Exhibit 10.4

 

SECURITY AGREEMENT

 

Read this document carefully. It grants the SBA a security interest (lien) in
all the property described in paragraph 4.

 

This document is predated. DO NOT CHANGE THE DATE ON THIS DOCUMENT.

 

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Exhibit 10.4

 

 

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U.S. Small Business Administration

 

SECURITY AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

SBA Loan #:

 

7852037408

 

 

 

 

 

 

Borrower:

 

ADOMANI, Inc.

 

 

 

 

 

 

Secured Party:

 

The Small Business Administration, an Agency of the U.S. Government

 

 

 

 

 

 

Date:

 

05.17 .2020

 

 

 

 

 

 

Note Amount:

 

$150,000.00

 

 

 

 

 

1.

DEFINITIONS.

 

Unless otherwise specified, all terms used in this Agreement will have the
meanings ascribed to them under the Official Text of the Uniform Commercial
Code, as it may be amended from time to time, (" UCC" ). "SBA" means the Small
Business Administration, an Agency of the U.S. Government.

 

2.

GRANT OF SECURITY INTEREST.

 

For value received, the Borrower grants to the Secured Party a security interest
in the property described below in paragraph 4 (the "Collateral" ).

 

3.

OBLIGATIONS SECURED.

 

This Agreement secures the payment and performance of: (a) all obligations under
a Note dated 05.17.2020, made by ADOMANI, Inc. , made payable to Secured Lender,
in the amount of $150,000.00 (" Note"), including all costs and expenses
(including reasonable attorney's fees), incurred by Secured Party in the
disbursement, administration and collection of the loan evidenced by the Note;
(b) all costs and expenses (including reasonable attorney ' s fees) , incurred
by Secured Party in the protection , maintenance and enforcement of the security
interest hereby granted; (c) all obligations of the Borrower in any other
agreement relating to the Note; and (d) any modifications, renewals,
refinancings , or extensions of the foregoing obligations.

 

4.

COLLATERAL DESCRIPTION.

 

The Collateral in which this security interest is granted includes the following
property that Borrower now owns or shall acquire or create immediately upon the
acquisition or creation thereof : all tangible and intangible personal property,
including, but not limited to: (a) inventory, (b) equipment, (c) instruments,
including promissory notes (d) chattel paper, including tangible chattel paper
and electronic chattel paper, (e) documents, (f) letter of credit rights, (g)
accounts, including health-care insurance receivables and credit card
receivables, (h) deposit accounts, (i) commercial tort claims, (j) general
intangibles, including payment intangibles and software and (k) as-extracted
collateral as such terms may from time to time be defined in the Uniform
Commercial Code. The security interest Borrower grants includes all accessions,
attachments, accessories, parts, supplies and replacements for the Collateral,
all products, proceeds and collections thereof and all records and data relating
thereto.

 

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Exhibit 10.4

 

5.

RESTRICTIONS ON COLLATERAL TRANSFER.

 

Borrower will not sell, lease , license or otherwise transfer (including by
granting security interests, liens, or other encumbrances in) all or any part of
the Collateral or Borrower' s interest in the Collateral without Secured Party's
written or electronically communicated approval, except that Borrower may sell
inventory in the ordinary course of business on customary terms. Borrower may
collect and use amounts due on accounts and other rights to payment arising or
created in the ordinary course of business, until notified otherwise by Secured
Party in writing or by electronic communication.

 

6.

MAINTENANCE AND LOCATION OF COLLATERAL; INSPECTION; INSURANCE.

 

Borrower must promptly notify Secured Party by written or electronic
communication of any change in location of the Collateral, specifying the new
location. Borrower hereby grants to Secured Party the right to inspect the
Collateral at all reasonable times and upon reasonable notice. Borrower must:
(a) maintain the Collateral in  good condition; (b) pay promptly all taxes,
judgments, or charges of any kind levied or assessed thereon ; (c) keep current
all rent or mortgage payments due, if any, on premises where the Collateral is
located; and (d) maintain hazard insurance on the Collateral, with an insurance
company and in an amount approved by Secured Party (but in no event less than
the replacement cost of that Collateral), and including such terms as Secured
Party may require including a Lender' s Loss Payable Clause in favor of Secured
Party. Borrower hereby assigns to Secured Party any proceeds of such policies
and all unearned premiums thereon and authorizes and empowers Secured Party to
collect such sums and to execute and endorse in Borrower's name all proofs of
loss, drafts, checks and any other documents necessary for Secured Party to
obtain such payments.

 

7.

CHANGES TO BORROWER'S LEGAL STRUCTURE, PLACE OF BUSINESS, JURISDICTION OF
ORGANIZATION, OR NAME.

 

Borrower must notify Secured Party by written or electronic communication not
less than 30 days before taking any of the following actions: (a) changing or
reorganizing the type of organization or form under which it does business; (b)
moving, changing its place of business or adding a place of business; (c)
changing its jurisdiction of organization; or (d) changing its name. Borrower
will pay for the preparation and filing of all documents Secured Party deems
necessary to maintain, perfect and continue the perfection of Secured Party 's
security interest in the event of any such change.

 

8.

PERFECTION OF SECURITY INTEREST.

 

Borrower consents, without further notice, to Secured Party's filing or
recording of any documents necessary to perfect, continue, amend or terminate
its security interest. Upon request of Secured Party, Borrower must sign or
otherwise authenticate all documents that Secured Party deems necessary at any
time to allow Secured Party to acquire, perfect , continue or amend its security
interest in the Collateral. Borrower will pay the filing and recording costs of
any documents relating to Secured Party's security interest. Borrower ratifies
all previous filings and recordings, including financing statements and
notations on certificates of title. Borrower will cooperate with Secured Party
in obtaining a Control Agreement satisfactory to Secured Party with respect to
any Deposit Accounts or Investment Property, or in otherwise obtaining control
or possession of that or any other Collateral.

 

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Exhibit 10.4

 

9.

DEFAULT.

 

Borrower is in default under this Agreement if: (a) Borrower fails to pay,
perform or otherwise comply with any provision of this Agreement; (b) Borrower
makes any materially false representation, warranty or certification in, or in
connection with, this Agreement, the Note, or any other agreement related to the
Note or this Agreement ; (c) another secured party or judgment creditor
exercises its rights against the Collateral; or (d) an event defined as a
"default" under the Obligations occurs. In the event of default and if Secured
Party requests, Borrower must assemble and make available all Collateral at a
place and time designated by Secured Party.

Upon default and at any time thereafter, Secured Party may declare all
Obligations secured hereby immediately due and payable, and, in its sole
discretion , may proceed to enforce payment of same and exercise any of the
rights and remedies available to a secured party by law including those
available to it under Article 9 of the UCC that is in effect in the jurisdiction
where Borrower or the Collateral is located. Unless otherwise required under
applicable law, Secured Party has no obligation to clean or otherwise prepare
the Collateral for sale or other disposition and Borrower waives any right it
may have to require Secured Party to enforce the security interest or payment or
performance of the Obligations against any other person.

 

10.

FEDERAL RIGHTS.

 

When SBA is the holder of the Note, this Agreement will be construed and
enforced under federal law, including SBA regulations. Secured Party or SBA may
use state or local procedures for filing papers, recording documents, giving
notice, enforcing security interests or liens, and for any other purposes. By
using such procedures, SBA does not waive any federal immunity from state or
local control, penalty, tax or liability. As to this Agreement, Borrower may not
claim or assert any local or state law against SBA to deny any obligation,
defeat any claim of SBA, or preempt federal law.

 

11.

GOVERNING LAW.

 

Unless SBA is the holder of the Note, in which case federal law will govern,
Borrower and Secured Party agree that this Agreement will be governed by the
laws of the jurisdiction where the Borrower is located, including the UCC as in
effect in such jurisdiction and without reference to its conflicts of laws
principles.

 

12.

SECURED PARTY RIGHTS.

 

All rights conferred in this Agreement on Secured Party are in addition to those
granted to it by law, and all rights are cumulative and may be exercised
simultaneously. Failure of Secured Party to enforce any rights or remedies will
not constitute an estoppel or waiver of Secured Party' s ability to exercise
such rights or remedies. Unless otherwise required under applicable law, Secured
Party is not liable for any loss or damage to Collateral in its possession or
under its control, nor will such loss or damage reduce or discharge the
Obligations that are due, even if Secured Party' s actions or inactions caused
or in any way contributed to such loss or damage.

 

13.

SEVERABILITY.

 

If any provision of this Agreement is unenforceable, all other provisions remain
in effect.

 

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Exhibit 10.4

 

 

14.

BORROWER CERTIFICATIONS.

 

Borrower certifies that: (a) its Name (or Names) as stated above is correct; (b)
all Collateral is owned or titled in the Borrower's name and not in the name of
any other organization or individual; (c) Borrower has the legal authority to
grant the security interest in the Collateral; (d) Borrower's ownership in or
title to the Collateral is free of all adverse claims, liens, or security
interests (unless expressly permitted by Secured Party); (e) none of the
Obligations are or will be primarily for personal, family or household purposes;
(f) none of the Collateral is or will be used, or has been or will be bought
primarily for personal, family or household purposes; (g) Borrower has read and
understands the meaning and effect of all terms of this Agreement.

 

15.

BORROWER NAME(S) AND SIGNATURE(S).

 

By signing or otherwise authenticating below, each individual and each
organization becomes jointly and severally obligated as a Borrower under this
Agreement.

 

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SBA Form 1059 (09-19) Previous Editions are obsolete