Document:

Blueprint

  Exhibit 10.3

 

THIS
PLEDGE AGREMEENT IS SUBJECT TO THE TERMS OF A SUBORDINATION AND
INTERCREDITOR AGREEMENT, DATED AS OF FEBRUARY 28, 2017, BY AND
AMONG THE PLEDGOR, THE SECURED PARTY AND M&T BANK.

 

PLEDGE AGREEMENT

 

This
Pledge Agreement (the “Pledge
Agreement”) is entered into this 28th day of February
2017 by LB&B Associates Inc., a North Carolina corporation (the
“Pledgor”) in
favor of Brekford Corp., a Delaware corporation (the
“Secured
Party”).

 

WHEREAS, pursuant to the terms of that
certain Subordinated Note dated as of February 28, 2017 (as amended
and in effect from time to time, the “Note”) issued
by Pledgor in favor of the Secured Party, the Secured Party has
agreed to make a loan to the Pledgor upon and subject to the terms
and conditions set forth therein;

 

WHEREAS, it is a condition precedent to
the obligation of the Secured Party to make the loan to the Pledgor
under the Note that the Pledgor shall have executed and delivered
this Pledge Agreement to the Secured Party for the purpose of
securing the Pledgor’s obligations to the Secured
Party;

 

WHEREAS, the Pledgor is the legal and
beneficial owner of the LLC Interests (as hereinafter defined) in
Global Public Safety, LLC (the “Company”);

 

NOW, THEREFORE, in consideration of the
foregoing premises and to induce the Secured Party to enter into
the Note and to make the loan to the Pledgor under the Note, the
Pledgor agrees as follows:

 

SECTION
1. DEFINITIONS.

 

All
capitalized terms used herein without definition shall have the
respective meanings ascribed thereto in the Note. Any term used in
this Pledge Agreement which is defined in the UCC (as defined
below) and not otherwise defined in this Pledge Agreement or the
Note shall have the meaning ascribed thereto in the UCC. The
following terms shall have the following meanings:

 

“Collateral” means the LLC
Interests.

 

“Default” means the
occurrence of an event of default under the Note or a material
default by the Pledgor under this Agreement that is not cured
within 10 days written notice from the Secured Party of such
breach.

 

“LLC Agreement” means any
limited liability agreement, operating agreement, membership
agreement, partnership agreement or similar agreement relating to
any LLC Interests, as amended and in effect from time to
time.

 

 

1

 

“LLC Interests” means the
801 Units of ownership interest in the Company purchased by the
Pledgor from the Secured Party on the date hereof pursuant to that
certain Contribution and Unit Purchase Agreement by, between and
among the Pledger, the Secured Party and the Company as of the date
hereof.

 

“Loan Documents” refers to
this Pledge Agreement and the Note.

 

“Obligations” means any
and all obligations of the Pledgor to make payments of principal
and interest under the Note.

 

“Pledge Agreement” means
this Pledge Agreement, as amended, restated, supplemented or
otherwise modified from time to time in accordance
herewith.

 

“Proceeds” means all
“Proceeds” as such term is defined in Article 9 of the
UCC and, in any event, shall include, without limitation, all
dividends or other income from the LLC Interests, collections
thereon, proceeds of sale thereof or distributions with respect
thereto.

 

“Security Interest” means
the security interest granted pursuant to Section 2.

 

“UCC” means the Uniform
Commercial Code as presently and hereafter enacted in the State of
Delaware.

 

SECTION
2. PLEDGE
AND GRANT OF SECURITY INTEREST.

 

The
Pledgor hereby grants to the Secured Party a continuing second
priority lien and security interest in the LLC Interests and all
other Collateral, free and clear of any liens other than liens
granted to M&T Bank by the Pledgor (the “Senior Liens”), as
collateral security for the prompt, timely and complete payment
when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations. At the time the
Collateral becomes subject to the lien and security interest
created by this Agreement,
the Pledgor
will be the sole, direct, legal and beneficial owner thereof, free
and clear of any lien, security interest, encumbrance, claim,
option or right of others except for the Senior Liens, the security
interest created by this Agreement or otherwise created by the Secured
Party.

 

SECTION
3. UCC
FILING.

 

Pursuant to the UCC
and any other applicable law, the Pledgor authorizes the Secured
Party to file or record financing statements and other documents or
instruments with respect to the LLC Interests and all other
Collateral without the signature of the Pledgor in such form and in
such offices as the Secured Party determines appropriate to perfect
the Security Interest granted to the Secured Party under this
Pledge Agreement. Such financing statements may describe the
Collateral in the same manner as described herein or may contain an
indication or description of Collateral that describes such
property in any other manner as the Secured Party may reasonably
determine, in its sole discretion, is necessary, advisable or
prudent to ensure the perfection of such Security
Interest.

 

 

2

 

SECTION
4. REPRESENTATIONS
AND WARRANTIES.

 

To
induce the Secured Party to execute the Note and make any
extensions of credit and to accept the security contemplated
hereby, the Pledgor hereby represents and warrants
that:

 

A. The Security
Interest granted by the Pledgor will constitute a valid and
perfected second priority lien on the Collateral described
herein.

 

B. The LLC constitute
all of the issued and outstanding ownership interests of the
Company purchased from the Secured Party in which the Pledgor has
any right, title or interest.

 

C. The Pledgor is the
record and beneficial owner of, and has good and marketable title
to, the LLC Interests free and clear of any and all liens or
options in favor of, or claims of, any other person, except the
Senior Liens, the Security Interest created by this Pledge
Agreement or liens or options in favor of, or claims of, any other
person that were created by the Secured Party prior to the
Pledgor’s purchase of the such LLC Interests from the Secured
Party. The Pledgor is entitled to pledge its LLC Interests to, and
grant and collaterally assign to, the Secured Party a security
interest in its LLC Interests without any further consent, approval
or action by any other party, including, without limitation, any
other party to any LLC Agreement.

 

D. The name and
address of the Pledgor listed in Section 22F are the
Pledgor’s exact legal name and address. Pledgor is a North
Carolina corporation. There has been no change in the name of the
Pledgor within the five (5) years preceding the date hereof except
as previously reported in writing to the Secured Party. The Pledgor
has not moved its state of formation within the five (5) years
preceding the date hereof except as previously reported in writing
to the Secured Party.

 

E. Upon the filing of
financing statements in the appropriate offices pursuant to the UCC
with respect to LLC Interests, the Security Interest granted
pursuant to this Pledge Agreement will constitute a valid,
perfected second priority lien on the Collateral, enforceable as
such against all creditors of the Pledgor other than M&T Bank
and any persons purporting to purchase any of the Collateral from
the Pledgor.

 

SECTION
5. CERTAIN
COVENANTS.

 

The
Pledgor covenants and agrees with the Secured Party that, from and
after the date of this Pledge Agreement until the Obligations are
paid in full:

 

A. The Pledgor shall
promptly notify the Secured Party, in writing, of any lien (other
than the Security Interest granted pursuant to this Pledge
Agreement or any Senior Liens) on any of the
Collateral.

 

B. Without the prior
written consent of the Secured Party, the Pledgor will not (i)
sell, assign, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral, or (ii) create, incur
or permit to exist any lien or option in favor of, or any claim of
any person with respect to, any of the Collateral, or any interest
therein, except the Senior Liens and the Security Interest granted
pursuant to this Pledge Agreement. The Pledgor shall maintain the
Security Interest created by this Pledge Agreement as a perfected
lien and defend the right, title and interest of the Secured Party
in and to the Collateral against the claims and demands of all
other
persons other than M&T Bank.

 

 

3

 

C. The Pledgor will
not, except upon prior written notice to the Secured Party and
delivery to the Secured Party of all additional instruments and
documents reasonably requested by the Secured Party to maintain the
validity, perfection and priority of the Security Interest granted
by the Pledgor:

 

(i) change its name or
state of formation; or

 

(ii) permit
any Collateral to be held by any securities intermediary, held or
maintained in the form of a securities entitlement or credited to
any securities account.

 

D. At
any time and from time to time, upon the written request of the
Secured Party, and at the sole expense of the Pledgor, the Pledgor
will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Secured Party
may reasonably request for the purposes of obtaining or preserving
the full benefits of this Pledge Agreement and of the rights and
powers herein granted.

 

SECTION
6. CASH
DIVIDENDS AND DISTRIBUTIONS; VOTING RIGHTS.

 

Unless
a Default shall have occurred and be continuing and the Secured
Party shall have given notice to the Pledgor of the Secured
Party’s intent to exercise its rights pursuant to Section 7
of this Pledge Agreement, the Pledgor shall be permitted to receive
all cash dividends and partnership or ownership distributions paid
in respect of the Collateral and to exercise all voting and
partnership or ownership rights, as applicable, with respect to the
Collateral. For so long as the Pledgor shall be entitled to
exercise voting rights with respect to the Collateral, the Pledgor
covenants and agrees not to vote or take any consensual action
which would cause a Default to occur.

 

SECTION
7. RIGHTS
OF THE SECURED PARTY.

 

If a
Default shall occur and be continuing and the Secured Party shall
give notice of its intent to exercise such rights to the Pledgor,
(i) the Secured Party shall have the right to receive any and
all cash dividends paid in respect of the partnership or ownership
distributions made in respect of the LLC Interests and apply such
amounts to the Obligations in the manner determined by the Secured
Party and (ii) all the LLC Interests shall be registered in the
name of the Secured Party and the Secured Party may thereafter
exercise (A) all voting, partnership, ownership, membership and
other rights pertaining to such LLC Interests at any meeting of
partners or members of the Company or otherwise and (B) any
and all rights, privileges or options pertaining to such LLC
Interests as if it were the absolute owner thereof, all without
liability except to account for property actually received by it,
but the Secured Party shall have no duty to the Pledgor to exercise
any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing. The LLC Agreement is
amended by this Section
7A to permit Pledgor to pledge all of its LLC Interests to
and grant and collaterally assign to M&T Bank and the Secured
Party a lien and security interest in its LLC Interests without any
further consent, approval or action by any other party, including,
without limitation, any other party to the LLC Agreement or
otherwise. The rights, powers and benefits granted pursuant to this
Section 7A shall
inure to the benefit of the Secured Party and its successors and
assigns and designated agents, as intended third party
beneficiaries.

 

 

4

 

SECTION
8. REMEDIES.

 

If a
Default shall occur and be continuing, the Secured Party, in
addition to all other rights and remedies granted to it in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, have all rights and
remedies of a secured party under the UCC or any other applicable
law. Without limiting the generality of the foregoing with regard
to the scope of the Secured Party’s remedies, the Secured
Party, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice
required by any applicable law referred to below) to or upon the
Pledgor, the Company or any other person (all of which are hereby
waived), may in such circumstances collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may
sell, assign, give options to purchase or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale
or sales, in the over-the-counter market, at any exchange,
broker’s board or office of the Secured Party or elsewhere
upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Secured Party
shall have the right upon any such public sale or sales, and, to
the extent permitted by any applicable law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral
so sold, free of any right or equity of redemption in the Pledgor,
which right or equity is hereby waived or released. To the extent
permitted by any applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the Secured Party
arising out of the exercise of any rights hereunder, other than
claims arising out of the gross negligence or willful misconduct of
the Secured Party as determined by a court of competent
jurisdiction by final and nonappealable judgment. If any notice of
a proposed sale or other disposition of Collateral shall be
required by any applicable law, such notice shall be deemed
reasonable and proper if given at least ten (10) days before such
sale or other disposition.

 

SECTION
9. SECURED
PARTY’S APPOINTMENT AS ATTORNEY-IN-FACT.

 

A. The Pledgor hereby
irrevocably constitutes and appoints the Secured Party and any
officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Pledgor and in the name of
the Pledgor or in its own name, for the purpose of carrying out the
terms of this Pledge Agreement, to take any and all appropriate
action and to execute any and all documents and instruments which
may be necessary or desirable to accomplish the purposes of this
Pledge Agreement, and, without limiting the generality of the
foregoing, the Pledgor hereby gives the Secured Party the power and
right, on behalf of the Pledgor, without notice to or assent by the
Pledgor, to do any or all of the following upon the occurrence and
continuation of a Default:

 

 

5

 

(i) pay or discharge
taxes and liens levied or placed on or threatened against the
Collateral;

 

(ii) execute,
in connection with any sale provided for in this Pledge Agreement,
any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and

 

(iii) (A)
commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (B) defend any suit, action or
proceeding brought against the Pledgor with respect to any
Collateral; (C) settle, compromise or adjust any such suit, action
or proceeding and, in connection therewith, give such discharges or
releases as the Secured Party may deem appropriate; and (D)
generally sell, transfer, pledge and make any agreement with
respect to or otherwise deal with any of the Collateral as fully
and completely as though the Secured Party were the absolute owner
thereof for all purposes, and do, at the Secured Party’s
option and the Pledgor’s expense, at any time, or from time
to time, all acts and things which the Secured Party deems
necessary to protect, preserve or realize upon the Collateral and
the Secured Party’s Security Interest therein and to effect
the intent of this Pledge Agreement, all as fully and effectively
as the Pledgor might do.

 

B. If the Pledgor
fails to perform or comply with any of its agreements contained
herein, the Secured Party, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement in accordance with
the provisions of Section
9A.

 

C. The expenses of the
Secured Party incurred in connection with actions taken pursuant to
the terms of this Pledge Agreement shall be payable by the Pledgor
to the Secured Party on demand.

 

D. The Pledgor hereby
ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof in accordance with Section 9A. All powers,
authorizations and agencies contained in this Pledge Agreement are
coupled with an interest and are irrevocable until this Pledge
Agreement is terminated and the Security Interests created hereby
are released.

 

SECTION
10. REGISTRATION
RIGHTS; PRIVATE SALES.

 

A. The Pledgor
recognizes that the Secured Party may be unable to effect a public
sale of any or all the Collateral, by reason of certain
prohibitions contained in applicable Federal and state securities
laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which
will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view
to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other
terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially reasonable
manner. The Secured Party shall be under no obligation to delay a
sale of any of the Collateral for the period of time necessary to
permit the Company to register such securities for public sale
under applicable Federal and state securities laws, even if the
Company would agree to do so.

 

 

6

 

B. The Pledgor further
agrees to use its best efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales of all or
any portion of the Collateral pursuant to this Section 10 valid and binding
and in compliance with any and all other applicable law. The
Pledgor further agrees that a breach of any of the covenants
contained in this Section
10 will cause irreparable injury to the Secured Party not
compensable in damages, that the Secured Party has no adequate
remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 10 shall be
specifically enforceable against the Pledgor, and the Pledgor
hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a
defense that no Default has occurred.

 

SECTION
11. CHANGES
WITH RESPECT TO THE OBLIGATIONS.

 

The
Pledgor shall remain obligated hereunder, and the Collateral shall
remain subject to the Security Interest granted herein,
notwithstanding that, without any reservation of rights against the
Pledgor, and without notice to or further assent by the Pledgor,
any demand for payment of any of the Obligations made by the
Secured Party may be rescinded by the Secured Party, and any of the
Obligations continued, and the Obligations, or the liability of the
Pledgor or any other person upon or for any part thereof, or any
collateral security or guarantee therefor, may, from time to time,
in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered, or released by the
Secured Party, and the Loan Documents and any other documents
executed and delivered in connection therewith may be amended,
modified, supplemented or terminated, in whole or part, as the
Secured Party may deem advisable from time to time, and any
guarantee or other collateral security at any time held by the
Secured Party for the payment of the Obligations may be sold,
exchanged, waived, surrendered or released. The Secured Party shall
not have any obligation to protect, secure, perfect or insure any
other lien at any time held by it as security for the Obligations
or any property subject thereto. The Pledgor waives any and all
notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Secured Party
upon this Pledge Agreement. The Obligations shall conclusively be
deemed to have been created, contracted or incurred in reliance
upon this Pledge Agreement and all dealings between the Pledgor, on
the one hand, and the Secured Party, on the other, shall likewise
be conclusively presumed to have been had or consummated in
reliance upon this Pledge Agreement. The Pledgor waives diligence,
presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Pledgor with respect to the
Obligations.

 

SECTION
12. NO
SUBROGATION.

 

Notwithstanding any
payment or payments made by the Pledgor hereunder, or the receipt
of any amounts by the Secured Party with respect to any of the
Collateral, the Pledgor shall not be entitled to be subrogated to
any of the rights of the Secured Party against any guarantor or
against any other collateral security held by the Secured Party for
the payment of the Obligations, nor shall the Pledgor seek any
reimbursement from any guarantor in respect of payments made by the
Pledgor in connection with the Collateral, or amounts realized by
the Secured Party in connection with the Collateral, until all
amounts owing to the Secured Party on account of the Obligations
are paid in full. If any amount shall be paid to the Pledgor on
account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be
held by the Pledgor in trust for the Secured Party, segregated from
other funds of the Pledgor, and shall, forthwith upon receipt by
the Pledgor, be turned over to the Secured Party in the exact form
received by the Pledgor (duly indorsed by the Secured Party, if
required) to be applied against the Obligations, whether matured or
unmatured, in such order or manner determined by the Secured Party
or in the order or preference as is provided in the
Note.

 

 

7

 

SECTION
13. LIMITATION
ON DUTIES REGARDING COLLATERAL.

 

The
Secured Party’s sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its
possession shall be to deal with it in the same manner as the
Secured Party deals with similar securities and property for its
own account. Neither the Secured Party nor any of its directors,
officers, managers, members, employees or agents shall be liable
for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the
request of the Pledgor or otherwise. The powers conferred on the
Secured Party hereunder are solely to protect the Secured
Party’s interests in the Collateral and shall not impose any
duty on the Secured Party to exercise any such powers. The Secured
Party shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it
nor any of its directors, officers, managers, members, employees or
agents shall be responsible to the Pledgor for any act or failure
to act hereunder, except for its gross negligence or willful
misconduct as determined by a court of competent jurisdiction by
final and nonappealable judgment.

 

SECTION
14. APPLICATION
OF PROCEEDS.

 

Upon
the occurrence and during the continuance of a Default, the
proceeds of any sale of, or other realization upon, all or any part
of the Collateral shall be applied by the Secured Party in such
order and manner as the Secured Party may determine. Any balance of
such Proceeds remaining shall be paid over to the Pledgor, or to
whomsoever may be lawfully entitled to receive the same. Only after
(a) payment by the Secured Party of any other amount required by
any provision of law, including, without limitation, Section 9-608
and Section 9-615 of the UCC and (b) the payment in full of the
Obligations, shall the Secured Party account for the surplus, if
any, to the Pledgor, or to whomever may be lawfully entitled to
receive the same. The Secured Party may make distribution hereunder
in cash or in kind or, on a ratable basis, in any combination
thereof.

 

SECTION
15. WAIVER,
DEFICIENCY.

 

The
Pledgor hereby waives, to the extent permitted by applicable law,
all rights of redemption, appraisement, valuation, stay, extension
or moratorium now or hereafter in force under any applicable law in
order to prevent or delay the enforcement of this Pledge Agreement
or the absolute sale of the Collateral or any portion thereof. The
Pledgor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys
employed by the Secured Party to collect such
deficiency.

 

 

8

 

SECTION
16. ALL
POWERS COUPLED WITH INTEREST.

 

All
powers of attorney and other authorizations granted to the Secured
Party pursuant to any provisions of this Pledge Agreement shall be
deemed coupled with an interest and shall be irrevocable so long as
any of the Obligations remain unpaid or unsatisfied.

 

SECTION
17. NO
WAIVERS, CUMULATIVE REMEDIES.

 

No
waiver of any Default shall be a waiver of any other Default. No
failure on the part of the Secured Party to exercise and no delay
in exercising, and no course of dealing with respect to, any right,
power or privilege under this Pledge Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
privilege. No remedy, right or power conferred upon the Secured
Party is intended to be exclusive of any other remedy, right or
power given hereunder or now or hereafter existing at law, in
equity, or otherwise, and all such remedies, rights and powers
shall be cumulative.

 

SECTION
18. EXPENSES
AND INDEMNIFICATION.

 

A. The Pledgor agrees
to indemnify the Secured Party from and against any and all claims,
losses and liabilities, as finally determined by a court of
competent jurisdiction, arising out of or resulting from this
Pledge Agreement (including enforcement of this Pledge Agreement),
except to the extent such claims, losses or liabilities result
solely from the Secured Party’s negligence or willful
misconduct as finally determined by a court of competent
jurisdiction.

 

B. The Pledgor shall
pay to the Secured Party upon demand the amount of any and all
costs and expenses, including the reasonable fees and expenses of
its counsel and of any experts and agents, that the Secured Party
may incur in connection with (i) the exercise or enforcement of any
of the rights of the Secured Party hereunder or (ii) the
failure by Pledgor to perform or observe any of the provisions
hereof.

 

SECTION
19. INJUNCTIVE
RELIEF; PUNITIVE OR INDIRECT DAMAGES.

 

A. The Pledgor
recognizes that, in the event the Pledgor fails to perform, observe
or discharge any of its obligations or liabilities under this
Pledge Agreement, any remedy of law may prove to be inadequate
relief to the Secured Party. Therefore, the Pledgor agrees that the
Secured Party shall be entitled to seek temporary and permanent
injunctive relief in any such case without the necessity of proving
actual damages.

 

B. The Secured Party
and the Pledgor hereby agree that it shall not have a remedy of
punitive or exemplary damages against any other party to a Loan
Document and to the extent permitted by law hereby waives any right
or claim to punitive or exemplary damages that it may now have or
that may arise in the future in connection with any dispute,
whether such dispute is resolved through arbitration or
judicially.

 

 

9

 

C. Without limiting
the generality of any provisions set forth herein relating to
indemnification or reimbursement by the Pledgor, each of the
Secured Party and the Pledgor hereby agrees that it shall not have
a remedy of consequential or indirect damages against any other
party to a Loan Document, and to the extent permitted by law it
hereby waives any right or claim to consequential or indirect
damages that it may now have or that may arise in the future in
connection with any dispute, whether such dispute is resolved
through arbitration or judicially.

 

SECTION
20. CONTROL
AGREEMENT; ACKNOWLEDGEMENT BY THE COMPANY.

 

A. The Pledgor hereby
authorizes and instructs the Company to comply, and the Company
hereby agrees to so comply, with any instruction received thereby
from the Secured Party in accordance with the terms of this Pledge
Agreement with respect to the Collateral, without any consent or
further instructions from the Pledgor (or other registered owner),
and the Pledgor agrees that the Company shall be fully protected in
so complying. The Company agrees that its agreement set forth in
the preceding sentence shall be sufficient to create in favor of
the Secured Party, “control” of the LLC Interests
within the meaning of such term under the UCC.

 

B. The Company
acknowledges receipt of a copy of this Pledge Agreement and agrees
to be bound thereby and to comply with the terms thereof insofar as
such terms are applicable to it. The Company further agrees that
the terms of Section
10 of this Pledge Agreement shall apply to it with respect
to all actions that may be required of it under or pursuant to or
arising out of Section
10 of this Pledge Agreement.

 

SECTION
21. RELEASES.

 

At such
time as the Obligations shall have been paid in full, this Pledge
Agreement and all obligations (other than those expressly stated to
survive such termination) of the Secured Party and the Pledgor
hereunder shall terminate, all without delivery of any instrument
or performance of any act by any party. Upon any such termination,
the Secured Party shall execute and deliver to the Pledgor, at the
Pledgor’s expense, such documents as the Pledgor shall
reasonably request to evidence such termination, and the Pledgor
shall be entitled to the return, upon its reasonable request, of
such of the Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof.

 

SECTION
22. MISCELLANEOUS.

 

A. Amendments and Waivers. No waiver, amendment or
modification of any provision of this Pledge Agreement shall be
valid unless in writing and signed by all of the parties
hereto.

 

 

10

 

B. Successors and Assigns. This Pledge
Agreement shall be binding upon the successors and assigns of the
Pledgor and shall inure to the benefit of the Pledgor (and shall
bind all persons who become bound as a Pledgor under this Pledge
Agreement), the Secured Party and its successors and assigns;
provided that the Pledgor may not assign, transfer or delegate any
of its rights or obligations under this Pledge Agreement without
the prior written consent of the Secured Party.

 

C. Governing Law; Jurisdiction. This Pledge
Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Delaware, without
reference to the conflicts or choice of law principles thereof. The
Pledgor hereby irrevocably consents to non-exclusive personal
jurisdiction in the State of Delaware.

 

D. Waiver of Jury Trial. THE PLEDGOR WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS PLEDGE
AGREEMENT, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR DUTIES HEREUNDER,
OR THE PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF. The Pledgor
(i) certifies that neither the Secured Party nor any
representative, agent or attorney of the Secured Party has
represented, expressly or otherwise, that the Secured Party would
not, in the event of litigation, seek to enforce the foregoing
waiver or other waivers contained in this Pledge Agreement, and
(ii) acknowledges that, in entering into the Loan Documents,
the Secured Party is relying upon, among other things, the waivers
and certifications contained in this Section.

 

E. Severability. Any provision of this
Pledge Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to
the extent of such prohibition or unenforceability without
invalidating the remainder of such provision or the remaining
provisions hereof or thereof or affecting the validity or
enforceability of such provision in any other
jurisdiction.

 

Notices. Any notices to the Pledgor shall be sufficiently
given, if in writing and mailed or delivered to LB&B
Associates, Inc., 9891 Broken Land Parkway, Suite 400, Columbia, MD
21046, ATTN: Rick Franz or such other address as provided
hereunder; and to the Secured Party, if in writing and mailed or
delivered to Brekford Corp, 7020 Dorsey Rd., Bldg. C, Hanover, MD
21076, ATTN: Rodney W. Hillman or such other address as the Secured
Party may specify in writing from time to time. In the event that
the Pledgor changes its mailing address at any time prior to the
date the Obligations are paid in full, the Pledgor agrees to
promptly give written notice of said change of address by
registered or certified mail, return receipt requested, all charges
prepaid.

 

F. Titles and Captions. Titles and captions
of Articles, Sections and subsections in, and the table of contents
of, this Pledge Agreement are for convenience only, and neither
limit nor amplify the provisions of this Pledge
Agreement

 

G. Counterparts; Integration;
Effectiveness. This Pledge Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be
an original and shall be binding upon all parties, their successors
and assigns, and all of which taken together shall constitute one
and the same agreement. This Pledge Agreement, together with the
Note, comprises the complete and integrated agreement of the
parties on the subject matter hereof and thereof and supersedes all
prior agreements, written or oral, on such subject matter. Delivery
of an executed counterpart of a signature page of this Pledge
Agreement by telecopy or electronic mail shall be effective as
delivery of a manually executed counterpart of this Pledge
Agreement. This Pledge Agreement shall remain in effect through and
including the date upon which all Obligations shall have been
indefeasibly and irrevocably paid and satisfied in
full.

 

[NEXT
PAGE IS SIGNATURE PAGE]

 

 

 

 

 

 

 

 

11

 

IN WITNESS WHEREOF, the undersigned have caused this Pledge
Agreement to be duly executed and delivered as of the date first
above written

      

	
 

	

PLEDGOR:

 

LB&B ASSOCIATES
INC.

 

By:
/s/ Frederick Franz  
                 
  
         

Name:
Frederick Franz  
                 
  

Title:
Executive Senior Vice
President

 

 

 

SECURED
PARTY:

 

BREKFORD
CORP.

 

By:
/s/ Rodney W.
Hillman

Name:
Rodney W.
Hillman
 Title: President and
COO   

        

 

ACKNOWLEDGED
AND AGREED:

 

GLOBAL
PUBLIC SAFETY, LLC

 

By:
/s/ Rodney W.
Hillman

Name:
Rodney W.
Hillman
 Title: President        
           

 

 

 

[Signature
Page to Pledge Agreement]

12Blueprint

  Exhibit 10.4

TRANSITION SERVICES AGREEMENT

 

This
Transition Services Agreement (this “Agreement”) is
dated and effective as of February 28, 2017 (the
“Effective
Date”) by and between
Brekford Corp., a Delaware corporation (“Transferor”),
and Global
Public Safety, LLC, a Delaware limited liability company
(“Transferee”).
Each capitalized term used but not otherwise defined herein
shall have the meaning ascribed to such term in the Purchase
Agreement (as defined below).

 

WHEREAS, pursuant to that certain
Contribution and Unit Purchase Agreement dated as of the date
hereof (the “Purchase
Agreement”) by and among Transferor, Transferee and
LB&B Associates Inc., a North Carolina corporation, Transferor
is contributing certain assets to Transferee that are used or held
for use in connection with the Business;

 

WHEREAS, Transferor and Transferee
desire to provide for the efficient transition of the Business
following the Closing; and

 

WHEREAS, in order to promote such
efficient transition and as a material inducement to Transferor and
Transferee to enter into the Purchase Agreement, Transferor and
Transferee have agreed to handle certain transitional matters in
the manner stated in this Agreement.

 

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

 

1. Transition
Services. During the Term (as
defined below), Transferor shall use commercially reasonable
efforts to provide or cause to be provided certain services to
Transferee and shall provide Transferee with access to and use of
certain assets owned by Transferor, as specifically set forth
on Schedule 1
attached hereto (collectively, the
“Transition
Services”), for the time
periods set forth therein for each of the Transition Services (the
time period for which Transferor will provide each Transition
Service, the “Service
Period”).

 

2. Fees
and Payment.

 

(a) As consideration
for the provision of the Transition Services, Transferee shall pay
to Transferor the fee set forth in the relevant provision of
Schedule 1 hereto
in respect of each such Transition Service (collectively, the
“Service
Fees”). 

 

(b) Transferor shall
submit statements of account to Transferee on a monthly basis (in
arrears) with respect to all amounts owed by Transferee to
Transferor hereunder (the “Invoiced
Amount”), setting out (i) the relevant Transition
Services provided during the preceding month by reference to
Schedule 1,
(ii) the Service Fees payable hereunder in respect thereof,
and (iii) any invoices for any service provided by third parties
(and payable by Transferee pursuant to the terms hereof).
Transferee shall pay the Invoiced Amount to Transferor by wire
transfer within thirty (30) days of the date of Transferee’s
receipt of the statement of account (the “Payment
Date”).

 

 

1

 

(c) In the event that
Transferor purchases from any unaffiliated third party any goods or
services used to provide any Transition Service set forth on
Schedule 1 and the
fees charged by such third party or its replacement increase or
decrease following the date of this Agreement, the
parties agree that the fees associated with any such Transition
Service shall be adjusted to reflect Transferor’s
out-of-pocket costs following such increase or decrease, provided
that any increase is commercially reasonable, and Schedule 1 shall be deemed to
be amended to reflect any such adjustment.

 

(d) Any Service Fees
not paid on the Payment Date shall be subject to late charges for
each day any such fees are overdue, calculated at a rate of 3% per
annum from the Payment Date to the date of payment.

 

(e) The parties
acknowledge and agree that there may be some services Transferor
provided with respect to the Business that are not specifically
identified in this Agreement, Schedule 1 or any other agreement
referred to herein, of which Transferor and Transferee may not be
aware until the time such services are needed. Accordingly, in
addition to the Transition Services described in Section 1 above,
the parties agree that if during the Term additional Transition
Services (the “Additional Transition
Services”) not currently contemplated by this
Agreement or Schedule
1 should be reasonably required to conduct the Business as
currently conducted or to migrate the Contributed Assets to
Transferee, then the parties hereto shall negotiate in good faith
for the provision of such services by Transferor to Transferee, and
Transferor shall charge Transferee the amounts payable for such
Additional Transition Services “at cost”. Transferee
and Transferor shall document the inclusion in this Agreement of
such Additional Transition Services hereunder by an amendment,
letter, agreement or memorandum signed by duly authorized
representatives of both parties, referencing and incorporating this
Agreement, as appropriate and agreed upon by the
parties.

 

(f) Any taxes assessed
on the provision of the Transition Services hereunder shall be paid
by Transferor.

 

3. Standard
of Performance of Transition Services. Transferor shall use reasonable care in
providing the Transition Services to Transferee and Transferee
shall use reasonable care when using the assets of Transferor.
Transferee shall assume responsibility for the Transition Services
as soon as reasonably practicable, and in any event, prior to the
expiration of the Service Period for the applicable Transition
Service, and Transferor shall use its commercially reasonable
efforts to assist Transferee, at Transferee’s sole cost and
expense (if such assistance is not already covered by the
Transition Services), in the transfer of responsibility for the
Transition Services to Transferee.

 

4. Warranty
and Liability; Indemnification.

 

(a) Except for
applicable warranties expressly set forth in this Agreement and the
Purchase Agreement, neither party hereto makes any warranties,
express or implied, with respect to the Transition Services to be
provided under this Agreement.

 

(b) To the extent
necessary to facilitate as quickly as practicable
Transferee’s substitution of services for the Transition
Services, Transferor shall, at the sole cost and expense of
Transferee (if such assistance is not already covered by the
Transition Services), afford to Transferee and its employees
reasonable access, upon reasonable notice during normal business
hours during the Term, to the personnel of Transferor responsible
for providing the Transition Services.

 

 

2

 

(c) Neither party shall
be liable to the other party for any Losses (including loss of
profits) caused directly or indirectly by any action taken in
connection with the Transition Services to be provided under this
Agreement, except as specifically provided herein or as results
from or arises in connection with the gross negligence or willful
misconduct of the other party.

 

(d) Each party hereto
will indemnify and hold the other party, its directors, officers,
members, employees and agents harmless from and against any and all
Losses arising out of or relating to (a) such party’s failure
or alleged failure to comply with its obligations pursuant to this
Agreement, and (b) any allegedly wrongful or grossly negligent acts
of such party (and/or its agents) with respect to the Transition
Services.

 

5. Force
Majeure. Neither party shall be
in default under this Agreement for failure or delay in performance
of its obligations under this Agreement, if caused by an act of God
or public enemy, war, government acts, regulations or orders, fire,
flood, embargo, quarantine, epidemic, labor stoppages or other
cause reasonably beyond the control of such party (a
“Force
Majeure Event”).

 

6. Term
and Termination.

 

(a) Term of Agreement. The term of
this Agreement shall commence on the Effective Date and shall
continue in effect until the last date on which the obligation to
provide any Transition Services hereunder (as set forth on
Schedule 1) shall
cease (the “Term”).

 

(b) Termination. This Agreement
shall automatically terminate at the end of the Term. Prior to the
end of the Term, this Agreement may be terminated by written notice
given as follows:

 

(1) by
Transferor if Transferee fails to pay any Service Fees (or any
portion thereof not being disputed in good faith) or to provide
Transferor with written notice of any good faith dispute with
respect to such Service Fees within thirty (30) days following a
Payment Date;

 

(2) by
either party if the other party is in breach of any material
obligation hereunder, and has not cured such breach within thirty
(30) days after receipt of written notice from the non-breaching
party specifying and requesting the correction of such
breach;

 

(3)  by
either party upon the filing or institution of any bankruptcy,
reorganization, liquidation or receivership proceedings by the
other party, or upon the failure by the other party for more than
sixty (60) days to discharge any such actions against it. Such
termination shall be effective upon receipt of the written notice
thereof; or

 

(4) by
either party if any failure or delay of the other party in
performing any obligation under this Agreement due to a Force
Majeure Event shall continue for more than thirty (30) consecutive
days or any 60 non-consecutive days.

 

 

3

 

(c) Termination of Transition
Services. Transferee may terminate receipt of any particular
Transition Service upon that number of days’ prior written
notice as set forth on Schedule 1 with respect to such
Transition Service. Such termination shall not affect any of the
other Transition Services being provided hereunder.

 

(d) Extension of Transition
Services. Any Service Period may be extended and applicable
rates established upon mutual agreement by Transferee and
Transferor.

 

7. Mutual
Cooperation and Future Assurances. Prior to the termination of this Agreement, the
parties shall reasonably cooperate in good faith to facilitate the
performance of this Agreement, and each party shall deliver to the
other party copies of such documents, records and information as
are reasonably necessary to such performance.

 

8. Confidentiality;
No License.

 

(a) Without limiting
the effectiveness of the transfer of the Contributed Assets to
Transferee pursuant to the Purchase Agreement, each party hereto
agrees that such party’s materials, data and/or information,
including, without limitation, any configuration files or indices,
that may be provided to the other party concerning the CI Providing
Party’s (as defined below) business provided to or generated
by the CI Receiving Party (as defined below) in connection with the
Transition Services are proprietary trade secrets and confidential
information (“Confidential
Information”) of the CI Providing Party, and neither
party shall possess any interest, title, lien or right in any
Confidential Information of the other party. Each party agrees not
to (i) disclose the Confidential Information of the other
party to any third party (other than its Representatives (as
defined below)) or (ii) use the Confidential Information of
the other party except as necessary to perform its obligations
under this Agreement, in either case without the express prior
written consent of the CI Providing Party, and each party shall be
responsible for any breaches of this Section 8 by its directors,
officers, members, managers, employees, representatives (including
financial advisors, attorneys and accountants) or agents
(collectively, the “Representatives”).

 

(b) The term
“Confidential
Information” will not, however, include information
that (i) is or becomes publicly available other than as a
result of a disclosure in breach of this Agreement by the party
receiving the Confidential Information (the “CI Receiving
Party”) or its Representatives, (ii) is or
becomes available to the CI Receiving Party on a non-confidential
basis from a source (other than the party providing, directly or
indirectly, its Confidential Information (the “CI Providing
Party”) or its Representatives) which, to the CI
Receiving Party’s knowledge, is not prohibited from
disclosing such information by a legal, contractual or fiduciary
obligation to the CI Providing Party, or (iii) is independently
developed by the CI Receiving Party.

 

(c) Upon the earliest
to occur of the termination of this Agreement, such time as any
Confidential Information ceases to be required by the CI Receiving
Party to perform or receive Transition Services hereunder or at the
request of a CI Providing Party, a CI Receiving Party shall
promptly return, or cause to be returned, all or any requested
portion of such Confidential Information and shall destroy, or
cause to be destroyed, all copies (including electronic versions)
of any compilations, analyses, studies or other documents prepared
by the CI Receiving Party or its Representatives containing or
reflecting any such Confidential Information, subject to and in
accordance with the terms and provisions of this Agreement and any
record retention requirement to which a CI Receiving Party is
subject under applicable Law; provided, however, that all such
Confidential Information, including any electronically stored
Confidential Information, which is not returned and/or destroyed in
accordance with this Section 8(c) shall continue to be treated as
Confidential Information by CI Receiving Party until its return or
destruction.

 

 

4

 

(d) Notwithstanding the
other provisions of this Section 8, the CI Receiving Party may
disclose Confidential Information of the CI Providing Party to the
minimum extent required by applicable Law, regulation or legal
process; provided,
that the CI Receiving Party (i) has, to the extent legally
permissible, first provided the CI Providing Party with prompt,
prior written notice of such request or requirement, and (ii) shall
cooperate with the CI Providing Party, at the CI Providing
Party’s expense, to seek an appropriate protective order or
other remedy or to take steps to resist or narrow the scope of such
request or legal process. Notwithstanding the foregoing, if the CI
Receiving Party discloses any of the CI Providing Party’s
Confidential Information pursuant to this Section 8(d) to any
Governmental Entity, the CI Receiving Party shall take all
reasonably necessary steps to ensure that such Governmental Entity
does not acquire the right to re-publish the Confidential
Information outside of said Governmental Entity. 

 

(e) Notwithstanding the
other provisions of this Section 8, the CI Receiving Party
acknowledges that the CI Providing Party has a responsibility to
its customers and other consumers using its services to keep
information about such persons strictly confidential. Except to
carry out the purposes for which the CI Providing Party or one of
its affiliates disclosed such information to the CI Receiving
Party, the CI Receiving Party hereby agrees that it will not
disclose Confidential Information of the CI Providing Party, during
or after the Term of this Agreement, other than on a “need to
know” basis and then only to: (i) affiliates of the CI
Providing Party, as requested by the CI Providing Party;
(ii) the CI Receiving Party’s directors, members,
managers, employees or officers; (iii) affiliates of the CI
Receiving Party, and (iv) the CI Receiving Party’s
independent contractors, agents and consultants, provided that such
independent contractors, agents and consultants are subject to a
written confidentiality agreement requiring such persons to comply
with the CI Receiving Party’s confidentiality and
non-disclosure policies or to otherwise maintain the
confidentiality of such information in accordance with the terms of
the applicable confidentiality agreement. The CI Receiving Party
shall not use or disclose Confidential Information of the CI
Providing Party for any purpose other than in connection with the
performance of this Agreement. The CI Receiving Party shall treat
Confidential Information of the CI Providing Party with at least
the same care that it employs for its own Confidential Information
of a similar nature which shall not be less than a commercially
reasonable level of care.

 

(f) Nothing contained
in this Agreement shall be construed as conferring by implication,
estoppel or otherwise any license of any intellectual property
owned or controlled by either party following consummation of the
transactions contemplated by the Purchase Agreement.

 

9. Relationship
of Parties. The relationship
between Transferee and Transferor is that of independent
contractors and nothing herein shall be deemed to constitute the
relationship of partners, joint venturers, nor of principal and
agent between Transferee and Transferor. Neither party shall have
any express or implied right or authority to assume or create any
obligation on behalf of or in the name of the other party or to
bind the other party to any contract, agreement or undertaking with
any third party.

 

 

5

 

10. Amendment
and Waiver. This Agreement may
be amended, or any provision of this Agreement may be waived, only
in writing executed by both parties. No course of dealing between
or among any persons having any interest in this Agreement will be
deemed effective to modify, amend, or discharge any part of this
Agreement or any rights or obligations of any person under or by
reason of this Agreement.

 

11. Notices.
The notice provisions of the Purchase Agreement shall govern this
Agreement.

 

12. Assignment.
Neither this Agreement nor any of the rights and obligations of the
parties hereunder may be assigned, by operation of law or
otherwise, by either of the parties hereto without the prior
written consent of the other party hereto. Notwithstanding the
foregoing, each party shall remain liable for all of their
respective obligations under this Agreement. Subject to the
forgoing, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns and no other person shall have any right, obligation or
benefit hereunder. Any attempted assignment or transfer in
violation of the foregoing shall be void.

 

13. Survival.
All terms of this Agreement that by their nature extend beyond the
expiration or termination of this Agreement shall remain in effect
until fulfilled, including Sections 4, 8, 13 and
14.

 

14. Miscellaneous.
This Agreement does not create any rights in any person or party
who is not a party to this Agreement. The language used in this
Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any person. This Agreement
shall be enforced, governed and construed in all respects in
accordance with the laws of the State of Delaware without regard to
the laws of any other jurisdiction that might be applied because of
the conflicts of laws principals of the State of Delaware, and
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. This Agreement
may be executed in one or more counterparts, any one of which need
not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same
instrument. The exchange of executed copies of this Agreement by
facsimile transmission, portable document format (PDF) or other
reasonable electronic transmission shall constitute effective
execution and delivery of this Agreement. Except for matters set
forth in the Purchase Agreement or other agreements executed in
connection with the Purchase Agreement, this Agreement sets forth
the complete agreement between the parties and supersedes any prior
understandings, agreements, or representations by or between the
parties, written or oral, that may have related to the subject
matter hereof in any way.

 

 

 

 

(Signatures appear on the following page.)

 

6

 

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.

 

TRANSFEREE: 

[GLOBAL PUBLIC SAFETY, LLC]

 

 

By:
/s/ Rodney W.
Hillman

Name:
Rodney W.
Hillman
Its: President        
           
  

 

 

 

TRANSFEROR: 

BREKFORD CORP.

 

 

By:
/s/ Rodney W.
Hillman

Name:
Rodney W.
Hillman
Its: President and COO     
 

 

 

 

 

[Signature Page to
Transition Services Agreement]

7

 

 

Schedule
1

 

SERVICES TO BE PROVIDED BY TRANSFEROR

	
 

	

Service

	

Term of Service

	

Cost

	

Notice required by Recipient to Terminate

	

1.

	

Technical
training and support to transition equipment and
systems

	

Two
Months

	

None

	

Immediate

	

2.

 

 

	

Engineering
consulting to support on-going programs as needed

	

Two
– Three Months

	

None

	

Immediate

	

3.

 

 

	

Transition
of payroll and benefits to Transferee systems.

	

One
Month

	

None

	

Immediate

	

4.

	

Contract
management services pertaining to existing contract portfolio
during Term of Service, including, without limitation, client
communications pending assignment and/or novation of the prime
agreement, and historical background and context.

 

	

Six
Months

	

None

	

Immediate

	

5.

	

Subcontract
management services pertaining to subcontracts and consultant
agreements arising from the Business’s existing contract
portfolio during Term of Service, including, without limitation,
subcontractor communications pending assignment and/or consent to
assignment, and historical background and context.

	

Six
Months

	

None

	

Immediate

	

6.

	

General
FP&A & accounting support on Transferor’s existing
contract portfolio until system migration & novation of
contracts is complete.

 

	

Three
– Six Months

	

None

	

Immediate

 

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00267-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00267-of-00352.parquet"}]]