Exhibit 10.16


 


ASSIGNMENT AND MODIFICATION AGREEMENT


 


This ASSIGNMENT AND MODIFICATION AGREEMENT
(this “Agreement”) is entered into as of this 20th day of October, 2010, by and
among CASTLEROCK SECURITY HOLDINGS, INC., a Delaware corporation (“Dealer”),
other Credit Parties now or hereafter party hereto, CASTLEROCK SECURITY, INC.,
a Delaware corporation (“Central Station”), and SIEMENS FIRST CAPITAL COMMERCIAL FINANCE, LLC, a Delaware limited
liability company, as agent for
the Lenders (as defined in the Credit Agreement) (“Agent”).


 


Preliminary Statement


 


A.            Central Station and Alarm Funding,
LLC (“Alarm Funding”) entered into that certain Servicing  Agreement dated November 26, 2008, a
true, correct and complete copy of which is attached hereto as Exhibit A
(the “Monitoring Agreement”), pursuant to which Central Station is providing
certain monitoring services to Dealer in connection with certain of Dealer’s
security alarm monitoring contracts with its customers (collectively, the “Subscriber
Contracts”).


 


B.            Alarm Funding has contributed the
Subscriber Contracts and the Monitoring Agreement to Dealer.


 


C.            Pursuant to that certain Credit
Agreement, dated as of May 25, 2007, as amended by that Amendment to
Credit Agreement and Credit Documents, dated as of August 16, 2007, as
further amended by that Amended and Restated Forbearance Agreement and
Amendment to Credit Agreement, dated as of February 16, 2008, as further
amended by that Consent, Limited Waiver and Third Amendment to Credit Agreement
and Credit Documents dated as of the date hereof, entered into among Alarm
Funding and Dealer (collectively, the “Borrower”), Credit Parties now or
hereafter party thereto, Agent and Lenders now or hereafter party thereto (as
the same may be amended, restated, modified, or supplemented, the “Credit
Agreement”), Lenders provide debt financing to Borrower, pursuant to which
Agent on behalf of Lenders has a perfected first lien security interest in all
of the Subscriber Contracts (the “Collateral”).


 


D.            Pursuant to the Credit Agreement,
Dealer has collaterally assigned all of its right, title and interest in and to
the telephone numbers and lines set forth on Exhibit B and all
others hereafter designated for the benefit of Borrower (collectively, the “Telephone
Numbers”) to Agent on behalf of Lenders.


 


E.             Until such time as all of the
Obligations (as defined in the Credit Agreement) under the Credit Agreement
have been paid in full and satisfied, the Credit Agreement terminated in
accordance with its terms, and Lenders have released their security interest in
the Collateral, the parties agree that the Monitoring Agreement shall be
modified as set forth herein.


 


F.             The execution and delivery of this
Agreement is a condition to Lender entering into the Credit Agreement and providing
debt financing and other credit accommodations to the Borrower.


 

















 


NOW, THEREFORE, in consideration of the
foregoing and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:


 


1.             Representations and
Warranties of Dealer and Central Station.  Dealer and Central Station represent and
warrant that the Telephone Numbers are used exclusively by Dealer’s accounts
for the transmission of alarm signals to the Central Station.  Dealer and Central Station represent and
warrant that a true, correct, and complete copy of the Monitoring Agreement is
attached hereto as Exhibit A. 
Dealer and Central Station represent and warrant that, except as
expressly set forth on Schedule 1 attached hereto, no other alarm
company or Central Station accounts are co-mingled with Dealer’s accounts on
the Telephone Numbers.  Dealer represents
and warrants that, except as disclosed on Schedule 1, none of the
equipment installed at the premises of Dealer’s customers is programmed to dial
local telephone numbers or is programmed to dial alternative numbers that
forward to the Telephone Numbers. 
Central Station represents and warrants that:  (a) it is properly licensed in all
jurisdictions where the nature of its business requires it to be licensed;
(b) it carries insurance, in both types and amounts, that would be
generally expected of companies engaged in the provision of central station
monitoring services,  (c) the Qwest
Total Advantage Agreement dated as of February 13, 2007, as amended by
Assignment and Assumption Agreement by and between Security Associates
International Inc and Central Station dated June 7, 2010, and as amended
by Amendment to Qwest Total Advantage Agreement effective as of July 2,
2010 (collectively, the “Qwest Agreement”) is in full force and effect and no
default has occurred and is existing thereunder as of the date hereof, and (d) there
are no Telephone Numbers governed or created by any other agreement other than
the  Qwest Agreement.


 


2.             Control
of Telephone Numbers.  Central Station
hereby collaterally assigns to Agent all of its right, title and interest in
the Telephone Numbers.  All such right,
title and interest will remain so encumbered until such time as all of
Borrowers’ obligations under the Credit Agreement have been indefeasibly paid
in full and the Credit Agreement has been terminated. Notwithstanding anything
contained herein to the contrary, in no event shall the foregoing assignment be
construed to include a collateral 
assignment of the Qwest Agreement if and for so long as such collateral
assignment shall constitute or result in the 
invalidation or unenforceability of any right under, or a default under,
the Qwest Agreement; provided, however, that the Qwest Agreement shall be
deemed collaterally assigned to the Agent at such time as the condition causing
such an invalidation, unenforceability or default shall be remedied, and to the
extent severable, shall immediately act as a collateral assignment of the
Central Station’s interest in the Qwest Agreement.


 


3.             Responsibility for
Payment.  Dealer shall be
responsible for all payments and other obligations owed to Central Station
under the Monitoring Agreement (the “Obligations”).  Agent acknowledges that if Dealer fails to
satisfy the Obligations, and except as otherwise set forth herein, then Central
Station shall be entitled to exercise such rights and remedies afforded to it
under the Monitoring Agreement.  Central
Station agrees:  (a) to notify Agent
in writing within 10 days of Dealer’s payment obligation becoming more than 30
days past due (with a copy sent to Buchanan Ingersoll & Rooney PC, One
Oxford Centre, 301 Grant Street, 20th Floor, Pittsburgh, PA 15219, Attention:
Hugh Van der Veer (“Agent’s Counsel”)) and (b) not to 


 


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exercise any remedies resulting from any non-payment
by Dealer until Dealer’s payment obligation is at least 60 days past due.


 


4.             Monitoring Agreement
and Related Covenants.


 


(a)           Dealer cannot terminate the Monitoring Agreement without
the prior written consent of Agent.  In
the event Dealer is in default under the Monitoring Agreement, Central Station
agrees to give Agent (with a copy to Agent’s Counsel) notice of such default
and a period of 30 days to cure, or cause Dealer to cure, such default.  If an Event of Default exists under the
Credit Agreement, Agent shall be entitled to assume control over the Telephone
Numbers upon written notice to Dealer and the Central Station. The Dealer and
Central Station agree they will not interfere with the Agent’s efforts to
exercise control over the Telephone Numbers and shall cooperate in the transfer
of control to the Agent.  Dealer and
Central Station further agree they will not interfere in any sale or assignment
of the Telephone Numbers approved by Agent and shall cooperate in any such sale
or assignment.  In the event that Agent
assumes control of the Telephone Numbers and/or Subscriber Contracts, including
any assignment of the Telephone Numbers and/or Subscriber Contracts to a third
party, then Central Station shall be required to continue to perform all of its
obligations under the Monitoring Agreement so long as the Agent or such third
party perform the monthly payment obligations pursuant to the Monitoring
Agreement (but not any other obligations of Dealer under the Monitoring
Agreement) which arise after the date the Agent or third party assignee assumes
control of the Telephone Numbers and/or Subscriber Contracts.  For the avoidance of doubt, the Agent or
third party assignee shall not be responsible for any payment obligations under
the Monitoring Agreement which arose prior to the date the Agent or third party
assignee assumed control of the Telephone Numbers and/or Subscriber Contracts.
In the event Agent or third party assignee assumes control over the Telephone
Numbers and/or Subscriber Contracts, Central Station agrees that the term of
the Monitoring Agreement shall become month to month as to Agent or third party
assignee and Agent or such third party assignee shall be liable only for the
negotiated monthly monitoring fees, and Central Station shall waive as to Agent
or third party assignee any rights to be paid early cancellation charges,
termination fees, data transfer fees or similar charges from Agent or such
third party.  This provision shall not
restrict Central Station’s right to pursue Dealer directly for any of these
charges.


 


(b)           In performing services under the Monitoring Agreement,
Central Station has access to certain data relating to the Subscriber
Contracts, such as customer names, customer addresses, telephone numbers,
central station account numbers, emergency contact lists, zone descriptions,
pass codes, signal and customer histories, reporting formats and line card configurations
(collectively, the “Information”). 
Central Station hereby disclaims any and all ownership interest in the
Information.  Central Station agrees to
keep the Information confidential and not use the Information for its own
benefit or for the benefit of any other person or entity other than Dealer,
Agent, Lenders or their successors or assigns. 
In furtherance of the foregoing, Central Station shall not contact any
customer except to perform services under the Monitoring Agreement and will not
otherwise undertake to establish any direct commercial relationship with
customers under the Subscriber Contracts. 
Central Station shall provide Agent with access to the Information as
requested, including providing timely responses to requests for online status
of accounts presented for financing, periodic electronic lists of accounts
being monitored, signals received, and other pertinent information necessary
for managing the 


 


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subscriber relationships and the electronic transfer
to Agent (or its designee or third party assignee) of any and all Information
held by Central Station.  There will be
no additional fees related to providing the Information to Agent.  The provisions of this Section shall
survive the termination of the Monitoring Agreement.


 


(c)           Central Station will provide Agent (with a copy to Agent’s
Counsel) with 60 days’ prior written notice of the expiration or termination of
the Monitoring Agreement.  At no time
shall Agent have any obligations under the Monitoring Agreement other than as
expressly set forth in this Agreement. 
This Agreement amends and modifies the Monitoring Agreement. Except as
hereby amended and modified, the Monitoring Agreement shall remain in full
force and effect, and all parties hereby affirm the Monitoring Agreement (and
all of their respective obligations, covenants, representations and warranties
contained therein) as amended hereby.


 


(d)           Dealer hereby authorizes and directs Central Station, and
Central Station hereby agrees, to deliver to Agent at the same time as Central
Station delivers to Dealer a duplicate set of all the reports and notices
required to be delivered to Dealer by Central Station under the Monitoring
Agreement.


 


(e)           Dealer and Central Station acknowledge that Dealer cannot
transfer the Telephone Numbers and cause them to communicate with another
central station without Agent’s prior written approval.


 


(f)            Central Station hereby agrees to permit any of the
officers, authorized employees, or representatives of Agent to visit and
inspect any of its properties and to examine and make excerpts from its books
and records and discuss its business affairs, finances, and accounts with
Central Station’s officers, all in such detail and at such times during normal
business hours and as often as Agent may reasonably request, provided
that Agent shall provide Central Station with reasonable notice prior to any
visit or inspection.


 


5.             General Terms and
Conditions.


 


(a)           There shall be no amendments, extensions, or modifications
to the terms and provisions of this Agreement or the Monitoring Agreement,
without the prior written consent of all the parties hereto.


 


(b)           This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns.


 


(c)           Except as expressly provided herein, neither this
Agreement nor any rights hereunder may be assigned or transferred by Dealer or
Central Station without the prior written consent of Agent.


 


(d)           The validity, interpretation and performance of this
Agreement shall, pursuant to New York General Obligations Law
Section 5-1401, be construed in accordance with the laws of the State of
New York.


 


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(e)           TO THE FULL EXTENT PERMITTED BY LAW, THE PARTIES WAIVE ANY
RIGHT TO A JURY TRIAL.


 


(f)            In the event of any conflict between this Agreement and
the Monitoring Agreement, the provisions of this Agreement shall control.


 


(g)           Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.


 


(h)           All notices, requests, demands, directions and other
communications (as used in this Section 5, collectively referred to
as “notices”) given to or made upon any party hereto under the provisions of
this Agreement shall be by telephone or in writing (including facsimile
communication) unless otherwise expressly permitted hereunder and shall be
delivered or sent by facsimile, electronic transmission  or via nationally-recognized overnight
courier, by hand or U.S. mail to the respective parties at the addresses and
numbers set forth on the signature page hereto or in accordance with any
subsequent unrevoked written direction from any party to the others.  All notices shall, except as otherwise
expressly herein provided, be effective (a) in the case of facsimile or
electronic transmission, upon telephone or further electronic transmission from
recipient acknowledging receipt (whether automatic or manual from recipient),
as applicable, (b) in the case of hand-delivered notice, when
hand-delivered, (c) if given by registered or certified mail, return
receipt requested, on the date on which such is received as indicated in such
return receipt and (d) if given by nationally recognized overnight
courier, 1 business day after deposit with such courier; provided, that
notices to the Agent shall not be effective until received.


 


(i)            This Agreement may be executed in multiple counterparts
and by the different parties hereto in separate counterparts each of which,
when so executed, shall be deemed an original, but all such counterparts shall
constitute one and the same instrument.


 


[SIGNATURE PAGES FOLLOW]


 


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[SIGNATURE PAGE 1 OF 2 OF ASSIGNMENT AND MODIFICATION
AGREEMENT]


 


 


IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first written.


 


	
  ALARM FUNDING, LLC,

  	
  CASTLEROCK SECURITY, INC.,

  
	
  a Delaware limited
  liability company

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
  By:

  	
  / s /    Westin Lovy

  	
   

  	
  By:

  	
  / s /    Brian E. Johnson

  
	
   

  	
  Westin Lovy, Managing
  Director

  	
   

  	
  Brian E. Johnson, President

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for notices:

  	
  Address for notices:

  
	
   

  	
   

  
	
  800 Connecticut Avenue,
  Suite E-403

  	
  2101 S. Arlington Heights
  Road, Suite 150

  
	
  Norwalk, CT 06854

  	
  Arlington
  Heights, Illinois 60005

  
	
  Attention: Westin H. Lovy

  	
  Attention: Brian E.
  Johnson

  
	
  Telephone: 203-656-4846

  	
  Telephone: 847-956-2929

  
	
  Telecopy:   203-656-1994

  	
  Telecopy: 847-890-6688

  
					



 

















 


[SIGNATURE PAGE 2 OF 2 OF ASSIGNMENT AND MODIFICATION
AGREEMENT]


 


 


	
   

  	
  SIEMENS
  FIRST CAPITAL COMMERCIAL 

  
	
   

  	
  FINANCE,
  LLC, as Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s /     Anthony Casciano

  
	
   

  	
  Name:
  Anthony Casciano

  
	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  and

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s /     Matthew R. Begley

  
	
   

  	
  Name:
  Matthew R. Begley

  
	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address
  for notices:

  3520 N.W. 58th Street

  Oklahoma City, OK 73112

  Attention: Lee Elmore, Senior Vice President

  Telephone:  405-917-1135

  Telecopy:  405-917-9660

  



 

















 


EXHIBIT A


 


MONITORING AGREEMENT


 


 


See attached.


 

















 


EXHIBIT B


 


TELEPHONE NUMBERS


 


	
  CS

  Software

  	
   

  	
  Receiver

  ID

  	
   

  	
  Receiver

  Type

  	
   

  	
  Primary

  Rec#

  	
   

  	
  Secondary

  Rec#

  	
   

  	
  Phone

  Carrier

  	
   

  	
  Number of

  Active

  Accts.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 

















 


SCHEDULE I


 


Exceptions to Representations