Exhibit 10.4

 

Execution Version

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) is entered into as of February 18,
2015, by and between Creative Realities, Inc., a Minnesota corporation (the
“Company”), those subsidiaries of the Company party hereto (collectively with
the Company, the “Obligors” and each, an “Obligor”), and Mill City Ventures III,
Ltd. (the “Secured Party”) under that certain Securities Purchase Agreement with
the Company dated of even date herewith (the “Purchase Agreement”). Capitalized
terms not otherwise defined in this Agreement shall have the meanings ascribed
to them in the Purchase Agreement.

 

NOW, THEREFORE, Obligors agree with Secured Party as follows:

 

1. Definitions. All terms defined in the Uniform Commercial Code of the State of
Minnesota (the “UCC”) and used herein, unless otherwise defined herein, shall
have the same definitions herein as specified in the UCC.

 

2. Security Interest. Each Obligor hereby grants Secured Party a security
interest in its accounts receivable, whether now owned or hereafter acquired or
arising, and all proceeds of such accounts receivable (collectively,
the “Collateral”).

 

3. Obligations Secured. The security interest granted in this Agreement shall
secure all of the obligations of the Company under the Note offered and sold
pursuant to the Purchase Agreement, and all extensions, renewals or
modifications thereof.

 

4. Authorization to File Financing Statements. Each Obligor hereby irrevocably
authorizes Secured Party at any time and from time to time to file in such form
and in such offices as the Secured Party reasonably determines appropriate to
perfect the security interests granted hereunder any initial financing
statements and amendments thereto (and continuations thereof) that (a) indicate
the Collateral as the accounts receivable of each Obligor, and (b) contain any
other information required by Article 9 of the UCC or its equivalent in any
foreign jurisdiction. Each Obligor agrees to furnish any such information to
Secured Party promptly upon request.

 

5. Ownership. Each Obligor represents and warrants that it owns, and to the
extent that the Collateral is to be acquired after the date hereof will own, the
Collateral free from encumbrance. Each Obligor will defend the Collateral
against all claims of all persons at any time claiming the Collateral or any
interest in the Collateral, except Secured Party.

 

6. Representations, Warranties and Covenants Concerning Collateral. Each Obligor
represents and warrants that no financing statement covering the Collateral is
on file in any public office. Each Obligor warrants that (a) its exact legal
name is as stated on the signature page of this Agreement, (b) it is an
organization of the type and organized in the jurisdiction set forth on the
signature page of this Agreement, and (c) its place(s) of business, its chief
executive office and its mailing address, are set forth on the signature page of
this Agreement. Each Obligor agrees that it will not change its name, any place
of business, any location of its collateral, its mailing address or its chief
executive office without giving at least 30 days prior written notice to Secured
Party. The Collateral is and will remain personal property. The Obligors shall
not change their type of organization, jurisdiction of organization or other
legal structure without the prior written consent of Secured Party. Each Obligor
hereby appoints Secured Party as its attorney-in-fact to do all acts and things
which Secured Party may deem necessary to perfect and to continue perfected the
security interest created hereby and to protect and to preserve the Collateral.

 

 

 

 

7. Other Actions as to any and all Collateral. Each Obligor further agrees to
take any other action reasonably requested by Secured Party to ensure the
attachment, perfection and priority of, and the ability of Secured Party to
enforce, Secured Party’s security interest in any and all of the Collateral.

 

8. No Sale or Transfer. No Obligor may sell or transfer the Collateral except in
the ordinary course of business prior to the occurrence of a Default. A sale or
transfer in the ordinary course of business does not include a sale or transfer
in partial or total satisfaction of a debt, or in bulk.

 

9. Inspection and Taxes. Each Obligor will at all reasonable times during normal
business hours allow Secured Party and its agents, employees, attorneys or
accountants to examine, inspect and make extracts from such Obligor’s books and
other records. Obligors will pay when due all taxes and assessments on the
Collateral.

 

10. Costs. The Company agrees to pay all reasonable out-of-pocket fees, costs
and expenses incurred in connection with any filing required hereunder,
including without limitation, any financing statements pursuant to the UCC or
similar laws, continuation statements, partial releases and/or termination
statements related thereto or any expenses of any searches reasonably required
by the Secured Party. If an Obligor fails to perform any of its duties
hereunder, Secured Party may, but shall not be required to, do so on any
Obligor’s behalf. If an Obligor defaults under this Security Agreement, each
Obligor will pay the costs, including the reasonable actual attorneys’ fees, of
Secured Party incurred in enforcing this Agreement. Any amounts expended by
Secured Party in performing an Obligor’s duties or enforcing this Security
Agreement shall be payable by the Obligors to Secured Party on demand and shall
bear interest at the rate applicable from time to time under the Note held by
Secured Party. Any liability arising under this Section 10 will be joint and
several among the Obligors.

 

11. Default. Obligors will each be in default under this Security Agreement upon
the happening of any of the following events (each a “Default”): (a) an
Obligor’s failure to perform when due any of the obligations hereunder required
to be performed by it (after giving effect to any applicable cure period); (b)
the occurrence of any “Event of Default” as defined in the Note; or (c) any
representation or warranty made by an Obligor herein is false or misleading in
any material respect.

 

12. Remedies. This Agreement and Secured Party’s rights under this Agreement or
under applicable law may be enforced by Secured Party, at its discretion,
against any one or more of the parties referred to above which are encompassed
within the term Obligor, without any need to bring any enforcement action
against the other parties who are encompassed within the term Obligor. At any
time during the continuance of a Default, Secured Party may declare any or all
monetary obligations under the Note due and payable, and shall have the remedies
of Secured Party under the Uniform Commercial Code. Secured Party may take
possession of the Collateral with or without judicial process. Secured Party may
require any Obligor to assemble the Collateral and make it available to Secured
Party. Secured Party will give the Obligors reasonable notice of the time that
any intended sale or disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if the notice is mailed, postage
prepaid, to any Obligor at least 20 calendar days before the time of the sale or
disposition.

 

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13. No Waivers. No waiver by Secured Party of any Default shall operate as a
waiver of any other Default or of the same Default on a future occasion. The
acceptance of this Security Agreement will not waive or impair any other
security that Secured Party may have or hereafter acquire for the obligations
secured hereunder, nor will the taking of any additional security waive or
impair the rights granted in this Security Agreement. Secured Party may resort
to any security it may have in any order it deems proper, and may apply any
payments made on any part of the obligations secured hereunder to any part of
such obligations, despite any directions of an Obligor to the contrary. No delay
or omission of the Secured Party to exercise, and no course of dealing with
respect to, any right, power or remedy accruing upon the occurrence and during
the continuance of any Default as aforesaid shall impair any such right, power
or remedy or shall be construed to be a waiver of any such Default or an
acquiescence therein.

 

14. Governing Law; Binding Effect. This Security Agreement shall be governed by
the laws of the State of New York without regard to its conflicts-of-law
principles, and shall inure to the benefit of, and bind, Secured Party and each
Obligor and their respective successors and assigns. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Security Agreement (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced exclusively in the
state and federal courts sitting in Hennepin County, Minnesota. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in Hennepin County, Minnesota, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper or is an inconvenient venue for such proceeding. Each
party hereby irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Security Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. No provision of this Security Agreement shall be amended,
modified or waived other than by a written instrument that refers to this
Security Agreement and is signed on behalf of Secured Party.

 

15. Termination. This Agreement shall terminate upon the indefeasible
satisfaction and payment of all obligations owed to Secured Party by each
Obligor, but shall automatically be reinstated with no further action by any
party hereto, in the event any such payment is or is ordered to be returned by
Secured Party for any reason whatsoever, including without limitation the
insolvency, bankruptcy or reorganization of any Obligor, and each Obligor shall
sign and deliver to the Secured Party all documents, and shall do such other
acts and things, as may be necessary to reinstate and perfect the Secured
Party's security interest.

 

16. Consent to Jurisdiction. AT THE OPTION OF SECURED PARTY, THIS AGREEMENT MAY
BE ENFORCED IN ANY FEDERAL OR STATE COURT SITTING IN NEW YORK, NEW YORK, OR IN
ANY OTHER JURISDICTION WHERE THE COLLATERAL IS LOCATED; AND EACH PARTY CONSENTS
TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT
VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT ANY PARTY COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT,
SECURED PARTY AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO
ONE OF THE JURISDICTIONS AND VENUES ABOVE DESCRIBED, OR IF SUCH TRANSFER CANNOT
BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

 

* * * * * * *

 

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IN WITNESS WHEREOF, the undersigned parties have set their hands to this
Security Agreement to be effective as of the date first set forth above.

 

  CREATIVE REALITIES, INC.         By: /s/ John Walpuck     John Walpuck    
Chief Financial Officer         BROADCAST INTERNATIONAL, INC.         By: /s/
John Walpuck     John Walpuck     Chief Financial Officer         CREATIVE
REALITIES, LLC         By: /s/ John Walpuck     John Walpuck     Chief Financial
Officer         WIRELESS RONIN TECHNOLOGIES
CANADA, INC.         By: /s/ John Walpuck     John Walpuck     Chief Financial
Officer

 

OBLIGOR INFORMATION:

 

Obligor Jurisdiction of Organization;
Type of Organization Address Creative Realities, Inc. Minnesota (corporation) 55
Broadway, 9th Floor New York, New York 10006 Broadcast International, Inc. Utah
(corporation) 6952 S. High Tech Drive Suite C, Salt Lake City, Utah 84047
Creative Realities, LLC Delaware (limited liability company) 55 Broadway, 9th
Floor New York, New York 10006 Wireless Ronin Technologies Canada, Inc. Canada
(corporation) 4510 Rhodes Drive, Suite 800, Windsor, Ontario

 

 

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