SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this “Agreement”), dated November 10, 2004, is by and among
INTEGRATED
ALARM SERVICES GROUP, INC.,
a
Delaware corporation, CRITICOM
INTERNATIONAL CORPORATION,
a
New Jersey corporation, MONITAL
SIGNAL CORPORATION,
a
New Jersey corporation, INTEGRATED
ALARM SERVICES, INC.,
a
Delaware corporation, XXXXX
SECURITY GROUP L.L.C.,
a
New Jersey limited liability company, and AMERICAN
HOME SECURITY, INC.,
a
Nevada corporation (each, individually, and collectively, known as the
“Borrower”; and, collectively, Borrower and any other persons or entities which
from time to time become parties hereto as debtors, known as the “Debtors” and
each, individually, a “Debtor”), and LASALLE
BANK N.A.,
a
national banking association (the “Bank”).
WITNESSETH:
WHEREAS,
Debtor is (or will be with respect to after-acquired property) the legal
and
beneficial owner and holder of the Collateral (as that term is defined herein);
and
WHEREAS,
the Borrower has entered into that certain Credit Agreement, dated as of
even
date herewith (as amended or otherwise modified from time to time, the
“Credit
Agreement”),
with
the Bank and the other parties listed therein, pursuant to which the Bank
has
agreed to make certain revolving credit loans to the Borrower; and
WHEREAS,
the obligation of the Bank to make loans under the terms and conditions of
the
Credit Agreement is subject to the condition, among others, that the Debtors
secure their obligations to the Bank under the terms and conditions of the
Credit Agreement in the manner set forth herein.
NOW,
THEREFORE, for and in consideration of any loan, advance or other financial
accommodation heretofore or hereafter made to the Debtors under or in connection
with the Credit Agreement, and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Definitions.
When
used herein: (a) the terms Account,
Account
Debtor,
Certificated
Security,
Chattel
Paper,
Commercial
Tort Claim,
Deposit
Account,
Document,
Electronic
Chattel Paper,
Equipment,
Financial
Asset,
Fixtures,
Goods,
Inventory,
Instrument,
Investment
Property,
Letter
of Credit Rights,
Payment
Intangibles,
Proceeds,
Security,
Security
Entitlement,
Supporting
Obligations
and
Uncertificated
Security
have the
respective meanings assigned thereto in the UCC (as defined below);
(b) capitalized terms which are not otherwise defined have the respective
meanings assigned thereto in the Credit Agreement; and (c) the following
terms have the following meanings (such definitions to be applicable to both
the
singular and plural forms of such terms):
Alarm
Contract
shall
have the meaning set forth in the Credit Agreement.
Assignee
Deposit Account
- see
Section
5.
1
Collateral
shall
have the meaning assigned to such term in Section 2.
Computer
Hardware
means,
with respect to any Debtor, all of such Debtor’s rights (including rights as
licensee and lessee) with respect to computer and other electronic data
processing hardware, including all integrated computer systems, central
processing units, memory units, display terminals, printers, computer elements,
card readers, tape drives, hard and soft disk drives, cables, electrical
supply
hardware, generators, power equalizers, accessories, peripheral devices and
other related computer hardware.
Computer
Software
means:
(i) all software programs designed for use on Computer Hardware, including
all
operating system software, utilities and application programs in whatsoever
form
(source code and object code in magnetic tape, disk or hard copy format or
any
other listings whatsoever); (ii) any firmware associated with any of the
foregoing; and (iii) any documentation for Computer Hardware, and for software
and firmware described in clauses (i) and (ii) above, including flow charts,
logic diagrams, manuals, specifications, training materials, charts and pseudo
codes.
Event
of Default
means
the occurrence of any Event of Default under Section 8.1 of the Credit
Agreement.
General
Intangibles
means,
with respect to any Debtor, all of such Debtor’s “general intangibles” as
defined in the UCC and, in any event, includes (without limitation) all of
such
Debtor’s trademarks, trade names, patents, copyrights, trade secrets, customer
lists, inventions, designs, Computer Software, goodwill, registrations,
licenses, franchises, tax refund claims, guarantee claims, Payment Intangibles,
security interests, books and records related to the Collateral and the Pledged
Collateral (as defined in the Pledge Agreement) and rights to
indemnification.
Intellectual
Property
means
all past, present and future: (i) trade secrets and other proprietary
information; (ii) trademarks, service marks, business names, Internet domain
names, designs, logos, trade dress, slogans, indicia and other source and/or
business identifiers, and the goodwill of the business relating thereto and
all
registrations or applications for registrations which have heretofore been
or
may hereafter be issued thereon throughout the world; copyrights (including
copyrights for computer programs and software) and (iii) copyright registrations
or applications for registrations which have heretofore been or may hereafter
be
issued throughout the world and all tangible property embodying the copyrights;
(iv) unpatented inventions (whether or not patentable); (v) patent applications
and patents; (vi) industrial designs, industrial design applications and
registered industrial designs; (vii) license agreements related to any of
the
foregoing and income therefrom; (viii) books, records, writings, computer
tapes
or disks, flow diagrams, specification sheets, source codes, object codes
and
other physical manifestations, embodiments or incorporations of any of the
foregoing; (ix) the right to xxx for all past, present and future infringements
of any of the foregoing; and (x) all common law and other rights throughout
the
world in and to all of the foregoing.
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Lender
Party
means
the Bank under and as defined in the Credit Agreement and any Affiliate of
the
Bank which is a party to an Interest Rate Agreement (as that term is defined
in
the Credit Agreement) or other agreement with the Debtor and any Additional
Banks as defined in the Credit Agreement.
Liabilities
means,
as to each Debtor, all Obligations (as that term is defined in the Credit
Agreement).
Organizational
I.D. Number
means,
if applicable with respect to any Debtor, the organizational identification
number assigned to such Debtor by the applicable governmental unit or agency
of
the jurisdiction of organization for such Debtor.
Type
of Organization
means,
with respect to any Debtor, the legal nature (i.e., kind or type of entity)
of
such Debtor (e.g., such as a corporation or limited liability
company).
UCC
means
the Uniform Commercial Code as in effect in the State of Illinois on the
date of
this Agreement, as may be amended or modified from time to time; provided
that, as
used in Section
7
hereof,
“UCC”
shall
mean the Uniform Commercial Code as in effect from time to time in any
applicable jurisdiction.
2. Grant
of Security Interest.
As
security for the payment of all Liabilities and for so long as this Security
Agreement shall remain in full force and effect as provided in Section 12(d)
below, each Debtor hereby grants to the Bank for the benefit of the Lender
Parties a lien on and security interest in, and right of set-off against,
and
acknowledges and agrees that the Bank has and shall continue to have for
the
benefit of the Lender Parties, a continuing lien on and security interest
in,
and right of set-off against, all right, title, and interest, whether now
owned
or existing or hereafter created, acquired or arising, in and to all of the
following property of such Debtor (all being collectively referred to herein
as
the “Collateral”):
(a) Accounts,
including, but not limited to, periodic and non-periodic payments under or
in
connection with Alarm Contracts;
(b) Certificated
Securities;
(c) Chattel
Paper, including Electronic Chattel Paper;
(d) Computer
Hardware and Computer Software and all rights with respect thereto, including
any and all licenses, options, warranties, service contracts, program services,
test rights, maintenance rights, support rights, improvement rights, renewal
rights and indemnifications, and any substitutions, replacements, additions
or
model conversions of any of the foregoing;
(e) Commercial
Tort Claims, as listed in Schedule 2(e) or in the notice to the Bank in the
form
of Attachment 1 to Schedule 2(e);
(f) Deposit
Accounts;
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(g) Documents;
(h) Financial
Assets;
(i) General
Intangibles;
(j) Goods
(including all of its Equipment, Fixtures and Inventory), and all embedded
software, accessions, additions, attachments, improvements, substitutions
and
replacements thereto and therefor;
(k) Instruments;
(l) Intellectual
Property;
(m) Investment
Property;
(n) Letter
of
Credit Rights;
(o) Letters
of Credit;
(p) money
(of
every jurisdiction whatsoever);
(q) Security
Entitlements;
(r) Supporting
Obligations;
(s) Uncertificated
Securities; and
(t) Any
of
the above property of such Debtor and any interest therein, of any kind or
description now held by any Lender Party or at any time hereafter transferred
or
delivered to, or coming into the possession, custody or control of, any Lender
Party, or any agent or affiliate of any Lender Party, whether expressly as
collateral security or for any other purpose (whether for safekeeping, custody,
collection or otherwise), and all dividends and distributions on or other
rights
in connection with any such property;
together
with all books, records, writings, data bases, information and other property
relating to, used or useful in connection with, or evidencing, embodying,
incorporating or referring to any of the foregoing, and all Proceeds, products,
offspring, rents, issues, profits and returns of and from any of the foregoing.
The Collateral shall not include any governmental license or permit that,
by its
terms, prohibits a grant of a security interest therein, unless all required
consents are obtained or such prohibition shall be determined to be ineffective
by reason of law, any proceeding or otherwise. The foregoing shall not, however,
exclude the Proceeds thereof from the security interest granted
herein.
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3. Lockbox
Agreement.
The
Debtors shall direct all of their Account Debtors to make all payments on
the
Accounts directly to a post office box (the “Lockbox”) designated by and under
the exclusive control of the Bank pursuant to a form of Lockbox Mail Collection
Service
Agreement between the Debtor and the Bank in form and substance satisfactory
to
the Bank, to be executed, dated and delivered to the Bank within 120 days
of the Closing under the Credit Agreement (the “Lockbox Agreement”). Within such
120-day period, the Debtor shall establish the Lockbox and an account (the
“Lockbox Account”) in the Debtor’s name with the Bank into which all payments
received in the Lockbox shall be deposited, and into which the Debtor will
promptly, but no later than within one (1) Business Day, deposit all payments
made for Inventory or services and received by the Debtor in the identical
form
in which such payments were made, whether by cash or check. If a Debtor,
a
Subsidiary or any director, officer, employee or agent of a Debtor or any
Subsidiary, or any other Person acting for or in concert with a Debtor shall
receive any monies, checks, notes, drafts or other payments relating to or
as
proceeds of Accounts or other Collateral, the Debtor and each such Person
shall
receive all such items in trust for, and as the sole and exclusive property
of,
the Bank and, immediately upon receipt thereof, shall remit the same (or
cause
the same to be remitted) in kind to the Lockbox Account. For the purpose
of this
paragraph, each Debtor irrevocably hereby makes, constitutes and appoints
the
Bank (and all Persons designated by the Bank for that purpose) as the Debtor’s
true and lawful attorney and agent in-fact: (i) to endorse the Debtor’s name
upon any such checks, notes, drafts, instruments, and other items of payment
and/or proceeds of Collateral and upon any Chattel Paper, document, instrument,
invoice or similar document or agreement relating to any Account of the Debtor
or goods pertaining thereto; (ii) to take control in any manner of any item
of
payment or proceeds thereof; and (iii) to have access to any lock box or
postal
box into which any of the Debtor’s mail is deposited, and open and process all
mail addressed to the Debtor and deposited therein.
4. Warranties.
Each
Debtor warrants that: (a) no financing statement other than any which may
have
been filed on behalf of the Bank or in connection with Permitted Liens, or
other
instrument similar in effect, covering all or any part of the Collateral
is on
file in any public office; (b) such Debtor is and will be the lawful owner
of
all Collateral, free of all Liens whatsoever, other than the security interest
hereunder and Permitted Liens, with full power and authority to execute this
Agreement and perform such Debtor’s obligations hereunder, and to subject the
Collateral to the security interest hereunder; (c) such Debtor’s chief executive
office and principal place of business are as set forth on Schedule
I
hereto
and, except as set forth on Schedule I, such Debtor has not maintained its
chief
executive office and principal place of business at any other location at
any
time after five (5) years prior to the date of this Agreement, and each other
location where such Debtor maintains a place of business is also set forth
on
Schedule
I
hereto;
(d) such Debtor is the Type of Organization stated and is duly organized,
validly existing and in good standing under the laws of the state set forth
on
Schedule
II
hereto;
(e) except as set forth on Schedule
III
hereto,
such Debtor is not now known and during the five (5) years preceding the
date
hereof has not previously been known by any trade name; (f) Debtor’s exact legal
name is as set forth on the signature pages of this Agreement and, except
as set
forth on Schedule
III
hereto,
during the five (5) years preceding the date hereof, such Debtor has not
been
known by any different legal name; (g) Schedule
IV
hereto
contains a complete listing of all of such Debtor’s Intellectual Property which
is subject to registration statutes; (h) Schedule
V
hereto
contains a complete listing of all of each Debtor’s Instruments, Deposit
Accounts, Investment Property, Letter-of-Credit Rights, Chattel Paper, Documents
and Commercial Tort Claims; (i) except as set forth on Schedule
VI
hereto,
Debtor has no tangible Collateral located outside of the United States; (j)
Schedule
VII
hereto
contains a complete listing of each Debtor’s
5
tangible
Collateral located with any bailee, warehousemen or other third parties;
(k)
Schedule
VIII
hereto
contains a complete listing of all of each Debtor’s Collateral which is subject
to certificate of title statutes; and (l) Schedule
IX
hereto
contains a complete listing of all of each Debtor’s Deposit Accounts and other
bank accounts, including locations and applicable account numbers.
In
addition to the above, each Debtor warrants and covenants that: (i) Debtor
has
used, and will continue to use for the duration of this Agreement, proper
statutory notice in connection with its use of the Patents, Trademarks and
Copyrights; and (ii) Debtor shall have the duty to the extent commercially
reasonable, through counsel acceptable to Bank, to prosecute diligently any
patent, trademark or copyright applications related to the Patents, Trademarks
and Copyrights pending as of the date of this Agreement or thereafter until
the
termination of this Security Agreement, to make application on unpatented
but
patenable inventions and unregistered but registrable trademarks or service
marks and copyrights (whenever it is commercially reasonable in the reasonable
judgment of Debtor to do so) and to preserve and maintain all rights in patent,
trademark, service xxxx and copyright applications and registrations of the
Patents, Trademarks and Copyrights, including, without limitation, the payment
of all registration, maintenance and renewal fees. Any expenses incurred
in
connection with such an application or registration shall be borne by
Debtor.
5. Collections,
etc.
Until
such time as the Bank shall notify such Debtor of the revocation of such
power
and authority, each Debtor may grant, in the ordinary course of business,
to any
party obligated on any of the Collateral, any rebate, refund or allowance
to
which such party may be lawfully entitled, and may accept, in connection
therewith, the return of Goods, the sale or lease of which shall have given
rise
to such Collateral. Until such time during the existence of an Event of Default
as the Bank shall notify Debtor of the revocation of such power and authority,
each Debtor: (a) may, in the ordinary course of its business, at its own
expense, sell, lease or furnish under contracts of service any of the Inventory
normally held by such Debtor for such purpose, use and consume in the ordinary
course of its business, any raw materials, work in process or materials normally
held by such Debtor for such purpose, and use in the ordinary course of its
business (but subject to the terms of the Credit Agreement), the cash proceeds
of Collateral and other money which constitutes Collateral; and (b) will,
at its
own expense, use its best efforts to collect, as and when due, all amounts
due
under any of the Collateral, including the taking of such action with respect
to
such collection as the Bank may request or, in the absence of such request,
as
such Debtor may deem advisable in accordance with good business
practices.
The
Bank, however, may, at any time that an Event of Default exists, whether
before
or after any revocation of such power and authority or the maturity of any
of
the Liabilities, notify an Account Debtor or other Person obligated on
Collateral to make payment or otherwise render performance to or for the
benefit
of the Bank and enforce, by suit or otherwise, the obligations of an Account
Debtor or other Person obligated on Collateral and exercise the rights of
such
Debtor with respect to the obligation of the Account Debtor or other Person
obligated on Collateral to make payment or otherwise render performance to
the
Debtor, and with respect to any property that secures the obligations of
the
Account Debtor or other Person obligated on the Collateral. In connection
with
the exercise of such rights and remedies, the Bank may surrender, release
or
exchange all or any part thereof, or compromise or extend or renew for any
period (whether or not longer than the original period) any indebtedness
thereunder or evidenced thereby. Upon the request of the Bank during the
existence of an Event of Default, each Debtor will, at its own expense,
immediately notify any or all parties obligated on
any of
the Collateral to make payment to the Bank of any amounts due or to become
due
thereunder.
6
Upon
request by the Bank during the existence of an Event of Default, each Debtor
will forthwith upon receipt, transmit and deliver to the Bank, in the form
received, all cash, checks, drafts and other instruments or writings for
the
payment of money (properly endorsed, where required, so that such items may
be
collected by the Bank) which may be received by such Debtor at any time in
full
or partial payment or otherwise as proceeds of any of the Collateral. Except
as
the Bank may otherwise consent in writing, any such items which may be so
received by any Debtor will not be commingled with any other of its funds
or
property, but will be held separate and apart from its own funds or property
and
upon express trust for the Bank until delivery is made to the Bank. Each
Debtor
will comply with the terms and conditions of any consent given by the Bank
pursuant to the foregoing sentence.
During
the existence of an Event of Default, all items or amounts which are delivered
by any Debtor to the Bank on account of partial or full payment or otherwise
as
proceeds of any of the Collateral shall be deposited to the credit of a deposit
account (each an “Assignee Deposit Account”) of such Debtor with Bank (or
another financial institution selected by the Bank) over which the Bank has
sole
dominion and control as security for payment of the Liabilities. No Debtor
shall
have any right to withdraw any funds deposited in the applicable Assignee
Deposit Account. The Bank may, from time to time, in its discretion, apply
all
or any of the then balance, representing collected funds, in the Assignee
Deposit Account toward payment of the Liabilities, whether or not then due,
in
such order of application as the Bank may determine in its discretion, and
the
Bank may, from time to time, in its discretion, release all or any of such
balance to the applicable Debtor.
The
Bank
(or any designee of the Bank) is authorized to endorse, in the name of the
applicable Debtor, any item, howsoever received by the Bank, representing
any
payment on or other Proceeds of any of the Collateral.
6. Certificates,
Schedules and Reports.
Each
Debtor will from time to time, as the Bank may request, deliver to the Bank
such
schedules, certificates and reports respecting all or any of the Collateral
at
the time subject to the security interest hereunder, and the items or amounts
received by such Debtor in full or partial payment of any of the Collateral,
as
the Bank may reasonably request. Any such schedule, certificate or report
shall
be executed by an Authorized Officer of such Debtor and shall be in such
form
and detail as the Bank may specify. Each Debtor shall immediately notify
the
Bank of the occurrence of any event causing any loss or depreciation in the
value of its Inventory or other Goods, and such notice shall specify the
amount
of such loss or depreciation.
7. Agreements
of the Debtors.
Each
Debtor: (a) hereby irrevocably authorizes the Bank at any time, and from
time to
time, to file in any jurisdiction, any initial financing statements and
amendments thereto that: (i) indicate the Collateral as all assets of such
Debtor or words of similar effect, regardless of whether any particular asset
comprised in the Collateral falls within the scope of Article 9 of the UCC
of
the jurisdiction wherein such financing statement or amendment is filed and
(ii)
contain any other information required by
7
Article
9
of the UCC of the jurisdiction wherein such financing statement or amendment
is
filed regarding the sufficiency or filing office acceptance of any financing
statement or amendment, including (x) whether such Debtor is an organization,
the Type of Organization, the Organization ID Number or Federal Employer
Identification Number issued to such Debtor and (y) in the case of a financing
statement filed as a fixture filing or indicating Collateral to be extracted
collateral, a sufficient description of real property to which the Collateral
relates; (b) will keep all its Inventory at, and will not maintain any place
of
business at, any location other than its address(es) shown on Schedule
I
hereto
(or any amendment thereto); (c) will keep its records concerning the Collateral
in such a manner as will enable the Bank or its designees to readily determine
at any time the status of the Collateral; (d) will furnish the Bank such
information concerning such Debtor, the Collateral and the Account Debtors
as
the Bank may from time to time reasonably request; (e) will permit the Bank
and
its designees, in accordance with the provisions of the Credit Agreement,
to
inspect such Debtor’s Inventory and other Goods, and to inspect, audit and make
copies of and extracts from all records and other papers in the possession
of
such Debtor pertaining to the Collateral and the Account Debtors, and will,
upon
request of the Bank during the existence of an Event of Default, immediately
deliver to the Bank all of such records and papers; (f) will, upon request
of
the Bank, stamp on its records concerning the Collateral, and add on all
Chattel
Paper and Instruments constituting a portion of the Collateral, a notation,
in
form satisfactory to the Bank, of the security interest of the Bank hereunder;
(g) except for the sale or lease of Inventory in the ordinary course
of its
business, sales of Equipment which is no longer used or useful in its business
or which is being replaced by similar Equipment or any other sale of Collateral
permitted under Section 7.2.7 of the Credit Agreement, will not sell,
lease, assign, create or permit to exist any Lien on any Collateral, other
than
Permitted Liens; (h) without limiting the provisions of Section 7.1.3
of
the Credit Agreement, will at all times keep all of its Inventory and other
Goods insured against loss, damage, theft and other risks in accordance with
the
insurance requirements set forth in the Credit Agreement; (i) will
take
such actions as are reasonably necessary to keep its Goods in good repair
and
condition (ordinary wear and tear excepted); (j) will take all such actions
as
are reasonably necessary to keep its Equipment in good repair and condition
and
in good working order, ordinary wear and tear excepted; (k) will, except
to the
extent otherwise permitted under the Credit Agreement, promptly pay when
due all
license fees, registration fees, taxes, assessments and other charges which
may
be levied upon or assessed against the ownership, operation, possession,
maintenance or use of its Equipment and other Goods; (l) will (i) cause to
be
noted on the applicable certificate, in the event any of its Equipment is
covered by a certificate of title, the security interest of the Bank in the
Equipment covered thereby, and (ii) deliver all such certificates to the
Bank or
its designees; (m) will take all steps necessary to protect, preserve and
maintain all of its rights in the Collateral; (n) except as listed on
Schedule
VI,
will
keep all of the tangible Collateral in the United States of America; (o)
will
promptly notify the Bank in writing upon acquiring or otherwise obtaining
any
Collateral after the date hereof consisting of Deposit Accounts, Investment
Property, Letter-of-Credit Rights or Electronic Chattel Paper not listed
on the
Schedules hereto and, upon the request of the Bank, will promptly execute
such
other documents, and do such other acts or things deemed appropriate by the
Bank
to deliver to the Bank control with respect to such Collateral; (p) will
promptly notify the Bank in writing upon acquiring or otherwise obtaining
any
Collateral after the date hereof consisting of Documents or Instruments and,
upon the reasonable request of the Bank, will promptly execute such other
documents, and do such other acts or things necessary to deliver to the Bank
possession of such Documents which are
8
negotiable
and Instruments, and, with respect to nonnegotiable Documents, to have such
nonnegotiable Documents issued in the name of the Bank; (q) with respect
to
Collateral in the possession of a third party, other than Certificated
Securities, Goods covered by a Document, or de
minimis
portions
of the Collateral temporarily in the possession of another in the ordinary
course of such third party’s business, including as described on Schedule
VII,
will
obtain an acknowledgment from the third party that it is holding the Collateral
for benefit of the Bank; (r) will promptly notify the Bank in writing upon
incurring or otherwise obtaining a Commercial Tort Claim against any third
party, and, upon the request of the Bank, will promptly enter into an amendment
to this Agreement, and do such other acts or things deemed appropriate by
the
Bank to give the Bank a security interest in such Commercial Tort Claim;
(s)
further agrees to execute and deliver to the Bank such documents and take
other
action as requested by the Bank to insure the attachment, perfection and
first
priority of, and the ability of the Bank to enforce, free and clear of all
Liens
and claims and rights of third parties whatsoever (except Permitted Liens),
the
security interests in any and all of the Collateral including, without
limitation, (i) complying with any provision of any statute, regulation or
treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability
of
the Bank to enforce, the security interests in such Collateral, (ii) obtaining
governmental and other third party consents and approvals, including, without
limitation, any consent of any licensor, lessor or other Person Obligated
on
Collateral, (iii) obtaining waivers from mortgagees and landlords in form
and
substance satisfactory to the Bank, and (iv) taking all actions required
by the
UCC in effect from time to time or by other law, as applicable in any relevant
UCC jurisdiction, or by other law as applicable in any foreign jurisdiction;
and
(t) will not change its state of incorporation or organization or Type of
Organization and will not change its legal name without providing the Bank
with
at least 30 days’ prior written notice.
Any
expenses incurred in protecting, preserving or maintaining any Collateral
shall
be borne by Debtors. Whenever an Event of Default shall be existing, the
Bank
shall have the right to bring suit to enforce any or all of the Intellectual
Property or licenses thereunder, in which event the applicable Debtor shall,
at
the request of the Bank, do any and all lawful acts and execute any and all
proper documents required by the Bank in aid of such enforcement, and such
Debtor shall promptly, upon demand, reimburse and indemnify the Bank for
all
expenses incurred by the Bank in the exercise of its rights under this
Section
7.
Notwithstanding the foregoing, subject to Section
11
hereof,
the Bank shall have no obligation or liability regarding the Collateral by
reason of, or arising out of, this Agreement.
To
the
extent Debtors use any proceeds from the Loans to purchase Collateral, Debtors’
repayment of the Loans may, at the discretion of the Bank, apply on a
“first-in-first-out” basis so that the portion of the Loans used to purchase a
particular item of Collateral shall be paid in the chronological order the
Debtors purchased the Collateral.
8. Default
and Remedies upon an Event of Default.
(a) If
an
Event of Default shall have occurred and be continuing, the Bank may exercise
(or cause its sub-agents to exercise) any or all of the remedies available
to it
under this Agreement.
9
(b) Without
limiting the generality of the foregoing, if an Event of Default shall have
occurred and be continuing, the Bank may exercise, on behalf of the Lender
Parties, all the rights of a secured party under the UCC (whether or not
in
effect in the jurisdiction where such rights are exercised) with respect
to any
Collateral and, in addition, the Bank may, without being required to give
any
notice, withdraw all cash held in the Assignee Deposit Account and apply
such
cash as provided in Section
9
hereof
and, if there shall be no such cash or if such cash shall be insufficient
to pay
all the Liabilities in full, sell, lease, license or otherwise dispose of
the
Collateral or any part thereof. Notice of any such sale or other disposition
shall be given to the relevant Debtors as required in Section
10
hereof.
9. Application
of Proceeds.
(a) If
an
Event of Default shall have occurred and be continuing, the Bank may apply
the
proceeds of any sale or other disposition of all or any part of the Collateral,
in the Bank’s discretion, in cash or in kind or, on a ratable basis, in any
combination thereof.
(b) All
distributions made by the Bank pursuant to this Section shall be final (except
in the event of manifest error), and the Bank shall have no duty to inquire
as
to the application by any of the Lender Parties of any amount distributed
to
it.
10. Authority
to Administer Collateral.
Each
Debtor irrevocably appoints the Bank its true and lawful attorney with full
power of substitution, in the name of such Debtor, any Lender Party or
otherwise, for the sole use and benefit of the Lender Parties, but at Debtors’
expense, to the extent permitted by law, to exercise, at any time and from
time
to time while an Event of Default shall have occurred and be continuing,
all or
any of the following powers with respect to all or any of such Debtors’
Collateral:
(a) to
demand, xxx for, collect, receive and give acquittance for any and all monies
due or to become due upon or by virtue thereof;
(b) to
settle, compromise, compound, prosecute or defend any action or proceeding
with
respect thereto;
(c) to
sell,
lease, license or otherwise dispose of the same or the Proceeds thereof,
as
fully and effectually as if the Bank were the absolute owner thereof,
and
(d) to
extend
the time of payment of any or all thereof and to make any allowance or other
adjustment with reference thereto;
provided
that, except in the case of Collateral that is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Bank will give the relevant Debtor ten (10) days’ prior written
notice of the time and place of any public sale thereof or the time after
which
any private sale or other intended disposition thereof will be made, and
Debtor
hereby agrees that such notice shall be deemed reasonable.
10
11. Limitation
on Duty in Respect of Collateral.
Beyond
the exercise of reasonable care in the custody and preservation thereof,
the
Bank will have no duty as to any Collateral in its possession or control
or in
the possession or control of any sub-agent or bailee or any income therefrom
or
as to the preservation of rights against prior parties or any other rights
pertaining thereto. The Bank will be deemed to have exercised reasonable
care in
the custody and preservation of the Collateral in its possession or control
if
such Collateral is accorded treatment substantially equal to that which it
accords its own property, and will not be liable or responsible for any loss
or
damage to any Collateral, or for any diminution in the value thereof, by
reason
of any act or omission of any sub-agent or bailee selected by the Bank in
good
faith or by reason of any act or omission by the Bank, except to the extent
that
such liability arises from the Bank’s gross negligence or willful
misconduct.
To
the
extent that applicable law imposes duties on the Bank to exercise remedies
in a
commercially reasonable manner, each Debtor acknowledges and agrees that
it is
not commercially unreasonable for the Bank: (a) to fail to incur expenses
deemed
significant by the Bank to prepare Collateral for disposition or otherwise
to
complete raw material or work-in-process into finished goods or other finished
products for disposition, (b) to fail to obtain third party consents for
access
to Collateral to be disposed of, or to obtain or, if not required by other
law,
to fail to obtain governmental or third party consents for the collection
or
disposition of Collateral to be collected or disposed of, (c) to fail to
exercise collection remedies against Account Debtors or other Persons obligated
on Collateral or to remove Liens on or any adverse claims against Collateral,
(d) to exercise collection remedies against Account Debtors and other Persons
obligated on Collateral directly or through the use of collection agencies
and
other collection specialists, (e) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (f) to contact other Persons, whether
or
not in the same business as such Debtor, for expressions of interest in
acquiring all or any portion of the Collateral, (g) to hire one or more
professional auctioneers to assist in the disposition of Collateral, whether
or
not the collateral is of a specialized nature, (h) to dispose of Collateral
by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing
so,
or that match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition warranties,
including, without limitation, any warranties of title, (k) to purchase
insurance or credit enhancements to insure the Bank against risks of loss,
collection or disposition of Collateral, or to provide to the Bank a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by the Bank, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Bank
in
the collection or disposition of any of the Collateral. Each Debtor acknowledges
that the purpose of this Section is to provide non-exhaustive indications
of
what actions or omissions by the Bank would not be commercially unreasonable
in
the Bank’s exercise of remedies against the Collateral and that other actions or
omissions by the Bank shall not be deemed commercially unreasonable solely
on
account of not being indicated in this Section. Without limitation upon the
foregoing, nothing contained in this Section shall be construed to grant
any
right to a Debtor or to impose any duties on the Bank that would not have
been
granted or imposed by this Agreement or by applicable law in the absence
of this
Section.
11
12. General.
(a) All
notices, requests, demands, directions and other communications (as used
in this
Section
12,
collectively referred to as “notices”) given to or made upon any party hereto
under the provisions of this Agreement shall be in writing (including facsimile
communication) unless otherwise expressly permitted hereunder and shall be
delivered or sent by facsimile or via nationally-recognized overnight courier,
by hand or U.S. mail to the respective parties at the addresses and numbers
set
forth under their respective names on Schedule
I
hereof
(for the Debtors), at the address set forth in the Credit Agreement (for
the
Bank) or in accordance with any subsequent unrevoked written direction from
any
party to the others delivered pursuant to the requirements of this Section
12(a). All notices shall, except as otherwise expressly herein provided,
be
effective: (a) in the case of facsimile, when received, (b) in the case of
hand-delivered notice, when hand-delivered, (c) in the case of telephonic
notice, when telephoned, provided
however,
that in order to be effective, telephonic notices must be confirmed in writing
no later than the next Business Day by letter or facsimile, (d) if given
by
mail, four (4) days after such communication is deposited in the mail with
first-class postage prepaid, return receipt requested, and (d) if given by
any
other means (including by air courier), when delivered; provided,
that
any notices to the Bank shall not be effective until received.
(b) Each
of
the Debtors agrees to pay all expenses, including reasonable attorney’s fees and
charges (including time charges of attorneys who are employees of the Bank)
paid
or incurred by the Bank or any Lender Party in endeavoring to collect the
Liabilities of such Debtor, or any part thereof, and in enforcing this Agreement
against such Debtor, and such obligations will themselves be
Liabilities.
(c) No
delay
on the part of the Bank in the exercise of any right or remedy shall operate
as
a waiver thereof, and no single or partial exercise by the Bank of any right
or
remedy shall preclude other or further exercise thereof or the exercise of
any
other right or remedy.
(d) This
Agreement shall remain in full force and effect until all Liabilities have
been
paid in full and all Commitments have terminated. If at any time all or any
part
of any payment theretofore applied by the Bank or any Lender Party to any
of the
Liabilities is or must be rescinded or returned by the Bank or such Lender
Party
for any reason whatsoever (including the insolvency, bankruptcy or
reorganization of any Debtor), such Liabilities shall, for the purposes of
this
Agreement, to the extent that such payment is or must be rescinded or returned,
be deemed to have continued in existence, notwithstanding such application
by
the Bank or such Lender Party, and this Agreement shall continue to be effective
or be reinstated, as the case may be, as to such Liabilities, all as though
such
application by the Bank or such Lender Party had not been made.
(e) This
Agreement shall be construed in accordance with and governed by the laws
of the
State of Illinois applicable to contracts made and to be performed entirely
within such State, without regard to conflict of laws principles. Whenever
possible, each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of
this
Agreement shall be prohibited by or invalid under applicable law,
12
such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
(f) The
rights and privileges of the Bank hereunder shall inure to the benefit of
its
successors and assigns.
(g) This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, and each such counterpart shall
be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement. At any time after the date of this Agreement,
one or
more additional Persons may become parties hereto by executing and delivering
to
the Bank a counterpart of this Agreement together with supplements to the
Schedules hereto setting forth all relevant information with respect to such
party as of the date of such delivery. Immediately upon such execution and
delivery (and without any further action), each such additional Person will
become a party to, and will be bound by all the terms of, this
Agreement.
(h) EACH
LOAN
PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE
CIRCUIT COURT OF XXXX COUNTY, ILLINOIS AND THE UNITED STATES DISTRICT COURT
FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, AND WAIVES PERSONAL
SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
BE
MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE
ADDRESSES PROVIDED FOR IN SCHEDULE
I
AND
SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF.
EACH LOAN PARTY WAIVES ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE
BASED ON LACK OF JURISDICTION OR VENUE. EACH DEBTOR AND THE BANK HEREBY WAIVE
TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND
ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.
[SIGNATURE
PAGES FOLLOW]
13
[SIGNATURE
PAGE - SECURITY AGREEMENT]
IN
WITNESS WHEREOF, this Agreement has been duly executed as of the day and
year
first above written.
DEBTORS:
INTEGRATED
ALARM SERVICES GROUP,
INC.,
a
Delaware corporation
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Chairman
& CEO
CRITICOM
INTERNATIONAL CORPORATION,
a
New
Jersey corporation
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Authorized
Person
MONITAL
SIGNAL CORPORATION,
a
New
Jersey corporation
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Authorized
Person
INTEGRATED
ALARM SERVICES, INC.,
a
Delaware corporation
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Chairman
& CEO
S-1
XXXXX
SECURITY GROUP L.L.C.,
a
New
Jersey limited liability company
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Manager
AMERICAN
HOME SECURITY, INC.,
a
Nevada
corporation
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Authorized
Person
BANK:
LASALLE
BANK N.A.,
a
national banking association
By:
Name:
Title:
S-2
SCHEDULE
I
(To
Be Completed by Borrower)
CHIEF
EXECUTIVE OFFICES AND ADDRESSES OF DEBTORS
| 1. |
[Name
of Borrower]
|
Chief
Executive Office:
Other
Business Locations:
SCHEDULE
II
(To
Be Completed by Borrower)
STATE
OF INCORPORATION OR ORGANIZATION FOR EACH DEBTOR
Information
Required:
Exact
Legal Name: [Name
of Borrower]
State
or
Organization: [_____________]
Type
of
Organization: [_____________________________]
Organizational
I.D. Number: [________]
Federal
Employer Identification Number: [_________]
Place
of
Business (or, if more
than
one,
the Chief Executive Office): [______________________________]
[______________________________]
[______________________________]
[______________________________]
SCHEDULE
III
(To
Be Completed by Borrower)
DBAs:
SCHEDULE
IV
(To
Be Completed by Borrower)
INTELLECTUAL
PROPERTY
TRADEMARKS:
Trademarks
and service xxxx owned by or licensed to [_______________________]:
PATENTS:
(a) Copyrights:
(b) Internet
Web-Site Addresses:
SCHEDULE
V
(To
Be Completed by Borrower)
Instruments:
Deposit
Accounts:
Bank
Account Information for Borrower
Bank Account
Description ABA
No. Account
No.
Investment
Property:
Letter-of-Credit
Rights:
Chattel
Paper:
Documents:
Commercial
Tort Claims:
SCHEDULE
VI
(To
Be Completed by Borrower)
COLLATERAL
NOT LOCATED IN THE UNITED STATES
SCHEDULE
VII
(To
Be Completed by Borrower)
COLLATERAL
LOCATED WITH THIRD PARTIES
Alarm
panels, devices and other alarm related equipment that is currently installed
at
customer locations pursuant to numerous service agreements. As of [____________],
the
depreciated value of such Collateral totaled approximately [$___________].
SCHEDULE
VIII
(To
Be Completed by Borrower)
COLLATERAL
SUBJECT TO CERTIFICATE OF TITLE STATUTE
|
Title
Owner
|
VEH
#
|
Garage
Location
|
Year
|
Make
|
Model
|
VIN
#
|
Lic.
#
|
O
= Own
NP
= FMCC
|
SCHEDULE
IX
(To
Be Completed by Borrower)
LIST
OF DEPOSIT ACCOUNTS
|
Owner
|
Bank
|
Account
Description
|
ABA
No.
|
Account
No.
|
SCHEDULE
2(E)
(To
Be Completed by Borrower)
COMMERCIAL
TORT CLAIMS
(Provide
a specific description of commercial tort claims currently in
existence
by
referring, for example, to a specific incident giving rise to the
claim.)
ATTACHMENT
1 TO SCHEDULE 2(E)
GRANT
OF SECURITY INTEREST
IN
COMMERCIAL TORT CLAIM
To: LaSalle
Bank N.A. with respect to the
Security
Agreement described below.
Pursuant
to the terms of the Security Agreement dated as of October __, 2004,
among us (the “Security Agreement”), we submit this Grant of Security Interest
in Commercial Tort Claim to you and certify that the information set forth
below
is true, correct and complete as of the date hereof. Capitalized terms used
herein and not otherwise defined shall have the meanings set forth in the
Security Agreement.
We
hereby
notify you of and grant to the Bank, as collateral security for the Liabilities,
a lien on and security interest in, and right of set-off against, and
acknowledge and agree that the Bank has and shall continue to have for the
benefit of the Lender Parties a continuing lien on and security interest
in, and
right of set-off against, all right, title, and interest, whether now owned
or
existing or hereafter created, acquired or arising, in and to the following
Commercial Tort Claim:
[Insert
a specific description for the commercial tort claim, followed by the words
“together with any and all proceeds and products thereof and all insurance
relating thereto and the proceeds thereof”.]
The
Commercial Tort Claim, proceeds and products and insurance described herein
shall henceforth be included as part of the Collateral as described in the
Security Agreement and the other Loan Documents.
DATED:
Very
truly yours,
INTEGRATED
ALARM SERVICES GROUP, INC.
[or
Applicable Debtor]
By:
/s/
Xxxxxxx X. XxXxxx
Name:
Xxxxxxx
X. XxXxxx
Title:
Chairman
& CEO
