Document:

Unassociated Document

Exhibit 10.9

 

NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON THE EXERCISE OF WARRANTS ISSUED IN CONNECTION HEREWITH HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

 

SECURED PROMISSORY NOTE

 

	
$750,000.00 

	
December __, 2012

 

For value received, Global Digital Solutions, Inc., a New Jersey company (the “Maker” or “Company”), promises to pay to Gabriel De Los Reyes or his permitted assign (the “Holder”), the principal sum of Seven Hundred Fifty Thousand Dollars ($750,000.00) together with interest thereon from the date of issuance of this Note. Simple interest shall accrue from the date of issuance of this Note on the unpaid principal amount at a rate equal to eight and one quarter percent (8 1/4%) per annum based on a 365-day year, payable upon maturity; provided, however, that upon the occurrence of, and during the continuance of, an Event of Default (as defined herein), interest shall accrue from the date of such Event of Default on the unpaid principal amount of this Note at a rate equal to twelve percent ( 12%) per annum, based on a 365- day year. This Note is issued pursuant to, and is subject to the terms and conditions of, that certain Promissory Note Purchase Agreement dated as of the date hereof by and between the Company and the Holder (the “Purchase Agreement”).

 

1.          Maturity; Payment. To the extent not previously redeemed in accordance with the terms of this Note, the Company shall repay the outstanding principal balance of this Note, and any accrued but unpaid interest then due and payable on this Note, in full on May 1, 2013 (the “Maturity Date”). All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. All payments received shall be applied first to the accrued and unpaid interest then due and payable on this Note and then against the outstanding principal balance of th is Note.

 

2.          Prepayment. The outstanding principal balance payable to the Holder hereunder may be prepaid at any time, without penalty. All prepayments so permitted shall be applied in the order provided in Section 1.

 

3.           Not Used.

 

  

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4.           Secured Obligation. The obligations of the Company under this Note are secured

by all of the assets of the Company pursuant to that certain Security Agreement, dated as of the date hereof, by and among the Company and the Holder.

 

5.           Default. For purposes of this Note, the term “Event of Default” shall include any of the following:

 

(a)          The failure by the Company to pay the principal and interest therein in full on the Maturity Date;

 

(b)          A material breach by the Company of any other term or provision of this Note or the Purchase Agreement; provided, however that the Company shall have ten (10) days to cure such default after the Company received written notice from the Holder of the occurrence thereof; and

 

(c)          The filing of a petition in bankruptcy or under any similar insolvency law by the Company, the making of an assignment for the benefit of creditors by the Company, or if any voluntary petition in bankruptcy or under any similar insolvency law is filed against the Company and such petition is not dismissed within sixty (60) days after the filing thereof.

 

If the Event of Default is pursuant to Sections 5(a) or 5(c), or if the Company is unable to cure its Event of Default under Section 5(b) within such ten (10) day period, the Holder may, at its option and for so long as such default is continuing, accelerate repayment of the portion of the unpaid principal balance of this Note, in which case such unpaid principal balance and all interest accrued thereon shall be due and payable immediately.

 

The Holder shall have all rights and remedies available to it upon any Event of Default.

 

6.          Not Used.

 

7.          Miscellaneous.

 

7.1          Waiver of Presentment and Notice. The Company and all endorsers, sureties, guarantors and accommodation parties of this Note, and all other persons liable or to become liable for all or any part of the indebtedness evidenced hereby, hereby waive, jointly and severally, presentment, demand, protest, notice of dishonor, diligence and all other notices, any release or discharge arising from any extension of time, discharge of a prior party, or other cause of release or discharge other than actual payment in full hereof.

 

7.2          Amendments and Waivers. Any term of this Note may be amended or modified, and obligations of the Company and the rights of Holders may be waived, only with the written consent of the Company and the Holder. Any amendment or waiver effected in accordance with this Section 7.2 shall be binding upon the Company, the Holder and each transferee of any Note. A waiver with reference to one event shall not be construed as continuing or as a bar to or waiver of any right or remedy as to a subsequent event. No delay or omission of Holder to exercise any right, whether before or after an Event of Default hereunder, shall impair any such right or shall be construed to be a waiver of any right or Default, and the acceptance at any time by Holder of any past-due amount shall not be deemed to be a waiver of the right to require prompt payment when due of any other amounts then or thereafter due and payable.

 

  

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7.3          Transfer; Successors and Assigns. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer this Note without the prior written consent of the Company.

 

7.4          Time is of the Essence. Time is of the essence hereof. Upon any Event of Default hereunder, Holder may exercise all rights and remedies provided for herein and by law or equity, including, but not limited to, the right to immediate payment in full of this Note.

 

7.5          Usury. Nothing in this Note shall require the Company to pay interest at a rate in excess of the maximum rate permitted by applicable law. Any interest payable hereunder or under any other instrument relating to the indebtedness evidenced hereby that is in excess of the maximum rate permitted by applicable law shall, in the event of acceleration of maturity, late payment, prepayment, or otherwise, be applied to a reduction of the unrepaid indebtedness evidenced hereby and not to the payment of interest, or if such excessive interest exceeds the unpaid balance of such unrepaid indebtedness, such excess shall be refunded to the Company. To the extent not prohibited by applicable law, determination of the maximum rate permitted by applicable law shall at all times be made by amortizing, prorating, allocating and spreading in equal parts during the full term of the indebtedness evidenced hereby, all interest at any time contracted for, charged or received from the Company in connection with the indebtedness evidenced hereby, so that the actual rate of interest on account of such indebtedness is uniform throughout the term thereof.

 

7.6          Attorney’s Fees. It is expressly agreed that if this Note is referred to any attorney or if suit is brought to collect or interpret this Note or any part hereof or to enforce or protect any rights conferred upon the Holder by this Note or any other document evidencing or securing this Note, then the Company covenants and agrees to pay all reasonable costs, including reasonable attorneys’ fees and expenses, incurred by Holder in connection therewith.

 

7.7          Governing Law; Jurisdiction. This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Florida, without giving effect to principles of conflicts of law. The Company and Holder agree that all legal proceedings concerning the interpretation, enforcement and defense of this Note and the transactions contemplated herein shall be commenced extensively in the jurisdiction of the state or federal courts located in Broward County or Palm Beach County, Florida.

 

7.8          Loss of Note . Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Note or any Note exchanged for it, and indemnity satisfactory to the Company (in case of loss, theft or destruction) or surrender and cancellation of such Note (in the case of mutilation), the Company will make and deliver in lieu of such Note a new Note of like tenor.

 

7.9          Shareholder Status. The Holder shall not have rights as a shareholder of the Company with respect to this Note.

 

[Signature Page Follows]

  

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IN WITNESS WHEREOF, the Company has executed this Secured Promissory Note as of the date first above written.

 

	 	
Global Digital Solutions, Inc.

	 
	 	 	 	 
	 	By:	/s/ William J. Delgado	 
	 	Name: 	William J. Delgado	 
	 	Title: 	CEO	 

 

 

4Unassociated Document

Exhibit 10.10

SECURITY AGREEMENT

 

This Security Agreement (this “Agreement”) is made as of the ___ day of December, 2012 by and among Global Digital Solutions, Inc., a New Jersey corporation (the “Company”), Bay Acquisition, LLC, a New Hampshire limited liability company and the noteholder of the Company identified on Schedule A hereto (the “Noteholder”).

 

RECITALS

 

WHEREAS, the Noteholder has purchased a secured promissory note from the Company (the “Note”) pursuant to that certain Promissory Note Purchase Agreement dated as of the date hereof by and among the Company and the Noteholder (the “Purchase Agreement”);

 

WHEREAS, as a condition to the purchase of the Note and as security for the performance by the Company of its obligations under the Note, including the payment of the interest and principal of the Note, the Company has agreed to grant a security interest in the Collateral (hereinafter defined) in favor of the Noteholder as provided herein.

 

WHEREAS, as a condition to the purchase of the Note and as security for the performance by the Company of its obligations under the Note, including the payment of the interest and principal of the Note, Bay Acquisition LLC has agreed to provide and grant a security interest in the Additional Collateral (hereinafter defined) in favor of the Noteholder as provided herein.

 

NOW, THEREFORE, in consideration of the promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.           Grant of Security Interests. In order to secure the payment and the performance of all the Obligations (as defined below) of the Company, subject to Section 14 of this Agreement:

 

(a)         the Company hereby grants and conveys to the Noteholder a continuing first priority lien security interest in the following:

 

All of the tangible assets of the Company and its operating subsidiaries, if any, of every kind and nature including, without limitation, all accounts, equipment, accessions, fixtures, inventory, goods, investment property, chattel paper, instruments, documents, rights to proceeds under letters of credit, letter-of-credit rights, supporting obligations, commercial tort claims, deposit accounts (including money, cash and cash equivalents), and all of the intangible assets of the Company and its operating subsidiaries, if any, including, without limitation, general intangibles, payment intangibles and software of the Company and any of its operating subsidiaries and all “Intellectual Property” (as defined below) used in connection with the operation of the Company’s business and any of its operating subsidiaries’ businesses, wherever located, now owned or hereafter acquired (hereinafter collectively called the “Collateral”).

 

  

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(b)         Bay Acquisition LLC hereby grants and conveys to the Noteholder a continuing first priority lien security interest in the following:

 

That certain tract of land situated in the Town of Martin, County of Floyd, and State of Kentucky, all as more fully described as a portion of Lots 17, 19, 42, 43, 44 and all of Lot 18 of Block F of the New Addition to Martin, Kentucky as shown on the plat on file in the County of Floyd Clerk’s office, which land is more particularly described on Exhibit A attached hereto and made a part hereof, together with the buildings, improvements and fixtures thereon and all the tenements, hereditaments, appurtenances, and rights of way incident and belonging thereto (collectively, the “Property”), together with that certain Lease Agreement attached hereto as Exhibit B (the “Lease”). The Property and the Lease are hereinafter collectively called the “Additional Collateral”.

 

For the purposes of this Agreement, the term “Obligations” means: (i) all amounts (whether principal, interest or otherwise) at any time due and owing by the Company to the Noteholder under the Note; (ii) all other debts, liabilities, duties and/or obligations of the Company to the Noteholder arising prior to, on or after the date of this Agreement, that arise under or in connection with the Note; (iii) all costs and expenses incurred by the Noteholder in the collection of any of the indebtedness described in this sentence or in connection with the enforcement of any of the duties and obligations of the Company to the Noteholder under the Note, including all court costs and expenses and all reasonable attorneys’ fees and expenses; and (iv) all future advances made by the Noteholder for the maintenance, protection, preservation or enforcement of, or realization upon, the Collateral or any portion of the Collateral. For purposes of this Agreement, the term “Intellectual Property” means (A) inventions, ideas or conceptions of potentially patentable subject matter, whether or not patentable, whether or not reduced to practice, whether or not yet made the subject of a pending patent application or applications, (B) patents and patent applications (including any continuations, continuations-in-part, divisionals, reissues, renewals and applications for any of the foregoing) ((A) and (B) collectively, “Patents”), (C) trademarks, service marks, trade dress, designs, logos, trade names, corporate names and general intangibles of like nature, whether or not registered, including all common law rights and registrations and applications for registration thereof, together with all goodwill relating to the foregoing (collectively, “ Trademarks”), (D) copyrights, whether or not registered, and registrations and applications for registration thereof, and all rights therein provided by multinational treaties or conventions (collectively, “Copyrights”), (E) trade secrets and confidential, technical or business information (including, without limitation, ideas, formulas and compositions), (F) technology (including, without limitation, know-how and show-how), production processes and techniques, research and development information, drawings, specifications, designs, sketches, design archives, plans, proposals, technical data, copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information, whether or not confidential, whether current or historical, (G) all rights to obtain and apply for Patents, and to register Trademarks and Copyrights, (H) all rights to sue, recover and retain damages (and costs and attorneys’ fees) for present and past infringement of any of the Intellectual Property rights hereinabove set out, and (I) all common law rights with respect to the Intellectual Property hereinabove set out.

 

  

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2.           Filing; Further Assurances. The Company, and Bay Acquisition LLC, will, at the Company’s expense, execute, deliver, file and record (in such manner and form as the Noteholder may require), and hereby expressly permits and authorizes the Noteholder to file and record, any financing statements (including any amendments and continuations), any photographic or other reproduction of any financing statement (including any amendments and continuations) or this Agreement (which shall be sufficient as a financing statement hereunder), any specific assignments or other paper that may be reasonably necessary or desirable, or that the Noteholder may reasonably request, in order to create, preserve, perfect or validate any security interests granted pursuant to Section 1 of this Agreement (the “Security Interests”) or to enable the Noteholder to exercise and enforce its rights hereunder with respect to any of the Collateral or the Additional Collateral. The Company shall pay all filing costs associated with perfection of interests created under and filings as a result of the issuance of the Note and this Agreement.

 

3.           Representations and Warranties of the Company. The Company hereby represents and warrants to the Noteholder that:

 

(a)         the Company is the owner of the Collateral free from any lien, security interest or encumbrance;

 

(b)         no financing statement covering the Collateral is on file in any public office, other than the financing statements filed pursuant to this Agreement;

 

(c)         this Agreement, coupled with the filing of appropriate UCC financing statements, creates in favor of the Noteholder a valid and perfected first priority security interest in all of the Collateral;

 

(d)         the Company is not subject to any voluntary or involuntary petition under the federal bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for its business or property;

 

(e)         there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of the Company, threatened against or affecting, any of the Collateral, before any court or arbitrator or any governmental body, agency or official; and

 

(f)          to the knowledge of the Company, there is no material fact directly relating to the business, operations, condition or prospects of the Company (including any competitive developments but other than facts which relate to general economic or industry trends or conditions) that materially adversely affects the same that has not been disclosed to Noteholder.

 

  

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4.           Representations and Warranties of Bay Acquisition LLC. Bay Acquisition LLC hereby represents and warrants to the Noteholder that:

 

(a)          it is the owner of the Additional Collateral free from any lien, security interest or encumbrance;

 

(b)         no financing statement covering the Additional Collateral is on file in any public office, other than the financing statements filed pursuant to this Agreement;

 

(c)         this Agreement, coupled with the filing of appropriate UCC financing statements, creates in favor of the Noteholder a valid and perfected first priority security interest in all of the Additional Collateral;

 

(d)         it is not subject to any voluntary or involuntary petition under the federal bankruptcy laws or any state insolvency law or the appointment of a receiver, fiscal agent or similar officer by a court for its business or property;

 

(e)         there is no action, suit, investigation or proceeding (or any basis therefor) pending against, or to the knowledge of Bay Acquisition LLC, threatened against or affecting, any of the Collateral, before any court or arbitrator or any governmental body, agency or official; and

 

(f)          to the knowledge of Bay Acquisition LLC, there is no material fact directly relating to the business, operations, condition or prospects of the Bay Acquisition LLC (including any competitive developments but other than facts which relate to general economic or industry trends or conditions) that materially adversely affects the same that has not been disclosed to Noteholder.

 

5.           Covenants of the Company. The Company hereby covenants and agrees with Noteholder that the Company:

 

(a)         will defend the Collateral against all claims and demands of all persons at any time claiming any interest therein;

 

(b)         will promptly pay any and all taxes, assessments, maintenance fees and governmental charges upon the Collateral prior to the date penalties are attached thereto, except to the extent that such taxes, assessments, maintenance fees and charges shall be contested in good faith by the Company;

 

(c)         will immediately notify the Noteholder of any event causing a substantial loss or diminution in the value of all or any material part of the Collateral and the amount or an estimate of the amount of such loss or diminution;

 

(d)         will keep the Collateral free from any additional lien, security interest or encumbrance and in good order and repair, reasonable wear and tear excepted, and will not waste or destroy the Collateral or any part thereof;

 

(e)         will not use the Collateral in violation of any law, statute or ordinance;

 

(f)          will cooperate, cause or assist the Noteholder to preserve and perfect the Noteholder ’s security interest in any of the Collateral, including but not limited to the execution, filing or recordation of any documents with the United States Patent and Trademark Office that the Noteholder deems necessary in order to perfect the Noteholder ’s security interest in the Intellectual Property of the Company and the Company’s execution, filing or recordation of any UCC-3’s or such other instruments and documents promptly terminating any subsequent liens on the Collateral in order to preserve and protect the priority of the Noteholder’s security interest in the Collateral prior to the rights of all third persons and entities; and

 

  

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(g)         grants to Noteholder a power of attorney for the sole and limited purpose of executing any documents on behalf of the Company which the Noteholder deems reasonably necessary to perfect its security interest in the Collateral (such power, coupled with an interest, is irrevocable until such time as the Obligations hereby secured are satisfied in full).

 

6.           Covenants of Bay Acquisition LLC. Bay Acquisition LLC hereby covenants and agrees with Noteholder that it:

 

(a)         will defend the Additional Collateral against all claims and demands of all persons at any time claiming any interest therein;

 

(b)         will promptly pay any and all taxes, assessments, maintenance fees and governmental charges upon the Additional Collateral prior to the date penalties are attached thereto, except to the extent that such taxes, assessments, maintenance fees and charges shall be contested in good faith by it;

 

(c)         will immediately notify the Noteholder of any event causing a substantial loss or diminution in the value of all or any material part of the Additional Collateral and the amount or an estimate of the amount of such loss or diminution;

 

(d)         will keep the Additional Collateral free from any additional lien, security interest or encumbrance and in good order and repair, reasonable wear and tear excepted, and will not waste or destroy the Additional Collateral or any part thereof;

 

(e)         will not use the Additional Collateral in violation of any law, statute or ordinance;

 

(f)          will cooperate, cause or assist the Noteholder to preserve and perfect the Noteholder’s security interest in the Additional Collateral, and its execution, filing or recordation of any UCC-3’s or such other instruments and documents promptly terminating any subsequent liens on the Additional Collateral in order to preserve and protect the priority of the Noteholder’s security interest in the Additional Collateral prior to the rights of all third persons and entities; and

 

(g)         grants to Noteholder a power of attorney for the sole and limited purpose of executing any documents on its behalf which the Noteholder deems reasonably necessary to perfect its security interest in the Additional Collateral (such power, coupled with an interest, is irrevocable until such time as the Obligations hereby secured are satisfied in full).

 

  

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7.           Records Relating to Collateral. The Company will keep its records concerning the Collateral at the Company’s office located at 9477 Greenback Lane, Folsom, CA 95630, or at such other place or places of business or residence as the Noteholder and the Company mutually agree in writing, which approval shall not be unreasonably withheld. The Company will hold and preserve such records and will permit the Noteholder at any time during normal business hours to examine and inspect the Collateral and to make abstracts from such records, and will furnish to the Noteholder such information and reports regarding the Collateral as the Noteholder may from time to time reasonably request.

 

8.           Records Relating to Additional Collateral. Bay Acquisition LLC will keep its records concerning the Additional Collateral at its office located at 777 South Flagler Drive, Suite 800, West Tower, West Palm Beach, FL 33401, or at such other place or places of business or residence as the Noteholder and Bay Acquisition LLC mutually agree in writing, which approval shall not be unreasonably withheld. Bay Acquisition LLC will hold and preserve such records and will permit the Noteholder at any time during normal business hours to examine and inspect the Additional Collateral and to make abstracts from such records, and will furnish to the Noteholder such information and reports regarding the Additional Collateral as the Noteholder may from time to time reasonably request.

 

9.           General Authority. The Company and Bay Acquisition LLC each hereby conditionally appoints the Noteholder the Company’s and Bay Acquisition LLC’s respective lawful attorney-in-fact, with full power of substitution, in the name of the Company, and in the name of Bay Acquisition LLC, for the sole use and benefit of the Noteholder, at the Company’s expense, to exercise all of the following powers with respect to the Collateral or the Additional Collateral, as the case may be, upon an Event of Default hereunder:

 

(a)          to demand, sue for, collect, receive and give acquittance for all monies due or to become due;

 

(b)          to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto;

 

(c)          to sell, transfer, assign or otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if the Noteholder was the absolute owner thereof;

 

(d)          to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; and

 

(e)          to discharge any taxes, liens, security interests or other encumbrances at any time placed thereon.

 

  

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10.         Events of Default. The Company shall be in default under this Agreement upon the occurrence of any one of the following events (herein referred to as an “Event of Default”):

 

(a)          default by the Company in the due observance or performance of any material covenant or agreement contained herein or breach by the Company of any material representation or warranty herein contained; or

 

(b)          the occurrence of any default by the Company under the provisions of any of the Note, the Purchase Agreement or any other document now or hereafter evidencing any of the Obligations or securing any of the Obligations.

 

So long as the Company is not in default under the terms of this Agreement, (i) the Company shall have full right to own, utilize and possess the Collateral free from any interference or exercise of authority over such Collateral by the Noteholder, and (ii) Bay Acquisition LLC shall have full right to own, utilize and possess the Additional Collateral free from any interference or exercise of authority over such Collateral by the Noteholder.

 

11.         Remedies Upon Event of Default. If any Event of Default shall have occurred and is continuing, the Noteholder may exercise all the rights and remedies of a secured party under the Uniform Commercial Code. The Noteholder may require (a) the Company to assemble all or any part of the Collateral (b) Bay Acquisition LLC to assemble all or any part of the Additional Collateral, and make such Collateral or Additional Collateral available to the Noteholder at a place to be designated by the Noteholder, which is reasonably convenient. The Noteholder shall give the Company and Bay Acquisition LLC thirty (30) days written notice of its intention to make any public or private sale of Collateral or the Additional Collateral, which notice, in case of a public sale, shall state the time and place fixed for such sale. At any such sale, the Collateral or the Additional Collateral may be sold in one lot as an entirety or in separate parcels, as the Noteholder may determine. The Noteholder shall not be obligated to make any such sale pursuant to any such notice. The Noteholder may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be adjourned. The Noteholder may, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral or the Additional Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction.

 

12.         Application of Collateral / Additional Collateral and Proceeds. The proceeds of any sale of, or other realization upon, all or any part of the Collateral or the Additional Collateral shall be applied in the following order of priorities: (a) first, to pay the expenses of such sale or other realization and all expenses, liabilities and advances incurred or made by the Noteholder in connection therewith, and any other un -reimbursed expenses for which the Noteholder is to be reimbursed pursuant to this Agreement, (b) to pay to Bay Acquisition LLC, or its successors or assigns, or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds up to the value of the Additional Collateral, and (c) to pay to the Company, or its successors or assigns, or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds.

 

  

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13.         Expenses. The Company will forthwith upon demand pay to the Noteholder:

 

(a)          the amount of any taxes which the Noteholder may have been required to pay by reason of the Security Interests (including any applicable transfer taxes) or to free any of the Collateral or Additional Collateral from any lien thereon; and

 

(b)          the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any agents not regularly in its employ, which the Noteholder may incur in connection with (i) the collection, sale or other disposition of any of the Collateral or the Additional Collateral, (ii) the exercise by the Noteholder of any of the powers conferred upon it hereunder, or (iii) any default on the Company’s part hereunder.

 

14.        Termination of Security Interests; Release of Collateral and Additional Collateral. Upon the repayment of the Note and the performance in full of all the remaining Obligations, the Obligations hereby secured shall be deemed satisfied for purposes of this Agreement, the Security Interests granted herein shall terminate and: (a) all rights to the Collateral shall revert to the Company, and (b) all rights to the Additional Collateral and shall revert to Bay Acquisition LLC. Upon any such termination of the Security Interests and release of the Collateral and the Additional Collateral, the Noteholder will, at the Company’s expense to the extent permitted by law, execute and deliver to the Company and to Bay Acquisition LLC such documents as the Company and Bay Acquisition LLC shall reasonably request to evidence the termination of the Security Interests or the release of such Collateral or Additional Collateral , as the case may be.

 

15.         Insurance. To the extent the same is insurable, the Company shall keep the Collateral, and Bay Acquis ition LLC shall keep the A dditional Collateral, insured against direct loss or damage occasioned by theft, fire, extended coverage perils and such other liabilities and hazards as the Noteholder, may reasonably require, in amounts, without co -insurance, not less than the unpaid balance of the Obligations or the full replacement value, whichever is less, and shall pay the premiums when due. The policies shall contain the standard mortgagee clause in favor of the Noteholders and a copy of all binders for such policies covering the Collateral and the Additional Collateral shall be deposited with the Noteholder. The Company and bay Acquisition LLC, as the case may be, shall promptly give notice of l oss to insurance companies, and the Noteholder. All proceeds from such insurance shall be applied, at the Noteholder’s option, to the installments of the Obligations in the inverse order of their maturities (without penalty for prepayment) or to the restoration of the improvements on the Collateral or the Additional Collateral, as applicable. In the event of foreclosure of this Agreement or other transfer of title to the Collateral or the Additional Collateral, in extinguishment of the indebtedness secured hereby, all right, title, and interest of the Company or of Bay Acquisition LLC, as applicable, in and to any insurance then in force shall pass to the purchaser or grantee.

 

16.         Notices. Any notice or other communication required or permitted to be given hereunder shall be in writing, by certified or registered mail (postage prepaid), facsimile or personal delivery. The addresses for such communications shall be as set forth below:

 

	
  

	
(i)

	
If to the Company, at

 

Global Digital Solutions, Inc. 

9477 Greenback Lane

Folsom, CA 95630

Attention: William Delgado

 

With a copy (which shall not constitute notice) to:

 

Global Digital Solutions, Inc. 

14 Saint George Pl.

Palm Beach Gardens, FL 33418 

Attn: David Loppert

 

  

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(ii)

	
If to Bay Acquisition LLC

 

Bay Acquisition LLC

777 South Flagler Drive, Suite 800 

West Tower

West Palm Beach, FL 33401

Attn: Richard Sullivan

 

	
  

	
(iii)

	
If to the Noteholder, at the address listed on Schedule A 

 

With a copy (which shall not constitute notice) to:

 

Kopelowitz, Ostrow, Ferguson, 

Weiselberg, Keechl

200 S.W. 1st Avenue, Suite 1200 

Fort Lauderdale, Florida 33301 

Attn: Scott Weiselberg

 

or to such other address as any party may designate by notice complying with the terms of this Section 16. Each such notice shall be deemed delivered: (a) on the date delivered if by personal delivery; (b) on the date of confirmed transmission if by telex, telecopy or other telegraphic communication; and (c) on the date upon which the return receipt is signed or delivery is refused or the notice if designated by the postal authorities as not deliverable, as the case may be, if mailed.

 

17.         Waivers. No failure on the part of the Noteholder to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or remedy under this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise by the Noteholder\s of any right, power or remedy under this Agreement preclude any other right, power or remedy. The remedies in this Agreement are cumulative and are not exclusive of any other remedies provided by law. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

 

  

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18.         Governing Law; Jurisdiction. Unless otherwise defined herein, or unless the context otherwise requires, all terms used herein which are defined in the Florida Uniform Commercial Code have the meanings therein stated. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Florida, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Florida or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than t he State of Delaware. The Company hereby irrevocably consents to the jurisdiction of the United States District Court for the Southern District of Florida and any Florida state court sitting in Broward County or Palm Beach County, Florida in any action or proceeding arising out of or relating to this Agreement, and hereby irrevocably agrees that all claims and disputes arising out of or relating to this Agreement may be heard and determined in such state court or, to the extent permitted by law, in such federal court. The choice of forum set forth in this Section 18 shall not be deemed to preclude the bringing of any action by the Noteholder or the enforcement by the Noteholder of any judgment obtained in such forum in any other appropriate jurisdiction. Each of the Company and the Noteholder hereby irrevocably waives, and hereby acknowledges that it is estopped from raising, the claims or defenses of lack of personal jurisdiction, improper venue or inconvenient forum to the maintenance of any such action or proceeding.

 

19.         WAIVER OF JURY TRIAL. EACH OF THE COMPANY AND THE NOTEHOLDER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THE NOTES OR THIS AGREEMENT AND ANY AGREEMENT EXECUTED OR CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF EITHER THE NOTEHOLDER OR THE COMPANY.

 

20.         Heirs, Personal Representatives, Successors and Assigns. All of the grants, covenants, terms, provisions and conditions herein shall apply to, bind and inure to the benefit of the heirs, personal representatives, successors and permitted assigns of the Noteholders. None of the Company’s obligations under this Agreement may be delegated or transferred without the prior written consent of the Noteholder; and, any such purported delegation or transfer or attempt to delegate or transfer any of such obligations without the prior written consent of the Noteholder will be deemed null, void and of no force or effect.

 

21.         Severability. If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction.

 

22.        Enumeration and Headings. The enumeration and headings contained in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any of the provisions of this Agreement.

 

23.        Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, oral or written, relating to said subject matter.

 

  

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24.         Amendment. This Agreement may not be amended or modified in any manner except by a written agreement executed by the Company, Bat Acquisition LLC and the Noteholder.

 

25.         Counterparts . This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together shall constitute one and the same agreement. This Agreement may be executed by facsimile or other electronic signatures.

 

[Signature Pages Follow]

 

  

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IN WITNESS WHEREOF, this Security Agreement has been executed by the parties hereto all as of the day and year first above written.

 

	 	
COMPANY:

	 
	 	 	 
	 	
Global Digital Solutions, Inc.

	 
	 	 	 	 
	 	
By: 

	/s/ William J. Delgado	 
	 	 	
Print Name: William J. Delgado

	 
	 	 	Print Title: CEO	 
	 	 	 	 	 
	 	BAY ACQUISITION, LLC	 
	 	 	 	 	 
	 	
By:

	 	 
	 	 	
Print Name:

	 
	 	 	Print Title:	 
	 	 	 	 
	 	
NOTEHOLDER:

[See attached Counterpart Signature Page]

	 

 

  

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IN WITNESS WHEREOF, this Security Agreement has been executed by the parties hereto all as of the day and year first above written.

 

	 	
COMPANY:

	 
	 	 	 
	 	
Global Digital Solutions, Inc.

	 
	 	 	 	 
	 	
By: 

	 	 
	 	 	
Print Name: 

	 
	 	 	Print Title: 	 
	 	 	 	 	 
	 	BAY ACQUISITION, LLC	 
	 	 	 	 	 
	 	
By:

	/s/ Richard J. Sullivan	 
	 	 	
Print Name: Richard J. Sullivan

	 
	 	 	Print Title: Managing Partner	 
	 	 	 	 
	 	
NOTEHOLDER:

[See attached Counterpart Signature Page]

	 

  

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COUNTERPART SIGNATURE PAGE

TO SECURITY AGREEMENT

by and among

Global Digital Solutions, Inc., Bay Acquisition LLC

and

the Noteholders who execute this

Counterpart Signature Page

 

 

By execution of this Counterpart Signature Page, the undersigned hereby agrees to become a party to the Security Agreement, and the undersigned shall be a "Noteholder" under the Security Agreement.

 

	
[Individual]

	 	
[Entities]

	 	 	 	 	 
	/s/ Gabriel A. de los Rayes	 	 
	
Signature

	 	Name of Entity
	 	 	 	 	 
	Name:	Gabriel A. de los Rayes	 	By:	/s/ Gabriel A. de los Rayes
	 	 	 	Name: 	Gabriel A. de los Rayes
	 	 	 	Title: 	President

 

  

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SCHEDULE A

 

LIST OF NOTEHOLDERS

 

	NAME 	 	 	ADDRESS	 
	 	 	 	 	 
	
Gabriel De Los Reyes

	 	 	17795 SW 158th Street	 
	 	 	 	

Miami, FL 33187

	 

 

  

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EXHIBIT A

 

 

16

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