Exhibit 10.2

 
SECURITY AGREEMENT

This is a Security Agreement (the “Security Agreement”) between PositiveID
Corporation, a Delaware corporation (“Debtor”), and Scott R. Silverman (the
“Secured Party”), and is dated as of December 8, 2011.
 
BACKGROUND
 
Debtor has agreed to issue to the Secured Party restricted stock of Debtor in
the aggregate amount of Three Million Three Hundred Ninety-Four Thousand Two
Hundred Twenty-Three Dollars and Twenty Cents ($3,394,223.20) (the “Restricted
Stock”) in lieu of contractually-committed cash salary and bonus for 2012
through 2015, plus compensation for consulting services, pursuant to the terms
of that certain Amended and Restated Employment and Non-Compete Agreement, dated
December 8, 2011 but effective December 6, 2011, between Debtor and the Secured
Party (the “Agreement”), in connection with the Secured Party’s agreement to
depart from the Company as its Chairman effective as of December 6,
2011.  Pursuant to the terms herein, this Security Agreement secures the
obligation of Debtor to satisfy the  $461,538.00 obligation described in Section
5(c)(1) of the Agreement and Debtor’s obligation to issue to Secured Party
2,468,118 shares of stock from the PositiveID Corporation 2011 Stock Incentive
Plan (the “Contractual Obligations Stock”) and the Restricted Stock and register
for resale the Contractual Obligations Stock and the Restricted Stock with the
Securities and Exchange Commission (collectively, the “Obligations”).
 
Accordingly, in consideration of the mutual covenants and agreements set forth
below, the parties agree as follows:
 
TERMS
 
1.           Grant of Security Interest.
 
a.             For good and valuable consideration received, the sufficiency of
which is hereby acknowledged and agreed, in order to secure Debtor’s
(a) performance of the Obligations; and (b) payment of all costs and expenses,
including attorney’s fees, incurred in connection with realizing upon the value
of the security provided by this Security Agreement following an Event of
Default (as defined herein) (collectively, the “Liabilities”); Debtor grants to
the Secured Party a first lien and first priority security interest (the
“Security Interest”) in all of Debtor’s assets, including, but not limited to,
collateral, accounts receivable, chattel paper, instruments, documents,
inventory, equipment, general intangibles, intellectual property, investment
property consisting of the security entitlements (shares of stock in
MicroFluidic Systems, a California corporation, represented by certificate
number 1), and all other present and future tangible and intangible property of
Debtor, whether now owned or existing or hereafter acquired or arising,
including additions, accessions and substitutions thereof, all proceeds of any
proceeds wherever located, and all cash and non-cash proceeds and products
thereof, but excluding any and all ownership interests of Debtor in any of its
subsidiaries and any and all assets of such subsidiaries, other than
MicroFluidic Systems (collectively, the “Collateral”).  This Security Interest
given to Secured Party shall also attach to all replacements and proceeds and
all proceeds of any proceeds of the Collateral.
 
 
 

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b.             Notwithstanding the grant by Debtor to Secured Party of a
Security Interest in the Collateral as noted above, Secured Party agrees, after
being requested therefore,  to not unreasonably withhold his consent to the
subordination of his Security Interest in the Collateral to the rights of any
bank, potential investor, or other financing source who makes available to
Debtor a loan or lending facility which includes the Collateral as part of the
security securing that loan.  Such subordination will include Secured Party
taking no action to enforce his Security Interest with regard to such Collateral
unless and until the lender has taken action to enforce its first lien with
regard to such security or in the event Debtor declares bankruptcy.  Any consent
by Secured Party to subordination of his Security Interest in the Collateral
shall be given without further payment or consideration to Secured
Party.  Secured Party further agrees that his first perfected lien will be
second in priority to the lien of the lender and agrees to promptly execute a
document mutually acceptable to Secured Party and the lender reflecting such
subordination.

2.           Assurances; Covenants.  Debtor hereby agrees that:
 
a.           Except as contemplated by Section 1(b), (i) the Collateral is and
will be free of all liens and security interests of every kind and nature,
except as may be in effect on the date hereof or have been the result of actions
of the Secured Party; (ii) Debtor will not assign, transfer, sell, convey,
hypothecate, pledge, or in any other way dispose of or encumber the Collateral
while this Security Agreement is in effect; and (iii) Debtor will warrant and
defend the Collateral and the Secured Party’s Security Interest against the
claims and demands of all persons.

b.           Except as set forth in Section 1(b), Debtor will not, without the
prior written consent of the Secured Party, borrow from anyone on the security
of the Collateral, or otherwise permit any liens, encumbrances, security
interests, or adverse claims against the Collateral, and will not permit the
Collateral to be levied upon under any legal process.

c.           Debtor authorizes the Secured Party to file financing statements,
including amendments or continuations thereof, describing the Collateral, and
from time to time at the request of the Secured Party, will execute such other
documents, and will do such other acts and things, all as the Secured Party may
reasonably request, to establish and maintain a valid first, perfected security
interest in the Collateral and to enable the Secured Party to enforce its rights
and remedies hereunder with respect to the Collateral.  Notwithstanding the
foregoing, Debtor agrees to file the financing statement describing the
Collateral and perfecting Secured Party’s Security Interest promptly following
the execution of this Security Agreement with the appropriate state recording
officer and with the United States Patent and Trademark Office (“USPTO”) for the
patents and trademarks collateral.  Debtor shall deliver to the Secured Party
filed marked and date stamped copies of the financing statements within three
(3) calendar days from the day Debtor receives them from the state recording
office and the USPTO.
 
 
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d.           Secured Party shall hold as security for the Obligations all of the
securities issued by MicroFluidic Systems, a California corporation, which are
in the name of Debtor and Debtor holds and which Debtor will arrange for the
transfer of these securities (shares of stock) on the books of MicroFluidic
Systems for the term of this Security Agreement.

3.           Representations and Warranties.  Debtor represents and warrants to
the Secured Party as follows:
 
a.           Debtor is a corporation duly organized, validly existing, and in
good standing and active status under the laws of the state of Delaware;
 
b.           Debtor has all requisite power to own and operate its properties
and to carry on its business as now being conducted, and has all necessary
rights to conduct its business;
 
c.           Debtor has the power, authority, and legal right to execute and
deliver this Security Agreement, and to perform its obligations hereunder, and
has taken all action necessary to authorize the execution, delivery, and
performance of this Security Agreement and to authorize the transactions
contemplated hereby;
 
d.           The principal place of business and chief executive office of
Debtor is located as follows:  1690 South Congress Avenue, Suite 200, Delray
Beach, Florida 33445;
 
e.           The execution, delivery, and performance by Debtor of this Security
Agreement will not (i) contravene, conflict with, result in the breach of, or
constitute a violation of or default under the organizational documents of
Debtor, any applicable law, rule, regulation, judgment, order, writ, injunction,
or decree of any court or governmental authority, or any agreement or instrument
to which Debtor is a party or by which Debtor or its property may be bound or
affected, or (ii) result in the creation of any lien, charge, or encumbrance
upon any property or assets of Debtor pursuant to any of the foregoing, except
the liens created by this Security Agreement;
 
f.           This Security Agreement constitutes a legal, valid, and binding
agreement enforceable against Debtor and the Collateral in accordance with its
terms and, without limiting the foregoing, this Security Agreement grants the
Secured Party a valid, perfected, first Security Interest in the Collateral; and
 
g.           Debtor is the owner of and has good and marketable title to all of
the Collateral free and clear of all liens, encumbrances, security interests,
and adverse claims whatsoever.  None of the Collateral is subject to any
prohibition against encumbering, pledging, hypothecating or assigning same or
requires notice or consent in connection therewith.
 
4.           Intentionally omitted.
 
5.           Default.  Each of the following shall, after receipt by Debtor of
written notice from the Secured Party and after a cure period of ten (10)
business days with respect to Sections 5(a) and 5(f) below, ninety (90) days
with respect to Section 5(b) below, and thirty (30) days with respect to
Sections 5(c) through 5(e) below, constitute an event of default under this
Security Agreement (each, an “Event of Default”):
 
 
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a.           Failure by the Debtor to issue the shares underlying the Stock
Obligation as provided for in the Agreement;
 
b.           Failure by the Debtor to register the common stock underlying the
Stock Obligation with the Securities and Exchange Commission;
 
c.           Any representation or warranty made by any Debtor under this
Security Agreement or any report, certificate, financial statement, or other
information provided by Debtor to the Secured Party in connection herewith is
false or misleading in any material respect when made or deemed made;
 
d.           Debtor fails to fully and promptly perform when due any agreement
or covenant under this Security Agreement or any related document (and such
failure continues beyond the expiration of any applicable grace or cure period);
 
e.           If a default occurs (and continues beyond the expiration of an
applicable grace or cure period) under any other agreement, undertaking or
instrument relating to any obligation of Debtor to Secured Party; or
 
f.           If Debtor is declared to be in default of any loan or other
obligation to any other secured party (and such default continues beyond the
expiration of any applicable grace or cure period).
 
In the event that Debtor substantially cures such default within the applicable
cure period, such default shall not constitute an Event of Default.
 
6.           Remedies Upon the Occurrence of an Event of a Default.
 
a.           Upon the occurrence and continuance of an Event of Default under
this Security Agreement, the Secured Party will have the right at any time and
from time to time, without further notice or demand to Debtor to exercise the
rights and remedies upon default that are granted to a secured party under the
Uniform Commercial Code and/or that are otherwise available to the Secured Party
under this Security Agreement or otherwise available to secured creditors at law
and/or in equity under applicable law, including without limitation:
 
(i)           Enforce Debtor’s rights against account debtors and notify any and
all account debtors or other parties against which Debtor has a claim under the
Collateral that such Collateral has been assigned by Debtor and that the Secured
Party has a security interest therein and, if desired by the Secured Party, that
all payments should be made to the Secured Party;
 
 
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(ii)           Receive and endorse the name of Debtor upon any instruments of
payment (including payments made under any policy of insurance) that may come
into the possession of the Secured Party;
 
b.           The net proceeds realized by the Secured Party upon a sale or other
disposition of the Collateral, or any part thereof, after deduction of the
expenses of retaking, holding, preparing for sale, selling or the like, and
reasonable attorneys’ fees and other expenses incurred by the Secured Party,
shall be applied to payment of (or held as a reserve against) the Liabilities,
whether or not then due, and in such order of application as the Secured Party
may from time to time elect.
 
7.           Termination.  This Security Agreement and the Security Interest
granted pursuant to this Security Agreement shall immediately terminate when the
Restricted Stock has been registered for resale with the Securities and Exchange
Commission.  Upon such termination, Debtor may take any action and file all
documents necessary to terminate all effective financing statements in the
Secured Party’s favor that are then on file or recorded with respect to the
Collateral described in this Security Agreement.  Secured Party will agree to
sign any reasonably required and reasonable documents within 3 business days of
termination of this Security Agreement.
 
8.           Assignment.  Neither this Security Agreement nor any of the rights,
interests, or obligations arising under this Security Agreement may be assigned
by Debtor without the prior written consent of the Secured Party.
 
9.           Binding Effect.  Subject to Section 8 above, this Security
Agreement shall be binding upon and inure to the benefit of the Secured Party,
his respective successors and assigns, and shall be binding upon Debtor and its
successors and assigns and shall bind all persons who become bound as a Debtor
to this Security Agreement.
 
10.           Severability.  Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
only, be ineffective only to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Security Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction.  If any provision of this Security Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only as broad as is
enforceable.
 
11.           Titles.  The titles and headings preceding the text of the
sections of this Security Agreement have been inserted solely for convenience of
reference and do not constitute a part of this Security Agreement or affect its
meaning, interpretation, or effect.
 
12.           Waiver.  The failure of any party to insist in any one or more
instances upon performance of any terms or conditions of this Security Agreement
shall not be construed as a waiver of future performance of any such term,
covenant, or condition, and the obligations of either party with respect to such
term, covenant, or condition shall continue in full force and effect.
 
 
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13.           Entire Agreement.  This Security Agreement contains the final,
complete, and exclusive expression of the understanding of Debtor and the
Secured Party with respect to the transactions contemplated in this Security
Agreement, and supersedes any prior or other contemporaneous agreement or
representation by or among the parties related to the subject matter of this
Security Agreement.
 
14.           Amendment.  This Security Agreement may not be amended, modified,
or changed in any respect and no waiver of any requirement hereof will be
effective except by an agreement in writing signed by Debtor and the Secured
Party.
 
15.           Notices.  All notices, requests, demands, claims and other
communications under this Security Agreement will be in writing. Any notice,
request, demand, claim or other communication under this Security Agreement
shall be deemed duly given if it is sent: (a) by personal delivery, or (b) by
commercial delivery or overnight courier service that requires a signature as
evidence of delivery, and, in each case, addressed to the intended recipient as
set forth below, or to any other or additional persons and addresses as the
Parties may from time to time designate in a writing delivered in a writing in
accordance with this Section 15:
 
If to Debtor:
 
1690 South Congress Avenue, Suite 200
Delray Beach, Florida 33445
Attn: William J. Caragol

If to the Secured Party:

Scott R. Silverman
955 Iris Drive
Delray Beach, Florida 33483

16.           Governing Law/Venue.  The validity, construction, enforcement, and
interpretation of this Security Agreement are governed by the laws of the State
of Florida and the federal laws of the United States of America, excluding the
laws of those jurisdictions pertaining to resolution of conflicts with laws of
other jurisdictions.  The Debtor and the Secured Party (a) consent to the
personal jurisdiction of the state and federal courts having jurisdiction in
Palm Beach County, Florida, (b) stipulate that the proper, exclusive, and
convenient venue for any legal proceeding arising out of this Security Agreement
is Palm Beach County, Florida, for state court proceedings, and the Southern
District of Florida, for federal district court proceedings, and (c) waive any
defense, whether asserted by a motion or pleading, that Palm Beach County,
Florida, or the Southern District of Florida, is an improper or inconvenient
venue.
 
17.           Relationship.  This Security Agreement does not create or evidence
a partnership or joint venture between Debtor and the Secured Party.

18.           Interpretation.  Neither this Security Agreement nor any
uncertainty or ambiguity in this Security Agreement shall be construed or
resolved against any party, whether under any rule of construction or
otherwise.  No party to this Security Agreement shall be considered the
draftsman.  The parties acknowledge and agree that this Security Agreement has
been reviewed, negotiated, and accepted by all the parties and their attorneys
and shall be construed and interpreted according to the ordinary meaning of the
words used so as to fairly accomplish the purposes and intentions of the
parties.
 
 
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19.           Time.  Time shall be of the essence with respect to all of the
provisions of this Security Agreement.

20.           Counterparts.  This Security Agreement may be executed (including
by facsimile transmission or portable document format) in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
 
21.           Enforcement of Security Agreement.  The parties agree that
irreparable damage will occur if any of the provisions of this Security
Agreement are not performed in accordance with its specific terms or are
otherwise breached.  It is therefore agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Security Agreement
and to specifically enforce the terms and provisions of this Security Agreement
in any court of the United States or any state having jurisdiction, in addition
to any other remedy to which they are entitled.
 
22.           Remedies Cumulative.  The rights and remedies provided in this
Security Agreement are cumulative and not exclusive of any rights or remedies
provided by law, and the warranties, representations, covenants, and other
provisions of this Security Agreement shall be cumulative.
 
23.           Fees and Expenses.  Debtor will pay the reasonable fees and
expenses of Secured Party’s counsel incurred in connection with the preparation
of this Security Agreement.
 
24.           Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS SECURITY
AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY
AGREEMENT.

 
 

 

 
[The next page is the signature page.]
 
 
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IN WITNESS WHEREOF, the undersigned have executed this Security Agreement as of
the date and year first above written.
 

/s/ Scott R.
Silverman                                                                           
Scott R. Silverman

POSITIVEID CORPORATION

By: /s/ William J.
Caragol                                                                
Name:  William J. Caragol
Title: Chief Executive Officer

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