Document:

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 RepresentationsExhibit 10.17

 

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (the “Agreement”), dated as of October 20, 2010, is
entered into by and between CASTLEROCK SECURITY HOLDINGS, INC., a Delaware
corporation (“NewCo”), and SIEMENS FIRST CAPITAL COMMERCIAL FINANCE, LLC, a
Delaware limited liability company, as Agent (the “Agent”), for the Lenders (as
that term is defined below).

 

WITNESSETH THAT:

 

WHEREAS,
NewCo is (or will be with respect to after-acquired property) the legal and
beneficial owner and holder of the Collateral (as that term is defined in
Section 1); and

 

WHEREAS,
pursuant to that certain Credit Agreement dated as of May 25, 2007, as
amended (as the same may be further amended, restated, modified, or
supplemented from time to time, the “Credit Agreement”) by and among Agent,
NewCo, Alarm Funding, LLC, a Delaware limited liability company (“Alarm Funding”,
and together with NewCo, “Borrower”) and Lenders now or hereafter party thereto
(“Lenders”), Agent and Lenders have agreed to make certain loans to Borrower;

 

WHEREAS
pursuant to the terms of that certain Borrower Joinder and Assumption Agreement
dated as of the date hereof, NewCo has become a Borrower party under the Credit
Agreement, and

 

WHEREAS,
the obligation of Agent and Lenders to make loans and other accommodations
under the Credit Agreement is subject to the condition, among others, that
NewCo secure its obligations to Agent and Lenders under the Credit Documents
and otherwise as more fully described herein in the manner set forth herein.

 

NOW,
THEREFORE, intending to be legally bound, the parties covenant and agree as
follows:

 

1.                                       Terms which are
defined in the Credit Agreement and not otherwise defined herein are used
herein as defined therein.  The rules of
construction set forth in Section 1.2 [Construction] of the Credit
Agreement shall apply to this Agreement. 
The following words and terms shall have the following meanings,
respectively, unless the context hereof otherwise clearly requires:

 

(a)           “Code” means the Uniform Commercial Code as in effect in
the State of New York on the date hereof and as amended from time to time,
except to the extent that the conflict of law rules of such Uniform
Commercial Code shall apply the Uniform Commercial Code as in effect from time
to time in any other state to specific property or other matters.

 

 

(b)           “Collateral” means all of NewCo’s right, title and
interest in, to and under the following described property of NewCo (each
capitalized term used in this Section 1(b) shall have in this
Agreement the meaning given to it by the Code):

 

(i)            all now existing and hereafter acquired or arising
Accounts, Goods, General Intangibles, Payment Intangibles, Deposit Accounts,
Chattel Paper (including Electronic Chattel Paper), Documents, Instruments,
Software, Investment Property, Letters of Credit, Letter of Credit Rights,
advices of credit, money, Commercial Tort Claims as listed on Schedule B
(as such Schedule is amended or supplemented from time to time), Equipment and
Inventory, Fixtures and Supporting Obligations, together with all products of
and Accessions to any of the foregoing and all Proceeds of any of the foregoing
(including all insurance policies and proceeds thereof);

 

(ii)           to the extent, if any, not included in clause (i), each
and every other item of personal property and fixtures, whether now existing or
hereafter arising or acquired, including all licenses, contracts and
agreements, and all collateral for the payment or performance of any contract
or agreement, together with all products and Proceeds (including all insurance
policies and proceeds) of any Accessions to any of the foregoing; and

 

(iii)          all present and future business records and information,
including computer tapes and other storage media containing the same and
computer programs and software (including source code, object code and related
manuals and documentation and all licenses to use such software) for accessing
and manipulating such information.

 

(c)           “Secured Obligations” shall mean and include the
following:  (i) all now existing and
hereafter arising Obligations of NewCo to Agent, Lenders, or any of their
respective Affiliates or subsidiaries, under the Credit Documents, including
all obligations, liabilities and indebtedness, whether for principal, interest,
fees, expenses or otherwise, now existing or hereafter incurred under any
Credit Document, together with any and all extensions, renewals, refinancings
and refundings thereof in whole or in part (and including obligations,
liabilities and indebtedness arising or accruing after the commencement of any
Insolvency Proceeding with respect to NewCo or which would have arisen or
accrued but for the commencement of such proceeding, even if the claim for such
obligation, liability or indebtedness is not enforceable or allowable in such proceeding,
and including all obligations, liabilities and indebtedness arising from any
extensions of credit under or in connection with the Credit Documents from time
to time, regardless of whether any such extensions of credit are in excess of
the amount committed under or contemplated by the Credit Documents or are made
in circumstances in which any condition to extension of credit is not
satisfied); and (ii) any sums advanced by Agent or Lenders or which may
otherwise become due pursuant to the provisions of any Credit Document or
pursuant to any other document or instrument at any time delivered to Agent in
connection therewith, including origination, annual, agent or other fees and
charges, and indemnification obligations under any such document or instrument,
together with all interest payable on any of the foregoing, whether such sums
are advanced or otherwise become due before or after the entry of any judgment
for foreclosure or any judgment on any Credit Document or with respect to any
default  under any of the Secured
Obligations.

 

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(d)           “Receivables” means all of the Collateral, except Goods,
Software, Fixtures, Equipment and Inventory.

 

2.             As
security for the due and punctual payment and performance of the Secured
Obligations in full, NewCo hereby agrees that Agent and Lenders shall have, and
NewCo hereby grants to and creates in favor of Agent for the benefit of itself,
and Lenders, a continuing first priority Lien on and security interest under
the Code in and to the Collateral, subject only to Permitted Liens.  Without limiting the generality of
Section 4, NewCo further agrees that with respect to each item of
Collateral as to which:  (a) the
creation of a valid and enforceable security interest is not governed
exclusively by the Code or (b) the perfection of a valid and enforceable
first priority security interest therein under the Code cannot be accomplished
either by Agent taking possession thereof or by the filing in appropriate locations
of appropriate Code financing statements executed by NewCo, NewCo will at its
expense execute and deliver to Agent and hereby does authorize Agent to execute
and file such documents, agreements, notices, assignments and instruments and
take such further actions as may be requested by Agent from time to time for
the purpose of creating a valid and perfected first priority Lien on such item,
subject only to Permitted Liens, enforceable against NewCo and all third
parties to secure the Secured Obligations.

 

3.             NewCo
represents and warrants to Agent and Lenders that:  (a) NewCo has good and marketable title
to the Collateral, (b) except for the security interest granted to and
created in favor of Agent for the benefit of itself and the Lenders hereunder
and Permitted Liens, all the Collateral is free and clear of any Lien,
(c) NewCo will defend the Collateral against all claims and demands of all
Persons at any time claiming the same or any interest therein, (d) each
Account is genuine and enforceable in accordance with its terms and NewCo will
defend the same against all claims, demands, recoupment, setoffs and
counterclaims at any time asserted, provided, however, NewCo
shall be permitted to negotiate and settle claims with respect to Accounts and
Payment Intangibles so long as such settlement is conducted in the ordinary
course of business consistent with NewCo’s customary past practices, no Event
of Default has occurred and is continuing and such actions are not prohibited
by the Credit Agreement, (e) at the time any Account becomes subject to
this Agreement, each such Account will be a good and valid Account representing
a bona fide sale of goods or services by NewCo and such goods will have been
shipped to the respective account debtors or the services will have been
performed for the respective account debtor or shall be rendered as required in
connection therewith, (or for those on behalf of whom the account debtors are
obligated on the Accounts) and no such Account will at such time be subject to
any claim for credit, allowance, setoff, recoupment, defense, counterclaim or
adjustment by any account debtor or otherwise, except as otherwise expressly
permitted under the Credit Agreement, (f) the exact legal name of NewCo is
as set forth on the signature page, (g) the state of incorporation,
formation or organization as applicable, of NewCo is as set forth on Schedule A,
and (h) Schedule C contains a complete listing of all of NewCo’s
trade names, patent applications, patents, trademark applications, trademarks
and copyrights that are subject to registration statutes.

 

4.             NewCo
will faithfully preserve and protect Agent’s security interest in the
Collateral as a prior perfected security interest under the Code, superior and
prior to the rights of all third Persons, except for holders of Permitted
Liens, and will do all such other acts and things and 

 

3

 

will, upon request therefor by Agent, execute,
deliver, file and record, and NewCo hereby authorizes Agent to so file, all
such other documents and instruments, including financing statements, security
agreements, assignments and documents and powers of attorney with respect to
the Collateral, and pay all filing fees and taxes related thereto, as Agent in
its reasonable discretion may deem necessary or advisable from time to time in
order to attach, continue, preserve, perfect and protect said security interest
(including the filing at any time or times after the date hereof of financing
statements under, and in the locations advisable pursuant to, the Code); and
NewCo hereby irrevocably appoints Agent, its officers, employees and agents, or
any of them, as attorneys-in-fact for NewCo for the purpose of executing,
delivering, filing and recording such items for NewCo and in NewCo’s name,
place and stead.  This power of attorney,
being coupled with an interest, shall be irrevocable for the life of this
Agreement.

 

5.             NewCo
covenants and agrees that:

 

(a)           it will defend Agent’s and Lenders’ right, title and lien
on and security interest in and to the Collateral and the proceeds thereof
against the claims and demands of all Persons whomsoever, other than any Person
claiming a right in the Collateral pursuant to an agreement between such Person
and Agent;

 

(b)           it will not suffer or permit to exist on any Collateral
any Lien except for Permitted Liens;

 

(c)           it will not take or omit to take any action, the taking or
the omission of which might result in a material alteration (except as
permitted by the Credit Agreement) or impairment of the Collateral or of Agent’s
rights under this Agreement;

 

(d)           it will not sell, assign or otherwise dispose of any
portion of the Collateral except as permitted in Section 7.2.7
[Disposition of Assets or Subsidiaries] of the Credit Agreement;

 

(e)           it will: 
(i) except for such Collateral delivered to Agent pursuant to this Section or
otherwise now or hereafter under the control of Agent, obtain and maintain sole
and exclusive possession of the Collateral, (ii) maintain its chief
executive office and keep the Collateral and all records pertaining thereto at
the locations specified on the Security Interest Data Summary attached as Schedule A,
unless it shall have given Agent prior written notice and taken any action
reasonably requested by Agent to maintain its security interest therein,
(iii) notify Agent if an Account becomes evidenced or secured by an
Instrument or Chattel Paper and deliver to Agent upon Agent’s request therefor
all Collateral consisting of Instruments and Chattel Paper immediately upon
NewCo’s receipt of a request therefor, (iv) deliver to Agent possession of
all Collateral the possession of which is required to perfect Agent’s lien
thereon or security interest therein or the possession of which grants priority
over a Person filing a financing statement with respect thereto,
(v) execute control agreements and cause other Persons to execute
acknowledgments in form and substance satisfactory to agent evidencing Agent’s
control with respect to all Collateral the control or acknowledgment of which
perfects Agent’s security interest therein, including Electronic Chattel Paper,
Deposit Accounts and Investment Property, and 

 

4

 

(vi) keep materially accurate and complete
books and records concerning the Collateral and such other books and records as
Agent may from time to time reasonably require;

 

(f)            it will promptly furnish to Agent such information and
documents relating to the Collateral as Agent may reasonably request, including
all invoices, Documents, contracts, Chattel Paper, Instruments and other
writings pertaining to NewCo’s contracts or the performance thereof, all of the
foregoing to be certified upon request of Agent by an authorized officer of
such NewCo;

 

(g)           it shall immediately notify Agent if any Account arises
out of contracts with the United States or any department, agency or
instrumentality thereof or any one or more of the states of the United States
or any department, agency or instrumentality thereof, and will execute any instruments
and take any steps required by Agent so that all monies due and to become due
under such contract shall be assigned to Agent and notice of the assignment
given to and acknowledged by the appropriate government agency or authority
under the Federal Assignment of Claims Act;

 

(h)           NewCo will not change its state of incorporation,
formation or organization, as applicable, without obtaining Agent’s advance
consent;

 

(i)            NewCo will not change its name without providing 30 days
prior written notice to Agent;

 

(j)            NewCo shall preserve its corporate existence and shall
not:  (i) in one, or a series of
related transactions, merge into or consolidate with any other entity, the
survivor of which is not NewCo, or (ii) sell all or substantially all of
its assets;

 

(k)           if NewCo shall at any time acquire a commercial tort
claim, as defined in the Code, NewCo shall immediately notify Agent in a
writing signed by NewCo of the details thereof and grant to Agent for the
benefit of Lenders in such writing a security interest therein and in the
proceeds thereof, with such writing to be in form and substance satisfactory to
Agent and such writing shall constitute a supplement to Schedule B;

 

(l)            NewCo hereby authorizes Agent to, at any time and from
time to time, file in any one or more jurisdictions financing statements that
describe the Collateral, together with continuation statements thereof and
amendments thereto, without the signature of NewCo and which contain any
information required by the Code or any other applicable statute applicable to
such jurisdiction for the sufficiency or filing office acceptance of any
financing statements, continuation statements, or amendments.  NewCo agrees to furnish any such information
to Agent promptly upon request.  Any such
financing statements, continuation statements or amendments may be signed by
Agent on behalf of NewCo if Agent so elects and may be filed at any time in any
jurisdiction; and

 

(m)          NewCo shall at any time and from time to time take such
steps as Agent may reasonably request as are necessary for Agent to insure the
continued perfection of Agent’s 

 

5

 

and Lenders’ security interest in the Collateral
with the same priority required hereby and the preservation of its rights
therein.

 

6.             NewCo
assumes full responsibility for taking any and all necessary steps to preserve
Agent’s and Lenders’ rights with respect to the Collateral against all Persons
other than anyone asserting rights in respect of a Permitted Lien.  Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if Agent takes such action for that purpose as NewCo shall request
in writing, provided that such requested action will not, in the sole judgment
of Agent, impair the security interest in the Collateral created hereby or
Agent’s and Lenders’ rights in, or the value of, the Collateral, and provided
further that such written request is received by Agent in sufficient time
to permit Agent to take the requested action.

 

7.             The
pledge, security interests and other Liens and the obligations of NewCo
hereunder shall not be discharged or impaired or otherwise diminished by any
failure, default, omission or delay, willful or otherwise, by Agent, or any
other obligor on any of the Secured Obligations, or by any other act or thing
or omission or delay to do any other act or thing which may or might in any
manner or to any extent vary the risk of NewCo or which would otherwise operate
as a discharge of NewCo as a matter of law or equity.  Without limiting the generality of the
foregoing, NewCo hereby consents to, and the pledge, security interests and
other Liens given by NewCo hereunder shall not, to the extent permitted by Law,
be diminished, terminated or otherwise similarly affected by any of the
following at any time and from time to time:

 

(a)           Any lack of genuineness, legality, validity,
enforceability or allowability (in any Insolvency Proceeding), or any avoidance
or subordination, in whole or in part, of any Credit Document or any of the
Secured Obligations and regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of the Secured
Obligations, any of the terms of the Credit Documents, or any rights of Agent
or any other Person with respect thereto;

 

(b)           Any increase, decrease or change in the amount, nature,
type or purpose of any of the Secured Obligations (whether or not contemplated
by the Credit Documents as presently constituted); any change in the time,
manner, method or place of payment or performance of, or in any other term of,
any of the Secured Obligations; any execution or delivery of any additional
Credit Documents; or any amendment, modification or supplement to, or
refinancing or refunding of, any Credit Document or any of the Secured
Obligations;

 

(c)           Any failure to assert any breach of or default under any
Credit Document or any of the Secured Obligations; any extensions of credit in
excess of the amount committed under or contemplated by the Credit Documents,
or in circumstances in which any condition to such extensions of credit has not
been satisfied; any other exercise or non-exercise, or any other failure,
omission, breach, default, delay or wrongful action in connection with any exercise
or non-exercise, of any right or remedy against NewCo or any other Person under
or in connection with any Credit Document or any of the Secured Obligations;
any refusal of payment or performance of any of the Secured Obligations,
whether or not with any reservation of rights against NewCo; or any application
of collections (including collections resulting from realization 

 

6

 

upon any direct or indirect security for the Secured
Obligations) to other obligations, if any, not entitled to the benefits of this
Agreement, in preference to Secured Obligations or, if any collections are
applied to Secured Obligations, any application to particular Secured
Obligations;

 

(d)           Any taking, exchange, amendment, modification, supplement,
termination, subordination, release, loss or impairment of, or any failure to
protect, perfect or preserve the value of, or any enforcement of, realization
upon, or exercise of rights or remedies under or in connection with, or any failure,
omission, breach, default, delay or wrongful action by Agent or any other
Person in connection with the enforcement of, realization upon, or exercise of
rights or remedies under or in connection with, or, any other action or
inaction by Agent or any other Person in respect of, any direct or indirect
security for any of the Secured Obligations (including the Collateral).  As used in this Agreement, “direct or
indirect security” for the Secured Obligations, and similar phrases, includes
any collateral security, guaranty, suretyship, letter of credit, capital
maintenance agreement, put option, subordination agreement or other right or
arrangement of any nature providing direct or indirect assurance of payment or
performance of any of the Secured Obligations, made by or on behalf of any
Person;

 

(e)           Any merger, consolidation, liquidation, dissolution,
winding-up, charter revocation or forfeiture, or other change in, restructuring
or termination of the corporate structure or existence of, NewCo or any other
Person; any Insolvency Proceeding with respect to NewCo or any other Person; or
any action taken or election (including any election under Section 1111(b)(2) of
the United States Bankruptcy Code or any comparable law of any jurisdiction)
made by Agent or NewCo or by any other Person in connection with any such
proceeding;

 

(f)            Any defense, setoff or counterclaim which may at any time
be available to or be asserted by NewCo or any other Person with respect to any
Credit Document or any of the Secured Obligations; or any discharge by
operation of law or release of NewCo or any other Person from the performance
or observance of any Credit Document or any of the Secured Obligations; and

 

(g)           Any other event or circumstance, whether similar or
dissimilar to the foregoing, and whether known or unknown, which might
otherwise constitute a defense available to, or limit the liability of a
guarantor or a surety, including NewCo, excepting only full, strict and
indefeasible payment and performance of the Secured Obligations in full and
irrevocable termination of the Commitments and the Credit Agreement.

 

8.             To
the full extent permitted by law, NewCo hereby waives any and all defenses
which NewCo may now or hereafter have based on principles of suretyship,
impairment of collateral or the like and NewCo hereby waives any defense to or
limitation on its obligations under this Agreement arising out of or based on
any event or circumstance referred to in the immediately preceding section
hereof.  Without limiting the generality
of the foregoing and to the fullest extent permitted by applicable law, NewCo
hereby further waives each of the following:

 

(a)           All notices, disclosures and demands of any nature which
otherwise might be required from time to time to preserve intact any rights
against NewCo, including the 

 

7

 

following: 
any notice of any event or circumstance described in the immediately
preceding section hereof; any notice required by any law, regulation or order
now or hereafter in effect in any jurisdiction; any notice of nonpayment,
nonperformance, dishonor or protest under any Credit Document or any of the
Secured Obligations; any notice of the incurrence of any Secured Obligations;
any notice of any default or any failure on the part of NewCo or any other
Person to comply with any Credit Document or any of the Secured Obligations or
any requirement pertaining to any direct or indirect security for any of the
Secured Obligations; and any notice or other information pertaining to the
business, operations, condition (financial or otherwise) or prospects of NewCo
or any other Person;

 

(b)           Any right to any marshalling of assets, to the filing of
any claim against such NewCo  or NewCo or
any other Person in the event of Insolvency Proceeding, or to the exercise
against NewCo or any other Person of any other right or remedy under or in
connection with any Credit Document or any of the Secured Obligations or any
direct or indirect security for any of the Secured Obligations; any requirement
of promptness or diligence on the part of Agent or any other Person; any
requirement to exhaust any remedies under or in connection with, or to mitigate
the damages resulting from default under, any Credit Document or any of the
Secured Obligations or any direct or indirect security for any of the Secured
Obligations; any benefit of any statute of limitations; and any requirement of
acceptance of this Agreement or any other Credit Document, and any requirement
that NewCo receive notice of any such acceptance; and

 

(c)           Any defense or other right arising by reason of any Law
now or hereafter in effect in any jurisdiction pertaining to election of
remedies (including anti-deficiency laws, “one action” laws, or the like), or
by reason of any election of remedies or other action or inaction by Agent
(including commencement or completion of any judicial proceeding or nonjudicial
sale or other action in respect of collateral security for any of the Secured
Obligations), which results in denial or impairment of the right of Agent to
seek a deficiency against NewCo or any other Person or which otherwise
discharges or impairs any of the Secured Obligations.

 

9.             NewCo
hereby waives to the full extent permitted by law any defense it may otherwise
have to the payment and performance of the Obligations that its liability
hereunder is limited.  NewCo acknowledges
and agrees that the foregoing waivers serve as a material inducement to the
agreement of Agent and Lenders to make the Revolving Credit Loans, and that
Agent and Lenders are relying on each specific waiver and all such waivers in
entering into this Agreement.  The
undertakings of NewCo hereunder secure the obligations of itself.  Each Lender and Agent hereby reserve all
rights against NewCo.

 

10.           (a)           At any time and from time to time
whether or not an Event of Default then exists and without prior notice to or
consent of NewCo, Agent may at its option take such actions as Agent reasonably
deems appropriate:  (i) to attach,
perfect, continue, preserve and protect Agent’s and Lenders’ first priority
security interest in or Lien on the Collateral, and/or (ii) to inspect,
audit and verify the Collateral, including reviewing all of NewCo’s books and
records, and copying and making excerpts therefrom, provided that prior
to an Event of Default or a Potential Default, the same is done pursuant to Section 7.1.6
[Visitation Rights] of the Credit Agreement to the extent access to NewCo’s
premises is required, and (iii) to add all liabilities, obligations, costs
and expenses reasonably incurred in connection with the foregoing clauses (i) and
(ii) to the Secured 

 

8

 

Obligations, to be paid by NewCo to Agent for the
benefit of Agent and Lenders upon demand; and

 

(b)           At any time and from time to time after an Event of
Default exists and is continuing and without prior notice to or consent of
NewCo, Agent may at its option take such action as Agent deems
appropriate:  (i) to maintain,
repair, protect and insure the Collateral, and/or (ii) to perform, keep,
observe and render true and correct any and all covenants, agreements,
representations and warranties of NewCo hereunder, and (iii) to add all
liabilities, obligations, costs and expenses reasonably incurred in connection
with the foregoing clauses (i) and (ii) to the Secured Obligations,
to be paid by NewCo to Agent for the benefit of Agent and Lenders upon demand.

 

11.           After
there exists any Event of Default under the Credit Agreement:

 

(a)           Agent shall have and may exercise all the rights and
remedies available to a secured party under the Code in effect at the time, and
such other rights and remedies as may be provided by Law and as set forth
below, including to take over and collect all of NewCo’s Receivables and all
other Collateral, and to this end, NewCo hereby appoints Agent, Agent’s
officers, employees and agents, as NewCo’s irrevocable, true and lawful
attorney-in-fact with all necessary power and authority to:  (i) take possession immediately, with or
without notice, demand, or legal process, of any of or all of the Collateral
wherever found, and for such purposes, enter upon any premises upon which the
Collateral may be found and remove the Collateral therefrom, (ii) require
NewCo to assemble the Collateral and deliver it to Agent or to any place
designated by Agent at NewCo’s expense, (iii) receive, open and dispose of
all mail addressed to NewCo and notify postal authorities to change the address
for delivery thereof to such address as Agent may designate, (iv) demand
payment of the Receivables, (v) enforce payment of the Receivables by
legal proceedings or otherwise, (vi) exercise all of NewCo’s rights and
remedies with respect to the collection of the Receivables, (vii) settle,
adjust, compromise, extend or renew the Receivables, (viii) settle, adjust
or compromise any legal proceedings brought to collect the Receivables,
(ix) to the extent permitted by applicable Law, sell or assign the
Receivables upon such terms, for such amounts and at such time or times as Agent
deems advisable, (x) discharge and release the Receivables, (xi) take
control, in any manner, of any item of payment or proceeds from any account
debtor, (xii) prepare, file and sign NewCo’s name on any Proof of Claim in
Bankruptcy or similar document against any account debtor, (xiii) prepare,
file and sign NewCo’s name on any notice of Lien, assignment or satisfaction of
Lien or similar document in connection with the Receivables, (xiv) do all
acts and things necessary, in Agent’s sole discretion, to fulfill NewCo’s
obligations to Agent or Lenders under the Credit Documents or otherwise,
(xv) endorse the name of NewCo upon any check, Chattel Paper, Document, Instrument,
invoice, freight bill, bill of lading or similar document or agreement relating
to the Receivables or Inventory; (xvi) use NewCo’s stationery and sign
NewCo’s name to verifications of the Receivables and notices thereof to account
debtors; (xvii) access and use the information recorded on or contained in
any data processing equipment or computer hardware or software relating to the
Receivables, Inventory, or other Collateral or proceeds thereof to which
NewCo has access, (xviii) demand, sue for, collect, compromise and give
acquittances for any and all Collateral, (xix) prosecute, defend or
compromise any action, claim or proceeding with respect to any of the
Collateral, and (xx) take such other action as Agent may deem appropriate,
including 

 

9

 

extending or modifying the terms of payment of NewCo’s
debtors.  This power of attorney, being
coupled with an interest, shall be irrevocable for the life of this
Agreement.  To the extent permitted by
Law, NewCo hereby waives all claims of damages due to or arising from or
connected with any of the rights or remedies exercised by Agent pursuant to
this Agreement, except claims for physical damage to the Collateral arising
from gross negligence or willful misconduct by Agent.

 

(b)           Agent shall have the right to lease, sell or otherwise
dispose of all or any of the Collateral at public or private sale or sales for
cash, credit or any combination thereof, with such notice as may be required by
Law (it being agreed by NewCo that, in the absence of any contrary requirement
of Law, 10 days’ prior notice of a public or private sale of Collateral shall
be deemed reasonable notice), in lots or in bulk, for cash or on credit, all as
Agent, in its sole discretion, may deem advisable.  Such sales may be adjourned from time to time
with or without notice.  Agent shall have
the right to conduct such sales on NewCo’s premises or elsewhere and shall have
the right to use NewCo’s premises without charge for such sales for such time
or times as Agent may see fit.  Agent may
purchase all or any part of the Collateral at public or, if permitted by Law,
private sale and, in lieu of actual payment of such purchase price, may set off
the amount of such price against the Secured Obligations.

 

(c)           NewCo, at its cost and expense (including the cost and
expense of any of the following referenced consents, approvals etc.) will
promptly execute and deliver or cause the execution and delivery of all
applications, certificates, instruments, registration statements and all other
documents and papers Agent may request in connection with the obtaining of any
consent, approval, registration, qualification, permit, license, accreditation
or authorization of any other Official Body or other Person necessary or
appropriate for the effective exercise of any rights hereunder or under the
other Credit Documents.  Without limiting
the generality of the foregoing, NewCo agrees that in the event Agent on behalf
of itself and/or Lenders shall exercise its rights hereunder or pursuant to the
other Credit Documents, to sell, transfer or otherwise dispose of, or vote,
consent, operate or take any other action in connection with any of the
Collateral, NewCo shall execute and deliver (or cause to be executed and
delivered) all applications, certificates, assignments and other documents that
Agent requests to facilitate such actions and shall otherwise promptly, fully,
and diligently cooperate with Agent and any other Persons in making any
application for the prior consent or approval of any Official Body or any other
Person to the exercise by Agent on behalf of itself and/or Lenders or any such
rights relating to all or any of the Collateral.  Furthermore, because NewCo agrees that the
remedies at law, of Agent on behalf of itself and/or Lenders, for failure of
NewCo to comply with this Subsection (c) would be inadequate, and that any
such failure would not be adequately compensable in damages, NewCo agrees that
this Subsection (c) may be specifically enforced.

 

(d)           Agent may request, without limiting the rights and
remedies of Agent on behalf of itself and Lenders otherwise provided hereunder
and under the other Credit Documents, that NewCo give Agent on behalf of
itself and Lenders specific assignments of the accounts receivable of NewCo
after such accounts receivable come into existence, and schedules of such accounts
receivable, the form and content of such assignment and schedules to be
satisfactory to Agent.

 

10

 

 

 

12.           The
Lien on the Collateral granted to and created in favor of Agent by this
Agreement shall be for the benefit of Agent and Lenders.  Each of the rights, privileges and remedies
provided to Agent hereunder or otherwise by Law with respect to NewCo’s Collateral
shall be exercised by Agent only for its own benefit and the benefit of
Lenders, and any of NewCo’s Collateral or proceeds thereof held or realized
upon at any time by Agent shall be applied as set forth in Section 8.2.5
[Application of Proceeds; Collateral Sharing] of the Credit Agreement.  NewCo shall remain liable to Agent and
Lenders for and shall pay to Agent for the benefit of itself and Lenders any
deficiency which may remain after such sale or collection.

 

13.           If
Agent repossesses or seeks to repossess any of the Collateral pursuant to the
terms hereof because of the occurrence of an Event of Default, then to the
extent it is commercially reasonable for Agent to store any Collateral on NewCo’s
premises, NewCo hereby agrees to lease to Agent on a month-to-month tenancy for
a period not to exceed 120 days at Agent’s election, at a rental of $1.00 per
month, the premises on which the Collateral is located, provided it is located
on premises owned or leased by NewCo.

 

14.           Upon
indefeasible payment in full of the Secured Obligations and the termination of
the Revolving Credit Commitments and the Credit Agreement, this Agreement shall
terminate and be of no further force and effect, and Agent shall thereupon
promptly return to NewCo such of the Collateral and such other documents
delivered by NewCo hereunder as may then be in Agent’s possession, subject to
the rights of third parties.  Until such
time, however, this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.

 

15.           No
failure or delay on the part of Agent in exercising any right, remedy, power or
privilege hereunder shall operate as a waiver thereof or of any other right,
remedy, power or privilege of Agent hereunder; nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.  No waiver of a single Event
of Default shall be deemed a waiver of a subsequent Event of Default.  All waivers under this Agreement must be in
writing.  The rights and remedies of
Agent under this Agreement are cumulative and in addition to any rights or
remedies which Agent may otherwise have, and Agent may enforce any one or more
remedies hereunder successively or concurrently at its option.

 

16.           All
notices, statements, requests and demands given to or made upon any party in
accordance with the provisions of this Agreement shall be given or made as
provided in Section 10.6 [Notices] of the Credit Agreement.

 

17.           NewCo
agrees that as of the date hereof, all information contained on the Security
Interest Data Schedule attached as Schedule A is accurate and
complete and contains no omission or misrepresentation.  NewCo shall promptly notify Agent of any
changes in the information set forth thereon.

 

18.           NewCo
acknowledges that the provisions hereof giving Agent rights of access to books,
records and information concerning the Collateral and NewCo’s operations and
providing Agent access to NewCo’s premises are intended to afford Agent with
immediate access to current 

 

11

 

information concerning NewCo and its activities,
including the value, nature and location of the Collateral so that Agent can,
among other things, make an appropriate determination after the occurrence of
an Event of Default, whether and when to exercise its other remedies hereunder
and at Law, including instituting a replevin action should NewCo refuse to turn
over any Collateral to Agent.  NewCo
further acknowledges that should NewCo at any time fail to promptly provide
such information and access to Agent, NewCo acknowledges that Agent would have
no adequate remedy at Law to promptly obtain the same.  NewCo agrees that the provisions hereof may
be specifically enforced by Agent and waives any claim or defense in any such
action or proceeding that Agent has an adequate remedy at Law.

 

19.           This
Agreement shall be binding upon and inure to the benefit of Agent, Lenders and
their respective successors and assigns, and NewCo and its successors and
assigns, except that NewCo may not assign or transfer NewCo’s obligations
hereunder or any interest herein.

 

20.           This
Agreement shall be deemed to be a contract under the laws of the State of New
York and shall, pursuant to New York General Obligations Law 5-1401, for all
purposes be governed by and construed and enforced in accordance with the laws
of the State of New York.

 

21.           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.

 

22.           NewCo
hereby irrevocably submits to the nonexclusive jurisdiction of any New York
State or Federal Court sitting in New York, New York, in any action or
proceeding arising out of or relating to this Agreement, and NewCo hereby
irrevocably agrees that all claims in respect of such action or proceeding may
be heard and determined in such New York State or Federal court.  NewCo hereby waives to the fullest extent it
may effectively do so, the defense of an inconvenient forum to the maintenance
of any such action or proceeding.  NewCo
hereby appoints the process agent identified below (the “Process Agent”) as its
agent to receive on its behalf and its respective property service of copies of
the summons and complaint and any other process which may be served in any
action or proceeding.  Such service may
be made by mailing or delivering a copy of such process to NewCo in care of the
Process Agent at the Process Agent’s address, and NewCo hereby authorizes and
directs the Process Agent to receive such service on its behalf.  NewCo agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions (or any political subdivision thereof) by suit on the judgment or
in any other manner provided by law. 
NewCo further agrees that it shall, for so long as any Commitment or any
obligation of any Credit Party to Lender remains outstanding, continue to
retain Process Agent for the purposes set forth in this Section 22.  The Process Agent is Borrower’s Managing
Director, with an office on the date hereof at 800 Connecticut Avenue, Suite
E-403, Norwalk, CT 06854.  NewCo shall
produce to Agent evidence of the acceptance by Process Agent of such
appointment.

 

23.           EXCEPT
AS PROHIBITED BY LAW, NEWCO HEREBY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY A
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER,
OR IN CONNECTION WITH THIS 

 

12

 

AGREEMENT OR ANY OTHER DOCUMENTS OR TRANSACTIONS RELATING
THERETO.

 

24.           This
Agreement may be executed in any number of 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.  NewCo acknowledges and
agrees that a telecopy or other electronic transmission to Agent or any Lender
of the signature pages hereof purporting to be signed on behalf of NewCo shall
constitute effective and binding execution and delivery hereof by NewCo.

 

 

[SIGNATURE PAGE FOLLOWS]

 

13

 

[SIGNATURE PAGE 1 OF 1 TO SECURITY AGREEMENT]

 

IN
WITNESS WHEREOF, the parties hereto, by their officers thereunto duly
authorized, have caused this Agreement to be executed and delivered as of the
day and year first above set forth.

 

	
   

  	
  CASTLEROCK
  SECURITY HOLDINGS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Brian E. Johnson

  	
  (SEAL)

  
	
   

  	
   

  	
  Brian
  E. Johnson, President

  	
   

  

 

 

	
   

  	
  SIEMENS
  FIRST CAPITAL COMMERCIAL

  
	
   

  	
  FINANCE,
  LLC, as Agent

  

 

 

	
   

  	
  By:

  	
  /s/
  Anthony Casciano

  
	
   

  	
  Name:

  	
  Anthony
  Casciano

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  

 

 

SCHEDULE A

TO

SECURITY AGREEMENT

 

SECURITY INTEREST DATA SUMMARY

 

1.                                       The chief
executive office of NewCo is located at:

 

2101 S. Arlington Heights Road, Suite 150

Arlington Heights, Illinois 60005

 

2.                                       NewCo’s true
and full name is as follows:  CastleRock
Security Holdings, Inc. NewCo uses the following trade names and/or fictitious
names: None.

 

3.                                       NewCo’s form of
organization is as follows:  Corporation.

 

4.                                       NewCo’s state
of organization is as follows:  Delaware.

 

5.                                       NewCo’s EIN #
is as follows:  27-3640588.

 

6.                                       NewCo’s
organization ID # with the Delaware Secretary of State is as follows:  4850818.

 

7.                                       All of NewCo’s
personal property which has not been delivered to Agent pursuant to the terms
of this Agreement or the Credit Agreement is now, and will be at all future
times, located at NewCo’s chief executive office as described in
Paragraph 1.

 

8.                                       All of NewCo’s
books and records, including those relating to accounts payable and accounts
receivable, are kept at NewCo’s chief executive office as described in
Paragraph 1.

 

 

SCHEDULE B

TO

SECURITY AGREEMENT

 

 

COMMERCIAL TORT CLAIMS

 

None.

 

 

SCHEDULE C

TO

SECURITY AGREEMENT

 

LIST OF REGISTERED PATENTS, TRADEMARKS,

TRADE NAMES AND COPYRIGHTS

 

	
  1.

  	
  Registered
  Patents:

  	
  None.

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Trademarks:

  	
  None.

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Trade
  Names:

  	
  None.

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Copyrights:

  	
  None

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