SECURITY AGREEMENT
Exhibit 10.4
THIS
SECURITY AGREEMENT is entered into as of February __, 2016 (the
“Security Agreement”), by and between the undersigned
creditors (“Creditors”), and FLUOROPHARMA MEDICAL,
INC., a Nevada corporation, located at 0 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxxx, XX 00000
(the “Borrower”).
RECITALS
A.
Creditors have
agreed to extend to Borrower a loan or loans in the aggregate
principal amount of up to One Million Dollars
($1,000,000).
B.
Such loan is
evidenced by promissory notes of Borrower in favor of each
Creditor, respectively, executed as of the date hereof, as amended
and in effect from time to time, and any notes or notes issued in
exchange for such notes (the “Notes”).
C.
As a condition
precedent to Creditors’ loan to Borrower, Borrower has agreed
to execute and deliver to Creditors a security agreement in
substantially the form hereof, and Borrower wishes to grant
security interests in favor of Creditors as herein
provided.
AGREEMENTS
In
consideration of the covenants and provisions set forth herein, and
for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as
follows:
SECTION
1. Grant of Security
Interest; Perfection of Security Interest. As security for
any and all of Borrower’s obligations under the Notes (the
“Obligations”), Borrower hereby grants a continuing
security interest to Creditors in and to all of the personal
property and assets of Borrower, wherever located, and now owned or
hereafter acquired, including:
a. Accounts;
b. Chattel
paper;
c. Goods;
d. Inventory;
e. Equipment;
f. Instruments
(including Promissory Notes);
g. Investment
Property;
h. Documents;
i. Deposit
Accounts;
j. Letter-of-Credit
Rights;
k. General intangibles
(including Payment Intangibles);
l. Supporting
Obligations; and
m. To the extent not
listed above as original collateral, proceeds and products of the
foregoing (collectively, the
“Collateral”).
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Any
term used in the Nevada Uniform Commercial Code (the
“UCC”) and not defined in this Security Agreement has
the meaning given to the term in the UCC. Borrower authorizes
Creditors to file a financing statement describing the
Collateral.
SECTION
2. State of
Organization and Legal Name. Borrower is a Nevada
corporation. Borrower’s legal name is “FLUOROPHARMA
MEDICAL, INC.”
SECTION
3. Covenants.
Borrower hereby covenants and agrees with Creditors that so long as
this Security Agreement shall remain in effect:
a. All of the
Collateral is, or when acquired will be, and will continue to be,
the sole property of Borrower (except that Inventory may be sold in
the ordinary course of business) and shall not be subject to any
liens, charges, senior security interests, conflicting security
interests, or any other rights in favor of any third
party;
b. Borrower will not
make any bulk transfer of all or any part of the
Collateral;
c. Borrower shall
promptly notify Creditors in writing of any event which occurs that
would have an adverse effect upon all or part of the
Collateral;
d. Borrower shall not
voluntarily or involuntarily exchange, sell, transfer or otherwise
dispose of any right, title or interest in the Collateral, other
than in good faith in the ordinary course of business, until( i)
Borrower has obtained the written consent of Creditors and in the
event of such transfer Borrower agrees, simultaneously with such
transfer, to execute and deliver to Creditors instruments,
certificates and documents, including without limitation, such
financing statements and mortgages, which Creditors deems necessary
to maintain or perfect the rights granted or intended to be granted
in this Security Agreement; or (ii) Borrower has repaid the Notes
in full.
e. Borrower agrees to
promptly give written notice to Creditors of any levy or
attachment, execution or other process against any of the
Collateral;
f. Borrower shall take
any and all actions reasonably necessary or desirable to defend the
Collateral against the claims and demands of all persons other than
Creditors;
g. Borrower shall keep
all tangible Collateral properly insured and in good order and
repair and notify Creditors of any event causing any material loss,
damage or depreciation in value of the Collateral and of the extent
of such loss, damage or depreciation;
h. Borrower shall,
upon request from Creditors and upon reasonable notice, provide
Creditors with access to Borrower’s books and records and to
the Collateral, and Creditors shall have the right to inspect such
books and records and the Collateral;
i. Borrower shall not
change the jurisdiction of the state in which it is organized,
whether by merger or otherwise, or its legal name, without sixty
(60) days prior written notice to Creditors;
j. Borrower shall not
amend or terminate any contract or other document or instrument
constituting part of the Collateral, except for transactions in the
ordinary course of business; make any compromise, settlement,
discharge or adjustment or grant any extension of time for payment
with respect to any Account or any lien, guaranty or remedy
pertaining thereto, except for transactions in the ordinary course
of business;
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k. Borrower shall
promptly pay any and all taxes, assessments and governmental
charges upon the Collateral prior to the date that penalties are
attached thereto, except to the extent that such taxes, assessments
and charges shall be contested in good faith by Borrower, adequate
reserves have been set aside therefor, and payment of such
contested taxes made prior to the institution of any enforcement
proceeding which could adversely affect the security interests
granted in this Security Agreement or the Collateral;
and
l. Borrower agrees to
execute and deliver to Creditors such instruments, certificates and
documents as Creditors deems necessary, and to do such other acts
as may from time to time be requested by Creditors in order to
effect the provisions of, or more fully perfect the rights granted
or intended to be granted by, this Security Agreement.
SECTION
4. Events of
Default. Each of the
following shall constitute an “Event of Default”
hereunder:
a. Failure of Borrower
to comply with any of the covenants and agreements to pay the
Obligations or any of the covenants and agreements set forth in the
Notes or this Security Agreement;
b. Creditors ceases,
other than as contemplated by this Security Agreement, to have a
valid and perfected security interest in any of the
Collateral;
c. Any provision of
this Security Agreement shall for any reason cease to be valid and
binding on Borrower.
SECTION
5. Remedies Upon an
Event of Default. In addition all other rights legally
available to Creditors, Creditors shall have the following
rights:
a. Borrower hereby
irrevocably appoints Creditors and any of Creditors’
designees (the “Attorney-in-Fact”) as Creditors’
attorney-in-fact, with full authority in the place and stead of
Borrower and in the name of Borrower or otherwise, from time to
time: (i) upon the occurrence and during the continuance of an
Event of Default, or an event which, with the giving of notice or
lapse of time or both would become an Event of Default, in the
Attorney-in-Fact’s discretion, to take any action and to
execute any instrument which the Attorney-in-Fact may deem
necessary or advisable to accomplish the purposes of this Security
Agreement, including without limitation (A) to obtain, adjust,
receive, endorse or collect insurance required to be paid to
Creditors, and (B) to file any claims or take any action or
institute any proceedings which the Attorney-in-Fact may deem
necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of Creditors with respect to any
of the Collateral; and (ii) to execute and deliver on behalf of
Borrower, without the signature of Borrower where permitted by
applicable law, such financing statements and other documents as
the Attorney-in-Fact may deem necessary to perfect or continue
perfected the rights in the Collateral granted herein. In addition,
Borrower will reimburse Creditors for all expenses of perfecting or
continuing perfection of the rights in the Collateral granted
herein;
b. If Borrower fails
to perform any agreement contained herein, Creditors may perform,
or cause performance of, such agreement, and the expenses of
Creditors incurred in connection therewith shall be payable by
Borrower, together with interest, on demand;
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c. If any Event of
Default shall have occurred and be continuing, Creditors may
exercise in respect of the Collateral, in addition to other rights
and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral) and
also may (i) require Borrower to, and Borrower hereby agrees that
it will at its expense and upon request of Creditors forthwith,
assemble all or part of the Collateral as directed by Creditors and
make it available to Creditors at a place to be designated by
Creditors which is reasonably convenient to both parties, (ii) upon
reasonable advance written notice to Borrower, enter upon the
property of Borrower to take possession of and remove the
Collateral, and (iii) upon reasonable advance written notice to
Borrower, sell, transfer, or otherwise deal with the Collateral or
any part thereof in its own name or that of Borrower, and may sell
the Collateral in one or more parcels at public or private sale,
for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Creditors may deem commercially
reasonable. Borrower agrees that to the extent notice of sale shall
be required by law, at least five (5) days notice of the time and
location at which such sale is to take place shall constitute
reasonable notification. Creditors shall not be obligated to make
any sale of Collateral after a notice of sale has been given.
Creditors may adjourn any public or private sale from time to time
by announcement at the time and place fixed thereof, and such sale
may, without further notice, be made at the time and place to which
it is so adjourned;
d. To the extent not
prohibited by the UCC, Borrower waives demand, presentment, notice
of dishonor, protest, notice of acceptance of this Security
Agreement, notice of Collateral received or delivered or other
action taken in reliance hereon and all other demands and notices
of any description. Creditors shall have no duty as to the
collection or protection of the Collateral beyond the safe custody
thereof, nor as to the preservation of rights against prior
parties. All rights and remedies of Creditors, whether evidenced
hereby or by any other instrument or papers shall be cumulative and
may be exercised singularly or concurrently; and
e. All proceeds from
the sale of Collateral and from the use of Collateral pursuant to
the license granted under subsection (c) above shall be applied as
follows: first, to the payment of any and all fees, costs and
expenses incurred by Creditors in connection with such sale,
including but not limited to the reasonable expenses of advertising
the Collateral to be sold, and the repayment of all advances made
by Creditors hereunder for the account of Borrower; and second, to
the payment in full of the Obligations, with any surplus to be paid
to Borrower, or as a court of competent jurisdiction shall
direct.
SECTION
6. Further
Assurances. Borrower agrees to do such further things, to
execute, acknowledge, deliver (including delivery of certificates
of deposits or receipts therefor) and cause to be duly filed all
such further instruments and documents and take all such actions as
Creditors may from time to time reasonably request for the better
assuring and preserving of the security interests and the rights
and remedies created hereby, including the execution and delivery
of such additional conveyances, assignments, licenses, agreements
and the execution, filing and recordation of any financing
statements (including fixture filings), filing, or other documents
as Creditors may deem reasonably necessary or desirable for the
perfection of the security interests granted hereunder, and
Borrower hereby grants to Creditors an irrevocable power of
attorney to execute in the name of Borrower any and all such
documents. If any amount payable under or in connection with any of
the Collateral shall be or become evidenced by any promissory notes
or other instrument, such notes or instrument shall be immediately
pledged and delivered to Creditors, duly endorsed in a manner
satisfactory to Creditors. If at any time Borrower shall take and
perfect a security interest in any property to secure payment and
performance of an Account, Borrower, upon the request of Creditors,
shall promptly assign such security interest to
Creditors.
SECTION
7. Effectiveness.
This Security Agreement shall take effect immediately upon
execution by Borrower and Creditors. This Security Agreement shall
continue in full force and effect, and the security interest in the
Collateral granted to Creditors hereunder shall continue in full
force and effect until Borrower’s obligations to pay the
Obligations have been fully discharged and performed at which time
the security interest herein granted shall terminate and be of no
further force or effect notwithstanding that Borrower may have
continuing obligations to Creditors under the Notes.
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SECTION
8. Notices. Any
notices desired, required or permitted to required or permitted to
be given hereunder shall be delivered personally, or mailed,
certified or registered mail, return receipt requested, postage
prepaid or delivered by commercial overnight courier service,
charges prepaid, to the following addresses, or such other
addresses as shall be given by notice delivered hereunder, and
shall be deemed to have been given upon delivery, if delivered
personally or faxed, (3) three business days after mailing, if
mailed, or one (1) business day after delivery to the overnight
courier service, if delivered by overnight courier
service:
If
to
Borrower, to:
President
0 Xxxxxxxx Xxxxxx,
Xxxxx 000
Xxxxxxxxx, XX
00000
If to Creditors,
to:
_____________________________
_____________________________
_____________________________
SECTION
9. Successors and
Assigns. This Security Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective
successors and assigns; provided, however, that
Borrower may not assign any of its rights or obligations hereunder
without the prior written consent of Creditors.
SECTION
10. Applicable
Law. This Security Agreement shall be construed in
accordance with and governed by the laws of the Commonwealth of
Nevada, without giving effect to its choice of law
provisions.
SECTION
11. Waivers. No
failure or delay of Creditors in exercising any power or right
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment
or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of Creditors
hereunder are cumulative and not exclusive of any rights or
remedies that it would otherwise have. Any waiver of any provision
of this Security Agreement or consent to any departure by Borrower
therefrom shall be effective only in the specific instance and for
the purpose for which given.
SECTION
12. Amendments.
Neither this Security Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or
agreements in writing entered into by Borrower and
Creditors.
SECTION
13. Severability.
In the event any one or more of the provisions contained in this
Security Agreement should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall not in any
way be affected or impaired thereby.
SECTION
14. Counterparts.
This Security Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all
of which when taken together shall constitute but one contract, and
shall become effective when copies hereof which, when taken
together, bear the signatures of each of the parties hereto shall
be delivered or mailed to Creditors.
SECTION
15. Headings.
Section headings used herein are for convenience of reference only
and are not to affect the construction of, or to be taken into
consideration in interpreting, this Security
Agreement.
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IN
WITNESS WHEREOF, Borrower and Creditors have executed this Security
Agreement as of the date first above written.
BORROWER:
By:
Xxxxxx
X. Tulip, CEO and President
CREDITORS:
____________________________
____________________________
____________________________
____________________________
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