Exhibit 10.2

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (the “Security Agreement”) is entered into May 20, 2020,
in connection with the Secured Line of Credit Security Agreement, by and between
Global Clean Solutions, LLC, a Nevada limited liability company (the
“Borrower”), Edison Nation, Inc., a Nevada corporation (“Guarantor”), and PPE
Brickell Supplies, LLC, a Florida limited liability company (“Secured Party”).

 

RECITALS

 

A. The Borrower has entered into a Secured Line of Credit with the Secured Party
(the “Loan”) in the principal amount of up to TWO MILLION FIVE-HUNDRED THOUSAND
Dollars ($2,500,000.00) dated on or about the date hereof the parties are
entering this Security Agreement.

 

B. The Guarantor has an interest in the Borrower and as security for Borrower’s
repayment obligations under the Loan, the Guarantor agrees to grant Secured
Party a security interest in the Collateral described below.

 

C. This Security Agreement together with the Loan and all documents referenced
therein (including any and all Promissory Notes), or executed in connection
herewith shall collectively be referred to herein as the “Loan Documents.”

 

NOW, THEREFORE, to that end and in consideration of the premises, and covenants
set forth below, and the mutual benefits to be derived from this Security
Agreement, and other good and valuable consideration, the parties hereto agree
as follows:

 

1. Security Interest. To secure the “Obligations” (as defined below), the
Guarantor grants to Secured Party a security interest in all right, title, and
interest to shares of common stock of the Guarantor, the amount of which is
determined by the conversion price calculation in each respective Promissory
Note (each a “Note”) issued under the Loan (hereinafter, collectively, the
“Collateral”).

 

2. Obligation. The security interest granted hereunder is given as security for
the payment and performance of all indebtedness and obligations owed by the
Borrower to Secured Party, whether now existing or hereafter incurred, under or
in connection with or evidenced by the Loan, the Promissory Notes, and/or this
Security Agreement, together with all extensions, modifications, or renewals of
any of the foregoing, including, without limitation, all unpaid principal
amounts, all interest accrued thereon, all fees and all other amounts payable by
the Borrower to Secured Party thereunder or in connection therewith (hereinafter
referred to, collectively, as the “Obligations”)

 

3. Authority. The Guarantor warrants that Guarantor is authorized to enter into
this Security Agreement with Secured Party and has requisite authority to
consummate the transactions contemplated herein.

 

4. Reservation of Shares. To ensure adequate capitalization to perform its
Obligations hereunder, Guarantor shall reserve 1,800,000 common shares of the
Guarantor by executing the Letter of Instruction to Guarantor’s Transfer Agent,
attached hereto as Exhibit A.

 

   

 

 

5. Default. Each of the following shall constitute an event of default (“Event
of Default”) under this Security Agreement:

 

(a) Representations and Warranties. If any of the representations and warranties
made by the Guarantor herein, or by the Guarantor in any of the Loan Documents
shall be false or misleading in any material respect when made;

 

(b) Covenants. If the Guarantor shall be in material default under any of the
terms, covenants, conditions, or obligations of this Security Agreement or any
of the Loan Documents and such default shall not have been cured within ten (10)
Banking Days of the Guarantor’s receipt of Secured Party’s written notice of
default;

 

(c) Failure to Timely File Reports. Without in any way limiting the Secured
Party’s right to pursue other remedies including actual damages and/or equitable
relief, the parties agree that if the Guarantor fails to file any of its
obligated reports, filings, or disclosures under the Securities Exchange Act of
1934, or any other required filing, the absence of which would make the
Guarantor’s securities ineligible for an exemption under Rule 144, a $2,000.00
default penalty shall be added to the principal of outstanding on any Promissory
Note for each calendar day that the Guarantor is late in making such filing; or

 

(d) Failure to Deliver Common Stock Prior to Deadline. Without in any way
limiting the Secured Party’s right to pursue other remedies, including actual
damages and/or equitable relief, the parties agree that if delivery of the
common stock issuable upon conversion of any Note is not delivered by the
deadline as stated in each respective Note due to action and/or inaction of the
Guarantor, the Guarantor shall pay to the Secured Party $2,000.00 per calendar
day in cash, for each calendar day beyond the deadline that the Guarantor fails
to deliver such common stock (the “Fail to Deliver Fee”); provided; however that
the Fail to Deliver Fee shall not be due if the failure is a result of a third
party (i.e., transfer agent; and not the result of any failure to pay such
transfer agent) despite the best efforts of the Guarantor to effect delivery of
such Common Stock. Such cash amount shall be paid to Secured Party by the fifth
(5th) day of the month following the month in which it has accrued or, at the
option of the Secured Party (by written notice to the Guarantor by the first
(1st) day of the month following the month in which it has accrued), shall be
added to the principal amount of this Note, in which event interest shall accrue
thereon in accordance with the terms of each Note and such additional principal
amount shall be convertible into Common Stock in accordance with the terms of
each Note. The Guarantor agrees that the right to convert is a valuable right to
the Secured Party. The damages resulting from a failure, attempt to frustrate,
interference with such conversion right are difficult if not impossible to
quantify. Accordingly, the parties acknowledge that the liquidated damages
provision contained in this Security Agreement are justified.

 

(e) Scope of Default. Any Event of Default under this Security Agreement is
separate and specific to this Security Agreement and does not otherwise affect
or impact any default under any other document or agreement between the parties
unless specifically referenced therein.

 

6. Remedies. In addition to any remedies specifically included in Section 5
herein, Secured Party shall have any other remedy available to it under law or
any of the other Loan Documents.

 

7. General. The waiver by Secured Party of any breach of any provision of this
Security Agreement or warranty or representation herein set forth will not be
construed as a waiver of any subsequent breach. The failure to exercise any
right hereunder by Secured Party will not operate as a waiver of such right. All
rights and remedies herein provided are cumulative. The Guarantor may not assign
its rights or delegate its duties hereunder without Secured Party’s written
consent. Any provision hereof found to be invalid will not invalidate the
remainder. All words used herein will be construed to be of such gender and
number as the circumstances require. This Security Agreement binds the Guarantor
and their successors and assigns, and inures to the benefit of Secured Party and
its successors and assigns. This Security Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute but one and the same Security Agreement.

 

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8. Choice of Law, Venue, Jury Trial Waiver. Except as otherwise and specifically
provided herein or as otherwise specifically prohibited by applicable law,
Nevada law governs this Security Agreement and the Loan Documents without regard
to principles of conflicts of law. The parties each submit to the exclusive
jurisdiction of the State and Federal courts of Nevada; provided, however, that
nothing in this Security Agreement shall be deemed to operate to preclude
Secured Party from bringing suit or taking other legal action in any other
jurisdiction to realize on the Collateral or any other security for the
Obligations if permitted by this Security Agreement, or to enforce a judgment or
other court order in favor of Secured Party.

 

9. Modification; Waiver. None of the terms or provisions of this Security
Agreement may be changed, waived, modified, discharged, or terminated except by
instrument in writing executed by the party or parties against whom enforcement
of the change, waiver, modification, discharge, or termination is asserted. None
of the terms or provisions of this Security Agreement shall be deemed to have
been abrogated or waived by reason of any failure or failures to enforce the
same.

 

10. Joint and Several Applicability. Both the Borrower and Guarantor are
agreeing to the terms of this Security Agreement. Any Obligation or requirement
herein applies to both the Borrower and Guarantor. To be clear, the Obligations
of the Borrower and Guarantor will be joint and several. Any remedy available
under this Security Agreement or the Loan, or any other related transaction
document shall be available against either Borrower or Guarantor.

 

TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND SECURED PARTY
EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS SECURITY AGREEMENT, THE LOAN DOCUMENTS OR ANY
CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER
CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS
SECURITY AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL AND BY
ITS EXECUTION OF THIS SECURITY AGREEMENT CONFIRMS THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH COUNSEL.

 

[THIS SECTION INTENTIONALLY LEFT BLANK]

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Security Agreement as of the
date first written above.

 

BORROWER       Global Clean Solutions, LLC.         By:     Brian McFadden,
Manager         By:     Matthew Pantofel, Manager         By:     Chris
Ferguson, Manager         By:     Brett Vroman, Manager         GUARANTOR      
Edison Nation, Inc.         By:     Chris Ferguson, CEO         SECURED PARTY  
    PPE Brickell Supplies, LLC         By:     Matthew Pantofel, Manager  

 

[SIGNATURE PAGE TO SECURITY AGREEMENT]

 

   

 

 

EXHIBIT A

 

Edison Nation, Inc.

1 West Broad Street, Suite 1004

Bethlehem, PA 18018

 

May 20, 2020

 

Nevada Agency and Transfer Company

50 West Liberty Street, Suite 880

Reno, Nevada 89501

 

Ladies and Gentlemen:

 

Edison Nation, Inc., a Nevada corporation (the “Company”) and PPE Brickell
Supplies, LLC., a Florida limited liability company (“Secured Party”) have
entered into a Security Agreement dated on or about May 20, 2020 (the “Security
Agreement”) providing a security interest in shares of the Company for repayment
of Promissory Notes (the “Notes”) issued by Global Clean Solutions, LLC, a
Nevada limited liability company to Secured Party.

 

You are hereby irrevocably authorized and instructed to reserve a sufficient
number of shares of common stock (“shares”) of the Company to Secured Party
(initially, 1,800,000 shares) for issuance upon full conversion of the Notes in
accordance with the terms thereof. The number of shares so reserved may be
increased, from time to time, by the Secured Party or the Company.

 

Pursuant to the Security Agreement, and the Notes, the ability to convert the
Notes in a timely manner is a material obligation of the Company. Provided you
are acting as Transfer Agent at the time and provided no single issuance is
greater than 4.99% of the issued and outstanding shares of the Company, your
firm is hereby irrevocably authorized and instructed to within three (3) trading
days issue shares of common stock of the Company to the Secured Party without
any further action or confirmation by the Company upon your receipt from the
Secured Party of: (i) a notice of conversion (“Notice”) executed by the Secured
Party, (ii) an opinion of counsel of the Secured Party confirming that the
shares may be issued upon conversion of the Note without any transfer
restrictions pursuant to the exemption provided by Rule 144 (or any other
available exemption) under the Securities Act of 1933, as amended (the
“Securities Act”), and (iii) copies of all supporting Rule 144 documentation
(including a Seller’s Representation Letter). A copy of the Notice must be sent
via email to the Company at the same time it is sent to you. Such shares should
be issued, at the option of the Secured Party as specified in the Notice either
(i) electronically by crediting the account of a Prime Broker with the
Depository Trust Company through its Deposit Withdrawal at Custodian (“DWAC”)
system provided the Secured Party causes its broker or bank to initiate a DWAC
deposit or (ii) in certificated form without any restrictive legend which would
restrict the transfer of the shares, provided however that if such shares are
not able to be sold under Rule 144 or any other exemption under the Securities
Act, then the issued certificates for such shares shall bear the following
restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

 

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Copies of the executed Notice, the opinion of Secured Party’s counsel and any
supporting documentation will be sent to authorized officers of the Company by
the Secured Party via email at the time of the issuance of the shares.

 

The shares shall remain in the created reserve with the Transfer Agent until
counsel to the Secured Party and an authorized officer of the Company provides
written instructions to the Transfer Agent that the shares or any part of them
shall be taken out of the reserve and shall no longer be subject to the terms of
these instructions. The shares of common stock of the Company to be issued to
the Secured Party’s pursuant to a Notice shall be issued from the created
reserve.

 

The Company shall indemnify you and your officers, directors, principals,
partners, agents and representatives, and hold each of them harmless from and
against any and all loss, liability, damage, claim or expense (including the
reasonable fees and disbursements of its attorneys) incurred by or asserted
against you or any of them arising out of or in connection with the instructions
set forth herein, the performance of your duties hereunder and otherwise in
respect hereof, including the costs and expenses of defending yourself or
themselves against any claim or liability hereunder, except that the Company
shall not be liable hereunder as to matters in respect of which it is determined
that you have acted with gross negligence or in bad faith. You shall have no
liability to the Company in respect of this if such action was taken or omitted
to be taken in good faith, and you shall be entitled to rely in this regard and
without liability on the advice of counsel, including counsel selected by you.

 

The Board of Directors of the Company has approved these irrevocable
instructions and does hereby extend the Company’s irrevocable agreement to
indemnify your firm for all loss, liability or expense in carrying out the
authority and direction herein contained on the terms herein set forth.

 

The Company agrees that in the event that the Transfer Agent resigns as the
Company’s transfer agent, the Company shall engage a suitable replacement
transfer agent that will agree to serve as transfer agent for the Company and be
bound by the terms and conditions herein, within five (5) business days.

 

The Secured Party is intended to be and is a third-party beneficiary hereof, and
no amendment or modification to the instructions set forth herein may be made
without the consent of the Secured Party.

 

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  Very truly yours,         EDISON NATION, INC.         By:   Name: Chris
Ferguson   Title: Chief Executive Officer

 

Acknowledged and Agreed:         SECURED PARTY         PPE Brickell Supplies,
LLC         By:   Name: Matthew Pantofel   Title: Managing Member        
Acknowledged and Agreed:         NEVADA AGENCY AND TRANSFER COMPANY         By:
  Name:     Title: