exv10w2



 







Exhibit 10.2




BERLINER COMMUNICATIONS, INC.




BCI COMMUNICATIONS, INC.

20 Bushes Lane

Elmwood Park, New Jersey 07407




December 29, 2006               




Sigma Opportunity Fund, LLC

c/o Sigma Capital Advisors, LLC

800 Third Avenue

Suite 1701

New York, NY 10022



Re: Security Agreement (“Agreement”)



Gentlemen:




     To secure the payment of our obligations to you pursuant to the Transaction Documents,
including the payment of principal and interest under the senior subordinated secured convertible
promissory note in the principal amount of $3,000,000, dated December 29, 2006, payable to you or
order (the “Note”), and to secure the performance of all obligations in your favor under any of the
Transaction Documents, including any other agreement securing, guaranteeing or otherwise pertaining
to the Note, we hereby grant you a continuing lien and security interest in all our accounts,
inventory, furniture, fixtures, equipment, general intangibles, patents, licenses, investment
property, promissory notes, instruments, documents and tangible and electronic chattel paper, and
all goods represented thereby and all goods that may be reclaimed or repossessed from or returned
by account debtors and all proceeds, products, rents and profits thereof (all as such terms are
defined in the New York State Uniform Commercial Code, as in effect from time to time) and in all
other assets of the undersigned, whether now existing or hereafter acquired (the “Collateral”). All
obligations secured hereby are collectively referred to herein as the “Obligations.” The lien and
security interest granted hereby is junior and subordinate to the lien and security interest
previously and separately granted by us to Presidential Financial Corporation of Delaware Valley
and to a working capital facility proposed to be entered into by us with a working capital lender
approved by you (as applicable, the “Senior Lender”) in a principal amount of up to $10 million
which is secured by all our assets and the proceeds thereof and senior to all of our other
indebtedness.



     We hereby authorize you, at our expense, to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the Collateral without our
signature. A carbon, photographic or other reproduction of this Agreement or any financing
statements covering the Collateral or any part thereof shall be sufficient as a financing statement
where permitted by applicable law.



 









 





     Upon payment or performance in full of all of the Obligations, you will, at our request and
expense, release the security interest granted herein and deliver such termination statements as
may be necessary therefor.



     We hereby warrant to you that (i) we own the Collateral free and clear of all liens,
restrictions and limitations except for Permitted Liens, (ii) this Agreement has been duly
authorized and constitutes our legal, valid and binding obligation enforceable against us in
accordance with its terms; (iii) no authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required either for the grant of a
security interest by us in the Collateral pursuant to this Agreement or for our execution, delivery
or performance of this Agreement or for your exercise of the rights provided for in this Agreement
or the remedies in respect of the Collateral pursuant to this Agreement or the Note; (iv) the grant
of a security interest in the Collateral to you pursuant to this Agreement creates a valid and,
upon filing of the financing statements in the form attached hereto and delivery of the stock
certificate of BCI Communications, Inc. to you evidencing our ownership of BCI, perfected security
interest in your favor in the Collateral (in which a security interest can be perfected by the
filing of a financing statement) securing the payment of the Note and the Obligations junior only
to the Senior Lender; and (v) there are no options, warrants, privileges or other rights
outstanding pursuant to which any of the Collateral may be acquired.



     We also agree that we will not transfer, assign or further encumber any of our rights in any
of the Collateral except pursuant to this Agreement or the Transaction Documents, in favor of the
Senior Lender as set forth above or as you may consent in writing.



     We will take such action and execute such additional documents as you may request in
connection with this Agreement or to enforce your rights hereunder, including, without limitation,
notification of account debtors if an Event of Default occurs. If we fail to take any such action
or execute any such document, we hereby authorize you to do so in our name and on our behalf.



     We hereby represent and warrant to you that there is no action, legal, administrative or other
proceeding pending or threatened against our title to the Collateral or against our grant of a
security interest therein hereunder, nor do we know of any basis for the assertion of any such
claim.



     We covenant with you that so long as any Obligation remains outstanding:




	 	1.	 	Protection of Security and Legal Proceedings. We will, at our own expense, take
any and all actions necessary to preserve, protect and defend your security interest
in the Collateral and the perfection and priority thereof against all adverse
claims, including appearing in and defending any and all actions and proceedings
which purport to affect any of the
foregoing. We will promptly reimburse you for all sums, including costs,
expenses and actual attorneys’ fees, which you may pay or incur in




 









 






	 	 	 	defending,
protecting or enforcing your security interest in the Collateral or perfection or
the priority thereof, or in discharging any prior or subsequent lien or adverse
claim against the Collateral or any part thereof, or by reason of becoming or being
made a party to or intervening in any action or proceeding affecting the Collateral
or your rights therein, all of which actions we hereby agree that you will have the
right to take in your sole and absolute discretion;
	 
	 	2.	 	Payment of Taxes. Except as permitted under the Transaction Documents, we shall pay or
cause to be paid all taxes and other levies with respect to the Collateral when the same become due
and payable;
	 
	 	3.	 	Use and Maintenance of Collateral. We shall: (A) comply with all laws, statutes and
regulations pertaining to our use and ownership of the Collateral and the conduct of our business;
(B) properly care for and maintain all of the Collateral in good condition, free of misuse, abuse,
waste and deterioration, reasonable wear and tear excepted; and (C) keep accurate and complete
books and records pertaining to the Collateral in accordance with generally accepted accounting
principles;
	 
	 	4.	 	Inspection. We shall give you such information as may be requested concerning the
Collateral and shall at all reasonable times and upon reasonable notice permit you and your agents
and representatives to enter upon any premises upon which the Collateral is located for the purpose
of inspecting the Collateral. Furthermore, you shall at all reasonable times on reasonable notice
have full access to and the right to audit any and all of our books and records pertaining to the
Collateral; provided, however, that any such action which involves communicating with our customers
shall be carried out by you through our independent auditors unless an Event of Default (as such
term is defined in the Note) occurs and is continuing, in which case you shall then have the right
directly to notify such obligors; and
	 
	 	5.	 	Sale or Hypothecation of Collateral. We shall not directly or indirectly, whether
voluntarily, involuntarily, by operation of law or otherwise sell, assign, transfer, exchange,
lease, lend, or grant any option with respect to or dispose of any of the Collateral, or any of our
rights therein, nor create or permit to exist any lien on or with respect to any of the Collateral,
except for the lien in favor of you and Permitted Liens or as otherwise permitted under the
Transaction Documents.





     You and your successors and assigns will have all of the rights, powers and privileges of a
secured party under the New York Uniform Commercial Code in force and effect from time to
time with respect to the security interest granted by this Agreement. Upon the occurrence and
during the continuation of any Event of Default under the Note, you may take any action which you
may deem necessary for the maintenance, preservation and protection of any of the



 









 







Collateral or
your security interest therein, and you will retain all of your rights under the New York Uniform
Commercial Code, including, without limitation, the right to transfer any of the Collateral into
your name or the name of your nominee and to sell any of the Collateral at a public or private sale
on such terms as you deem appropriate and the right to foreclose upon the Collateral. To the
extent permitted by applicable law, at any such sale you may be the purchaser.



     You will not be required to resort to or pursue any of your rights or remedies under or with
respect to any other security for or guaranty of payment of any of the obligations secured by this
Agreement before pursuing any of your rights or remedies under this Agreement.



     This Agreement and your rights and obligations hereunder will be governed by and construed in
accordance with the laws of the State of New York. We agree that any legal action or proceeding
with respect to this Agreement may be brought in the courts of the State of New York and of the
United States having jurisdiction in the Borough of Manhattan, City and State of New York and for
the purpose of any such legal action or proceeding, we hereby waive any claim or defense that such
forum is not convenient or proper. We agree that any such court shall have in personam
jurisdiction over us and that service of process may be effected in any manner authorized by New
York law.



     This Agreement will be binding upon our administrators, successors and assigns.



     WE HEREBY WAIVE, AND COVENANT THAT WE WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE SUBJECT MATTER HEREOF, ANY
DOCUMENT RELATING HERETO OR ANY OBLIGATION, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING
OR WHETHER IN CONTRACT OR IN TORT OR OTHERWISE.



     Capitalized terms used herein and not otherwise defined shall have the meaning provided in the
Note Purchase Agreement, dated December 29, 2006, between Berliner Communications, Inc. and Sigma
Opportunity Fund, LLC.



 









 




If the foregoing is acceptable to you, please sign the enclosed copy of this letter in the space
provided below, whereupon this letter will become an agreement between us as of the date first
above written.




	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	BERLINER COMMUNICATIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard B. Berliner
 

	 	 
	 	 	Name: Richard B. Berliner
	 	 
	 	 	Title: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	BCI COMMUNICATIONS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Richard B. Berliner
 

	 	 
	 	 	Name: Richard B. Berliner
	 	 
	 	 	Title: Chief Executive Officer	 	 





AGREED AND ACCEPTED:



SIGMA OPPORTUNITY FUND, LLC



By: SIGMA CAPITAL ADVISORS, LLC




	 	 	 	 	 
	By:

	 	/s/ Thom Waye
 

Name: Thom Waye
	 	 
	 

	 	Title: Managing Partner