Security Agreement between Brekford Traffic Safety, Inc. and Cedarview Opportunities Master Fund, LP, dated April 3, 2018

 

 

 

(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;

 

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;

 

 

(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;

 

 

 

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:

 

(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:

 

 

 

 

 

 

 

 

 

 

 

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

 

 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.