Continuing Security Agreement
161108-V4
Exhibit
10.4
Dated
as of January 13, 2020
Grant of Security Interest. To secure the payment and
performance of the Liabilities, BK Technologies, Inc. (whether one
or more, the "Borrower", individually and collectively if more than
one) pledges, assigns and grants to JPMorgan Chase Bank, N.A.,
whose address is 000 X Xxxxxx Xxx, Xxxxx 00, Xxxxxxx, XX 00000-0000 (together with its
successors and assigns, the "Bank") a continuing security interest
in, all of its right, title and interest in the Collateral (as
hereinafter defined), whether now owned or hereafter acquired and
whether now existing or hereafter arising.
"Liabilities"
means all obligations, indebtedness and liabilities of the Borrower whether individual,
joint and several, absolute or contingent, direct or
indirect, liquidated or unliquidated, now or hereafter existing in
favor of the Bank, including
without limitation, all liabilities, all interest, costs and fees
arising under or from any note, open account, overdraft, letter of
credit application, endorsement, surety agreement, guaranty, credit
card, lease, Rate Management Transaction, acceptance, foreign
exchange contract or depository service contract, whether payable
to the Bank or to a third party and subsequently acquired by the
Bank, any monetary obligations (including interest) incurred or
accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceedings, regardless of whether
allowed or allowable in such proceeding, and all renewals,
extensions, modifications, consolidations, rearrangements,
restatements, replacements or substitutions of any of the
foregoing. "Rate Management
Transaction" means any transaction (including an agreement with
respect thereto) that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity
index swap, equity or equity index option, bond option, interest
rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency swap
transaction, cross-currency rate swap transaction, currency option,
derivative transaction or any other similar transaction (including
any option with respect to any of these transactions) or any
combination thereof, whether linked to one or more interest rates,
foreign currencies, commodity prices, equity prices or other
financial measures. The Borrower and the Bank specifically contemplate that
Liabilities include indebtedness hereafter incurred by the Borrower
to the Bank.
The
term "Collateral" means all of the Borrower's "accounts"; "chattel paper"; "deposit
accounts" and other payment obligations of financial institutions
(including the Bank); "documents"; "equipment", including any
documents and certificates of title issued with respect to any of
the equipment; "general intangibles" and any right to a refund of
taxes paid at any time to any governmental entity; "instruments";
"inventory", including any documents and certificates of title
issued with respect to any of the inventory; "investment property";
"financial assets"; "letter of credit rights"; all as defined in
the UCC, whether owned or consigned by or to, or leased from or to
the Borrower, and wherever located. In addition, the term
"Collateral" includes all "proceeds", "products" and "supporting
obligations" (as such terms are defined in the UCC) of the
Collateral, including but not limited to all stock rights,
subscription rights, dividends, stock dividends, stock splits, or
liquidating dividends, and all cash, accounts, chattel paper,
"instruments," "investment property," "financial assets," and
"general intangibles" (as such terms are defined in the UCC)
arising from the sale, rent, lease, casualty loss or other
disposition of the Collateral, and any Collateral returned to,
repossessed by or stopped in transit by the Borrower, and all
insurance claims relating to any of the Collateral. The term
"Collateral" further includes all of the Borrower's right, title
and interest in and to all books, records and data relating to the
Collateral, regardless of the form of media containing such
information or data, and all software necessary or desirable to use
any of the Collateral or to access, retrieve, or process any of
such information or data. Where the Collateral is in the possession
of the Bank or the Bank's agent, the Borrower agrees to deliver to
the Bank any property that represents an increase in the Collateral
or profits or proceeds of the Collateral.
The
term "UCC" means the Uniform Commercial Code of Florida, as in
effect from time to time.
Representations, Warranties and Covenants. The Borrower
represents, warrants, and covenants to the Bank that each of the
following is true and will remain true until termination of this
agreement and payment in full of all Liabilities and agrees with
the Bank that:
1.
At its own expense,
it shall maintain comprehensive casualty insurance on the
Collateral against such risks, in such amounts, with such
deductibles and with such companies as may be satisfactory to the
Bank. Each insurance policy on the Collateral shall contain a
lender's loss payable endorsement satisfactory to the Bank and a
prohibition against cancellation or amendment of the policy or
removal of the Bank as loss payee without at least thirty (30)
days' prior written notice to
the Bank. In all events, the amounts of such insurance coverages on
the Collateral shall be in such minimum amounts that the Borrower
will not be deemed a co-insurer. The policies on the Collateral, or
certificates evidencing them, shall, if the Bank so requests, be
deposited with the Bank.
2.
It shall permit the
Bank, at the Borrower's expense, to inspect and examine the
Collateral and to check and test the same as to quality, quantity,
value, and condition.
3.
It shall maintain
the Collateral in good repair; use the Collateral in accordance
with law and in compliance with any policy of insurance thereon;
and exhibit the Collateral to the Bank on demand.
4.
Until the Bank
gives notice to the Borrower to the contrary or until the Borrower
is in default, it may use the funds collected in its business. Upon
notice from the Bank or upon default, the Borrower agrees that all
sums of money it receives on account of or in payment or settlement
of the accounts, chattel paper, certificated securities, negotiable
certificates of deposit, documents, general intangibles and
instruments shall be held by it as trustee for the Bank without
commingling with any of the Borrower's other funds, and shall
immediately be delivered to the Bank with endorsement to the Bank's
order of any check or similar instrument. It is agreed that, at any
time the Bank so elects, the Bank shall be entitled, in its own
name or in the name of the Borrower or otherwise, but at the
expense and cost of the Borrower, to collect, demand, receive, xxx
for or compromise any and all accounts, chattel paper, certificated
securities, negotiable certificates of deposit, documents, general
intangibles, and instruments, and to give good and sufficient
releases, to endorse any checks, drafts or other orders for the
payment of money payable to the Borrower and, in the Bank's
discretion, to file any claims or take any action or proceeding
which the Bank may deem necessary or advisable. It is expressly
understood and agreed, however, that the Bank shall not be required
or obligated in any manner to make any demand or to make any
inquiry as to the nature or sufficiency of any payment received by
it or to present or file any claim or take any other action to
collect or enforce the payment of any amounts which may have been
assigned to the Bank or to which the Bank may be entitled at any
time or times. All notices required in this paragraph will be
immediately effective when sent. Such notices need not be given
prior to the Bank's taking action. The Borrower irrevocably
appoints the Bank or the Bank's designee as the Borrower's
attorney-in-fact to do all things with reference to the Collateral
as provided for in this agreement including without limitation (1)
to sign the Borrower's name on any invoice or xxxx of lading
relating to any Collateral, on assignments and verifications of
account and on notices to the Borrower's customers, and (2) to do
all things necessary to carry out this agreement or to perform any
of the Borrower's obligations under this agreement, (3) to notify
the post office authorities to change the Borrower's mailing
address to one designated by the Bank, and (4) to receive, open and
dispose of mail addressed to the Borrower. The Borrower ratifies
and approves all acts of the Bank as attorney-in-fact. This power
of attorney appointment is irrevocable, coupled with an interest,
and shall survive the death or disability of Borrower. The Bank shall not be liable for any act
or omission, nor any error of judgment or mistake of fact or law,
but only for its gross negligence or willful misconduct. This power
being coupled with an interest is irrevocable until all of the
Liabilities have been fully satisfied. Immediately upon its receipt
of any Collateral evidenced by an agreement, "instrument," "chattel
paper," certificated "security" or "document" (as such terms are
defined in the UCC) (collectively, "Special Collateral"), it shall
xxxx the Special Collateral to show that it is subject to the
Bank's security interest, pledge and assignment and shall deliver
the original to the Bank together with appropriate endorsements and
other specific evidence of assignment or transfer in form and
substance satisfactory to the Bank.
5.
It will not, sell,
lease, license or offer to sell, lease, license, grant as security
to anyone other than the Bank, or otherwise transfer the Collateral
or any rights in or to the Collateral, without the written consent
of the Bank, except for the sale of inventory in the ordinary
course of business; or change the location of the Collateral from
the locations of the Collateral disclosed to the Bank, without
providing at least ten (10) days' prior written notice to the
Bank.
6.
No financing
statement or similar record covering all or any part of the
Collateral or any proceeds is on file in any public office, unless
the Bank has approved that filing.
7.
When the Collateral is located at, used in or attached
to a facility leased by the Borrower, the Borrower will, at
the request of the Bank, obtain from the lessor a consent to the
granting of this security interest and a release or subordination
of the lessor's interest in any of the Collateral, in form and
substance satisfactory to the Bank.
2
Remedies Regarding Collateral. The Bank shall have the right
to require the Borrower to assemble the Collateral and make it
available to the Bank at a place to be designated by the Bank which
is reasonably convenient to both parties, the right to take
possession of the Collateral with or without demand and with or
without process of law, and the right to sell and dispose of it and
distribute the proceeds according to law. The Borrower agrees that
upon default the Bank may dispose of any of the Collateral in its
then present condition, that the Bank has no duty to repair or
clean the Collateral prior to sale, and that the disposal of the
Collateral in its present condition or without repair or clean-up
shall not affect the commercial reasonableness of such sale or
disposition. The Bank's compliance with any applicable state or
federal law requirements in connection with the disposition of the
Collateral will not adversely affect the commercial reasonableness
of any sale of the Collateral. The Bank may disclaim warranties of
title, possession, quiet enjoyment, and the like, and the Borrower
agrees that any such action shall not affect the commercial
reasonableness of the sale. In connection with the right of the
Bank to take possession of the Collateral, the Bank may take
possession of any other items of property in or on the Collateral
at the time of taking possession, and hold them for the Borrower
without liability on the part of the Bank. The Borrower expressly
agrees that the Bank may enter upon the premises where the
Collateral is believed to be located without any obligation of
payment to the Borrower, and that the Bank may, without cost, use
any and all of the Borrower's "equipment" (as defined in the UCC)
in the manufacturing or processing of any "inventory" (as defined
in the UCC) or in growing, raising, cultivating, caring for,
harvesting, loading and transporting of any of the Collateral that
constitutes "farm products" (as defined in the UCC). If there is
any statutory requirement for notice, that requirement shall be met
if the Bank sends notice to the Borrower at least ten (10) days
prior to the date of sale, disposition or other event giving rise
to the required notice, and such notice shall be deemed
commercially reasonable. Without limiting any other remedy, the
Borrower is liable for any deficiency remaining after disposition
of the Collateral. The Bank is authorized to cause all or any part
of the Collateral to be transferred to or registered in its name or
in the name of any other person or business entity, with or without
designating the capacity of that nominee. The Bank shall be entitled to the appointment of a
receiver as a matter of right, without notice and without regard to
the value of the Collateral. Without limitation, the receiver shall
have the power to (i) protect and preserve the Collateral, (ii)
operate the business of the Borrower, (iii) collect and apply the
proceeds, over and above the costs of the receivership, to the
Liabilities, (iv) close the business of the Borrower and liquidate
all Collateral, and/or (v) sell the business of the Borrower as a
going concern. The receiver shall serve without bond, if permitted
by law. At its option the Bank may, but shall be under no
duty or obligation to, discharge taxes, liens, security interests
or other encumbrances at any time levied or placed on the
Collateral, pay for insurance on the Collateral, and pay for the
maintenance and preservation of the Collateral, and the Borrower
agrees to reimburse the Bank on demand for any such payment made or
expense incurred by the Bank with interest at the highest rate at
which interest may accrue under any of the instruments evidencing
the Liabilities. The Borrower authorizes the Bank to endorse on the
Borrower's behalf and to negotiate drafts reflecting proceeds of
insurance of the Collateral, provided that the Bank shall remit to
the Borrower such surplus, if any, as remains after the proceeds
have been applied, at the Bank's option, to the satisfaction of all
of the Liabilities (in such order of application as the Bank may
elect) or to the establishment of a cash collateral account for the
Liabilities. The Bank shall have the right now, and at any time in
the future in its sole and absolute discretion, without notice to
the Borrower to (a) prepare, file and sign the Borrower's name on
any proof of claim in bankruptcy or similar document against any
owner of the Collateral and (b) prepare, file and sign the
Borrower's name on any notice of lien, assignment or satisfaction
of lien or similar document in connection with the
Collateral.
Miscellaneous. A carbon, photographic or other reproduction
of this agreement is sufficient as, and can be filed as, a
financing statement or similar record. The Borrower authorizes the
Bank to file one or more financing statements or similar records
covering the Collateral or such lesser amount of assets as the Bank
may determine, or the Bank may, at its option, file financing
statements or similar records containing any collateral description
which reasonably describes the Collateral, and the Borrower will
pay the cost of filing them in all public offices where filing is
deemed by the Bank to be necessary or desirable. In addition, the
Borrower shall execute and deliver, or cause to be executed and
delivered, such other documents as the Bank may from time to time
request to perfect or to further evidence the pledge, security
interest and assignment created in the Collateral by this
agreement. If any provision of this agreement cannot be enforced,
the remaining portions of this agreement shall continue in effect.
The provisions of this agreement are severable, and if any one or
more of the provisions of this agreement are held to be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions shall not
in any way be affected or impaired; and the invalidity, illegality
or unenforceability in one jurisdiction shall not affect the
validity, legality or enforceability of such provision(s) in any
other jurisdiction. Time is of the essence under this agreement and
in the performance of every term, covenant and obligation contained
herein. Any notices and demands under
or related to this agreement shall be in writing and delivered to
the Borrower at 0000 Xxxxxxxxxx Xxxxx, Xxxx Xxxxxxxxx, XX
00000 and if to the Bank, shall be
addressed to Manager Wholesale Lending Services, JPMorgan
Chase Bank, N.A., 10 X. Xxxxxxxx, IL1-1145 (Floor L2), Xxxxxxx, XX
00000-0000 with a copy addressed to Amine Radi, JPMorgan Chase
Bank, N.A., 000 X Xxxxxx Xxx, Xxxxx 00, Xxxxxxx, XX 00000-0000
by one of the following means: (a) by
hand; (b) by a nationally recognized overnight courier service; or
(c) by certified mail, postage prepaid, with return receipt
requested. Notice (other than any Subordinated Creditor Termination
Notice) shall be deemed given: (i) upon receipt if delivered by
hand; (ii) on the Delivery Day after the day of deposit with a
nationally recognized courier service; or (iii) on the third
Delivery Day after the notice is deposited in the mail.
"Delivery
Day" means a day other than a
Saturday, a Sunday, or any other day on which national banking
associations are authorized to be closed. Any party may change the
party’s address for purposes of the receipt of notices and
demands by giving notice of the change in the manner provided in
this provision.
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Borrower:
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BK
Technologies, Inc.
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By:
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/s/ Xxxxxxx X. Xxxxx,
EVP and CFO
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Xxxxxxx X. Xxxxx,
EVP and CFO
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Printed
Name
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Title
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Date
Signed:
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1/30/20
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