Exhibit
10.3


 


ASSIGNMENT


OF


FACTORING CREDIT BALANCES


 


THIS AGREEMENT, made this 27  day of July,
2004, by and among PARAGON SYSTEMS, INC., an
Alabama corporation (“Company”), LSQ FUNDING
GROUP, L.C., a Florida limited liability company (“Factor”), and BRE LLC, a Florida limited liability
company (“Lender”);


 


WITNESSETH:


 


WHEREAS, Company has entered into a Letter Agreement and Security Agreement with
Factor executed by Company on July 27, 2004, and accepted by Factor on July 27,
2004, (“Letter Agreement”), pursuant to which factor purchases from Company
accounts receivable arising out of the sale of goods by Company as more fully
set forth in the Letter Agreement; and


 


WHEREAS, in order to induce Lender to make loans and extend other financial
accommodations to Company, Company has agreed to provide Lender with security
for the same and to establish a procedure for the repayment thereof;


 


NOW THEREFORE, in consideration of the mutual covenants herein contained and other and
valuable consideration, receipt whereof is hereby acknowledged, the parties
hereto agree as follows:


 


1.                                     Grant of Security Interest.  As
security for any and all loans made or to be made to it by Lender, Company
hereby assigns, transfers and sets over unto Lender and hereby grants a security
interest to Lender in and to all of its rights, title and interest in and to
monies due and to become due to it under the Letter Agreement.


 


2.                                     Letter Agreement. 
Factor and Company warrant and represent that a true and correct copy of
the Letter Agreement, and all amendments thereto, if any, is attached hereto as
Exhibit A.


 


3.                                     Consent to Security
Agreement.  Factor agrees that notwithstanding any
contrary provisions in the Letter Agreement, Company may grant a security
interest to Lender in any and all of Company’s accounts, accounts receivable,
receivables, existing or hereafter arising, all cash and non-cash proceeds
resulting therefrom and all rights relating thereto; and all proceeds in the
form of accounts, accounts receivable and receivables resulting from the sale,
exchange, collection or other disposition of Company’s inventory hereafter
arising and all cash and non-cash proceeds resulting therefrom, and agrees that
the grant of such security interest shall not constitute a default or event of
default by Company under the Letter Agreement; provided, however, Lender’s
security interest in any and all of Company’s accounts, accounts receivable,
receivables, existing or hereafter arising, all cash and non-cash proceeds
resulting therefrom and all rights relating thereto; and all proceeds in the
form of accounts, accounts receivable and receivables resulting from the sale;
exchange, collection or other disposition of Company’s inventory hereafter
arising and all cash and non-cash proceeds resulting therefrom, shall be
subject and subordinate to the security interest granted to Factor by Company
pursuant to the Letter Agreement. 
Notwithstanding the foregoing, however, the rights of Lender in and to
the Specified Invoices (as defined in Security Agreement of even date herewith,
between Lender and Company), and the proceeds thereof, shall take precedence
and priority over Factor’s rights therein. 
Factor confirms that to the best of its knowledge, no assignment, notice
of assignment or notice of lien applicable to the monies and credit balances
assigned to Lender under this Agreement has been filed with Factor by any
person, firm or corporation.


 
















 


4.                                    Remittance of Funds. 
Factor shall remit to Company all monies due Company pursuant to the
Letter Agreement until such time as Factor receives written notice from Lender
sent by certified mail, return receipt requested, that such monies shall
thereafter be remitted directly to Lender (“Notice”), and Company hereby
authorizes and directs Factor, upon its receipt of a Notice, to remit all such
monies directly to Lender for the account of Company.  Factor acknowledges Company’s assignment and
authorization herein contained and agrees and undertakes, upon its receipt of a
Notice from Lender, to remit directly to Lender, all monies to which Company is
now or may hereafter be entitled pursuant to the terms of the Letter Agreement
as and when such monies become due to Company under the Letter Agreement,
subject to the (a) payment in full of any and all obligations of any nature
whatsoever owing by Company to Factor under the terms of the Letter Agreement,
(b) the reserve, if any, which Factor in its sole discretion may decide to
retain, and (c) Factor’s rights under the Letter Agreement.


 


5.                                    Statement of Account.  Company
authorizes and instructs Factor to send Lender a monthly statement of Company’s
account with Factor covering transactions under the Letter Agreement after the
close of each month concurrently with the sending of such statement of Company.


 


6.                                    Information Sharing. 
Company hereby irrevocably authorizes Lender and Factor to share with
each other all information in their possession from time to time concerning
Company, its financial condition and business prospects, and the accounts of
Company.  Company shall promptly furnish
to Lender all reports, notices, summaries, pledges, assignments and statements
that Company is obligated to furnish to Factor or which Company receives from
Factor.


 


7.                                    Grant of Authority to
Lender.  Company hereby irrevocable authorizes and
empowers Lender, from and after the giving of Notice to Factor, to ask, demand,
receive, receipt and give acquittance for any and all monies hereby assigned,
to endorse any checks or other orders for the payment of monies payable to
Company in payment thereof and, in its discretion, to file any claims or
commerce or take any action or proceeding and make settlements and compromises
and grant releases and otherwise take such action in its own name or in the
name of Company, or otherwise, which Lender may deem necessary or advisable in
the premises.  Company agrees that it
will, at the request of Lender, make, do and execute any such further acts,
agreements, assurances and other documents or instruments as shall be
reasonably required to enable Lender to collect all monies due or to become due
to Company under the Letter Agreement according to the intent and purpose of
this Agreement.  Company further agrees
that the rights granted herein to Lender by Company are in addition to the
rights that are otherwise available to Lender and that this Agreement shall be
binding upon Company and its successors and assigns and shall inure to the
benefit of Lender and its successors and assigns.


 


8.                                    Warranties and
Representations of Lender.  Lender warrants and represents to Factor that
the aforementioned assignment, transfer and security interest granted to Lender
by Company has been validly perfected in all respects pursuant to the Uniform
Commercial Code or other applicable law, and Lender alone, upon the receipt by Factor
of a Notice, is or will be entitled to receive all amounts otherwise available
to Company under the Letter Agreement. 
Lender hereby agrees to indemnify and to hold Factor harmless from any
and all loss, claims, liability, cost or expense, including attorneys’ fees,
which may be incurred by reason of Factor’s recognition of the assignment and
security interest herein contained and its remittances to Lender as herein
provided.


 


9.                                    Term of Agreement.  This
Agreement is to continue in effect until written notice by certified mail,
return receipt requested, of termination is served by any one of the parties
hereto upon the others, but any such termination shall not affect the
assignment to Lender or Lender’s right to receive monies due or to become due under
the Letter Agreement and this Agreement until all obligations of Company to
Lender created prior to such termination are paid in full, subject to Factor’s
rights under the Letter Agreement and this Agreement.


 


2
















 


10.                              Notices.  All
notices required or permitted hereunder shall be in writing and shall be sent
by certified mail, return receipt requested, addressed to the party to be
notified as follows;


 


	
  (a)

  	
   

  	
  If to Company:

  	
   

  	
  Paragon Systems, Inc.

  3317 Triana Boulevard,

  Huntsville Alabama 35805

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  If to Lender:

  	
   

  	
  BRE LLC

  1403 W. Colonial Drive, Suite B

  Orlando, Florida 32804

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  If to Factor

  	
   

  	
  LSQ Funding Group, L.C.

  1403 W. Colonial Drive, Suite B

  Orlando, Florida 32804

  



 


or
such address as each party may designate for itself by like notice.


 


11.                              Miscellaneous.  This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Florida; shall be binding upon the parties hereto and their
successors and assigns; is made solely for the benefit of the parties hereto
and of the provisions hereof; and may not be amended or changed in any respect
or in any manner other than by writing signed by the parties hereto.  All headings used herein are for convenience
or reference only and do not constitute a substantive part of this Agreement
and shall not affect its interpretation.


 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on
the date first above written.


 


 


	
   

  	
  “COMPANY”

  
	
   

  	
   

  
	
   

  	
  PARAGON
  SYSTEMS, INC., an
  Alabama corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R.G. Farrell.

  	
   

  
	
   

  	
  Name:

  	
  R.G. Farrell

  	
   

  
	
   

  	
  Title:

  	
  Chairman

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “FACTOR”

  
	
   

  	
   

  
	
   

  	
  LSQ
  FUNDING GROUP, L.C.,
  a Florida limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Maxwell Eliscu

  	
   

  
	
   

  	
  Name:

  	
  A. Maxwell Eliscu

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
	
   

  	
   

  
						



 


3
















 


	
   

  	
  “LENDER”

  
	
   

  	
   

  
	
   

  	
  BRE LLC, a
  Florida limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ A. Maxwell Eliscu

  	
   

  
	
   

  	
  Name:

  	
  A. Maxwell Eliscu

  	
   

  
	
   

  	
  Title:

  	
  Manager

  	
   

  
						



 


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