx, Esq.
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Tel:
(000) 000-0000
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Email:
xxxxx@xxxxxxx.xxx
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IN
WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first above written.
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BORROWER:
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LENDER:
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BREKFORD TRAFFIC SAFETY, INC.
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CEDARVIEW OPPORTUNITIES MASTER FUND L.P.
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By: /s/
Xxxxxx X. Xxxxxx
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By: /s/
Xxxxxx Xxxxxxxxx
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Name:
Xxxxxx X. Xxxxxx
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Name:
Xxxxxx Xxxxxxxxx
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Title:
Authorized Signatory
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Title:
Managing Partner
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