EXHIBIT 10.4
SECURITY
AGREEMENT
THIS SECURITY AGREEMENT (the
“Agreement”) dated August 12, 2005, is by and among
Bullet Freight Systems and Logistics, Inc., a Florida corporation
(“the “Debtor”) and Segmentz, Inc., a Delaware
corporation (the “Secured Party”).
WITNESSETH:
WHEREAS, the Secured Party has
extended loans to Debtor concurrently herewith pursuant to the
terms of a promissory note issued by Debtor to Secured Party in the
principal amount of $33,000 (the “1 st Note”) and a line of credit
promissory note issued by Debtor to Secured Party in the principal
amount of up to $200,000 (the “2 nd Note” and together with the
1 st Note the “Notes”);
and
WHEREAS, in order to induce the
Secured Party to extend the loans evidenced by the Notes, the
Debtor has agreed to execute and deliver to the Secured Party this
Agreement to grant the Secured Party a security interest in certain
property of the Debtor to secure the prompt payment, performance
and discharge in full of all of the Debtor’s obligations
under the Notes.
NOW, THEREFORE, in consideration of
the agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as
follows:
1. Certain Definitions
. As used in this
Agreement, the following terms shall have the meanings set forth in
this Section 1. Terms used but not otherwise defined in this
Agreement that are defined in Article 9 of the UCC (such as
“receivables” and “proceeds”) shall have
the respective meanings given such terms in Article 9 of the
UCC.
(a) “Collateral” means
the collateral in which the Secured Party is granted a security
interest by this Agreement and which shall include the following,
whether presently owned or existing or hereafter acquired or coming
into existence, and all additions and accessions thereto and all
substitutions and replacements thereof, and all proceeds, products
and accounts thereof, including, without limitation, all proceeds
from the sale or transfer of the Collateral and of insurance
covering the same and of any tort claims in connection
therewith:
(i) All assets of Debtor set forth
on the attached Schedule l(a)(i), together with all documents of
title and documents representing the same, all additions and
accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing and all improvements thereto
(collectively, the “Purchase Assets”); and
(ii) All receivables of the Debtor
including all insurance proceeds, and rights to refunds or
indemnification whatsoever owing,
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together with all instruments, all
documents of title representing any of the foregoing, all rights in
any merchandising, goods, and equipment which any of the same may
represent, and all right, title, security and guaranties with
respect to each receivable; and
(iii) All products and proceeds of
all of the foregoing Collateral set forth in clauses (i) and (ii)
above.
(b) “Obligations” means
all of the Debtor’s obligations under this Agreement and the
Notes, in each case, whether now or hereafter existing, voluntary
or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owed with
others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or
any portion of such obligations or liabilities that are paid, to
the extent all or any part of such payment is avoided or recovered
directly or indirectly from the Secured Party as a preference,
fraudulent transfer or otherwise as such obligations may be
amended, supplemented, converted, extended or modified from time to
time.
(c) “UCC” means the
Uniform Commercial Code of the State of Florida.
2. Grant of Security
Interest . As
an inducement for the Secured Party to extend the loans as
evidenced by the Notes and to secure the complete and timely
payment, performance and discharge in full, as the case may be, of
all of the Obligations, the Debtor hereby, unconditionally and
irrevocably, pledges, grants and hypothecates to the Secured Party,
a continuing security interest in, a lien upon and a right of
set-off against all of its right, title and interest of whatsoever
kind and nature in and to the Collateral (the “Security
Interest”).
3. Representations,
Warranties, Covenants and Agreements of the Debtor .
The Debtor represents and warrants
to, and covenants and agrees with, the Secured Party as
follows:
(a) The Debtor has the requisite
corporate power and authority to enter into this Agreement and
otherwise to carry out its obligations hereunder. The execution,
delivery and performance by the Debtor of this Agreement and the
filings contemplated therein have been duly authorized by all
necessary action on the part of the Debtor and no further action is
required by the Debtor.
(b) The Debtor represents and
warrants that it has no place of business or offices where its
books of account and records are kept other than 7270 NW 35
th
Terrace, Miami Florida
33122 (the “Executive Office”).
(c) The Debtor is the sole owner of
the Collateral, free and clear of any liens, security interests,
encumbrances, rights or claims, and is fully authorized to grant
the Security Interest in and to pledge the Collateral. There
is
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not on file in any governmental or
regulatory authority, agency or recording office an effective
financing statement, security agreement, license or transfer or any
notice of any of the foregoing (other than those that have been
filed in favor of the Secured Party pursuant to this Agreement)
covering or affecting any of the Collateral. So long as this
Agreement shall be in effect, Debtor shall not execute and shall
not knowingly permit to be on file in any such office or agency any
such financing statement or other document or instrument (except to
the extent filed or recorded in favor of the Secured party pursuant
to the terms of this Agreement).
(d) This Agreement creates in favor
of the Secured Party a valid security interest in the Collateral
securing the payment and performance of the Obligations and, upon
making the filings described in the immediately following sentence,
a perfected security interest in such Collateral. Except for the
filing of financing statements pursuant to the UCC with the proper
filing and recording agencies, no authorization or approval of or
filing with or notice to any governmental authority or regulatory
body is required either (i) for the grant by the Debtor of, or the
effectiveness of, the Security Interest granted hereby or for the
execution, delivery and performance of this Agreement by the Debtor
or (ii) for the perfection of or exercise by the Secured Party of
its rights and remedies hereunder.
(e) No part of the Collateral has
been judged invalid or unenforceable. No written claim has been
received that any Collateral or Debtor’s use of any
Collateral violates the rights of any third party. There has been
no adverse decision to Debtor’s claim of ownership rights in
or exclusive rights to use the Collateral in any jurisdiction or to
Debtor’s right to keep and maintain such Collateral in full
force and effect, and there is no proceeding involving said rights
pending or, to the best knowledge of the Debtor, threatened before
any court, judicial body, administrative or regulatory agency,
arbitrator or other governmental authority.
(f) The execution, delivery and
performance of this Agreement by the Debtor does not conflict with,
or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing
Debtor’s debt or otherwise) or other understanding to which
Debtor is a party or by which any property or asset of the Debtor
is bound or affected. No consent (including, without limitation,
from stock holders or creditors of the Debtor) is required for the
Debtor to enter into and perform its obligations
hereunder.
(g) The Debtor shall at all times
maintain the liens and Security Interest provided for hereunder as
valid and perfected liens and security interests in the Collateral
in favor of the Secured Parties until this Agreement and the
Security Interest hereunder shall be terminated. The Debtor hereby
agrees to
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defend the same against any and all
persons. The Debtor shall safeguard and protect all Collateral for
the account of the Secured Party. At the request of the Secured
Party, the Debtor will sign and deliver to the Secured Party at any
time or from time to time one or more financing statements pursuant
to the UCC in form reasonably satisfactory to the Secured Party and
will pay the cost of filing the same in all public offices wherever
filing is, or is deemed by the Secured Party to be, necessary or
desirable to effect the rights and obligations provided for herein.
Without limiting the generality of the foregoing, the Debtor shall
pay all fees, taxes and other amounts necessary to maintain the
Collateral and the Security Interest hereunder, and the Debtor
shall obtain and furnish to the Secured Party from time to time,
upon demand, such releases and/or subordinations of claims and
liens which may be required to maintain the priority of the
Security Interest hereunder.
(h) The Debtor will not transfer,
pledge, hypothecate, encumber, license (except for non-exclusive
licenses granted by debtor in its ordinary course of business and
sales of inventory), sell or otherwise dispose of any of the
Collateral without the prior written consent of the Secured
Party.
(i) The Debtor shall, within two (2)
days of obtaining knowledge thereof, advise the Secured Party
promptly, in sufficient detail, of any substantial change in the
Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the
Secured Party’s security interest therein.
(j) The Debtor shall promptly
execute and deliver to the Secured Party such further deeds,
mortgages, assignments, security agreements, financing statements
or other instruments, documents, certificates and assurances and
take such further action as the Secured Party may from time to time
request and may in its sole discretion deem necessary to perfect,
protect or enforce its security interest in the
Collateral.
(k) The Debtor shall at all times
maintain the Collateral, and its books of account and records
relating to the Collateral, at the Executive Office, and may not
relocate such books of account and records or tangible Collateral
unless they deliver to the Secured Parties at least 30 days prior
to such relocation written notice of such relocation and the new
location thereof (which must be within the United
States).
(1) The Debtor shall keep and
preserve its tangible Collateral in good condition, repair and
order and shall not operate or locate any such Collateral (or cause
to be operated or located) in any area excluded from insurance
coverage.
(m) The Debtor shall permit the
Secured Party and its representatives and agents to inspect the
Collateral at any time, and to make copies of records pertaining to
the Collateral as may be requested by a Secured Party from time to
time.
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(n) The Debtor shall take all steps
reasonably necessary to diligently pursue and seek to preserve,
enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.
(o) The Debtor shall promptly notify
the Secured Parties in sufficient detail upon becoming aware of any
attachment, garnishment, execution or other legal process levied
against any Collateral and of any other information received by the
Debtor that may materially affect the value of the Collateral, the
Security Interest or the rights and remedies of the Secured Parties
hereunder.
(p) All information heretofore,
herein or hereafter supplied to the Secured Parties by or on behalf
of the Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date
furnished.
(q) The Debtor shall at all times
preserve and keep in full force and effect its existence and good
standing and any rights and franchises material to its
business.
(r) The Debtor will not
