Exhibit 10.1
PROMISSORY NOTE
FOR
VALUE RECEIVED, BREKFORD TRAFFIC SAFETY, INC. (“BTS”),
a Delaware corporation, and NOVUME SOLUTIONS, INC.
(“Novume”), a Delaware corporation, (collectively
"Borrower"), promise to pay to CEDARVIEW OPPORTUNITIES MASTER FUND,
LP, a Delaware limited partnership ("Payee" or
“Lender”), in lawful money of the United States of
America, the principal sum of Two Million ($2,000,000) Dollars
(“Loan”), in the manner provided below.
SECTION
1. PAYMENTS
1.1
PRINCIPAL AND INTEREST
The
principal sum of Two Million ($2,000,000) Dollars, shall be due and
payable on May 1, 2019 (the “Maturity Date”) or upon an
Event of Default, both principal and interest payable in lawful
money of the United States of America at the offices of Payee at
the address listed below or such other address as Payee shall
designate in writing. Interest from the date hereof at the rate of
fifteen (15%) percent per annum shall be calculated and payable to
Payee in full the first day of each month from the date of this
Note through the Maturity Date. Borrower shall in all events pay to
Lender one full year’s interest. Lender shall be paid all
interest through the Maturity Date regardless of any prepayment by
Borrower of principal of this Loan.
1.2
MANNER OF PAYMENT
Payment
on this Note shall be made by certified or bank cashier's check or
by wire transfer of immediately available funds to an account
designated by Payee in writing. If any payment of principal, or
interest on this Note is due on a day which is not a Business Day,
such payment shall be due on the next succeeding Business Day, and
such extension of time shall be taken into account in calculating
the amount of interest payable under this Note. "Business Day"
means any day other than a Saturday, Sunday or legal holiday in the
State of New York.
SECTION
2. TRANSFER OF SHARES
In
consideration for making the Loan, Novume shall be obligated to
issue to Lender upon execution of this Note Thirty Five (35,000)
Thousand shares of restricted Novume stock with full registration
rights (the “Lender’s Shares”), subject to
approval of listing of additional shares by the Nasdaq Stock
Market. Novume agrees to include the Lender’s Shares on the
next registration statement filed with the Securities and Exchange
Commission with respect to shares to be sold by selling
stockholders (the “Selling Stockholder Registration
Statement”). In the event Novume does not include the
Lender’s Shares on the Selling Stockholder Registration
Statement, Novume shall be required to issue an additional 15,000
shares of Novume common stock to the Lender. Upon request of the
Lender at any time after six months from the date of this Note,
Novume shall cause its counsel to issue a legal opinion to permit
the sale of the Lender’s Shares in accordance with Rule 144
under the Securities Act of 1933, assuming satisfaction of all
requirements of such rule.
SECTION
3. ASSET SALE PARTICIPATION
3.1 In
the event the capital stock or the business and assets of BTS is
sold, either in whole or in part in the discretion of the Borrower
(the “Asset Sale”), the Lender shall participate in and
receive from the Asset Sale, in cash, an amount equal to seven (7)
percent of all consideration received by Borrower in excess of Five
Million ($5,000,000) Dollars from the proceeds or other
consideration received in connection with any Asset Sale,
regardless of whether each occurs prior or subsequent to the
Maturity Date (“Lender’s Participation”). In the
event the business and assets of BTS are sold or transferred in the
course of more than one Asset Sale, Lender shall receive a cash
payment(s) equal to a participation of seven (7) percent of the
cash value of the cumulative value in excess of Five Million
($5,000,000) Dollars of all such Asset Sales in the aggregate as
its Lender’s Participation. Borrower shall pay to Lender its
Lender’s Participation within thirty (30) days of the close
of each Asset Sale. In addition, commencing January 1, 2020,
Cedarview shall receive, on a quarterly basis, seven percent of
BTS’ cash flow, defined as “EBITDA less capital
expenditure less taxes”, and the distributions made to
Cedarview under this formula shall be credited against any payments
that might ultimately be paid to Cedarview as its Lender’s
Participation.
3.2 In
the event that a minority stake of BTS is sold at an implied
valuation that exceeds $5,000,000, the proceeds shall be applied as
follows: first, to pay all outstanding principal and interest of
this Loan and, second, to make a participation payment equal to the
difference between the implied value of the transaction and
$5,000,000 multiplied by the 7 percent Lender’s Participation
and further multiplied by the percentage of the assets as a whole
that are being sold. As an example – if 30 percent of BTS is
sold to a partner for $3,000,000, which gives the business as a
whole an implied $10,000,000 valuation, then Lender will receive
(i) the $2,000,000 of the outstanding principal it is owed, plus
interest, plus a payment of $105,000, which is $10,000,000, less
$5,000,000, X 7 percent, X 30 percent.
SECTION
4. CREATION OF A SECURITY INTEREST
4.1
Security
Interest
. BTS hereby grants to Lender to secure the payment
and performance in full of all of the obligations under this Note,
a continuing security interest in, and pledges to Lender, all of
BTS’s right, title and interest in, to and under all the
assets of BTS wherever located (the “Collateral”),
whether now owned or hereafter acquired or arising, and all
proceeds and products thereof. Borrower represents, warrants and
covenants that the security interest granted herein is and shall at
all times be a first priority perfected security interest in the
Collateral.
4.2
Authorization
to File Financing Statements.
Borrower hereby authorizes
Lender to file financing statements, or any document similar
thereto including collateral agreements, without notice to
Borrower, with all appropriate jurisdictions to perfect or protect
Lender’s interest or rights hereunder. Such financing
statements may indicate the collateral as “all assets of the
Debtor (such Debtor being BTS)” or words of similar effect,
all in Lender’s discretion and in accordance with the
requirements of the Uniform Commercial Code (the
“Code”).
SECTION
5.
REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower hereby
represents and warrants to Lender as of the date hereof as
follows:
5.1
Binding
Agreement.
The Agreement and the other Loan Documents
constitute and will constitute, when issued and delivered valid and
binding obligations of Borrower, enforceable in accordance with
their respective terms.
5.2
Organization,
Power, Authorization.
Each of the Borrowers is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Borrowers has the
requisite power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated
thereby.
5.3
Non-Contravention.
Neither the execution and the delivery of this Agreement and the
Loan Documents, nor the consummation of the transactions
contemplated hereby will (a) violate any injunction, order, decree,
ruling, charge or any provision of Borrower’s charter
documents or, any restriction of any government, governmental
agency, or court to which Borrower is subject, or (b) conflict
with, result in a material breach of , constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate , or cancel, any material agreement,
contract, lease, license, instrument, or other agreement to which
Borrower is a party or by which it is bound or to which any of its
assets are subject.
5.4
Collateral.
BTS has good title to, has rights in, and the power to transfer
each item of the Collateral upon which it purports to grant a Lien
hereunder, free and clear of any and all liens. The security
interests and Liens granted to Lender under this Agreement and the
other Loan Documents to which BTS is a party constitute valid and
perfected first priority liens and security interests in and upon
the Collateral to which BTS now has or hereafter acquires
rights.
SECTION
6. COVENANTS.
6.1
Encumbrances.
BTS
shall not create, incur, allow, or suffer any Lien on any
Collateral, convey or permit any Collateral not to be subject to
the first priority security interest granted herein.
6.2
Reports.
Borrower
shall provide Lender on a timely basis all quarterly financials of
BTS.
6.3
Further
Assurances
. Borrower shall execute any further
instruments and take further action as Lender reasonably requests
to perfect or continue Lender’s security interest in the
Collateral or to otherwise affect the purposes of this
Agreement.
SECTION
7. REPRESENTATIONS AND WARRANTIES OF LENDER.
7.1
Organization; Power;
Authorization
. Lender is limited partnership,
duly organized and in good standing under the laws of the State of
Delaware. Lender has full power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.
SECTION
8. EVENTS OF DEFAULT; REMEDIES UPON DEFAULT.
8.1
Events of
Default
. The occurrence of any of the following
events shall constitute an event of default (each, an
“
Event of
Default
”) hereunder:
(a)
Borrower fails to pay timely any interest payment within ten (10)
days when due hereunder, the principal and Lender’s
Partcipation, and any other amounts due under the Loan Documents
within ten (10) of when the same becomes due and
payable;
(b)
Borrower (A) files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law, or any
other law for the relief of, or relating to, debtors, now or
hereafter in effect; (B) applies for or consents to the
appointment of a custodian, receiver, trustee, sequestrator,
conservator or similar official for Borrower or for a substantial
part of Borrower’s assets; (C) makes a general
assignment for the benefit of creditors; (D) becomes unable
to, or admits in writing its inability to, pay its debts generally
as they come due; or (E) takes any corporate action in
furtherance of any of the foregoing;
(c) An
involuntary petition is filed against Borrower (unless such
petition is dismissed or discharged within sixty (60) days) under
any bankruptcy statute now or hereafter in effect, or a custodian,
receiver, trustee, sequestrator, conservator, assignee for the
benefit of creditors (or other similar official) is appointed to
take possession, custody or control of any property of
Borrower;
(d) One
or more judgments for the payment of money in an amount,
individually or in the aggregate, that could reasonably
be expected to have a material adverse effect on Borrower’s
business or operations (not covered by independent third-party
insurance as to which liability has been accepted by such insurance
carrier) are entered by a court of competent jurisdiction against
Borrower which judgment remains undischarged, unsatisfied,
unvacated or unstayed for a period of twenty (20) days after
such judgment becomes final and non-appealable;
(e)
Borrower breaches any representation, warranty or covenant set
forth herein, or any representation, warranty or other statement
made by Borrower in the Loan Documents, or any other agreement or
other document delivered in connection with any of the Loan
Documents, including without limitation Sections 2 and 3 herein,
which shall prove to have been false or misleading in any material
respect;
(f)
After the date hereof, Borrower grants any Person, other than
Lender, any Lien or other encumbrance on the Collateral or on all
or any substantial part of its assets, except for mechanic’s
liens and any such other liens which individually or in the
aggregate are not material.
SECTION
9.
Remedies Upon
Default
. Upon the occurrence of an Event of Default
hereunder:
9.1
All
unpaid principal, unpaid interest, Lender’s Participation and
other amounts owing hereunder shall, at the option of Lender, be
immediately due and payable by Borrower.
9.2
Lender
shall have the right to exercise all the remedies of a secured
party under the Code, including without limitation the right to
require BTS to assemble the Collateral and to make it available
to Lender at a place designated by Lender. Borrower will pay
any reasonable expenses (including reasonable attorneys’
fees) incurred by Lender in connection with the exercise of any of
Lender’s rights hereunder, including without limitation any
expense incurred in disposing of the Collateral; and
9.3
Lender
may proceed to protect and enforce its right by suit in the
specific performance of any covenant or agreement contained in the
Loan Documents or in aid of the exercise of any power granted in
the Loan Documents or may proceed to enforce the payment of the
Loan Documents or to enforce any other legal or equitable rights as
Lender may have, including exercising any right or remedies
available to Lender under the Loan Documents and under the Code
(including disposal of the Collateral pursuant to the terms
thereof).
9.4
Any
and all amounts (including principal, interest, Lender’s
Participation and other amounts due and all reasonable costs and
expenses of collection, including reasonable attorneys’ fees)
outstanding hereunder after an Event of Default shall bear Default
Interest from the date due until paid at the rate of eighteen
percent (18%) per annum.
9.5
If
an Event of Default has occurred and is continuing, Borrower shall
have no right to specify the order or the accounts to which Lender
shall allocate or apply any payments required to be made by
Borrower to Lender or otherwise received by Lender under this
Agreement when any such allocation or application is not specified
elsewhere in this Agreement. If an Event of Default has
occurred and is continuing, Lender may apply any funds in its
possession, whether from Borrower account balances, payments,
proceeds realized as the result of any collection of accounts or
other disposition of the Collateral, or otherwise, to the
obligations in such order as Lender shall determine in its sole
discretion.
9.6
Lender’s
Liability for the Collateral. So long as Lender complies
with reasonable practices regarding the safekeeping of the
Collateral in the possession or under the control of Lender
customary for Persons in possession or having control of items
similar to the Collateral, Lender shall not be liable or
responsible for: (i) any loss or damage to the Collateral; (ii) any
diminution in the value of the Collateral; or (iii) any act or
default of any carrier, warehouseman, bailee, or other Person.
Borrower bears all risk of loss, damage or destruction of the
Collateral.
SECTION
10. MISCELLANEOUS.
10.1
Governing
Law/Jurisdiction/Waiver
. The interpretation and enforcement
of this Agreement and the Loan Documents shall be governed in all
respects by the laws of the State of New York, without giving
effect to conflict of laws principles thereof. Disputes arising out
of this Note or the performance thereof and/or any other agreement
made herewith including the Security Agreement shall be governed by
such laws and each party hereto irrevocably and unconditionally
submits to the exclusive jurisdiction of any federal or state court
sitting in the County of New York in the State of New York and
irrevocably agrees that all actions or proceedings arising out of
or relating to this Agreement shall be litigated exclusively in
such court.
10.2
EACH
OF THE PARTIES HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER. The parties hereby submit to the exclusive
jurisdiction of the courts of the State of New York located in New
York County and the Federal courts located in the Southern District
of New York, with respect to any action or legal proceeding
commenced by either party with respect to this Agreement. Each
party irrevocably waives any objection it now has or hereafter may
have respecting the jurisdiction or venue of any such action or
proceeding or the inconvenience of such forum, and each party
consents to the service of process in any such action or proceeding
by overnight delivery only to the parties listed in Section 10.5
herein. Each party agrees that in any such action, the prevailing
party shall be entitled to its reasonable attorney’s
fees.
10.3
Amendment
and Waiver
. The provisions of this Agreement may be amended,
modified, or waived only with the prior written consent of the
parties hereto. No course of dealing or the failure of any party to
enforce any of the provisions of this Agreement shall in any way
operate as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision
of this Agreement in accordance with its terms.
10.4
Entire
Agreement
. This Agreement including all Loan Documents
constitute the full and complete understanding of the parties, and
supersedes and terminates all other prior agreements and writings
between the parties hereto only with respect to their subject
matter.
10.5
Notices
.
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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One Penn Plaza, 45th Floor
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New York, NY 10119
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Email : Bweinstein@cedarviewcapital.com
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with a
copy to:
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LAW OFFICE OF MARK R. KOOK
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270
Madison Avenue, Suite 1203
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New
York, New York 10016
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Email:
Mkook@kooklaw.com
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If to
the Borrower:
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NOVUME SOLUTIONS, INC.
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BREKFORD TRAFFIC SAFETY, INC.
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14420
Albemarle Point Place, Suite 200
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Chantilly,
VA 20151
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Tel:
(703) 953-3838
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Attn:
Suzanne R. Loughlin
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EVP,
General Counsel
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with a
copy to:
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SICHENZIA
ROSS FERENCE KESNER LLP
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1185
Avenue of the Americas
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New
York, NY 1003
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Attn:
Thomas A. Rose, Esq.
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Tel:
(212) 930-9700
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Email:
trose@srfkllp.com
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10.6
Severability
.
Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to
be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement
in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such
jurisdiction as if such valid, illegal or unenforceable provision
had never been contained herein.
10.7
Counterparts
.
This Agreement may be executed in counterparts (including by means
of facsimile or electronic delivery), each of which shall be deemed
to be an original but all of which together shall constitute one
agreement. Fax and .pdf copies of signatures shall be treated as
originals for all purposes.
10.8
Representation
by Counsel
. Each party agrees that it has had full
opportunity to have this Agreement and the Loan Documents reviewed
by its own counsel, and has not relied on the advice of the other
party's counsel.
10.9
Usury
.
In no event shall the amount of interest due or payable hereunder
exceed the maximum amount of interest allowed by applicable law. In
the event the interest provided for hereunder exceeds the maximum
lawful amount, then the interest rate provided herein shall be
deemed modified to the maximum lawful amount, and in the event any
payment is made which exceeds such maximum lawful amount, then the
amount of such excess sum shall be credited as a payment of
principal. It is the express intent hereof that Borrower shall not
pay and Lender shall not receive, directly or indirectly, interest
in excess of what may lawfully be paid by Borrower under applicable
law.
[Signature
page follows.]
IN
WITNESS WHEREOF, the parties hereto have executed this Secured Loan
and 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/
Robert A. Berman
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By: /s/
Burton Weinstein
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Name:
Robert A. Berman
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Name:
Burton Weinstein
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Title:
Authorized Signatory
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Title:
Managing Partner
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NOVUME SOLUTIONS, INC
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By: /s/
Robert A. Berman
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Name:
Robert A. Berman
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Title:
Chief Executive Officer
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Exhibit 10.1
SECURITY AGREEMENT
THIS
SECURITY AGREEMENT made as of this
3
rd
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 One Penn
Plaza, 45th Floor, New York, NY 10119 (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;
(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:
(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;
(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
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.
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 MARK R. KOOK
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270
Madison Avenue, Suite 1203
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New
York, New York 10016
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Email:
Mkook@kooklaw.com
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If to
the Borrower:
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NOVUME SOLUTIONS, INC.
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BREKFORD TRAFFIC SAFETY, INC.
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14420
Albemarle Point Place, Suite 200
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Chantilly,
VA 20151
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Tel:
(703) 953-3838
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Attn:
Suzanne R. Loughlin
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EVP,
General Counsel
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with a
copy to:
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SICHENZIA
ROSS FERENCE KESNER LLP
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1185
Avenue of the Americas
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New
York, NY 1003
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Attn:
Thomas A. Rose, Esq.
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Tel:
(212) 930-9700
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Email:
trose@srfkllp.com
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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/
Robert A. Berman
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By: /s/
Burton Weinstein
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Name:
Robert A. Berman
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Name:
Burton Weinstein
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Title:
Authorized Signatory
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Title:
Managing Partner
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