Exhibit 10.2
 
SECURITY AGREEMENT
 
This SECURITY AGREEMENT (as amended, restated, supplemented or otherwise
modified from time to time, this “Agreement”), dated as of April 15, 2013, by
and among AW SOLUTIONS, INC., a Florida corporation (“AW Solutions”), AW
SOLUTIONS PUERTO RICO, LLC, a Puerto Rico limited liability company (“AWPR,” and
collectively with AW Solutions, the “Grantors”), KEITH W. HAYTER (“Hayter”),
BOBBY A. VARMA (“Varma”), JAMES PARTRIDGE (“Partridge”), EMMANUEL POULIN
(“Poulin”), JEFFREY DUBAY (“DuBay”) (each of Hayter, Varma, Partridge, Poulin
and DuBay, a “Seller,” and collectively, the “Sellers”).
 
WHEREAS, it is a condition precedent to the Sellers accepting the Promissory
Notes from Intercloud Systems, Inc., a Delaware corporation (“Buyer”), as part
of the consideration payable by Buyer to the Sellers for the purchase by Buyer
from the Sellers of all of the equity interests in AW Solutions and AWPR
pursuant to the terms of that certain Purchase Agreement, dated as of April 3,
2013, by and among Buyer, the Sellers and the Grantors, as amended (the
“Purchase Agreement”), that the Grantors execute and deliver to the Agent (as
defined below) a security agreement in substantially the form hereof; and
 
WHEREAS, the Grantors wish to grant a security interest in favor of the Agent as
herein provided.
 
NOW, THEREFORE, in consideration of the premises contained herein and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
 
1.             Definitions. “Obligations” means all liabilities and obligations
of the Grantor to the Secured Parties arising under or in connection with this
Agreement, the Purchase Agreement or under any Promissory Note issued to any
Seller pursuant to the terms of the Purchase Agreement.  “Person” means any
natural person, corporation, partnership, joint venture, association, trust or
unincorporated organization or any other judicial entity, or a nation, state,
government entity or any agency or political subdivision thereof.  All terms
defined in the Uniform Commercial Code of the State of New York and used herein
shall have the same definitions herein as specified therein.  Any capitalized
terms used but not defined herein shall have the meanings ascribed to them in
the Purchase Agreement.
 
2.             Appointment of Agent.  By their execution hereof, each of the
Sellers hereby designates and appoints Keith W. Hayter or in his absence Bobby
A. Varma (the “Agent”) as such Seller’s agent and attorney-in-fact irrevocably
and with power of substitution, with the same power and authority with respect
to this Agreement as is granted to the Agent pursuant to Section 2.5 of the
Purchase Agreement and to act as the secured party with respect to the
Collateral pursuant to the terms hereof.
 
 
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3.             Grant of Security Interest.  The Grantors hereby unconditionally
grant to the Agent, to secure the payment and performance in full of all of the
Obligations, a security interest in and pledge and assign to the Agent the
Accounts Receivable of the Grantors as of the Closing Date (the
“Collateral”).  The security interest in the Collateral granted under this
Agreement is and shall be subordinate and junior in right to any liens and
security interests of the Holders of Senior Debt in the Collateral.  “Holders of
Senior Debt” means any bank, financial institution or other lender that holds
indebtedness for borrowed money of Buyer and/or the Grantors, whether now
existing or hereafter incurred.
 
4.             Authorization to File Financing Statements.  The Grantors hereby
irrevocably authorize the Agent at any time and from time to time to file in any
filing office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto with respect to the Collateral.
 
5.             Further Assurances.  The Grantors further agree, upon the request
of the Agent and at the Agent’s option, to take any and all other actions as the
Agent may reasonably determine to be necessary for the attachment, perfection
and first priority of, and the ability of the Agent to enforce, the Agent’s
security interest in any and all of the Collateral.
 
6.             Events of Default.
 
6.1.         Each of the following shall constitute an event of default
hereunder (each, an “Event of Default”): (i) the failure of Buyer to pay when
due any amounts due and payable under the Promissory Notes (whether by demand,
acceleration or otherwise) and such failure has continued for five (5) Business
Days following notice thereof from the Agent; (ii) the filing by Buyer of a
petition in bankruptcy, whether voluntary or involuntary; (iii) an assignment by
Buyer for the benefit of creditors; and (iv) any security interest provided for
herein ceasing to be a valid and perfected security interest in any material
portion of the Collateral.
 
6.2.         Upon the occurrence and during the continuance of an Event of
Default, the Agent shall have in any jurisdiction where enforcement is sought,
in addition to all other rights and remedies that the Agent or the Sellers may
have under this Agreement or the Promissory Notes and under applicable law or in
equity, all of their rights and remedies as secured parties, and in addition the
following rights and remedies, all of which may be exercised with or without
prior written notice to the Grantors:
 
6.2.1.           to enforce payment and prosecute any action or proceeding with
respect to any and all of the Collateral and take or bring, in its own name or
in the name of the Grantors, all steps, actions, suits or proceedings deemed by
the Agent necessary or desirable to effect collection of or to realize upon the
Collateral;
 
6.2.2.           to endorse, in the name of the Grantors, all checks, notes,
drafts, money orders, instruments and other evidence of payment relating to the
Collateral; and
 
6.2.3.           in accordance with applicable law, to foreclose the liens and
security interests created under this Agreement or under any other agreement
relating to the Collateral by any available judicial procedure or without
judicial process, and to sell, assign or otherwise dispose of the Collateral or
any part thereof, either at public or private sale or at any broker’s board or
securities exchange, in lots or in bulk, for cash, on credit or on future
delivery, or otherwise, with or without representations or warranties, and upon
such terms as shall be acceptable to the Agent.
 
 
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7.             Representations and Warranties Concerning the Grantors’ Legal
Status.  Each Grantor represents and warrants to the Agent as follows: (a) its
exact legal name and type of and jurisdiction of organization is set forth in
the preamble hereto and (b) the Grantor has not, in the previous five (5) years,
had any other name, been any other type of organization, or been organized in
any other jurisdiction, other than as set forth in the preamble hereto.
 
8.             Covenants Concerning the Grantors’ Legal Status.  Each Grantor
covenants with the Agent as follows: without providing at least thirty (30) days
prior written notice to the Agent, the Grantor will not change its name, its
place of business or, if more than one, chief executive office, or its mailing
address or organizational identification number if it has one or its type of
organization, jurisdiction of organization or other legal structure.
 
9.             Preservation of Collateral.  Anything herein to the contrary
notwithstanding, the Grantors shall remain obligated and liable under each
contract or agreement comprised in the Collateral to be observed or performed by
the Grantors thereunder.  The Agent shall not have any obligation or liability
under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Agent of any payment relating to any of the
Collateral, nor shall the Agent be obligated in any manner to perform any of the
obligations of the Grantors under or pursuant to any such contract or agreement.
 
10.           No Waiver by Secured Party.  Neither the Agent nor the Sellers
shall be deemed to have waived any of its rights and remedies in respect of the
Obligations or the Collateral unless such waiver shall be in writing and signed
by the Agent.  No delay or omission on the part of the Agent in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy.  A waiver on any one occasion shall not be construed as a bar
to or waiver of any right or remedy on any future occasion.  All rights and
remedies of the Agent and the Sellers with respect to the Obligations or the
Collateral, whether evidenced hereby or by any other instrument or papers, shall
be cumulative and may be exercised singularly, alternatively, successively or
concurrently at such time or at such times as the Agent deems expedient.
 
11.           Suretyship Waivers by the Grantors.  Each Grantor waives demand,
notice, protest, notice of acceptance of this Agreement, notice of any
investment, loan or advance made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other demands and
notices of any description.  With respect to both the Obligations and the
Collateral, each Grantor assents to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or release of or
failure to perfect any security interest in any Collateral, to the addition or
release of any party or person primarily or secondarily liable, to the
acceptance of partial payment thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Agent may deem advisable.  Each Grantor further waives any and all other
suretyship defenses other than payment in full of the Obligations.
 
 
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12.           Governing Law; Consent to Jurisdiction.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.  The Grantors agree that any action or claim arising out of any dispute in
connection with this Agreement, any rights or obligations hereunder or the
performance or enforcement of such rights or obligations may be brought in the
courts of the State or any federal court sitting therein and consents to the
non-exclusive jurisdiction of such court.  The Grantors hereby waive any
objection that they may now or hereafter have to the venue of any such suit or
any such court or that such suit is brought in an inconvenient court.
 
13.           Miscellaneous.  The headings of each section of this Agreement are
for convenience and shall not define or limit the provisions thereof.  The Agent
and the Sellers may assign any or all of their rights and obligations hereunder
without the consent of or notice to the Grantors.  The Grantors may not assign
any or all of their rights and obligations hereunder, and any purported such
assignment will be void ab initio.  This Agreement and all rights and
obligations hereunder shall be binding upon the Grantors and their respective
successors and assigns, and shall inure to the benefit of the Agent and the
Sellers and their successors and assigns.  If any term of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby.  This Agreement may be executed in
any number of counterparts (including by facsimile or other electronic
transmission), but all such counterparts together shall constitute but one and
the same agreement.
 
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IN WITNESS WHEREOF, intending to be legally bound, the parties have has caused
this Security Agreement to be duly executed as of the date first above written.
 

  AW Solutions, Inc.,            
By:
/s/ Lawrence M. Sands
     
Lawrence M. Sands
     
Vice President
            AW Solutions Puerto Rico, LLC            
By:
/s/ Lawrence M. Sands
     
Lawrence M. Sands
     
Vice President
             
/s/ Keith W. Hayter
     
Keith W. Hayter
             
/s/ Bobby A. Varma
     
Bobby A. Varma
             
/s/ James Partridge
     
James Partridge
             
/s/ Emmanuel Poulin
     
Emmanuel Poulin
             
/s/ Jeffrey DuBay
     
Jeffrey DuBay
 

 
 
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ACKNOWLEDGEMENT

State of ________________________)
 
County of_______________________) ss.:

On the ________ day of ______________________ in the year ________ before me,
the undersigned, personally
appeared____________________________________________, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual(s) whose
name(s) is (are) subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their capacity(ies), and that by
his/her/their signatures(s) on the instrument, the individual(s), or the person
upon behalf of which the individual(s) acted, executed the instrument.

Witness My Hand and Official Seal.

_________________________________
Signature
My Commission expires on _____________

 
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