Document:

Exhibit 10.2

 

ASSIGNMENT OF CONTRACT PROCEEDS

 

THIS ASSIGNMENT OF CONTRACT PROCEEDS (“Assignment”), dated as of February 18,
2004, from PARAGON SYSTEMS, INC., an
Alabama corporation (“Paragon”) to LSQ
FUNDING GROUP, L.C., a Florida limited liability company (“LSQ”).

 

W  I  T  N  E  S  S
E  T  H:

 

WHEREAS, Paragon has entered into those certain contacts set forth on Exhibit “A” hereto, as they may have
been amended, modified or supplemented (collectively, the “Contract”) with the
United States of America, and/or agencies or component parts thereof
(collectively, the “Agency”); and

 

WHEREAS, Paragon is executing and delivering this Assignment as security for the
repayment of amounts due to LSQ in connection with that certain Factoring and
Security Agreement between LSQ and Paragon dated as of February 18, 2004 (the
“Factor Agreement”), pursuant to which LSQ has, and will, from time-to-time,
purchased certain accounts receivable from Paragon, and has provided Paragon
funds in accordance with the terms thereof (the “Funds”).

 

NOW, THEREFORE, to induce LSQ to enter into the Factor
Agreement and for other good and valuable consideration, the receipt of which
is hereby acknowledged:

 

1.             ASSIGNMENT. 
Paragon (a) in order to secure and provide for the due and punctual (i)
payment of the Fund indebtedness evidence by the account receivable (including
the principal thereof and interest thereon), and all other sums that may
hereafter become secured by or payable by Paragon under this Assignment, the
Factor Agreement or other documents related thereto, and (ii) performance and
observance of, and compliance with, the covenants, terms and conditions of
Paragon under the Factor Agreement, and the other documents, (b) does hereby
sell, assign, pledge, mortgage, transfer, grant a security interest in and lien
on, set over and confirm unto LSQ, its successors and assigns, all of Paragon’s
right, title and interest in and to all monies and claims for monies due and to
become due to Paragon under the Contract. 
Paragon shall cause all payments due to Paragon under the Contract to be
paid directly to LSQ for application to the obligations of Paragon to LSQ.  

 

2.             PARAGON TO REMAIN
LIABLE.  Anything in this Assignment to the contrary
notwithstanding, Paragon shall remain liable under the Contract, and shall
observe, perform and fulfill all of the conditions and obligations to be
observed, performed and fulfilled by it thereunder, and LSQ shall have no
obligation or liability thereunder or by reason of or arising out of this
Assignment, nor shall LSQ be required or obligated in any manner to observe,
perform or fulfill any of the conditions or obligations of Paragon thereunder
or pursuant thereto, or to make any payment or to make any inquiry as to the
nature or sufficiency of any payment received by it or Paragon, or to present
or file any claim, or to take any other action to collect or enforce the
payment of any amounts which may have been assigned to LSQ or to which LSQ may
be entitled hereunder at any time or times.

 

 

3.             FILINGS AND FURTHER
ASSURANCES.

 

(a)           Paragon shall effect the due filing of financing and continuation
statements, shall make all other filings and recordings, shall give all
notices, including notices to the Agency, and take such other action, including
obtaining the consent of the Agency, as required by law so that this Assignment
shall create a valid assignment under the provisions of the Assignment of
Claims Act of 1940, as amended (31 U.S.C. Section 3727, 41 U.S.C. Section
15).  Paragon hereby authorizes and
empowers LSQ to file any financing or continuation statement and any amendments
thereto with respect to the filing or recording of the Assignment in accordance
with the laws of any applicable jurisdiction, whether pursuant to the Uniform
Commercial Code or any other applicable law, without the signatures of Paragon
whenever permitted by applicable law.

 

(b)           Paragon shall at any time and from time to time duly execute and
deliver any and all such other and further assurances and documents and take
such actions as in the judgment of LSQ may be necessary, useful or desirable to
obtain or maintain the full benefits or this Assignment.

 

4.             REPRESENTATIONS AND
WARRANTIES.  Paragon hereby represents, warrants and
agrees that except for this Assignment it has not assigned, pledged or
otherwise granted a security interest in or lien on, and hereby agrees that it
will not assign, pledge or otherwise grant a security interest in or lien on
the whole or any part of the rights, titles and interests hereby assigned to
anyone other than LSQ, or its successors or assigns.  All rights herein may be further assigned by
LSQ to any bank, trust company or other financial institution, including any
state or federal lending agency.

 

5.             BANK AS ATTORNEY OF PARAGON.

 

(a)           Paragon hereby authorizes and empowers LSQ and its successors and
assigns and hereby irrevocably appoints LSQ and its successors and assigns the
true and lawful attorney of Paragon with full power of substitution, in
Paragon’s name and stead upon the occurrence and during the continuance of an
Event of Default under the Factor Agreement: (i) to ask, require, demand,
receive, enforce and give acquittance for any and all claims for monies due and
to become due and payable to LSQ under or arising out of this Assignment; (ii)
to endorse any checks or other instruments or orders in connection therewith;
(iii) to file any claims or take any action or institute any proceedings which
in the judgment of LSQ may be necessary or advisable under this Assignment;
(iv) to execute and deliver any other and further assurances or documents or
take any actions referred to in Section 3(b) hereof upon the failure of Paragon
to do so; and (v) to make any filings, including of financing and continuation
statements and amendments thereto with respect to this Assignment in accordance
with the laws of any applicable jurisdiction without Paragon’s signature and/or
in Paragon’s name.

 

(b)           Any action or proceeding brought by LSQ as attorney of Paragon or under
any other provision of this Assignment or otherwise, and any claim by LSQ under
this Assignment, may be compromised, withdrawn or otherwise dealt with by LSQ
without any notice to or approval of Paragon.

 

2

 

(c)           The
powers and authority granted to LSQ have been given for a valuable
consideration and are hereby declared to be irrevocable. In addition to any
rights, powers and remedies it might otherwise have with respect to this
Assignment and the assignments hereunder, LSQ shall also have all rights, powers
and remedies of a secured party at law, equity or otherwise with respect to
this Assignment and the assignments hereunder.

 

6.             GENERAL.

 

(a)           LSQ
shall promptly distribute any monies received under this Assignment, after
payment of all amounts then due to LSQ, to Paragon, or such other parties as
Paragon shall direct, provided however, that in the event of a default under
the Factor Agreement and acceleration of Paragon’s, obligations, LSQ shall
distribute the monies received to itself until all obligations to LSQ have been
rectified in full.

 

(b)           This
Assignment and the rights and obligations of the parties hereunder shall be
governed by, and construed in accordance with, the laws of the State of
Florida, except to the extent governed by the Assignment of Claims Act of 1940,
as amended, and the Federal Acquisition Regulations.  The parties consent to the jurisdiction and
venue of the courts of the State of Florida and the United Stated District
Court for the Middle District of Florida. 
The assignments hereunder shall terminate and be of no further force or
effect upon the repayment or prepayment in full of Paragon’s loan and note and
the payment of other amounts payable under the Factor Agreement. LSQ shall
execute and deliver to Paragon promptly such releases or other documents as
Paragon may reasonably request to evidence such terminations.

 

IN WITNESS WHEREOF,
Paragon has caused this Assignment to be executed and sealed as of the day and
year first above written.

 

	
   

  	
  PARAGON SYSTEMS, INC., an Alabama

  corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Charles
  Keathley

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Ronald G. Farrell.

  
	
   

  	
   

  	
   

  	
  RONALD G.
  FARRELL,

  
	
   

  	
   

  	
  President

  

 

3

 

The
foregoing Assignment is hereby acknowledged and accepted as of the day and year
first above written.

 

	
   

  	
  LSQ
  FUNDING GROUP, L.C., a
  Florida

  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maxwell
  Eliscu

  
	
   

  	
   

  	
   

  	
  MAXWELL
  ELISCU,

  
	
   

  	
   

  	
  President

  

 

4Exhibit
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

  	
   

  
						

 

4

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