PLEDGE AGREEMENT
Exhibit
99.5
Execution Copy
This PLEDGE AGREEMENT dated as of December 14, 2009 (the “Pledge Agreement”) is executed by ARGYLE
SECURITY, INC. (the “Pledgor”), whose address is 00000 Xxxxxxxx Xxxxx, Xxx Xxxxxxx, Xxxxx 00000, to
and for the benefit of THE PRIVATEBANK & TRUST COMPANY, an Illinois state bank (the “Bank”), whose
address is 000 Xxxxx Xx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000.
RECITALS:
A. The Bank and ISI Security Group, Inc. (the “Borrower”), entered into that certain Loan and
Security Agreement dated as of October 3, 2008, (as amended, supplemented or modified from time to
time, the “Loan Agreement”); and.
B In connection with the Loan Agreement, that certain Facility A Loan Note dated as of October 3,
2008 in the maximum original principal amount of TEN MILLION and 00/100 Dollars ($10,000,000.00),
the Facility B Loan Note dated as of October 3, 2008 in the maximum original principal amount of
FIVE MILLION and 00/100 Dollars ($5,000,000.00) and the Facility C Loan Note dated as of October 3,
2008 in the maximum original principal amount of TEN MILLION and 00/100 Dollars ($10,000,000.00),
were each executed by the Borrower and made payable to the order of the Bank, (together with any
and all notes issued in extension, renewal or modification thereof or substitution or replacement
therefor, collectively the “Notes”); and
C. The Pledgor is the sole owner of all of the issued and outstanding capital stock of the
Borrower;
D. The Borrower has requested amendments to the Loan Agreement more fully set forth in Amendment
No. 4 to Loan and Security Agreement, dated as of even date herewith (the “Amendments”);
E. Such amendments shall be of benefit, either directly or indirectly, to the Bank, the Pledgor and
the Borrower; and
F. As a condition to the Bank’s entering into the Amendments, the Bank requires that the Pledgor
enter into this Pledge Agreement for the benefit of the Bank.
NOW, THEREFORE, for and in consideration of the foregoing premises, which are hereby incorporated
herein as true, and the mutual promises and agreements contained herein, the Pledgor and the Bank
hereby agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used herein shall have
the meanings ascribed to such terms in the Loan Agreement. The term “UCC” means the Uniform
Commercial Code as in effect in the State of Illinois. The terms “Adverse Claim”, “Control”,
“Entitlement Order”, “Financial Asset”, “Securities Account”, “Securities
Entitlement”, “Securities Intermediary” and “Security” have the meanings given them in Article 8 of
the UCC.
2. Pledge and Grant of Security Interest. To secure the prompt payment and performance in
full when due of the Secured Obligations (as defined in Section 3 hereof), Pledgor hereby
pledges and assigns and grants to the Bank, a continuing security interest in any and all right,
title and interest of Pledgor in and to the following, whether now owned or existing or owned,
acquired, or arising hereafter (collectively, the “Pledged Collateral”):
(a) Pledged Collateral. 100% of the issued and outstanding shares, partnership
interests, membership interests, securities, and all other equity interests of Pledgor in
the Borrower, including, without limitation, those set forth on Exhibit A attached
hereto;
(b) Distributions. All shares, securities, membership interests or other equity
interests representing a dividend on any of the Pledged Collateral, or representing a
distribution or return of capital upon or in respect of the Pledged Collateral, or
resulting from a stock split, revision, reclassification or other exchange therefor, and
any subscriptions, warrants, rights or options issued to the holder of, or otherwise in
respect of, the Pledged Collateral; and in the event of any consolidation or merger
involving the issuer of any Pledged Collateral and in which such issuer is not the
surviving entity, all shares of each class of the capital stock of the successor entity
formed by or resulting from such consolidation or merger; and
(c) Proceeds. All Proceeds and Products of the foregoing, however and whenever
acquired and in whatever form.
Without limiting the generality of the foregoing, it is hereby specifically understood and agreed
that Pledgor may from time to time hereafter pledge and deliver additional shares of stock or other
interests to the Bank as collateral security for the Secured Obligations. Upon such pledge and
delivery to the Bank, such additional shares of stock or other interests shall be deemed to be part
of the Pledged Collateral of Pledgor and shall be subject to the terms of this Pledge Agreement
whether or not Exhibit A is amended to refer to such additional shares.
3. Security for Secured Obligations. The security interest created hereby in the Pledged
Collateral of Pledgor constitutes continuing collateral security for all of the following, whether
now existing or hereafter incurred (the “Secured Obligations”): (a) all of the Obligations,
howsoever evidenced, created, incurred or acquired, whether primary, secondary, direct, contingent,
or joint and several; (b) the obligations of the Pledgor contained in this Pledge Agreement; and
(c) all expenses and charges, legal and otherwise, reasonably incurred by the Bank in collecting or
enforcing any Obligations or Secured Obligations or in realizing on or protecting any security
therefor, including without limitation the security granted hereunder.
4. Delivery of the Pledged Collateral; Perfection of Security Interest. Pledgor hereby
agrees that:
(a) Delivery of Certificates. Pledgor shall deliver to the Bank (i) simultaneously
with or prior to the execution and delivery of this Pledge Agreement, all certificates
representing the Pledged Collateral of Pledgor and (ii) promptly upon the receipt thereof
by or on behalf of Pledgor, all other certificates and instruments constituting Pledged
Collateral of Pledgor. Prior to delivery to the Bank, all such certificates and
instruments constituting Pledged Collateral of Pledgor shall be held in trust by Pledgor
for the
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benefit of the Bank pursuant hereto. All such certificates shall be delivered in
suitable form for transfer by delivery or shall be accompanied by duly executed instruments
of transfer or assignment in blank, substantially in the form provided in Exhibit B
attached hereto.
(b) Additional Securities. If Pledgor shall receive by virtue
of its being or having been the owner of
any Pledged Collateral, any (i)
certificate, including without limitation,
any certificate representing a dividend or
distribution in connection with any
increase or reduction of capital,
reclassification, merger, consolidation,
sale of assets, combination of shares or
membership or equity interests, stock
splits, spin-off or split-off, promissory
notes or other instrument; (ii) option or
right, whether as an addition to,
substitution for, or an exchange for, any
Pledged Collateral or otherwise; (iii)
dividends payable in securities; or (iv)
distributions of securities or other
equity interests in connection with a
partial or total liquidation, dissolution
or reduction of capital, capital surplus
or paid-in surplus, then Pledgor shall
receive such certificate, instrument,
option, right or distribution in trust for
the benefit of the Bank, shall segregate
it from Pledgor’s other property and shall
deliver it forthwith to the Bank in the
exact form received together with any
necessary endorsement and/or appropriate
stock power duly executed in blank,
substantially in the form provided in
Exhibit B, to be held by the Bank as
Pledged Collateral and as further
collateral security for the Secured
Obligations.
(c) Financing Statements. Pledgor authorizes the Bank to prepare and
file such UCC or other applicable
financing statements as may be reasonably
deemed necessary or desirable by the Bank
in order to perfect and protect the
security interest created hereby in the
Pledged Collateral of Pledgor.
(d) Provisions Relating to Securities Entitlements and Securities Accounts. With
respect to any Pledged Collateral consisting of a Securities Entitlement or held in a
Securities Account, (a) the Pledgor and the applicable Securities Intermediary shall enter
into an agreement with the Bank granting Control to the Bank over such Pledged Collateral,
such agreement to be in form and substance reasonably satisfactory to the Bank and (b) the
Bank shall be entitled, upon the occurrence and during the continuance of a Default or an
Event of Default, to notify the applicable Securities Intermediary that it should follow
the Entitlement Orders of the Bank and no longer follow the Entitlement Orders of Pledgor.
Upon receipt by Pledgor of notice from a Securities Intermediary of its intent to terminate
the Securities Account of Pledgor held by such Securities Intermediary, prior to the
termination of such Securities Account the Pledged Collateral in such Securities Account
shall be (i) transferred to a new Securities Account which is subject to a control
agreement as provided above or (ii) transferred to an account held by the Bank (in which it
will be held until a new Securities Account is established).
5. Representations and Warranties. Pledgor hereby represents and warrants to the Bank, for
the benefit of the Bank, that until all of the Secured Obligations have been satisfied in full:
(a) Authorization of Pledged Collateral. The Pledged Collateral is duly authorized
and validly issued, is fully paid and nonassessable and is not subject to the preemptive
rights of any Person. All other shares of capital stock constituting Pledged Collateral
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will be duly authorized and validly issued, fully paid and nonassessable and not subject to
the preemptive rights of any Person.
(b) Capital Stock of Borrower. The Pledged Collateral represents
100% of the issued and outstanding
Capital Securities of the Borrower.
(c) Title. Pledgor has good and indefeasible title to the Pledged
Collateral and hereby covenants to at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any
Lien, other than Permitted Liens. There exists no Adverse Claim with
respect to the Pledged Collateral.
(d) Exercising of Rights. The exercise by the Bank of its rights and
remedies hereunder will not violate any law or governmental regulation
or any material contractual restriction binding on or affecting
Pledgor or any of its property, provided that the Bank obtains all
necessary Governmental Approvals pursuant to Section 10(e) hereof.
(e) Pledgor’s Authority. No authorization, approval or action by, and no
notice or filing with any Governmental Authority, the issuer of any
Pledged Collateral or third party is required either (i) for the
pledge made by Pledgor or for the granting of the security interest by
Pledgor pursuant to this Pledge Agreement or (ii) for the exercise by
the Bank of its rights and remedies hereunder (except as may be
required by laws affecting the offering and sale of securities).
(f) Security Interest/Priority. This Pledge Agreement creates a
valid security interest in favor of
the Bank for the benefit of the Bank
in the Pledged Collateral. The
taking possession by the Bank of the
certificates (if any) representing
the Pledged Collateral and all other
certificates and instruments
constituting Pledged Collateral will
perfect and establish the first
priority (subject to Permitted
Liens) of the Bank’s security
interest in all certificated Pledged
Collateral and such certificates and
instruments. Pledgor is a
“registered organization”, as that
term is defined in Article 9 of the
UCC, and its name on its signature
line hereto is its exact legal name
as registered in the state of its
organization. Upon the filing of
UCC financing statements in the
appropriate filing office in the
location of Pledgor’s State of
organization, the Bank shall have a
perfected first priority (subject to
Permitted Liens) security interest
in all uncertificated Pledged
Collateral consisting of partnership
or limited liability company
interests that do not constitute a
Security pursuant to Section
8-103(c) of the UCC. With respect
to any Pledged Collateral consisting
of a Securities Entitlement or held
in a Securities Account, upon
execution and delivery by the
Pledgor, the applicable Securities
Intermediary and the Bank of an
agreement granting Control to the
Bank over such Pledged Collateral,
the Bank shall have a perfected
first priority (subject to Permitted
Liens) security interest in such
Pledged Collateral. Except as set
forth in this Section, no action is
necessary to perfect or otherwise
protect such security interest.
(g) No Other Capital Securities. Except as set forth on Exhibit A
attached hereto, Pledgor does not
own any Capital Securities of
Borrower. Exhibit A, hereto, as
revised
or updated from time to time after the date hereof by the Pledgor, as it pertains to
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Pledgor, includes all Foreign Subsidiaries directly owned by Pledgor, and does not include
any Person not directly owned by Pledgor.
6. Covenants. Pledgor hereby covenants that until all of the Obligations have been
performed and paid in full, Pledgor shall:
(a) Defense of Title. Use commercially reasonable efforts to warrant and
defend title to and ownership of the Pledged Collateral at its own
expense against the claims and demands of all other parties claiming
an interest therein, keep the Pledged Collateral free from all Liens,
except for Permitted Liens, and not sell, exchange, transfer, assign,
lease or otherwise dispose of Pledged Collateral or any interest
therein, except as permitted under the Loan Agreement and the other
Loan Documents.
(b) Further Assurances. Promptly execute and deliver at its expense all
further instruments and documents and take all further action that may
be necessary or reasonably desirable or that the Bank may reasonably
request in order to (i) perfect and protect the security interest
created hereby in the Pledged Collateral (including, without
limitation, the authentication and filing of UCC financing statements
and any and all action reasonably necessary to satisfy the Bank that
the Bank has obtained a first priority perfected security interest in
all Pledged Collateral); (ii) enable the Bank to exercise and enforce
its rights and remedies hereunder in respect of the Pledged
Collateral; and (iii) otherwise effect the purposes of this Pledge
Agreement, including, without limitation and if requested by the Bank,
delivering to the Bank irrevocable proxies in respect of the Pledged
Collateral.
(c) Amendments. Not make or consent to any amendment or other modification
or waiver with respect to any of the Pledged Collateral or enter into
any agreement or allow to exist any restriction with respect to any of
the Pledged Collateral other than pursuant hereto or as may be
permitted under the Loan Agreement.
(d) Compliance with Securities Laws. File all reports and other
information now or hereafter
required to be filed by Pledgor
with the United States
Securities and Exchange
Commission and any other state,
federal or foreign agency in
connection with the ownership of
the Pledged Collateral.
7. Performance of Obligations; Advances by Bank. Upon the occurrence and during the
continuance of an Event of Default, on failure of Pledgor to perform any of the covenants and
agreements contained herein, the Bank may, at its sole option and in its reasonable discretion,
perform or cause to be performed the same and in so doing may expend such sums as the Bank may
reasonably deem advisable in the performance thereof, including, without limitation, the payment of
any taxes with respect to the Pledged Collateral, a payment to obtain a release of a Lien or
potential Lien, expenditures made in defending against any adverse claim and all other expenditures
which the Bank may make for the protection of the security hereof or which may be compelled to make
by operation of law. All such sums and amounts so expended shall be repayable by the Pledgor
promptly upon timely notice thereof and demand therefor, shall constitute additional Secured
Obligations and shall bear interest from the date said amounts are
expended at the Default Rate. No such performance of any covenant or agreement by the Bank
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on behalf of Pledgor, and no such advance or expenditure therefor, shall relieve the Pledgor of any
default under the terms of this Pledge Agreement, the other Loan Documents or any Hedging Agreement
between any Obligor and the Bank or affiliate of the Bank. The Bank may make any payment hereby
authorized in accordance with any xxxx, statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry into the accuracy of such xxxx,
statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title
or claim except to the extent such payment is being contested in good faith by Pledgor in
appropriate proceedings and against which adequate reserves are being maintained in accordance with
GAAP.
8. Events of Default. The occurrence of an event which under the Loan Agreement would
constitute an Event of Default shall be an event of default hereunder (an “Event of Default”).
9. Remedies.
(a) General Remedies. Upon the occurrence of an Event of Default and
during the continuation thereof, the Bank shall have, in respect of
the Pledged Collateral, in addition to the rights and remedies
provided herein, in the Loan Documents, in any Hedging Agreement
between any Obligor and the Bank or by law, the rights and remedies of
a secured party under the UCC or any other applicable law.
(b) Sale of Pledged Collateral. Upon the occurrence of an Event of Default
and during the continuation thereof, without limiting the generality
of this Section and without notice, the Bank may, in its reasonable
discretion, sell or otherwise dispose of or realize upon the Pledged
Collateral, or any part thereof, in one or more parcels, at public or
private sale, at any exchange or broker’s board or elsewhere, at such
price or prices and on such other terms as the Bank may deem
commercially reasonable, for cash, credit or for future delivery or
otherwise in accordance with applicable law. To the extent permitted
by law, the Bank may in such event, bid for the purchase of such
securities. Pledgor agrees that, to the extent notice of sale shall be
required by law and has not been waived by Pledgor, any requirement of
reasonable notice shall be met if notice, specifying the place of any
public sale or the time after which any private sale is to be made, is
personally served on or mailed, postage prepaid, to Pledgor, in
accordance with the notice provisions of the Loan Agreement at least
10 days before the time of such sale. The Bank shall not be obligated
to make any sale of Pledged Collateral of Pledgor regardless of notice
of sale having been given. The Bank may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
(c) Private Sale. Upon the occurrence of an Event of Default
and during the continuation thereof, the
Pledgor recognizes that the Bank may deem it
impracticable to effect a public sale of all
or any part of the Pledged Collateral and
that the Bank may, therefore, determine to
make one or more private sales of any such
Pledged Collateral to a restricted group of
purchasers that have agreed, among other
things, to acquire such Pledged Collateral
for their own account, for investment and
not with a view to the distribution or
resale thereof. Pledgor acknowledges that
any such private sale may be at
prices and on terms less favorable to the seller than the prices and other terms which
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might have been obtained at a public sale and, notwithstanding the foregoing, agrees that
such private sale shall be deemed to have been made in a commercially reasonable manner and
that the Bank shall have no obligation to delay sale of any such Pledged Collateral for the
period of time necessary to permit the issuer of such Pledged Collateral to register such
Pledged Collateral for public sale under the Securities Act of 1933. Pledgor further
acknowledges and agrees that any offer to sell such Pledged Collateral which has been (i)
publicly advertised on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of New York, New York (to the extent that such offer
may be advertised without prior registration under the Securities Act of 1933), or (ii)
made privately in the manner described above shall be deemed to involve a “public sale”
under the UCC, notwithstanding that such sale may not constitute a “public offering” under
the Securities Act of 1933, and the Bank may, in such event, bid for the purchase of such
Pledged Collateral.
(d) Retention of Pledged Collateral. In addition to the rights and
remedies hereunder, upon the occurrence of an Event of Default and
during the continuation thereof, the Bank may, after providing the
notices required by Section 9-621 of the UCC (or any successor
sections of the UCC) or otherwise complying with the requirements of
applicable law of the relevant jurisdiction, accept or retain all or
any portion of the Pledged Collateral in full or partial satisfaction
of the Secured Obligations. Unless and until the Bank shall have
provided such notices, however, the Bank shall not be deemed to have
retained any Pledged Collateral in satisfaction of any Secured
Obligations for any reason.
(e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient
to pay all amounts to which the Bank is
legally entitled, the Pledgor shall be
liable for the deficiency, together with
interest thereon at the Default Rate,
together with the costs of collection and
the reasonable fees of any attorneys
employed by the Bank to collect such
deficiency. Any surplus remaining after the
full payment and satisfaction of the Secured
Obligations shall be returned to the Pledgor
or to whomsoever a court of competent
jurisdiction shall determine to be entitled
thereto.
(f) Other Security. To the extent that any of the Secured Obligations are now or
hereafter secured by property other than the Pledged Collateral (including, without
limitation, real and other personal property owned by Pledgor), or by a guarantee,
endorsement or property of any other Person, then the Bank shall have the right to proceed
against such other property, guarantee or endorsement upon the occurrence of any Event of
Default, and the Bank has the right, in its sole discretion, to determine which rights,
security, liens, security interests or remedies the Bank shall at any time pursue,
relinquish, subordinate, modify or take with respect thereto, without in any way modifying
or affecting any of them or any of the Bank’s rights or the Secured Obligations under this
Pledge Agreement, under any other of the Loan Documents or under any Hedging Agreement
between any Obligor and the Bank or an affiliate of the Bank.
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10. Rights of the Bank.
(a) Power of Attorney. In addition to other powers of attorney contained herein,
Pledgor hereby designates and appoints the Bank and each of its designees or agents as
attorney-in-fact of Pledgor, irrevocably and with power of substitution, with authority to
take any or all of the following actions upon the occurrence and during the continuation of
an Event of Default:
(i) to demand, collect, settle, compromise, adjust and give discharges and releases
concerning the Pledged Collateral of Pledgor, all as the Bank may reasonably
determine;
(ii) to commence and prosecute any actions at any court for the purposes of
collecting any of the Pledged Collateral of Pledgor and enforcing any other right
in respect thereof;
(iii) to defend, settle, adjust or compromise any action, suit or proceeding
brought and, in connection therewith, give such discharge or release as the Bank
may deem reasonably appropriate;
(iv) to pay or discharge taxes, liens, security interests, or other encumbrances
levied or placed on or threatened against the Pledged Collateral of Pledgor;
(v) to direct any parties liable for any payment under any of the Pledged
Collateral to make payment of any and all monies due and to become due thereunder
directly to the Bank or as the Bank shall direct;
(vi) to receive payment of and receipt for any and all monies, claims, and other
amounts due and to become due at any time in respect of or arising out of any
Pledged Collateral;
(vii) to sign and endorse any drafts, assignments, proxies, stock powers,
verifications, notices and other documents relating to the Pledged Collateral of
Pledgor;
(viii) to execute and deliver all assignments, conveyances, statements, financing
statements, renewal financing statements, pledge agreements, affidavits, notices
and other agreements, instruments and documents that the Bank may determine
necessary in order to perfect and maintain the security interests and liens granted
in this Pledge Agreement and in order to fully consummate all of the transactions
contemplated herein;
(ix) to exchange any of the Pledged Collateral of Pledgor or other property upon
any merger, consolidation, reorganization, recapitalization or other readjustment
of the issuer thereof and, in connection therewith, deposit any of the Pledged
Collateral of Pledgor with any committee, depository, transfer agent, registrar or
other designated agency upon such terms as the Bank may determine;
(x) to vote for a shareholder, partner or member resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of the
Pledged
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Collateral of Pledgor into the name of the Bank or into the name of any transferee
to whom the Pledged Collateral of Pledgor or any part thereof may be sold pursuant
to Section 9 hereof; and
(xi) to do and perform all such other acts and things as the Bank may reasonably
deem to be necessary, proper or convenient in connection with the Pledged
Collateral.
This power of attorney is a power coupled with an interest and shall be irrevocable until all of
the Secured Obligations have been satisfied in full. The Bank shall be under no duty to exercise or
withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly
granted to the Bank in this Pledge Agreement, and shall not be liable for any failure to do so or
any delay in doing so. The Bank shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or its capacity as
attorney-in-fact except acts or omissions resulting from its gross negligence or willful
misconduct. This power of attorney is conferred on the Bank solely to protect, preserve and realize
upon its security interest in the Pledged Collateral.
(b) Assignment by the Bank. The Bank may from time to time assign the Secured
Obligations or any portion thereof and/or its Lien on the Pledged Collateral or any portion
thereof, and the assignee shall be entitled to all of the rights and remedies of the Bank
under this Pledge Agreement in relation thereto.
(c) The Bank’s Duty of Care. Other than the exercise of reasonable care to ensure
the safe custody of the Pledged Collateral while being held by the Bank hereunder, the Bank
shall have no duty or liability to preserve rights pertaining thereto, it being understood
and agreed that Pledgor shall be responsible for preservation of all rights in the Pledged
Collateral, and the Bank shall be relieved of all responsibility for Pledged Collateral
upon surrendering it or tendering the surrender of it to the Pledgor. The Bank shall be
deemed to have exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if such Pledged Collateral is accorded treatment substantially
equal to that which the Bank accords its own property, which shall be no less than the
treatment employed by a reasonable and prudent agent in the industry, it being understood
that the Bank shall not have responsibility for (i) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other matters relating to
any Pledged Collateral, whether or not the Bank has or is deemed to have knowledge of such
matters; or (ii) taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral.
(d) Voting Rights in Respect of the Pledged Collateral.
(i) Until such time as an Event of Default shall have occurred and be continuing
and the Bank shall have given Pledgor notice thereof, to the extent permitted by
law, Pledgor may exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral of Pledgor or any part thereof for any purpose not
inconsistent with the terms of this Pledge Agreement or the Loan Agreement; and
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(ii) Subject to Subsection (e) of this Section, upon the occurrence and
during the continuance of an Event of Default and notice from Bank to Pledgor, all
rights of Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to paragraph (i) of this Subsection
(d) shall cease and all such rights shall thereupon become vested in the Bank
which shall then have the sole right to exercise such voting and other consensual
rights.
(e) Dividend and Distribution Rights in Respect of the Pledged Collateral.
(i) So long as no Event of Default shall have occurred and be continuing and
subject to Section 4(b) hereof, Pledgor may receive and retain any and all
dividends (other than stock or ownership interest dividends and other dividends
constituting Pledged Collateral which are addressed hereinabove), distributions or
interest paid in respect of the Pledged Collateral to the extent they are allowed
under the Loan Agreement.
(ii) Upon the occurrence and during the continuation of an Event of Default:
(A) all rights of Pledgor to receive the dividends, distributions and
interest payments which it would otherwise be authorized to receive and
retain pursuant to paragraph (i) of this Subsection (e) shall
cease and all such rights shall thereupon be vested in the Bank which
shall then have the sole right to receive and hold as Pledged Collateral
such dividends, distributions and interest payments; and
(B) all dividends, distributions and interest payments which are
received by Pledgor contrary to the provisions of clause (A) of this
paragraph (ii) shall be received in trust for the benefit of the Bank,
shall be segregated from other property or funds of Pledgor, and shall be
forthwith paid over to the Bank as Pledged Collateral in the exact form
received, to be held by the Bank as Pledged Collateral and as further
collateral security for the Secured Obligations.
(f) Release of Pledged Collateral. The Bank may release any of the Pledged
Collateral from this Pledge Agreement or may substitute any of the Pledged Collateral for
other Pledged Collateral without altering, varying or diminishing in any way the force,
effect, lien, pledge or security interest of this Pledge Agreement as to any Pledged
Collateral not expressly released or substituted, and this Pledge Agreement shall continue
as a first priority lien on all Pledged Collateral not expressly released or substituted.
11. Application of Proceeds. Upon the occurrence and during the continuation of an Event of
Default, any payments in respect of the Secured Obligations and any proceeds of any Pledged
Collateral, when received by the Bank in cash or its equivalent, will be applied in reduction of
the Secured Obligations in the order set forth in the Loan Agreement, and Pledgor irrevocably
waives the right to direct the application of such payments and proceeds and acknowledges and
agrees that the Bank shall have the continuing and exclusive right to apply
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and reapply any and all such payments and proceeds in the Bank’s sole discretion, notwithstanding
any entry to the contrary upon any of its books and records.
12. Costs of Counsel. If at any time hereafter, whether upon the occurrence of an Event of
Default or not, the Bank employs counsel to prepare or consider amendments, waivers or consents
with respect to this Pledge Agreement, or to take action or make a response in or with respect to
any legal or arbitral proceeding relating to this Pledge Agreement or relating to the Pledged
Collateral, or to protect the Pledged Collateral or exercise any rights or remedies under this
Pledge Agreement or with respect to the Pledged Collateral, then the Pledgor agrees to promptly pay
in accordance with the Loan Agreement any and all such reasonable documented costs and expenses of
the Bank, all of which costs and expenses shall constitute Secured Obligations hereunder.
13. Continuing Agreement.
(a) This Pledge Agreement shall be a continuing agreement in every respect and shall remain
in full force and effect until all of the Secured Obligations have been satisfied in full.
Upon the occurrence of all of the Secured Obligations being satisfied in full, this Pledge
Agreement shall be automatically terminated and the Bank shall, upon the request and at the
expense of the Pledgor, forthwith release all of its liens and security interests hereunder
and shall execute and deliver all UCC termination statements and/or other documents
reasonably requested by the Pledgor evidencing such termination. Notwithstanding the
foregoing all releases and indemnities provided hereunder shall survive termination of this
Pledge Agreement.
(b) This Pledge Agreement shall continue to be effective or be automatically reinstated, as
the case may be, if at any time payment, in whole or in part, of any of the Secured
Obligations is rescinded or must otherwise be restored or returned by the Bank as a
preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar
law, all as though such payment had not been made; provided that in the event payment of
all or any part of the Secured Obligations is rescinded or must be restored or returned,
all reasonable costs and expenses (including without limitation any reasonable legal fees
and disbursements) incurred by the Bank in defending and enforcing such reinstatement shall
be deemed to be included as a part of the Secured Obligations.
14. Amendments; Waivers; Modifications. This Pledge Agreement and the provisions hereof may
not be amended, waived, modified, changed, discharged or terminated except as set forth in the Loan
Agreement.
15. Successors in Interest. This Pledge Agreement shall create a continuing security
interest in the Pledged Collateral and shall be binding upon Pledgor, its successors and assigns
and shall inure, together with the rights and remedies of the Bank hereunder, to the benefit of the
Bank and its successors and permitted assigns; provided, however, that the Pledgor may not assign
its rights or delegate its duties hereunder without the prior written consent of the Bank, as
required by the Loan Agreement.
16. Notices. All notices required or permitted to be given under this Pledge Agreement
shall be in conformance with the Loan Agreement or the Guaranty, as applicable.
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17. Counterparts. This Pledge Agreement may be executed in any number of counterparts, each
of which where so executed and delivered shall be an original, but all of which shall constitute
one and the same instrument. It shall not be necessary in making proof of this Pledge Agreement to
produce or account for more than one such counterpart.
18. Headings. The headings of the sections and subsections hereof are provided for
convenience only and shall not in any way affect the meaning, construction or interpretation of any
provision of this Pledge Agreement.
19. WAIVER OF DEFENSES. PLEDGOR WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION,
COUNTERCLAIM OR SETOFF WHICH PLEDGOR MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE BANK
IN ENFORCING THIS PLEDGE AGREEMENT. PROVIDED THE BANK ACTS IN GOOD FAITH, PLEDGOR RATIFIES AND
CONFIRMS WHATEVER THE BANK MAY DO PURSUANT TO THE TERMS OF THIS PLEDGE AGREEMENT. THIS PROVISION IS
A MATERIAL INDUCEMENT FOR THE BANK GRANTING ANY FINANCIAL ACCOMMODATION TO THE DEBTOR.
20. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE
BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED THAT NOTHING IN THIS PLEDGE
AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE THE BANK FROM BRINGING SUIT OR TAKING OTHER LEGAL
ACTION IN ANY OTHER JURISDICTION. PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF ILLINOIS
FOR THE PURPOSE OF ANY SUCH LITIGATION, AS SET FORTH ABOVE. THE
PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID,
OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE PLEDGOR HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO
ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
21. WAIVER OF JURY TRIAL. THE BANK AND PLEDGOR, AFTER CONSULTING OR HAVING HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHTS UNDER THIS PLEDGE AGREEMENT, ANY NOTE, ANY OTHER LOAN DOCUMENT, ANY OF THE OTHER
OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN
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CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH THE
BANK AND PLEDGOR ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE
TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK
GRANTING ANY FINANCIAL ACCOMMODATION TO THE PLEDGOR.
22. Severability. If any provision of this Pledge Agreement is determined to be illegal,
invalid or unenforceable, such provision shall be fully severable and the remaining provisions
shall remain in full force and effect and shall be construed without giving effect to the illegal,
invalid or unenforceable provisions.
23. Entirety. This Pledge Agreement, the other Loan Documents and any Hedging Agreement
between any Obligor and the Bank or any affiliate of the Bank represent the entire agreement of the
parties hereto and thereto, and supersede all prior agreements and understandings, oral or written,
if any, including any commitment letters or correspondence relating to this Pledge Agreement, the
other Loan Documents, any such Hedging Agreement, or the transactions contemplated herein and
therein.
24. Survival. All representations and warranties of the Pledgor hereunder shall survive the
execution and delivery of this Pledge Agreement, the other Loan Documents and any Hedging Agreement
between any Obligor and the Bank or any affiliate of the Bank, the delivery of the Notes and the
making of the Loans and the issuance of the Letters of Credit under the Loan Agreement.
25. Marshalling. The Bank shall not be under any obligation to xxxxxxxx any assets in favor
of Pledgor or any other Person or against or in payment of any or all of the Secured Obligations.
26. Subordination and Postponement of Subrogation Rights. Pledgor hereby subordinates any
right of subrogation, indemnity, reimbursement or contribution against the issuer of any Pledged
Collateral or any other Obligor arising on account of any disposition of or other realization on
the Pledged Collateral by the Bank pursuant to Section 9 to the rights and interests of the
Bank in the Pledged Collateral and agrees that it shall not attempt to exercise or realize on any
such rights until all of the Secured Obligations have been satisfied in full.
27. Conflicts. To the extent that any provision of this Pledge Agreement is inconsistent
with or conflicts with any provision of the Loan Agreement, the provision of the Loan Agreement
will control.
Each of the parties hereto has caused a counterpart of this Pledge Agreement to be duly
executed and delivered as of the date first above written.
[Signatures follow on the next page.]
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Execution Copy
| “Pledgor” | ARGYLE SECURITY, INC., a Delaware corporation | |||||||
| By: | /s/ Xxxxxx X. Xxxxxxx | |||||||
| Chief Financial Officer | ||||||||
| “Bank” | THE PRIVATEBANK AND TRUST COMPANY, an Illinois state bank | |||||||
| By: | /s/ Xxxx Xxxxxx | |||||||
EXHIBIT A
Stock Certificate No. 18 representing 119.0064 shares of Common Stock, $1.00 par value, of ISI
Security Group, Inc.
A-1
EXHIBIT B
STOCK POWER
FOR VALUE RECEIVED,
does hereby sell, assign and transfer unto
,
(
) Shares of the
Capital Stock, par value $0.
per share, of
,
a
corporation, represented by Certificate number
, standing in the name of the
undersigned on the books of said Company.
The undersigned does hereby irrevocably constitute and appoint as
attorney to transfer the said stock on the books of said Company, with full power of substitution
in the premises.
Dated: , 200
| By: | ||||||||
| Name: | ||||||||
| Title: | ||||||||
IMPORTANT: The signature to this Power must correspond with the name as written upon the face of
the certificate in every particular without alteration or any change whatever.
B-1
