Exhibit
10.1


 


FACTORING AND SECURITY AGREEMENT


 


THIS
FACTORING AGREEMENT is made as of Closing Date by and between PARAGON
SYSTEMS, INC. (“Seller”) and LSQ FUNDING GROUP L.C. (“Purchaser”).


 


1.  Sale; Purchase Price; Billing; Reserve


 


1.1.  Assignment and Sale.


 


1.1.1.  Seller
shall offer to sell to Purchaser as absolute owner such of Seller’s Accounts as
are listed from time to time on a Schedule of Accounts.


 


1.1.2.  Each
Schedule of Accounts shall be accompanied by such documentation supporting and
evidencing the Account as Purchaser shall from time to time request.


 


1.1.3.  Purchaser
shall purchase from Seller such Accounts as Purchaser determines to be Eligible
Accounts, so long as the Balance Subject to Funds Usage Fee does not exceed,
before and after such purchase, the Maximum Amount.


 


1.1.4.  Purchaser
shall pay the Purchase Price, less any amounts due to Purchaser from Seller,
including, without limitation, any amounts due under Section 1.3.2 hereof, of
any Purchased Account, to Seller’s Deposit Account within one (1) Business Day
of the Purchase Date, whereupon such Account shall be deemed purchased
hereunder.


 


1.2.  Billing. 
Purchaser may send a monthly statement to all Account Debtors
itemizing their account activity during the preceding billing period.  All Account Debtors will be instructed to
make payments to Purchaser.


 


1.3.  Reserve Account


 


1.3.1.  Purchaser
may apply a portion of any Purchase Price to the Reserve Account in the amount
of the Reserve Shortfall.


 


1.3.2.  Seller
shall pay to Purchaser on demand the amount of any Reserve Shortfall.


 


1.3.3.  Purchaser
shall pay to Seller upon Seller’s request, any amount by which the Reserve
Account exceeds the Required Reserve Amount.


 


1.3.4.  Purchaser
may charge the Reserve Account with any Obligation, including any amounts due
from Seller to Purchaser hereunder.


 


1.3.5.  Purchaser
may pay any amounts due Seller hereunder by a credit to the Reserve
Account.  In the event that all of the
Seller’s Obligations to Purchaser have been satisfied in full and the Seller
has delivered a general release in form and substance that is satisfactory to
the Purchaser, Purchaser will, upon the request by the Seller, immediately
transfer any collected cash balance in the Reserve Account to the account of
Seller.


 


	
  This Factoring Agreement
  is at all

  	
   

  	
   

  
	
  times subject to the liens
  in favor of

  	
   

  	
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  Fleet Capital Corporation.

  	
   

  	
   

  



 
















 


2.  Authorization for Purchases  Subject to the terms and conditions of
this agreement, Purchaser is authorized to purchase Accounts upon telephonic,
facsimile, or other instructions received from anyone purporting to be an
officer, employee, or representative of Seller.


 


3.  Fees and Expenses.  Seller shall pay to Purchaser:


 


3.1.  Factoring Fees.


 


3.1.1.  Initial Fee.  the Initial Fee, payable in consideration of
the rendering of the Credit and Collection Services, which will be deducted
from the Purchase Price.


 


3.1.2.  Funds Usage Fee.


 


3.1.2.1.  A Funds Usage Fee,
earned daily, to be paid monthly on the last day of the month in which it
accrues.


 


3.1.2.2.  Notwithstanding Section
3.1.2.1, the Funds Usage Fee shall not accrue and be payable on any funds
subject to the Default Charge.


 


3.1.3.  Service
Charge.  The service Charge, payable
on the date on which a Purchased Account is paid in full or repurchased.


 


3.2.  Other Fees.


 


3.2.1.  Misdirected
Payment Fee.  any Misdirected Payment
Fee immediately upon its accrual. 
Notwithstanding the foregoing, the Misdirected Payment Fee shall not be
chargeable on payments which are directed to the account of the Seller during
the period commencing on the date of execution of this Agreement, and ending 45
days thereafter.


 


3.2.2.  Default
Charge.  the Default Charge,
immediately upon its accrual, on:


 


3.2.2.1.  all
past due amounts due from Seller to Purchaser hereunder; and


 


3.2.2.2.  the
amount of any Reserve Shortfall.


 


3.2.3.  Missing
Notation Fee.  The Missing Notation
Fee on any Invoice that is sent by Seller to an Account Debtor which does not
contain the notice as required by Section 8.8 hereof. There shall be a one-time
grace period for such amount.


 


3.3.  Reimbursable Expenses. 
The expenses directly incurred by Purchaser in the
administration of this agreement such as wire transfer fees, overnight mail
delivery, check certification, UCC filing and search fees, and audit fees.  These fees are due immediately upon payment
by Purchaser.


 


4.  Repurchase Of Accounts.


 


4.1.  Purchaser
may require that Seller repurchase, by payment of the unpaid Face Amount
thereof together with any unpaid fees relating to the Purchased Account on
demand, or, at Purchaser’s option, by Purchaser’s charge to the Reserve
Account:


 


	
   

  	
   

  	
   

  	
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4.1.1.  any
Purchased Account, the payment of which has been disputed by the Account Debtor
obligated thereon, Purchaser being under no obligation to determine the bona
fides of such dispute;


 


4.1.2.  Any
Purchased Account for with Seller has breached its warranty under Section 11
hereunder.


 


4.1.3.  Any
Purchased Account owing from an Account Debtor which in Purchaser’s reasonable
credit judgment has become insolvent.


 


4.1.4.  all
Purchased Accounts upon the occurrence of an Event of Default, or upon the
effective date of termination of this agreement;


 


4.1.5.  any
Purchased Account which remains unpaid beyond the Late Payment Date.


 


4.2.  The
repurchase of a Purchased Account shall not constitute a reassignment thereof
and Purchaser shall retain its security interest therein.


 


5.  Clearance Days.  For all purposes under this agreement,
Clearance Days will be added to the date on which any payment is received by
Purchaser.


 


6.  Security Interest.


 


6.1.  To
secure payment and performance of the Obligations, Seller grants to Purchaser a
continuing first priority security interest in and to the Collateral.  Upon request, and provided the Seller is not
in default hereunder, the Purchaser will subordinate its lien on the Collateral
other than the Accounts Receivable in connection with other institutional
financing obtained by Seller.


 


6.2.  Notwithstanding
the creation of the above security interest, the relationship of the parties
shall be that of Purchaser and Seller of accounts, and not that of lender and
borrower.


 


7.  Authorization to Purchaser.


 


7.1.  Seller hereby irrevocably authorizes
Purchaser and any designee of Purchaser, at Seller’s sole expense, to exercise
at any times in Purchaser’s or such designee’s discretion all or any of the
following powers until all of the Obligations have been paid in full: (a)
receive, take, endorse, assign, deliver, accept and deposit, in the name of
Purchaser or Seller, any and all cash, checks, commercial paper, drafts,
remittances and other instruments and documents relating to the Collateral or
the proceeds thereof, (b) take or bring, in the name of Purchaser or Seller,
all steps, actions, suits or proceedings deemed by Purchaser necessary or
desirable to effect collection of or other realization upon the accounts and
other Collateral, (c) after an Event of Default, change the address for
delivery of mail to Seller and to receive and open mail addressed to Seller,
(d) after an Event of Default, extend the time of payment of, compromise or
settle for cash, credit, return of merchandise, and upon any terms or
conditions, any and all accounts or other Collateral which includes a monetary
obligation and discharge or release any account debtor or other obligor
(including filing of any public record releasing any Lien granted to Seller by
such account debtor), without affecting any of the Obligations, (e) execute in
the name of Seller and file against Seller in favor of Purchaser financing
statements or amendments with


 


	
   

  	
   

  	
   

  	
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respect to the Collateral,
(f) pay any sums necessary to discharge any Lien or encumbrance which is senior
to Purchaser’s security interest in the Collateral, which sums shall be
included as Obligations hereunder, and in connection with which sums the Late
Charge shall accrue and shall be due and payable, and (g) file in the name of
Seller or Purchaser or both (1) mechanics lien or related notices, or (2)
claims under any payment bond, in connection with goods or services sold by
Seller in connection with the improvement of realty, (h) at any time,
irrespective of whether an Event of Default has occurred, without notice to or
the assent of Seller, notify any Account Debtor obligated with respect to any
Account, that the underlying Account has been assigned to Purchaser by Seller
and that payment thereof is to be made to the order of and directly and solely
to Purchaser, and (i) communicate directly with Seller’s Account Debtors to
verify the amount and validity of any Account created by Seller.  Notwithstanding anything to the contrary
herein, Purchaser shall not initiate any litigation related to collection of
any unpaid Account Receivable until Purchaser shall have contacted Seller
identifying the unpaid Account Receivable until Purchaser shall have contacted
Seller identifying the unpaid Account Receivable at issue, and providing Seller
fifteen (15) days from the date of such notice to repurchase such Account
Receivable, and if such Account Receivable is repurchased, then Purchaser shall
not initiate such suit.


 


7.2.  Seller
hereby releases and exculpates Purchaser, its officers, employees and
designees, from any liability arising from any acts under this agreement or in
furtherance thereof whether of omission or commission, and whether based upon
any error of judgment or mistake of law or fact, except for willful misconduct.  In no event will Purchaser have any liability
to Seller for lost profits or other special or consequential damages.  Without limiting the generality of the
foregoing, Seller releases Purchaser from any claims which Seller may now or
hereafter have arising out of Purchaser’s endorsement and deposit of checks
issued by Seller’s customers stating that they were in full payment of an
account, but issued for less than the full amount which may have been owed on
the account.


 


7.3.  Seller
authorizes Purchaser to accept, endorse, and deposit on behalf of Seller any
checks tendered by an account debtor “in full payment” of its obligation to
Seller.  Seller shall not assert against
Purchaser any claim arising therefrom, irrespective of whether such action by Purchaser
effects an accord and satisfaction of Seller’s claims, under §3-311 of the UCC,
or otherwise.


 


7.4.  ACH
Authorization.  In order to satisfy any
of the Obligations, Purchaser is hereby authorized by Seller to initiate
electronic debit or credit entries through the ACH system to Seller’s Account
or any other deposit account maintained by Seller wherever located.  Seller may only terminate this authorization
by giving Purchaser thirty (30) days prior written notice of termination.


 


8.  Covenants By Seller.


 


8.1.  After
written notice by Purchaser to Seller, and automatically, without notice, after
an Event of Default, Seller shall not, without the prior written consent of
Purchaser in each instance, (a) grant any extension of time for payment of any of
the Purchased Accounts, (b) compromise or settle any of the Purchased Accounts
for less than the full amount thereof, (c) release in whole


 


	
   

  	
   

  	
   

  	
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or in part any Account
Debtor, or (d) grant any credits, discounts, allowances, deductions, return
authorizations, or the like with respect to any of the Purchased Accounts.


 


8.2.  From
time to time as requested by Purchaser, at the sole expense of Seller,
Purchaser or its designee shall have access, during reasonable business hours
if prior to an Event of Default and at any time if on or after an Event of
Default, to all premises where Collateral is located for the purposes of
inspecting (and removing, if after the occurrence of an Event of Default) any
of the Collateral, including Seller’s books and records, and Seller shall
permit Purchaser or its designee to make copies of such books and records or
extracts therefrom as Purchaser may request. 
Without expense to Purchaser, Purchaser may use any of Seller’s
personnel, equipment, including computer equipment, programs, printed output
and computer readable media, supplies, and premises for the collection of
Accounts and realization on other Collateral as Purchaser, in its sole
discretion, deems appropriate.  Seller
hereby irrevocably authorizes all accountants and third parties to disclose and
deliver to Purchaser at Seller’s expense all financial information, books and
records, work papers, management reports, and other information in their
possession relating to Seller.


 


8.3.  Before
sending any invoice evidencing a Purchased Account to the Account Debtor,
Seller shall mark same with the a notice of assignment as may be required by
Purchaser.


 


8.4.  Seller
shall pay when due all payroll and other taxes and shall provide proof thereof
to Purchaser in such form as Purchaser shall reasonably require.


 


8.5.  Seller
shall not create, incur, assume, or permit to exist any Lien upon or with
respect to any Collateral now owned or hereafter acquired by Seller.


 


8.6.  Seller
shall maintain insurance on all property owned or leased by Seller in the
manner, to the extent and against at least such risks (in any event, including
but not limited to fire and business interruption insurance) as usually
maintained by owners of similar businesses and properties in similar geographic
areas.  All such insurance shall be in
amounts and form and with insurance companies acceptable to Purchaser in its
sole discretion.  Seller shall furnish to
Purchaser upon written request, any and all information concerning such
insurance carried.  All policies of
insurance shall provide for not less than thirty (30) days prior written
cancellation notice to Purchaser.


 


8.7.  Notwithstanding
that Seller has agreed to pay the Misdirected Payment Fee pursuant to Section
3.2.1 hereof, Seller shall deliver in kind to Purchaser on the next Business
Day following the date of receipt by Seller of the amount of any payment on
account of a Purchased Account.


 


8.8.  Before
sending any Invoice to an Account Debtor, Seller shall mark same with a notice
of assignment as may be required by Purchaser.


 


8.9.  Avoidance Claims.


 


8.9.1.  Seller
shall indemnify Purchaser from any loss arising out of the assertion of any
Avoidance Claims shall pay to Purchaser on demand the amount thereof.


 


	
   

  	
   

  	
   

  	
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8.9.2.  Seller
shall notify Purchaser within two Business Days of its becoming aware of the
assertion of an Avoidance Claim.


 


8.9.3.  This
Section shall survive the termination of this agreement.


 


9.  Account Disputes.  Seller shall notify Purchaser
promptly of and, if requested by Purchaser, will settle all disputes concerning
any Purchased Account, at Seller’s sole cost and expense.


 


10.  Perfection of Security Interest.


 


a.  Seller
shall execute and deliver to Purchaser such documents and instruments,
including, without limitation, UCC financing statements, as Purchaser may
request from time to time in order to evidence and perfect its security
interest in any collateral securing the Obligations.


 


b.  To
the extent allowable by applicable law, Purchaser agrees not to further sell or
assign its interests in the Accounts Receivable, except as expressly approved
by Purchaser in writing.


 


11.  Representations and Warranties.  To induce Purchaser to enter into
this agreement and to purchase the Purchased Accounts hereunder, Seller hereby
represents and warrants to Purchaser as follows (each of which representations
and warranties shall be deemed to be continuing and to have been restated and
reaffirmed on each occasion that Seller submits a Schedule of Accounts to
Purchaser):


 


11.1.  it
is fully authorized to enter into this agreement and to perform hereunder;


 


11.2.  this
agreement constitutes a legal and valid obligation that is binding upon it and
that is enforceable against it in accordance with the terms hereof.


 


11.3.  Seller
is solvent and in good standing in the state of its organization.


 


11.4.  there
are no pending actions, suits, or other legal proceedings of any kind (whether
civil or criminal) now pending (or, to Seller’s knowledge, threatened) against
Seller, the adverse result of which would in any material respect affect the
property or financial condition, or threaten the continued operations, of
Purchaser;


 


11.5.  Seller
has not conducted business under or used any other name, whether legal or
fictitious, except the name Parasys, Inc.;


 


11.6.  each
financial statement of Seller provided to Purchaser, whether provided prior to
or after the date of this agreement, is true and correct in all material
respects.


 


11.7.  The
Purchases Accounts are and will remain:


 


11.7.1.  bona
fide existing obligation created by the sale and delivery of goods or the
rendition of services in the ordinary course of Seller’s business; and


 


	
   

  	
   

  	
   

  	
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11.7.2.  unconditionally
owed and will be paid to Purchaser without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation;


 


11.8. Purchase
has not received notice of actual or imminent bankruptcy, insolvency, or
material impairment of the financial condition of any applicable Account Debtor
regarding Purchased Accounts.


 


12.  Default.


 


12.1.  Events of Default. 
The occurrence or existence of any of the following events or
conditions shall constitute an Event of Default hereunder: (a) Seller defaults
in the payment of any of the Obligations or in the performance of any provision
hereof or of any other agreement now or hereafter entered into with Purchaser,
or any warranty or representation contained herein proves to be false in any
way, howsoever minor, (b) Seller or any guarantor of any of the Obligations
becomes subject to any debtor-relief proceedings, including by way of the
commencement of any petition for relief filed by or against Seller or any
guarantor under any chapter of the federal bankruptcy laws, (c) any such
guarantor fails to perform or observe any of such guarantor’s obligations to
Purchaser or shall notify Purchaser of its intention to rescind, modify,
terminate, or revoke any guaranty of any of the Obligations, or any such
guaranty shall cease to be in full force and effect for any reason whatever,
(d) Purchaser for any reason, in good faith, deems itself insecure with respect
to the prospect of repayment or performance of any of the Obligations, or (e)
the Seller assigns, sells, pledges or encumbers the Accounts to any other
party.


 


12.2.  Waiver of Notice. 
SELLER WAIVES ANY REQUIREMENT THAT PURCHASER INFORM SELLER BY
AFFIRMATIVE ACT OR OTHERWISE OF ANY ACCELERATION OF SELLER’S OBLIGATIONS
HEREUNDER.  FURTHER, PURCHASER’S FAILURE
TO CHARGE OR ACCRUE INTEREST OR FEES AT ANY “DEFAULT” OR “PAST DUE” RATE SHALL
NOT BE DEEMED A WAIVER BY PURCHASER OF ITS CLAIM THERETO.


 


12.3.  Effect of Default.


 


12.3.1.  Upon the occurrence of any Event of Default,
in addition to any rights Purchaser has under this agreement or applicable law:


 


12.3.1.1.     Purchaser may immediately terminate this
agreement, at which time all Obligations shall immediately become due and payable
without notice, and


 


12.3.1.2.     the Default Charge shall accrue and be
payable on any Obligation not paid when due.


 


13.  Termination; Effective Date.  This agreement will be effective when
executed by Purchaser, will continue in full force and effect for one (1) year
thereafter, unless earlier terminated as provided herein, upon sixty (60) days
written notice to Purchaser, and shall be further annually extended
automatically unless Seller shall have given Purchaser written notice of its
intention to terminate at least sixty (60) days prior to each such anniversary,
whereupon this agreement shall terminate on said anniversary.


 


	
   

  	
   

  	
   

  	
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14.  Enforcement.  This agreement and all agreements relating
to the subject matter hereof are the product of negotiation and preparation by
and among each party and its respective attorneys, and shall be construed
accordingly.  Accordingly, no provision
of this agreement shall be construed against or interpreted to the disadvantage
of any party hereto by any court or other governmental or judicial party by
reason of such party having, or being deemed to have, structured, drafted, or
dictated such provision.


 


15.  Amendment. 
Neither this agreement nor any provisions hereof may be changed,
waived, discharged, or terminated, nor may any consent to the departure from
the terms hereof be given, orally (even if supported by new consideration), but
only by an instrument in writing signed by all parties to this agreement.  Any waiver or consent so given shall be
effective only in the specific instance and for the specific purpose for which
given.


 


16.  No Lien Termination Without Release.  In recognition of the Purchaser’s right
to have its attorneys’ fees and other expenses incurred in connection with this
Agreement secured by the Collateral, notwithstanding payment in full of all
Obligations by Seller, Purchaser shall not be required to record any
terminations or satisfactions of any of Purchaser’s Liens on the Collateral unless
and until Seller has executed and delivered to Purchaser a general release in a
form reasonably satisfactory to Purchaser unless this Agreement is terminated
due to the intentional violation of this Agreement by Purchaser.  Seller understands that this provision
constitutes a waiver of its rights under §§9-509(d)(2) and 9-513 of the UCC.


 


17.  Account Stated.  Purchaser shall render to Seller a
statement setting forth the transactions arising hereunder.  Each statement shall be considered correct
and binding upon Seller as an account stated, except to the extent that
Purchaser receives, within thirty (30) days after the mailing of such
statement, written notice from Seller of any specific exceptions by Seller to
that statement, and then it shall be binding against Seller as to any items to
which it has not objected.


 


18.  Conflict. 
Unless otherwise specifically stated in any other agreement entered
into between Purchaser and Seller hereafter, if a conflict exists between the
provisions of this agreement and the provisions of such other agreement, the
provisions of this agreement shall control.


 


19.  Survival. 
All representations, warranties, and covenants contained in this
agreement shall be and remain effective for so long as this agreement has not been
terminated in accordance with its terms or any of the Obligations remain
outstanding


 


20.  No Waiver; Cumulative Nature of Rights and Remedies.  No failure to exercise and no delay in
exercising any right, power, or remedy hereunder shall impair any right, power,
or remedy which Purchaser may have, nor shall any such delay be construed to be
a waiver of any of such rights, powers, or remedies, or any acquiescence in any
breach or default hereunder; nor shall any waiver by Purchaser of any breach or
default by Seller hereunder be deemed a waiver of any default or breach
subsequently occurring.  All rights and
remedies granted to Purchaser hereunder shall remain in full force and effect
notwithstanding any single or partial exercise of, or any discontinuance of
action begun to enforce, any such right or remedy.  The rights and remedies specified herein are
cumulative and not exclusive of each other or of any rights or remedies which
Purchaser would otherwise have.  Any
waiver, permit, consent or approval by


 


	
   

  	
   

  	
   

  	
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Purchaser of any breach or
default hereunder must be in writing and shall be effective only to the extent
set forth in such writing and only as to that specific instance.


 


21.  Severability.  In the event any one or more of the
provisions contained in this agreement is held to be invalid, illegal, or
unenforceable in any respect, then such provision shall be ineffective only to
the extent of such prohibition or invalidity, and the validity, legality, and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby.


 


22.  Relationship of Parties.  The relationship of the parties hereto
shall be that of Seller and Purchaser of Accounts, and neither Party shall be a
fiduciary of the other Party.


 


23.  Reimbursement of Expenses.  Seller agrees to reimburse Purchaser on
demand for the actual amount of all costs and expenses, including reasonable
attorneys’ fees, which Purchaser has incurred or may incur in (a) negotiating,
preparing, or administering this agreement and any documents prepared in
connection herewith, all of which shall be paid contemporaneously with the
execution hereof, and (b) protecting, preserving, or enforcing any Lien, security
interest, or other right granted by Seller to Purchaser or arising under
applicable law, whether or not suit is brought. 
Any such costs and expenses incurred subsequent to the execution hereof
shall become part of the Obligations when incurred and may be added to the
outstanding principal amount due hereunder.


 


24.  Entire Agreement.  This agreement supersedes all prior or
contemporaneous agreements and understandings between said parties, verbal or
written, express or implied, relating to the subject matter hereof.  No promises of any kind have been made by
Purchaser or any third party to induce Seller to execute this agreement.  No course of dealing, course of performance
or trade usage, and no parole evidence of any nature, shall be used to
supplement or modify any terms of this agreement.


 


25.  Choice of Law.  This agreement and all transactions
contemplated hereunder and/or evidenced hereby shall be governed by, construed
under, and enforced in accordance with the internal laws of the State of
Florida.


 


26.  Construction of Agreement.  Notwithstanding anything to the contrary
set forth in this agreement, in no event shall the rate or amount of fees or
other charges that are deemed interest under applicable law and that are
charged or collected hereunder exceed the maximum amount chargeable under
applicable law (it being the intent hereof that Purchaser not contract or
receive and Seller not pay interest in excess of the maximum authorized by
applicable law); and, if a court of competent jurisdiction determines that
Purchaser has charged or collected interest in excess of the highest lawful
rate, Purchaser shall promptly refund such excess to Seller and shall not
otherwise be penalized.


 


27.  JURY TRIAL WAIVER.  IN RECOGNITION
OF THE HIGHER COSTS AND DELAY WHICH MAY RESULT FROM A JURY TRIAL, THE PARTIES
HERETO WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE
OF ACTION (a) ARISING HEREUNDER, OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES


 


	
   

  	
   

  	
   

  	
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HERETO OR ANY OF THEM WITH RESPECT
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY FURTHER WAIVES ANY
RIGHT TO CONSOLIDATE ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED; AND
EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


 


28.  Venue; Jurisdiction.  The parties agree that any suit, action, or
proceeding arising out of the subject matter hereof, or the interpretation,
performance, or breach of this agreement, shall, if Purchaser so elects, be
instituted in the United States District Court for the Middle District of
Florida or any court of the State of Florida located in Orange County (each an
“Acceptable Forum”).  Each party agrees
that the Acceptable Forums are convenient to it, and each party irrevocably
submits to the jurisdiction of the Acceptable Forums, irrevocably agrees to be
bound by any judgment rendered thereby in connection with this agreement, and
waives any and all objections to jurisdiction or venue that it may have under
the laws of the State of Florida or otherwise in those courts in any such suit,
action, or proceeding.  Should such
proceeding be initiated in any other forum, Seller waives any right to oppose
any motion or application made by Purchaser as a consequence of such proceeding
having been commenced in a forum other than an Acceptable Forum.


 


29.  Notice.


 


29.1.  All
notices required to be given to any party other than Purchaser shall be deemed
given upon the first to occur of (i) deposit thereof in a receptacle under the
control of the United States Postal Service, properly addressed and postage
prepaid, (ii) transmittal by electronic means to a receiver under the control
of such party; or (iii) actual receipt by such party or an employee or agent of
such party.


 


29.2.  All
notices required to be given to Purchaser hereunder shall be deemed given upon
actual receipt by a responsible officer of Purchaser.


 


29.3.  For
the purposes hereof, notices hereunder shall be sent to the following
addresses, or to such other addresses as each such party may in writing
hereafter indicate:


 


SELLER


 


	
  ADDRESS:

  	
   

  	
  3015 Wellington Road

  
	
   

  	
   

  	
  Alpharetta, GA 30022

  
	
   

  	
   

  	
   

  
	
  OFFICER:

  	
   

  	
  Ron Farrell

  
	
   

  	
   

  	
   

  
	
  FAX NUMBER:

  	
   

  	
   

  	
   

  



 


	
   

  	
   

  	
   

  	
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PURCHASER


 


	
  ADDRESS:

  	
   

  	
  1403 West Colonial Drive

  
	
   

  	
   

  	
  Suite B

  
	
   

  	
   

  	
  Orlando FL 32804

  
	
   

  	
   

  	
   

  
	
  OFFICER:

  	
   

  	
  Mr. Max Eliscu, President

  
	
   

  	
   

  	
   

  
	
  FAX NUMBER:

  	
   

  	
  407-206-0025

  



 


30.  Counterparts.  This agreement may be signed in any
number of counterparts, each of which shall be an original, with the same
effect as if all signatures were upon the same instrument.  Delivery of an executed counterpart of the
signature page to this agreement by facsimile shall be effective as delivery of
a manually executed counterpart of this agreement, and any party delivering such
an executed counterpart of the signature page to this agreement by facsimile to
any other party shall thereafter also promptly deliver a manually executed
counterpart of this agreement to such other party, provided that the failure to
deliver such manually executed counterpart shall not affect the validity,
enforceability, or binding effect of this agreement.


 


31.  Definitions.  The following terms used herein shall
have the following meanings.  All
capitalized terms not herein defined shall have the meaning set forth in the
UCC:


 


31.1.  “Avoidance Claim” – any claim that any
payment received by Purchaser from or for the account of an Account Debtor is
avoidable under the Bankruptcy Code or any other debtor relief statute.


 


31.2.  “Balance Subject to Funds Usage Fee” - the
unpaid Face Amount of all Purchased Accounts minus the Reserve Account.


 


31.3.  “Business Day” – a day of the week other
than a Saturday, Sunday, or a holiday under which banks located in the State of
Florida are required or permitted to be closed.


 


31.4.  “Clearance Days” – Three (3) Business Days
for all payments.


 


31.5.  “Collateral” - all now owned and hereafter
acquired personal property and fixtures, and proceeds thereof, (including
proceeds of proceeds) including without limitation:


 


31.5.1.  Accounts,
including health-care insurance receivables;


 


31.5.2.  Chattel
Paper;


 


31.5.3.  Inventory;


 


31.5.4.  Equipment;


 


31.5.5.  Instruments,
including Promissory Notes;


 


31.5.6.  Investment
Property;


 


31.5.7.  Documents;


 


	
   

  	
   

  	
   

  	
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31.5.8.  Deposit
Accounts;


 


31.5.9.  Letter
of Credit Rights;


 


31.5.10.  General
Intangibles; and


 


31.5.11.  Supporting
Obligations.


 


31.6.  “Credit and Collection Services” -
shall include the following services performed by Purchaser on behalf of Seller
as a result of the purchase of accounts hereunder:


 


31.6.1.  All
accounts receivable record keeping, including the recording of invoices and
payments;


 


31.6.2.  Collection
of accounts;


 


31.6.3.  Setting
of such credit limits for sales by Seller as may be required.


 


31.7.  “Default Charge”  – The maximum default rate allowable by law


 


31.8.  “Early Termination Fee”
–                    .


 


31.9.  “Eligible Account” - an Account which is
acceptable for purchase as determined by Purchaser in its sole discretion.


 


31.10.  “Events of Default”
- See Section 12.1


 


31.11.  “Face Amount” - the face amount due on an
Account.


 


31.12.  “Funds Usage Fee” – the product of the
Funds Usage Fee Rate and the Balance Subject to Funds Usage Fee.


 


31.13.  “Funds Usage Fee Rate” – Two (2%) percent in excess of the Prime
Rate, not less than 6.0%, calculated on the basis of the actual number of days
elapsed in a year of 360 days.


 


31.14.  “Initial Fee” - the fee earned by Purchaser
in consideration of its performance of Credit and Collection Services, computed
as the Initial Fee Percentage multiplied by the Face Amount of each Purchased
Account.


 


31.15.  “Initial Fee Percentage” – Ex: 1.8%


 


31.16.  “Late Payment Date” – the date which is
sixty (60) days from the date on which the Purchased Account was due.


 


31.17.  “Lien” - any interest in property securing
an Obligation owed to, or a claim by, a person other than the owner of the
property, whether such interest is based upon common law, statute, or contract.


 


31.18.  “Maximum Amount” – $5,500,000.


 


	
   

  	
   

  	
   

  	
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31.19.  “Misdirected Payment Fee” – Seven and one
half (7.5%) percent of the amount of any payment on account of a Purchased
Account which has been received by Seller and not delivered in kind to
Purchaser on the next Business Day following the date of receipt by Seller.


 


31.20.  “Missing Notation Fee” – Seven and one half
(7.5%) of the Face Amount.


 


31.21.  “Obligations” - all present and future
obligations owing by Seller to Purchaser whether or not for the payment of
money, whether or not evidenced by any note or other instrument, whether direct
or indirect, absolute or contingent, due or to become due, joint or several,
primary or secondary, liquidated or unliquidated, secured or unsecured,
original or renewed or extended, whether arising before, during, or after the
commencement of any bankruptcy case in which Seller is a Debtor, including but
not limited to any obligations arising pursuant to letters of credit or
acceptance transactions or any other financial accommodations.


 


31.22.  “Prime Rate” – The prime rate published by
The Wall Street Journal, from time to time as its prime rate, whether or not
such rate is the lowest or best rate quoted by such bank to its most
creditworthy customers.  Seller
acknowledges that such bank charges interest at, above, and below its announced
prime rate.


 


31.23.  “Purchase Price” - the unpaid Face Amount
of an Account at the time of purchase.


 


31.24.  “Purchased Accounts” - Accounts purchased
hereunder which have not been Repurchased.


 


31.25.  “Purchase Date” – The date on which Seller
has been advised in writing that Purchaser has agreed to purchase an Account.


 


31.26.  “Repurchased” - an Account has been
repurchased when Seller has paid to Purchaser the then unpaid Face Amount.


 


31.27.  “Required Reserve Amount” - the Reserve
Percentage multiplied by the unpaid Face Amount of Purchased Accounts.


 


31.28.  “Reserve Account” - an account or accounts
on the books of Purchaser reflecting transactions hereunder.


 


31.29.  “Reserve Percentage” –Fifteen (15%)
percent, which percent may be revised at any time by Purchaser to protect
Purchaser with regard to (i) any indebtedness owing by Seller hereunder, or
(ii) possible returns, claims or defenses of any Account Debtor.


 


31.30.  “Reserve Shortfall” - the amount by which
the Reserve Account is less than the Required Reserve Amount.


 


31.31.  “Schedule of Accounts” - a form supplied by
Purchaser from time to time wherein Seller lists such of its Accounts as it
requests that Purchaser purchase under the terms of this agreement.


 


	
   

  	
   

  	
   

  	
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31.32.  “Seller’s Deposit Account” - any demand
deposit account maintained by Seller, or represented by an employee of Seller
to be maintained by Seller, wherever located.


 


31.33.  “Service Charge” - a fee earned by
Purchaser, which, in addition to the Initial Fee is in consideration of its
performance of Credit and Collection Services, based on the number of days the
Purchased Account is unpaid in whole or in part, computed from the invoice date
(each, a “Service Charge Period”), and not Repurchased, as follows:


 




	
  Days
  Unpaid

  	
   

  	
  Service Charge

  	
   

  
	
  between 60 and 75

  	
   

  	
  .5

  	
  %

  
	
  between 76 and 90

  	
   

  	
  .5

  	
  %

  






 


31.34.  Service Charge Period” - See definition of
Service Charge


 


31.35.  “UCC”
- the Uniform Commercial Code (or any successor statute) as adopted and in
force from time to time in the State of Florida or, when the laws of any other
state govern the method or manner of the perfection or enforcement of any
security interest in any of the Collateral, the Uniform Commercial Code (or any
successor statute) as adopted and in force from time to time in such state.


 


IN
WITNESS WHEREOF, the Parties have executed this agreement on the day and year
first above written.


 


	
  SELLER:

  	
  PARAGON SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  By: Ron Farrell

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  /s/ Ron Farrell

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Sole Director

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  PURCHASER:

  	
  LSQ FUNDING GROUP L.C.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Maxwell Eliscu

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Maxwell Eliscu

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
									



 


	
   

  	
   

  	
   

  	
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