SECURITY AGREEMENT
THIS
SECURITY AGREEMENT (this "Agreement")
is
entered into as of November 10, 2008 by and among each of the signatories
party hereto (including any permitted successors and assigns, the "Debtor")
and
CRESTPARK LP, INC. (the "Lender")
on
behalf of itself and its Affiliates (the "Secured
Party").
PRELIMINARY
STATEMENT
ISECURETRAC
CORP. (the "Borrower")
and
the Lender are entering into a Loan Agreement dated as of November 10, 2008
(as it may be amended, supplemented, restated or modified from time to time,
the
"Loan
Agreement").
The
Debtor is entering into this Agreement in order to, among other things, induce
the Lender to enter into and extend credit to the Borrower under the Equipment
Term Loan (as defined herein) made under the Loan Agreement.
ACCORDINGLY,
the Debtor and the Secured Party hereby agree as follows:
ARTICLE
I
DEFINITIONS
1.1 Terms
Defined in Loan Agreement.
All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Loan Agreement.
1.2 Terms
Defined in Texas Uniform Commercial Code.
Terms
defined in the Texas Uniform Commercial Code which are not otherwise defined
in
this Agreement are used herein as defined in the Texas Uniform Commercial Code
as in effect on the date hereof.
1.3 Definitions
of Certain Terms Used Herein.
As used
in this Agreement, in addition to the terms defined in the Preliminary
Statement, the following terms shall have the following meanings:
"Article"
means a
numbered article of this Agreement, unless another document is specifically
referenced.
"Collateral"
means
all Equipment that is purchased with the proceeds of the Equipment Term Loan,
and such Equipment to the extent it constitutes Inventory, wherever located,
in
which the Debtor now has or hereafter acquires any right or interest, and the
Proceeds, insurance Proceeds and products thereof, together with all books
and
records, customer lists, credit files, software, computer files, programs,
printouts and other computer materials and records related thereto; provided,
however,
that to
the extent the Debtor obtains Permanent Equipment Financing with respect to
any
item of Equipment, such Equipment shall no longer be Collateral
hereunder..
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"Equipment"
means
any "equipment", as such term is defined in Section 9.102(a)(33) of the
UCC, now owned or hereafter acquired by the Debtor and, in any event, shall
include, without limitation, all machinery, equipment, furnishings, fixtures
and
vehicles now owned or hereafter acquired by the Debtor and any and all
additions, substitutions, and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment, and
accessories installed thereon or affixed thereto.
"Equipment
Term Loan"
means
that certain term loan described in the Loan Agreement.
"Inventory"
means
any "inventory", as such term is defined in Section 9.102(a)(48) of the
UCC, now owned or hereafter acquired by the Debtor, and, in any event, shall
include, without limitation, each of the following, whether now owned or
hereafter acquired by the Debtor: (a) all goods and other personal property
of the Debtor that are held for sale or lease or to be furnished under any
contract of service, (b) all raw materials, work-in-process, finished goods,
inventory, supplies, and materials of the Debtor, (c) all wrapping, packaging,
advertising, and shipping materials of the Debtor, (d) all goods that have
been
returned to, repossessed by, or stopped in transit by the Debtor, and (e) all
documents evidencing any of the foregoing.
"Obligations"
means
all obligations, indebtedness, and liabilities of any Borrower, any guarantor
and any other Obligated Party to the Lender or Affiliates of the Lender, or
both
under the Equipment Term Loan between the Borrower and the Lender, now existing
or hereafter arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the obligations, indebtedness, and liabilities
under this Agreement, the other Loan Documents, any cash management or treasury
services agreements and all interest accruing thereon (whether a claim for
post-filing or post-petition interest is allowed in any insolvency,
reorganization or similar proceeding) and all attorneys' fees and other expenses
incurred in the enforcement or collection thereof.
"Proceeds"
means
any "Proceeds," as such term is defined in Section 9.102(a)(65) of the UCC
and, in any event, shall include, but not be limited to, (a) any and all
Proceeds of any insurance, indemnity, warranty, or guaranty payable to the
Debtor from time to time with respect to any of the Collateral, (b) any and
all
payments (in any form whatsoever) made or due and payable to the Debtor from
time to time in connection with any requisition, confiscation, condemnation,
seizure, or forfeiture of all or any part of the Collateral by any Governmental
Authority (or any person acting under color of Governmental Authority), and
(c)
any and all other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Schedule"
refers
to a specific schedule to this Agreement, unless another document is
specifically referenced.
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"Section"
means a
numbered Section of this Agreement, unless another document is specifically
referenced.
"Secured
Obligations"
means
the Obligations, including without limitation any such Obligations incurred
or
accrued during the pendency of any bankruptcy, insolvency, receivership or
other
similar proceeding, whether or not allowed or allowable in such
proceeding.
"UCC"
means
the Uniform Commercial Code as in effect in the State of Texas, as the same
has
been or may be amended or revised from time to time, or, if so required with
respect to any particular Collateral by mandatory provisions of applicable
law,
as in effect in the jurisdiction in which such Collateral is
located.
The
foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms.
ARTICLE
II
GRANT
OF
SECURITY INTEREST
2.1 Security
Interest.
The
Debtor hereby pledges, assigns and grants to the Secured Party, a security
interest in all of the Debtor's right, title and interest in and to the
Collateral to secure the prompt and complete payment and performance of the
Secured Obligations; provided,
however,
that if
any Collateral ceases to be Collateral, including as a result of the Debtor
obtaining Permanent Equipment Financing for such Collateral, the Secured Party
shall take all actions reasonably requested by the Debtor to terminate, and
evidence the termination of, the Secured Party's security interest in such
Collateral, including without limitation the execution, delivery and filing
of
any applicable release. If the security interest granted hereby in any rights
of
the Debtor under any contract included in the Collateral is expressly prohibited
by such contract, then the security interest hereby granted therein nonetheless
remains effective to the extent allowed by Article or Chapter 9 of the UCC
or other applicable law but is otherwise limited by that
prohibition.
2.2 Debtor
Remains Liable.
Notwithstanding anything to the contrary contained herein, (a) the Debtor
shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its respective
duties and obligations thereunder to the same extent as if this Agreement had
not been executed, (b) the exercise by the Secured Party of any of its
rights hereunder shall not release the Debtor from any of its duties or
obligations under the contracts and agreements included in the Collateral,
and
(c) the Secured Party shall not have any obligation or liability under any
of the contracts and agreements included in the Collateral by reason of this
Agreement, nor shall the Secured Party be obligated to perform any of the
obligations or duties of the Debtor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
2.3 Authorization
to File Financing Statements.
The
Debtor hereby irrevocably authorizes the Secured Party at any time and from
time
to time to file in any UCC jurisdiction any initial financing statements and
amendments thereto that (a) indicate the Collateral (i) as described
herein, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article or Chapter 9 of the UCC, or (ii) as
being of an equal or lesser scope or with greater detail, and (b) contain
any other information required by subchapter E of Chapter 9 of the UCC
for the sufficiency or filing office acceptance of any financing statement
or
amendment, including whether the Debtor is an organization, the type of
organization and any organization identification number issued to the Debtor.
The Debtor agrees to furnish any such information to the Secured Party promptly
upon request.
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2.4 Purchase
Money Security Interest.
The
security interest granted herein shall constitute a purchase money security
interest under Section 9-324 of the UCC.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
The
Debtor represents and warrants to the Secured Party that:
3.1 Title,
Authorization, Validity and Enforceability.
The
Debtor has good and valid rights in and title to the Collateral with respect
to
which it has purported to grant a security interest hereunder, free and clear
of
all Liens except for Liens permitted under Section 4.1.6,
and has
full power and authority to grant to the Secured Party the security interest
in
such Collateral pursuant hereto. The execution and delivery by the Debtor of
this Agreement has been duly authorized by proper corporate or other
proceedings, and this Agreement constitutes a legal, valid and binding
obligation of the Debtor and creates a security interest which is enforceable
against the Debtor in all now owned and hereafter acquired Collateral. When
financing statements have been filed in the appropriate offices against the
Debtor in the locations listed on Schedule 1,
the
Secured Party will have a fully perfected first priority security interest
in
that Collateral in which a security interest may be perfected by filing, subject
only to Liens permitted under Section 4.1.6.
3.2 Conflicting
Laws and Contracts.
Neither
the execution and delivery by the Debtor of this Agreement, the creation and
perfection of the security interest in the Collateral granted hereunder, nor
compliance with the terms and provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Debtor or the Debtor's articles or certificate of incorporation, bylaws,
articles of organization or operating agreement or other charter documents,
as
the case may be, the provisions of any indenture, instrument or agreement to
which the Debtor is a party or is subject, or by which it, or its property,
is
bound, or conflict with or constitute a default thereunder, or result in the
creation or imposition of any Lien pursuant to the terms of any such indenture,
instrument or agreement (other than any Lien of the Secured Party).
3.3 Principal
Location.
The
Debtor's mailing address, and the location of its chief executive office and
of
the books and records relating to the Collateral, are disclosed in Schedule 2;
the
Debtor has no other places of business except those set forth in Schedule 2.
3.4 Litigation.
There
is no litigation, investigation or governmental proceeding threatened against
the Debtor or any of its properties which if adversely determined would have
a
Material Adverse Effect on the Collateral or the financial condition,
operations, or business of the Debtor.
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3.5 No
Other Names.
The
Debtor has not conducted business during the five years preceding the date
of
this Agreement under any name except the name in which it has executed this
Agreement.
3.6 No
Default.
No
Default exists.
3.7 No
Financing Statements.
No
financing statement describing all or any portion of the Collateral which has
not lapsed or been terminated naming the Debtor as debtor has been filed in
any
jurisdiction except (a) financing statements naming the Secured Party as
the secured party, and (b) as permitted by Section 4.1.6.
3.8 Federal
Employer Identification Number.
The
Debtor's Federal employer identification number is as listed on Schedule 3.
ARTICLE
IV
COVENANTS
From
the
date of this Agreement, and thereafter until this Agreement is
terminated:
4.1 General.
4.1.1 Inspection.
The
Debtor will permit the Secured Party, by its representatives and agents, upon
reasonable advance notice (a) to inspect the Collateral, (b) to
examine and make copies of the records of the Debtor relating to the Collateral
and (c) to discuss the Collateral and the related records of the Debtor
with, and to be advised as to the same by, the Debtor's officers and employees,
all at such reasonable times and intervals as the Secured Party may determine,
and all at the Debtor's expense.
4.1.2 Taxes.
The
Debtor will pay when due all taxes, assessments and governmental charges and
levies upon the Collateral, except those which are being contested in good
faith
by appropriate proceedings and with respect to which no Lien
exists.
4.1.3 Records
and Reports; Notification of Event of Default.
The
Debtor will maintain complete and accurate books and records with respect to
the
Collateral, and furnish to the Secured Party such reports relating to the
Collateral as the Secured Party shall from time to time reasonably request.
The
Debtor will give prompt notice in writing to the Secured Party of the occurrence
of any Event of Default and of any other development, financial or otherwise,
which might materially and adversely affect the Collateral. The Debtor shall
xxxx its books and records to reflect the security interest of the Secured
Party
under this Agreement.
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4.1.4 Financing
Statements and Other Actions; Defense of Title.
The
Debtor will execute and deliver to the Secured Party all financing statements,
control agreement and other documents and take such other actions as may from
time to time be reasonably requested by the Secured Party in order to maintain
a
first perfected security interest in the Collateral. The Debtor will take any
and all commercially reasonable actions necessary to defend title to the
Collateral against all persons and to defend the security interest of the
Secured Party in the Collateral and the priority thereof against any Lien not
expressly permitted hereunder.
4.1.5 Disposition
of Collateral.
The
Debtor will not sell, lease or otherwise dispose of the Collateral except
(a) prior to the occurrence of an Event of Default, dispositions
specifically permitted pursuant to the Loan Agreement, (b) until such time
following the occurrence of an Event of Default, as the Debtor receives a notice
from the Secured Party instructing the Debtor to cease such transactions, sales
or leases of Collateral consisting of Inventory in the ordinary course of
business, and (c) until such time as the Debtor receives a notice from the
Secured Party pursuant to Article VII,
Proceeds of Collateral consisting of Inventory collected in the ordinary course
of business. Notwithstanding anything to the contrary contained herein, nothing
in the Loan Documents, including this Section
4.1.5
and
Section
4.1.6
shall
prohibit the Debtor from deploying the Collateral in accordance with the terms
of contracts with the Debtor’s customers.
4.1.6 Liens.
The
Debtor will not create, incur, or suffer to exist any Lien on the Collateral
except (a) the security interest created by this Agreement, and
(b) other Liens permitted pursuant to the Loan Agreement.
4.1.7 Change
in Location, Jurisdiction of Organization or Name.
The
Debtor will not (a) have any Collateral, or Proceeds or products thereof
(other than Collateral consisting of Inventory and Proceeds thereof disposed
of
as permitted by Section 4.1.5)
at a
location other than a location specified in Schedule 2,
(b) maintain a place of business at a location other than a location
specified on Schedule 2,
(c) change its name or taxpayer identification number, (d) change its
mailing address, or (e) change its jurisdiction of organization, unless the
Debtor shall have given the Secured Party not less than 30 days prior written
notice thereof, and the Secured Party shall have determined that such change
will not adversely affect the validity, perfection or priority of the Secured
Party's security interest in the Collateral.
4.1.8 Other
Financing Statements.
The
Debtor will not file or authorize the filing on its behalf of any financing
statement naming it as debtor covering all or any portion of the Collateral,
except as permitted by Section 4.1.6.
4.2 Collateral
Consisting of Inventory and Equipment.
4.2.1 Maintenance
of Goods.
The
Debtor will do all things necessary to maintain, preserve, protect and keep
the
Collateral in good repair and working and saleable condition, normal wear and
tear and damage by casualty loss excepted.
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4.2.2 Insurance.
The
Debtor will (a) maintain fire and extended coverage insurance on the
Collateral containing a lender's loss payable clause in favor of the Secured
Party, and providing that said insurance will not be terminated except after
at
least 30 days written notice from the insurance company to the Secured Party,
(b) maintain such other insurance on the Collateral for the benefit of the
Secured Party as the Secured Party shall from time to time request,
(c) furnish to the Secured Party upon the request of the Secured Party from
time to time the originals of all policies of insurance on the Collateral and
certificates with respect to such insurance and (d) maintain general
liability insurance naming the Secured Party as an additional
insured.
4.2.3 Safekeeping
of Collateral Consisting of Inventory; Inventory Covenants.
The
Secured Party shall not be responsible for (a) the safekeeping of the
Collateral consisting of Inventory; (b) any loss or damage thereto or
destruction thereof occurring or arising in any manner or fashion from any
cause; (c) any diminution in the value of Collateral consisting of
Inventory or (d) any act or default of any carrier, warehouseman, bailee or
forwarding agency or any other Person in any way dealing with or handling the
Collateral consisting of Inventory, except to the extent that the Debtor incurs
any loss, cost, claim or damage from any of the foregoing as a result of the
gross negligence or willful misconduct of the Secured Party. All risk of loss,
damage, distribution or diminution in value of the Collateral consisting of
Inventory shall, except as noted in the previous sentence, be borne by the
Debtor.
4.2.4 Records
and Schedules of Inventory.
The
Debtor shall keep correct and accurate daily records on a first-in, first-out
basis, itemizing and describing the kind, type, quality and quantity of
Collateral consisting of Inventory, the Debtor's cost therefor and selling
price
thereof, and the daily withdrawals therefrom and additions thereto and
Collateral consisting of Inventory then on consignment, and shall, at the
request of the Secured Party, furnish to the Secured Party, daily copies of
the
working papers related thereto.
4.3 Federal,
State or Municipal Claims.
The
Debtor will notify the Secured Party of any Collateral which constitutes a
claim
against a Governmental Authority, or any instrumentality or agency thereof,
the
assignment of which claim is restricted by federal, state or municipal
law.
4.4 Warehouse
Receipts Non-Negotiable.
The
Debtor agrees that if any warehouse receipt or receipt in the nature of a
warehouse receipt is issued with respect to any of its Collateral consisting
of
Inventory, such warehouse receipt or receipt in the nature thereof shall not
be
"negotiable" (as such term is used in Section 7-104 of the
UCC).
4.5 Mortgagee's
and Landlord Waivers.
The
Debtor shall cause each mortgagee of real property owned by the Debtor and
each
landlord of real property leased by the Debtor (in both cases upon request
by
the Secured Party), where the value of the Collateral located on such real
property has an aggregate value equal to or greater than $50,000, to execute
and
deliver instruments satisfactory in form and substance to the Secured Party
by
which such mortgagee or landlord waives or subordinates their rights, if any,
in
the Collateral.
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4.6 Notices,
Reports and Information.
The
Debtor shall (i) notify the Secured Party of any claim made or asserted
against the Collateral by any Person or other event which could reasonably
be
expected to have a Material Adverse Effect; (ii) furnish to the Secured
Party such statements and schedules further identifying and describing the
Collateral as the Secured Party may reasonably request, all in reasonable
detail; and (iii) upon reasonable request of the Secured Party make such
demands and requests for information and reports as the Debtor is entitled
to
make in respect of the Collateral.
4.7 Further
Assurances.
At any
time and from time to time, upon the request of the Secured Party, and at the
sole expense of the Debtor, Debtor shall promptly execute and deliver all such
further instruments and documents and take such further action as the Secured
Party may reasonably deem necessary or desirable to preserve and perfect its
security interest in the Collateral and carry out the provisions and purposes
of
this Agreement, including, without limitation, (a) the execution and filing
of such financing statements as the Secured Party may reasonably require and
(b) the deposit of all certificates of title issuable with respect to any
of the Collateral and noting thereon the security interest hereunder. A carbon,
photographic, or other reproduction of this Agreement or of any financing
statement covering the Collateral or any part thereof shall be sufficient as
a
financing statement and may be filed as a financing statement. The Debtor shall
promptly endorse and deliver to the Secured Party all documents, instruments,
and chattel paper relating to the Collateral that it now owns or may hereafter
acquire.
ARTICLE
V
DEFAULT
5.1 Acceleration
and Remedies.
Upon
the occurrence and during the continuation of an Event of Default under the
Loan
Agreement or any other Loan Document, the Secured Party may exercise any or
all
of the following rights and remedies:
5.1.1 Those
rights and remedies provided in this Agreement, the Loan Agreement, or any
other
Loan Document, provided that this Section 5.1.1
shall
not be understood to limit any rights or remedies available to the Secured
Party
prior to an Event of Default that by their terms are not so
limited.
5.1.2 Those
rights and remedies available to a secured party under the UCC (whether or
not
the UCC applies to the affected Collateral) or under any other applicable law
(including, without limitation, any law governing the exercise of a bank's
right
of setoff or bankers' Lien) when a debtor is in default under a security
agreement.
5.1.3 Without
notice except as specifically provided in Section 7.1
or
elsewhere herein, sell, lease, assign, grant an option or options to purchase
or
otherwise dispose of the Collateral or any part thereof in one or more parcels
at public or private sale, for cash, on credit or for future delivery, and
upon
such other terms as the Secured Party may deem commercially
reasonable.
5.2 Debtor's
Obligations Upon Event of Default.
Upon
the request of the Secured Party after the occurrence of an Event of Default,
the Debtor will:
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5.2.1 Assembly
of Collateral.
Assemble and make available to the Secured Party the Collateral and all records
relating thereto at any place or places specified by the Secured
Party.
5.2.2 The
Secured Party's Access.
Permit
the Secured Party, by the Secured Party's representatives and agents, to enter
any premises where all or any part of the Collateral, or the books and records
relating thereto, or both, are located, to take possession of all or any part
of
the Collateral and to remove all or any part of the Collateral.
5.3 License.
The
Secured Party is hereby granted a license or other right to use, following
the
occurrence and during the continuance of an Event of Default, without charge,
the Debtor's labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, customer lists and advertising
matter, or any property of a similar nature, as it pertains to the Collateral,
in completing production of, advertising for sale, and selling any Collateral,
and, following the occurrence and during the continuance of an Event of Default,
the Debtor's rights under all licenses and all franchise agreements shall inure
to the Secured Party's benefit for such purposes. In addition, the Debtor hereby
irrevocably agrees that the Secured Party may, following the occurrence and
during the continuance of an Event of Default, sell any of the Debtor's
Collateral consisting of Inventory directly to any Person, including without
limitation Persons who have previously purchased the Debtor's Collateral
consisting of Inventory from the Debtor and in connection with any such sale
or
other enforcement of the Secured Party's rights under this Agreement, may sell
Collateral consisting of Inventory which bears any trademark owned by or
licensed to the Debtor and any Collateral consisting of Inventory that is
covered by any copyright owned by or licensed to the Debtor and the Secured
Party may finish any work in process and affix any trademark owned by or
licensed to Debtor and sell such Collateral consisting of Inventory as provided
herein.
ARTICLE
VI
WAIVERS,
AMENDMENTS AND REMEDIES
No
delay
or omission of the Secured Party to exercise any right or remedy granted under
this Agreement shall impair such right or remedy or be construed to be a waiver
of any Event of Default, or an acquiescence therein, and any single or partial
exercise of any such right or remedy shall not preclude any other or further
exercise thereof or the exercise of any other right or remedy. No waiver,
amendment or other variation of the terms, conditions or provisions of this
Agreement whatsoever shall be valid unless in writing signed by the Secured
Party and then only to the extent in such writing specifically set forth. All
rights and remedies contained in this Agreement or by law afforded shall be
cumulative and all shall be available to the Secured Party until the Secured
Obligations have been paid in full.
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ARTICLE
VII
GENERAL
PROVISIONS
7.1 Notice
of Disposition of Collateral.
To the
extent notice of the time and place of any public sale or the time after which
any private sale or other disposition of all or any part of the Collateral
may
not be waived under applicable law, any notice made shall be deemed reasonable
if sent to the Debtor, addressed as set forth in Article VIII,
at
least 10 days prior to (a) the date of any such public sale or (b) the
time after which any such private sale or other disposition may be
made.
7.2 The
Secured Party Performance of Debtor's Obligations.
Without
having any obligation to do so, the Secured Party may perform or pay any
obligation which the Debtor has agreed to perform or pay in this Agreement
and
the Debtor shall, reimburse the Secured Party for any amounts paid by the
Secured Party pursuant to this Section 7.2.
The
Debtor's obligation to reimburse the Secured Party pursuant to the preceding
sentence shall be a Secured Obligation payable on demand.
7.3 Authorization
for the Secured Party to Take Certain Action.
The
Debtor irrevocably authorizes the Secured Party at any time and from time to
time in the sole discretion of the Secured Party and appoints the Secured Party
as its attorney in fact during the existence of an Event of Default (a) to
execute on behalf of the Debtor as debtor and to file financing statements
necessary or desirable in the Secured Party's sole discretion to perfect and
to
maintain the perfection and priority of the Secured Party's security interest
in
the Collateral, (b) to indorse and collect any cash Proceeds of the
Collateral, (c) to file a carbon, photographic or other reproduction of
this Agreement or any financing statement with respect to the Collateral as
a
financing statement in such offices as the Secured Party in its sole discretion
deems necessary or desirable to perfect and to maintain the perfection and
priority of the Secured Party's security interest in the Collateral, and
(d) to discharge past due taxes, assessments, charges, fees or Liens on the
Collateral (except for such Liens as are specifically permitted hereunder),
and
the Debtor agrees to reimburse the Secured Party on demand for any payment
made
or any expense incurred by the Secured Party in connection therewith, provided
that this authorization shall not relieve the Debtor of any of its obligations
under this Agreement or under any other Loan Document.
7.4 Specific
Performance of Certain Covenants.
The
Debtor acknowledges and agrees that a breach of any of the covenants contained
in Sections 4.1.4,
4.1.6, 5.3, or 7.6
will
cause irreparable injury to the Secured Party, that the Secured Party has no
adequate remedy at law in respect of such breaches and therefore agrees, without
limiting the right of the Secured Party to seek and obtain specific performance
of other obligations of the Debtor contained in this Agreement, that the
covenants of the Debtor contained in the Sections referred to in this
Section 7.4
shall be
specifically enforceable against the Debtor.
7.5 Use
and Possession of Certain Premises.
Upon
the occurrence of an Event of Default, the Secured Party shall be entitled
to
occupy and use any premises owned or leased by the Debtor where any of the
Collateral or any records relating to the Collateral are located until the
Secured Obligations are paid or the Collateral is removed therefrom, whichever
first occurs, without any obligation to pay the Debtor for such use and
occupancy.
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7.6 Dispositions
Not Authorized.
The
Debtor is not authorized to sell or otherwise dispose of the Collateral except
as set forth in Section 4.1.5
and
notwithstanding any course of dealing between the Debtor and the Secured Party
or other conduct of the Secured Party, no authorization to sell or otherwise
dispose of the Collateral (except as set forth in Section 4.1.5)
shall
be binding upon the Secured Party unless such authorization is in writing signed
by the Secured Party.
7.7 Benefit
of Agreement.
The
terms and provisions of this Agreement shall be binding upon and inure to the
benefit of the Debtor, the Secured Party and their respective successors and
assigns, except that the Debtor shall not have the right to assign its rights
or
delegate its obligations under this Agreement or any interest herein, without
the prior written consent of the Secured Party.
7.8 Survival
of Representations.
All
representations and warranties of the Debtor contained in this Agreement shall
survive the execution and delivery of this Agreement.
7.9 Taxes
and Expenses.
Any
taxes (including income taxes) payable or ruled payable by federal or state
authority in respect of this Agreement shall be paid by the Debtor, together
with interest and penalties, if any. Debtor shall reimburse the Secured Party
for any and all out-of-pocket expenses and internal charges (including
reasonable attorneys', auditors' and accountants' fees and reasonable time
charges of attorneys, paralegals, auditors and accountants who may be employees
of the Secured Party) paid or incurred by the Secured Party in connection with
the preparation, execution, delivery, administration, collection and enforcement
of this Agreement (subject to limitations set forth in the Loan Agreement)
and
in the audit, analysis, administration, collection, preservation or sale of
the
Collateral (including the reasonable expenses and charges associated with any
periodic or special audit of the Collateral). Any and all costs and expenses
incurred by the Debtor in the performance of actions required pursuant to the
terms hereof shall be borne solely by the Debtor.
7.10 Headings.
The
title of and section headings in this Agreement are for convenience of reference
only, and shall not govern the interpretation of any of the terms and provisions
of this Agreement.
7.11 Termination.
This
Agreement shall continue in effect (notwithstanding the fact that from time
to
time there may be no Secured Obligations outstanding) until (a) the Loan
Agreement has terminated pursuant to its express terms and (b) all of the
Secured Obligations have been indefeasibly paid and performed in full and no
commitments of the Secured Party which would give rise to any Secured
Obligations are outstanding.
7.12 ENTIRE
AGREEMENT.
THIS AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE
DEBTOR AND THE SECURED PARTY RELATING TO THE COLLATERAL AND SUPERSEDES ALL
PRIOR
AGREEMENTS AND UNDERSTANDINGS BETWEEN THE DEBTOR AND THE SECURED PARTY RELATING
TO THE COLLATERAL.
7.13 CHOICE
OF LAW.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF TEXAS, BUT GIVING EFFECT
TO
FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
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11
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7.14 INDEMNITY.
THE
DEBTOR HEREBY AGREES TO INDEMNIFY SECURED PARTY AND ITS RESPECTIVE SUCCESSORS,
ASSIGNS, AGENTS, ATTORNEYS, AND EMPLOYEES, FROM AND AGAINST ANY AND ALL
LIABILITIES, DAMAGES, PENALTIES, SUITS, COSTS, AND EXPENSES OF ANY KIND AND
NATURE (INCLUDING, WITHOUT LIMITATION, ALL REASONABLE EXPENSES OF LITIGATION
OR
PREPARATION THEREFOR WHETHER OR NOT SECURED PARTY IS A PARTY THERETO) IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST SECURED PARTY OR THEIR RESPECTIVE
SUCCESSORS, ASSIGNS, AGENTS, ATTORNEYS, AND EMPLOYEES, IN ANY WAY RELATING
TO OR
ARISING OUT OF THIS AGREEMENT, OR THE MANUFACTURE, PURCHASE, ACCEPTANCE,
REJECTION, OWNERSHIP, DELIVERY, LEASE, POSSESSION, USE, OPERATION, CONDITION,
SALE, RETURN OR OTHER DISPOSITION OF ANY COLLATERAL (INCLUDING, WITHOUT
LIMITATION, LATENT AND OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE BY
THE
SECURED
PARTY
OR THE
DEBTOR, AND ANY CLAIM FOR PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT). WITHOUT
LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION SHALL
BE
INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE
SOLE
CONTRIBUTORY OR ORDINARY NEGLIGENCE OF SUCH PERSON; PROVIDED,
HOWEVER,
NO
PERSON SHALL BE INDEMNIFIED HEREUNDER FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
7.15 WAIVER
OF JURY TRIAL.
TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEBTOR HEREBY IRREVOCABLY AND
EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT
OF OR
RELATING TO ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY
OR THE ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
THEREOF.
7.16 TEXAS
FINANCE CODE SECTION 307.052 COLLATERAL PROTECTION INSURANCE
NOTICE.
DEBTOR
IS REQUIRED TO: (I) KEEP THE PROPERTY INSURED AGAINST DAMAGE IN THE AMOUNT
SPECIFIED IN THE LOAN DOCUMENTS; (II) PURCHASE THE INSURANCE FROM AN INSURER
THAT IS AUTHORIZED TO DO BUSINESS IN THE STATE OF TEXAS OR AN ELIGIBLE SURPLUS
LINES INSURER; AND (III) NAME SECURED PARTY AS THE PERSON TO BE PAID UNDER
THE
POLICY IN THE EVENT OF A LOSS AS AND TO THE EXTENT REQUIRED IN THE LOAN
AGREEMENT. DEBTOR MUST, IF REQUIRED BY SECURED PARTY PURSUANT TO THE LOAN
AGREEMENT, DELIVER TO SECURED PARTY A COPY OF THE POLICY AND PROOF OF THE
PAYMENT OF PREMIUMS. IF DEBTOR FAILS TO MEET ANY REQUIREMENT SET FORTH IN THIS
SECTION
7.15,
SECURED
PARTY MAY OBTAIN COLLATERAL PROTECTION INSURANCE ON BEHALF OF DEBTOR AT THE
DEBTOR'S EXPENSE AS AND TO THE EXTENT EXPLICITLY PERMITTED BY THE LOAN
AGREEMENT.
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12
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ARTICLE
VIII
NOTICES
8.1 Sending
Notices.
Any
notice required or permitted to be given under this Agreement shall be sent
(and
deemed received) in the manner and to the addresses set forth in the Loan
Agreement. All such notices to the Debtor hereunder shall be given or made
at
the appropriate address or telecopier number of the Debtor in accordance with
the Loan Agreement.
8.2 Change
in Address for Notices.
The
Debtor and the Secured Party may change the address for service of notice upon
it by a notice in writing to the other parties.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the Debtor and the Secured Party have executed this Agreement
as of the date first above written.
|
DEBTOR:
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|
|
By:
|
/s/
Xxxxx X. Xxxxxx
|
|
Name:
Xxxxx X. Xxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
Address
for Notices:
|
0000
X. 000xx
Xxxxxx
|
|
|
Xxxxx,
Xxxxxxxx 00000
|
||
|
Fax
No.:
|
|
|
|
Telephone
No.:
|
|
|
|
Attention:
|
|
|
|
e-mail:
|
|
Signature
Page to Security Agreement
|
SECURED
PARTY:
|
|
|
CRESTPARK
LP, INC.
|
|
|
By:
|
/s/
Xxxxxxx Xxxxxxx
|
|
Name:
Xxxxxxx Xxxxxxx
|
|
|
Title:
Senior Vice President
|
|
Signature
Page to Security Agreement
SCHEDULE
1
UCC
Filing Jurisdictions
|
Debtor
|
Jurisdiction
|
|
|
Secretary
of State Delaware
|
SCHEDULE
2
Locations
Principal
Place of Business and Mailing Address:
0000
Xxxxx 000xx
Xxxxxx
Xxxxx,
XX
00000
Location(s)
of Receivables Records (if different from Principal Place of Business
above):
Properties
Leased by each Debtor (indicate which) (include Landlord's
Name):
|
1)
|
SECUREtrac
Corp. Home Xxxxxx
|
0000
Xxxxx 000xx
Xxxxxx
Xxxxx,
XX
00000
Record
Owner/Landlord: CB Xxxxxxx Xxxxx/MEGA Corp.
|
2)
|
iSECURETrac
Corp. Monitoring Center
|
11132
“Q”
Xxxxxx
Xxxxx,
XX
00000
Record
Owner/Landlord: CB Xxxxxxx Xxxxx/MEGA Corp.
SCHEDULE
3
Federal
Employer Identification Numbers
|
Debtor
|
Federal Employer
Identification Number
|
|
|
00-0000000
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||
|
IST
SERVICES, INC.
|
00-0000000
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