Document:

Exhibit 10.18

 

PLEDGE AGREEMENT

 

THIS
PLEDGE AGREEMENT (the “Agreement”), dated as of October 20, 2010, is given
by Alarm Funding, LLC, a Delaware limited liability company (“Pledgor”), the
owner of the equity interests in CastleRock Security Holdings, Inc., a
Delaware corporation (“Company”) as more fully described on Schedule A,
and SIEMENS FIRST CAPITAL COMMERCIAL FINANCE, LLC, a Delaware limited liability
company, as agent for Lenders (“Secured Party” or “Agent”).

 

WHEREAS,
pursuant to that certain Credit Agreement dated as of May 25, 2007, as
amended, by and among Pledgor, (Pledgor, together with Company pursuant to the
terms of that certain Borrower Joinder and Assumption Agreement of Company
dated as of the date hereof, “Borrower”), lenders now or hereafter party
thereto (“Lenders”), and Secured Party (as further amended, restated, modified,
or supplemented from time to time, the “Credit Agreement”), Secured Party and
Lenders agreed to provide certain loans and other financial accommodations to Borrower;

 

WHEREAS,
pursuant to and in consideration of the Credit Agreement, all of the issued and
outstanding and other ownership interests (collectively, “Ownership Interests”)
of Pledgor in Company are to be pledged to Secured Party in accordance
herewith;

 

WHEREAS,
Pledgor  owns the issued and outstanding
Ownership Interests of Company as set forth on Schedule A; and

 

WHEREAS,
as a condition to induce Secured Party and Lenders to continue the Loans under
the Credit Agreement, waive certain Events of Default and consent to the
acquisition of Company by Borrower, Pledgor hereby makes this Agreement in
favor of Secured Party, for the benefit of Lenders.

 

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

 

1.            Defined Terms.

 

(a)           Except
as otherwise expressly provided herein, capitalized terms used in this
Agreement shall have the respective meanings assigned to them in the Credit
Agreement.  Where applicable and except
as otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in Article 8
and Article 9 of the Uniform Commercial Code as enacted in New York as
amended from time to time (the “Code”). 
As used herein, “including” is not a word of limitation and means “including
without limitation”; “hereof,” “herein,” and words of similar import refer to
this Agreement as a whole; and, the plural includes the singular and vice versa.

 

(b)           “Pledged
Collateral” shall mean and include the following:  (i) the Ownership Interests listed on Schedule A,
all other Ownership Interests in Company owned or held by Pledgor at any time
and any and all other Ownership Interests hereafter pledged by Pledgor to
Secured Party, and (ii) all rights and privileges pertaining thereto, including
all voting and other consensual rights, present and future dividends,
distributions, and other Ownership 

 

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Interests
receivable in respect of or in exchange for any of the foregoing, all present
and future rights under operating agreements, and other similar agreements
relating to Company, all present and future rights to subscribe for Ownership
Interests incident to or arising from ownership of any of the foregoing
together with all present and future cash, interest, stock and other dividends
or distributions paid or payable on any of the foregoing, and all present and
future books and records (whether paper, electronic or any other medium)
pertaining to any of the foregoing, including all stock record and transfer
books, and (iii) whatever is received when any of the foregoing is sold,
exchanged, replaced or otherwise disposed of, including all proceeds, as such
term is defined in the Code.

 

(c)           “Debt”
shall mean and include the following: 
(i) all now existing and hereafter arising Obligations of Borrower
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 Borrower 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 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 or owing to Agent or Lenders for any reason relating to any Credit
Document, or any collateral relating thereto, 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, including for
indemnification, for maintenance, preservation, protection or  enforcement of, or realization upon, the
Pledged Collateral or other collateral security or any one or more guaranties,
and for enforcement, collection or preservation of the rights of Secured Party,
and regardless whether before or after default or the entry of any judgment.

 

2.            Grant of Security Interests.

 

(a)           To
secure the payment and performance of all Debt, in full when due, whether at
stated maturity, by acceleration or otherwise, Pledgor hereby grants to Secured
Party a first priority security interest in and hereby pledges to Agent, in
each case for the benefit of each Lender and Agent and any Affiliate of any
Lender, all of Pledgor’s now existing and hereafter acquired or arising right,
title and interest in, to and under the Pledged Collateral whether now or
hereafter existing and wherever located.

 

(b)           Upon
the execution and delivery of this Agreement, Pledgor shall deliver to and
deposit with Secured Party (or with a Person designated by Secured Party to
hold the Pledged Collateral on behalf of Secured Party) in pledge, all stock,
partnership, member and ownership certificates and other instruments evidencing
the Pledged Collateral owned by 

 

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Pledgor,
together with undated transfer powers in form and substance satisfactory to
Secured Party, signed in blank by Pledgor.

 

3.            Further Assurances.

 

Prior
to or concurrently with the execution of this Agreement, and thereafter at any
time and from time to time upon reasonable request of Secured Party, Pledgor
shall execute and deliver to Secured Party all financing statements,
continuation financing statements, assignments, certificates and documents of
title, affidavits, reports, notices, schedules of account, letters of
authority, further pledges, powers of attorney and all other documents
(collectively, the “Security Documents”) which Secured Party may reasonably
request, in form  reasonably satisfactory to
Secured Party, and take such other action which Secured Party may reasonably
request, to perfect and continue perfected and to create and maintain the first
priority status of Secured Party’s security interest in the Pledged Collateral
and to fully consummate the transactions contemplated under this
Agreement.  Pledgor agrees that Secured
Party may record any one or more financing, continuation or amendment
statements pursuant to the Code in all jurisdictions in which such filing is
deemed by the Secured Party to be necessary or desirable to perfect, preserve
and protect its Liens with respect to the pledge and security interest herein
granted.  Pledgor hereby irrevocably
makes, constitutes and appoints Secured Party (and any of Secured Party’s
officers or employees or agents designated by Secured Party) as Pledgor’s true
and lawful attorney with the power to (i) sign the name of Pledgor on all
or any documents, instruments and books and records which Secured Party
determines must be executed, filed, recorded, registered or sent in order to
perfect or continue perfected Secured Party’s security interest in the Pledged
Collateral in any jurisdiction and to exercise any or all of its rights and
remedies under this Agreement; and (ii) subject to Pledgor’s rights set
forth in Section 20 hereof, vote any right or interest with respect to the
Pledged Collateral.  Such power, being
coupled with an interest, is irrevocable until all of the Debt has been paid in
full and the Credit Agreement has terminated.

 

4.            Representations and Warranties.

 

Pledgor
hereby represents and warrants to Secured Party as follows:

 

(a)           The
Pledged Collateral does not include Margin Stock.  “Margin Stock” shall have the meaning
ascribed to such term by Regulation U of the Board of Governors of the Federal
Reserve System of the United States;

 

(b)           Pledgor
has and will continue to have (or, in the case of after-acquired Pledged
Collateral, at the time Pledgor acquires rights in such Pledged Collateral,
will have and will continue to have) title to its Pledged Collateral, free and
clear of all Liens, and is and will be, the sole holder of record and
beneficial owner of the Pledged Collateral;

 

(c)           The
Ownership Interests constituting the Pledged Collateral have been duly
authorized and validly issued to Pledgor (as set forth on Schedule A)
and are fully paid and nonassessable;

 

(d)           The
Liens in the Pledged Collateral of Pledgor granted hereunder are valid,
perfected and of first priority, subject to the Lien of no other Person;

 

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(e)           Other
than those restrictions applicable to the Pledged Collateral pursuant to that
certain Contribution Agreement and that certain Right of First Refusal
Agreement, both dated September 24, 2010, there are no restrictions upon
the transfer of the Pledged Collateral of Pledgor and Pledgor has the power and
authority, and unencumbered right to transfer the Pledged Collateral owned by
Pledgor free of any Lien and without the necessity of obtaining the consent of
any other Person;

 

(f)            Pledgor
has all necessary power to execute, deliver and perform this Agreement;

 

(g)           There
are no actions, suits or proceedings pending or, to Pledgor’s best knowledge
after due inquiry, threatened against or affecting Pledgor with respect to
Pledgor’s Pledged Collateral, at law or in equity or before or by any Official
Body, and Pledgor is not in default with respect to any judgment, writ,
injunction, decree, rule or regulation which could adversely affect
Pledgor’s performance hereunder;

 

(h)           This
Agreement has been duly executed and delivered and constitutes the valid and
legally binding obligation of Pledgor, enforceable in accordance with its
terms, except to the extent that enforceability of this Agreement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar Laws affecting the enforceability of creditors’ rights generally
or limiting the right of specific performance;

 

(i)            Neither the execution or delivery by Pledgor of this
Agreement nor the compliance with the terms and provisions hereof will violate
any provision of any Law or conflict with or result in a breach of any of the
terms, conditions or provisions of any judgment, order, injunction, decree or
ruling of any Official Body to which Pledgor or any of its property is subject
or any provision of any agreement, understanding or arrangement to which
Pledgor is a party or by which Pledgor or any of its property is bound;

 

(j)            Pledgor’s
exact legal name is as set forth on the signature page;

 

(k)           If
applicable, the jurisdiction of incorporation or organization of Pledgor is as
set forth on Schedule A; and

 

(l)            All
rights of Pledgor in connection with its ownership of Company are evidenced and
governed solely by the ownership certificates and Organizational Documents of
Company, and no voting or other similar agreements are applicable to any of the
Pledged Collateral or any of Pledgor’s rights with respect thereto; and, the
Organizational Documents of Company contain no restrictions on the rights of
the stockholders thereof other than those that normally would apply to a
company organized under the laws of the jurisdiction of organization of
Company.

 

5.            General Covenants.

 

Pledgor
hereby covenants and agrees as follows:

 

(a)           Pledgor
shall do all reasonable acts that may be necessary and appropriate to maintain,
preserve and protect the Pledged Collateral of Pledgor; Pledgor shall be
responsible 

 

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for
the risk or loss of, damage to, or destruction of the Pledged Collateral owned
by Pledgor, unless such loss is the result of the gross negligence or willful
misconduct of Secured Party or a breach of Section 8 by Secured
Party.  Pledgor shall not change its
jurisdiction of organization or merge with or into any entity without the prior
written consent of Secured Party;

 

(b)           Pledgor
shall appear in and defend any action or proceeding of which Pledgor is aware
which could reasonably be expected to affect Pledgor’s title to, or Secured
Party’s interest in, the Pledged Collateral or the proceeds thereof; provided,
however, that with the prior written consent of Secured Party, Pledgor
may settle such actions or proceedings with respect to the Pledged Collateral,
which consent of Secured Party shall not be unreasonably withheld or delayed;

 

(c)           Pledgor
shall, and shall cause Company to, keep separate, accurate and complete records
of the Pledged Collateral of Pledgor, disclosing Secured Party’s Lien
hereunder;

 

(d)           Pledgor
shall comply with all Laws applicable to the Pledged Collateral of Pledgor
unless any noncompliance would not individually or in the aggregate materially
impair the use or value of the Pledged Collateral of Pledgor or Secured Party’s
rights hereunder;

 

(e)           Pledgor
shall pay any and all taxes, duties, fees or imposts of any nature imposed by
any Official Body on any of the Pledged Collateral of Pledgor, except to the
extent contested in good faith by appropriate proceedings;

 

(f)            Pledgor
shall permit Secured Party, its officers, employees and agents at reasonable
times to inspect all books and records related to the Pledged Collateral of
Pledgor;

 

(g)           To
the extent, following the date hereof, Pledgor acquires other Ownership
Interests of Company or any of the rights, property or other Ownership
Interests described in the definition of Pledged Collateral with respect to
Company, all such rights, property or Ownership Interests shall be subject to
the terms hereof and, upon such acquisition, shall be deemed to be hereby
pledged to Secured Party; and, Pledgor thereupon, in confirmation thereof,
shall deliver all such Ownership Interests together with an updated Schedule A,
to Secured Party;

 

(h)           Except
as expressly permitted by the Credit Agreement, during the term of this
Agreement, Pledgor shall not sell, assign, replace, retire, transfer or
otherwise dispose of Pledgor’s Pledged Collateral; and

 

(i)            Except
as expressly permitted by the Credit Agreement in connection with the Equity
Raise and/or the Equity Incentive Issuance, during the term of this Agreement,
Pledgor shall not permit Company to issue any certificated ownership interest
whatsoever, unless such interest is issued to Pledgor and delivered to Secured
Party in accordance with the terms of this Agreement, or treat any
uncertificated ownership interests as securities which are subject to Article 8
of the Code.

 

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6.            Other Rights With Respect to Pledged Collateral.

 

(a)           In
addition to the other rights with respect to the Pledged Collateral granted to
Secured Party hereunder, at any time and from time to time, after and during
the continuation of an Event of Default, Secured Party (personally or through
an agent), at the expense of Pledgor, is hereby authorized and empowered to
(i) transfer and register in its name or in the name of its nominee the
whole or any part of the Pledged Collateral, (ii) exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations, (iii) exercise voting and
all other rights as a holder with respect thereto, (iv) collect and
receive all dividends and other payments and distributions made thereon,
(v) notify the parties obligated on any of the Pledged Collateral to make
payment to Secured Party of any amounts due or to become due thereunder,
(vi) endorse instruments in the name of Pledgor to allow collection of any
of the Pledged Collateral, (vii) enforce collection of any of the Pledged
Collateral by suit or otherwise, and surrender, release or exchange all or any
part thereof, or compromise or renew for any period (whether or not longer than
the original period) any liabilities of any nature of any Person with respect
thereto, (viii) sell in one or more sales after ten (10) days’ notice
of the time and place of any public sale or of the time after which a private
sale is to take place (which notice Pledgor agrees is commercially reasonable)
the whole or any part of the Pledged Collateral, (ix) otherwise act with
respect to the Pledged Collateral as though Secured Party was the outright
owner thereof, and (x) exercise any other rights or remedies Secured Party
may have under the UCC or other applicable law. 
Any sale shall be made at a public or private sale at Secured Party’s
place of business, or at any place to be named in the notice of sale, either
for cash or upon credit or for future delivery at such price as Secured Party
may deem fair, and Secured Party may be the purchaser of the whole or any part
of the Pledged Collateral so sold and hold the same thereafter in its own right
free from any claim of any Pledgor or any right of redemption.  Each such sale shall be made to the highest
bidder, but Secured Party reserves the right to reject any and all bids at such
sale which, in its reasonable discretion, it shall deem inadequate.  Secured Party reserves the right to withdraw
all or any part of the Pledged Collateral from such sale, or cancel or postpone
such sale for any reason whatsoever. 
Demands of performance, except as otherwise herein specifically provided
for, notices of sale, advertisements and the presence of property at sale are
hereby waived and any sale hereunder may be conducted by an auctioneer or any
officer or agent of Secured Party. 
PLEDGOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS SECURED PARTY AS THE
PROXY AND ATTORNEY-IN-FACT FOR PLEDGOR WITH RESPECT TO THE PLEDGED COLLATERAL, INCLUDING,
DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, (I) THE RIGHT TO TRANSFER
AND REGISTER IN ITS NAME OR IN THE NAME OF ITS NOMINEE ON THE BOOKS OF THE
COMPANY, THE WHOLE OR ANY PART OF THE PLEDGED COLLATERAL, (II) THE
RIGHT TO VOTE THE OWNERSHIP INTERESTS, WITH FULL POWER OF SUBSTITUTION TO DO
SO, (III) THE RIGHT TO RECEIVE AND COLLECT ANY DIVIDEND OR OTHER PAYMENT
OR DISTRIBUTION IN RESPECT OF OR IN EXCHANGE FOR THE PLEDGED COLLATERAL OR ANY
PORTION THEREOF, TO GIVE FULL DISCHARGE FOR THE SAME AND TO ENDORSE ANY
INSTRUMENT MADE PAYABLE TO SUCH PLEDGOR FOR SAME, (IV) THE RIGHT TO
EXERCISE ALL OTHER RIGHTS, POWERS, PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF
THE PLEDGED COLLATERAL WOULD BE ENTITLED (INCLUDING, WITH RESPECT TO THE OWNERSHIP
INTERESTS, GIVING OR WITHHOLDING WRITTEN CONSENTS 

 

6

 

OF
STOCKHOLDERS, CALLING SPECIAL MEETINGS OF STOCKHOLDERS AND VOTING AT SUCH
MEETINGS), AND (V) THE RIGHT TO TAKE ANY ACTION AND TO EXECUTE ANY INSTRUMENT
WHICH LENDER MAY DEEM NECESSARY OR ADVISABLE TO ACCOMPLISH THE PURPOSES OF
THIS AGREEMENT.  THE APPOINTMENT OF
SECURED PARTY AS PROXY AND ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND
SHALL BE VALID AND IRREVOCABLE UNTIL (X)  THE SECURED OBLIGATIONS HAVE
BEEN PAID IN FULL IN ACCORDANCE WITH THE PROVISIONS OF THE CREDIT AGREEMENT AND
ANY OTHER RELATED AGREEMENTS OR ANY OTHER GOVERNING DOCUMENTATION, AS
APPLICABLE, AND (Y) THE SECURED PARTY HAS NO FURTHER OBLIGATIONS UNDER THE
CREDIT AGREEMENT, ANY OTHER RELATED AGREEMENTS OR ANY OTHER DOCUMENTS.  SUCH APPOINTMENT OF SECURED PARTY AS PROXY
AND ATTORNEY-IN-FACT SHALL BE VALID AND IRREVOCABLE AS PROVIDED HEREIN
NOTWITHSTANDING ANY LIMITATIONS TO THE CONTRARY SET FORTH IN THE OPERATING
AGREEMENT OR OTHER ORGANIZATIONAL DOCUMENTS OF THE RELEVANT ENTITIES.

 

(b)           Upon
exercise of the proxy set forth herein, all prior proxies given by any Pledgor
with respect to any of the Pledged Collateral or any of the Ownership
Interests, as applicable (other than to Secured Party or otherwise under the
Credit Agreement) are hereby revoked, and no subsequent proxies (other than to
Secured Party or otherwise under the Credit Agreement) will be given with
respect to any of the Pledged Collateral or any of the Ownership Interests, as
applicable.  Secured Party, as proxy,
will be empowered and may exercise the irrevocable proxy to vote the Pledged
Collateral and/or the Ownership Interests at any and all times, including, but
not limited to, at any meeting of shareholders, partners or members, as the
case may be, however called, and at any adjournment thereof, or in any action
by written consent, and may waive any notice otherwise required in connection
therewith.  To the fullest extent permitted
by applicable law, Secured Party shall have no agency, fiduciary or other
implied duties to any Credit Party or any other party when acting in its
capacity as such proxy or attorney-in-fact. 
To the extent permitted by applicable law, Pledgor hereby waives and
releases any claims that it may otherwise have against Secured Party with
respect to any breach or alleged breach of any such agency, fiduciary or other
duty.  Notwithstanding the foregoing
appointment of Secured Party as proxy and attorney-in-fact, Secured Party shall
have no duty to exercise any such right or to preserve the same and shall not
be liable for any failure to do so or for any delay in doing so.

 

(c)           Pledgor
agrees to the maximum extent permitted by applicable law that after and during
the continuation of an Event of Default it will not at any time plead, claim or
take the benefit of any appraisal, valuation, stay, extension, moratorium or
redemption law now or hereafter in force except for a defense that no Event of
Default has occurred in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of the Pledged
Collateral or the possession thereof by any purchaser at any sale hereunder,
and Pledgor waives the benefit of all such laws to the extent it lawfully may
do so. Pledgor agrees that it will not interfere with any right, power and
remedy of Secured Party provided for in this Agreement or now or hereafter
existing at law or in equity or by statute or otherwise, or the exercise or
beginning of the exercise by Secured Party of any one or more of such rights,
powers or remedies except for a defense that no Event of Default has occurred.
No failure or delay on 

 

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the
part of Secured Party to exercise any such right, power or remedy and no notice
or demand which may be given to or made upon Pledgor by Secured Party with
respect to any such remedies shall operate as a waiver thereof, or limit or
impair Secured Party’s right to take any action or to exercise any power or
remedy hereunder, without notice or demand, or prejudice its rights as against
Pledgor in any respect.

 

(d)           Pledgor
further agrees that a breach of any of the covenants contained in this Section 6
will cause irreparable injury to Secured Party, that Secured Party shall have
no adequate remedy at law in respect of such breach and, as a consequence,
agrees that each and every covenant contained in this Section 6
shall be specifically enforceable against Pledgor, and to the extent permitted
by applicable law, Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that the secured obligations under the Credit Agreement are not then
due and payable.

 

7.            Additional Remedies Upon Event of Default.

 

Upon
the occurrence of any Event of Default and while such Event of Default shall be
continuing, Secured Party shall have, in addition to all rights and remedies of
a secured party under the Code or other applicable Law, and in addition to its
rights under Section 6 and under the other Credit Documents, the following
rights and remedies:

 

(a)           Secured
Party may, after 10 days’ advance notice to Pledgor, sell, assign, give an
option or options to purchase or otherwise dispose of Pledgor’s Pledged Collateral
or any part thereof at public or private sale, at any of Secured Party’s
offices or elsewhere, for cash, on credit or for future delivery, and upon such
other terms as Secured Party may deem commercially reasonable.  Pledgor agrees that 10 days’ advance notice
of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification.  Secured Party shall not be obligated to make
any sale of Pledged Collateral regardless of notice of sale having been
given.  Secured Party may adjourn any
public or private sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be made at the time
and place to which it was so adjourned. 
Pledgor recognizes that Secured Party may be compelled to resort to one
or more private sales of the Pledged Collateral to a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
Ownership Interests for their own account for investment and not with a view to
the distribution or resale thereof; and

 

(b)           The
proceeds of any collection, sale or other disposition of the Pledged
Collateral, or any part thereof, shall, after Secured Party has made all
deductions of reasonable expenses, including attorneys’ fees and other expenses
incurred in connection with repossession, collection, sale or disposition of
such Pledged Collateral or in connection with the enforcement of Secured Party’s
rights with respect to the Pledged Collateral, including in any Insolvency
Proceeding, be applied against the Debt, whether or not all the same be then
due and payable, as follows:

 

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(i)            first,
to the Debt and to reimburse Secured Party for reasonable out-of-pocket costs,
expenses and disbursements, including reasonable attorneys’ fees and legal
expenses, incurred by Secured Party in connection with realizing on the Pledged
Collateral or collection of any obligation of Pledgor under any of the Credit
Documents, including advances made subsequent to an Event of Default by Secured
Party for the reasonable maintenance, preservation, protection or enforcement
of, or realization upon, the Pledged Collateral, including advances for taxes,
insurance and the like, and reasonable expenses incurred to sell or otherwise
realize on, or prepare for sale of or other realization on, any of the Pledged
Collateral, in such order as Secured Party may determine in its discretion; and

 

(ii)           the
balance, if any, as required by Law.

 

8.            Secured Party’s Duties.

 

The
powers conferred on Secured Party hereunder are solely to protect its interest
in the Pledged Collateral and shall not impose any duty upon it to exercise any
such powers.  Except for the safe custody
of any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Pledged Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Pledged
Collateral.

 

9.            No Waiver; Cumulative Remedies.

 

No
failure to exercise, and no delay in exercising, on the part of Secured Party,
any right, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any further exercise thereof or the exercise of any other right, power
or privilege.  No waiver of a single
Event of Default shall be deemed a waiver of a subsequent Event of Default.  The remedies herein provided are cumulative
and not exclusive of any remedies provided under the other Credit Documents or
by Law, rule or regulation and Secured Party may enforce any one or more
remedies hereunder successively or concurrently at its option.  To the extent permitted by applicable law,
Pledgor waives any right to require Secured Party to proceed against any other
Person or to exhaust any of the Pledged Collateral or other security for the
Debt or to pursue any remedy in Secured Party’s power.

 

10.         No Discharge Until Payment of the Debt.

 

The
Liens given by, and the obligations of, Pledgor hereunder shall not be
discharged or impaired or otherwise diminished by any failure, default,
omission or delay, willful or otherwise, by Secured Party, or any other obligor
on any of the Debt, 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 Pledgor or which would otherwise operate as a discharge of Pledgor as a
matter of law or equity.  Without
limiting the generality of the foregoing, Pledgor hereby consents to, and the
Liens given by Pledgor hereunder shall not 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 a
bankruptcy, insolvency, reorganization or similar proceeding, or otherwise), or
any 

 

9

 

avoidance
or subordination, in whole or in part, of any Credit Document or any of the
Debt and regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of the Debt, any of the terms of the Credit
Documents or any rights of Secured Party or any other Person with respect
thereto;

 

(b)           Any
increase, decrease or change in the amount, nature, type or purpose of any of
the Debt (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 Debt; 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 Debt;

 

(c)           Any
failure to assert any breach of or default under any Credit Document or any of
the Debt; 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 Pledgor or any other Person under or in connection
with any Credit Document or any of the Debt; any refusal of payment or
performance of any of the Debt, whether or not with any reservation of rights
against Pledgor; or any application of collections (including collections
resulting from realization upon any direct or indirect security for the Debt)
to other obligations, if any, not entitled to the benefits of this Agreement,
in preference to Debt or, if any collections are applied to Debt, any application
to particular Debt;

 

(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 Secured Party 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
Secured Party or any other Person in respect of, any direct or indirect
security for any of the Debt (including the Pledged Collateral).  As used in this Agreement, “direct or
indirect security” for the Debt, 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 Debt, 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, Pledgor, Borrower or any other Person; any
Insolvency Proceeding with respect to Pledgor, Borrower 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 Secured Party or Pledgor, Borrower 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 Pledgor, Borrower or any other Person with respect to any Credit
Document or

 

10

 

any
of the Debt; or any discharge by operation of law or release of Pledgor,
Borrower or any other Person from the performance or observance of any Credit
Document or any of the Debt; 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
Pledgor, excepting only full, strict and payment and performance of the Debt in
full and termination of the Credit Agreement.

 

11.          Waivers.

 

To
the extent permitted by applicable law, Pledgor hereby waives any and all
defenses which Pledgor may now or hereafter have based on principles of
suretyship, impairment of collateral, or the like and to the extent permitted
by applicable law, Pledgor hereby waives any defense to or limitation on
Pledgor’s obligations under this Agreement arising out of or based on any event
or circumstance referred to in the immediately preceding section.  Without limiting the generality of the
foregoing and to the fullest extent permitted by applicable law, Pledgor 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 Pledgor,
including the following:  any notice of
any event or circumstance described in the immediately preceding section; 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 Debt; any notice of the incurrence of
any Debt; any notice of any default or any failure on the part of Pledgor,
Borrower or any other Person to comply with any Credit Document or any of the
Debt or any requirement pertaining to any direct or indirect security for any
of the Debt; and any notice or other information pertaining to the business,
operations, condition (financial or otherwise) or prospects of Borrower or any
other Person;

 

(b)           Any
right to any marshalling of assets, to the filing of any claim against Pledgor,
Borrower, or any other Person in the event of any Insolvency Proceeding, or to
the exercise against Pledgor, Borrower or any other Person of any other right
or remedy under or in connection with any Credit Document or any of the Debt or
any direct or indirect security for any of the Debt; any requirement of
promptness or diligence on the part of Secured Party 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
Debt or any direct or indirect security for any of the Debt; any benefit of any
statute of limitations; and any requirement of acceptance of this Agreement or
any other Credit Document, and any requirement that Pledgor 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 Secured Party (including
commencement or completion of any judicial proceeding or nonjudicial sale or
other action in respect of collateral security for any of the Debt), which
results 

 

11

 

in
denial or impairment of the right of Secured Party to seek a deficiency against
Borrower or any other Person or which otherwise discharges or impairs any of
the Debt.

 

12.          Taxes.

 

(a)           No
Deductions.  All payments and
collections made by or from Pledgor under this Agreement shall be made or
received free and clear of and without deduction for any present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on the net income of
Secured Party and all income and franchise taxes of the United States
applicable to Secured Party (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).  If Pledgor shall be
required by Law to deduct any Taxes from or in respect of any sum payable or
any collection made under this Agreement, (i) the sum payable or
collectable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
or collectable under this Subsection) Secured Party receives an amount equal to
the sum it would have received had no such deductions been made,
(ii) Pledgor shall make such deductions and (iii) Pledgor shall
timely pay the full amount deducted to the relevant tax authority or other
authority in accordance with applicable law;

 

(b)           Stamp
Taxes.  In addition, Pledgor
acknowledges that the Pledged Collateral of Pledgor secures payment of all
present and future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment or collection
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement (hereinafter referred to as “Other Taxes”);

 

(c)           Indemnification
for Taxes Paid by Secured Party. 
Pledgor acknowledges that the Pledged Collateral secures the full amount
of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 12) paid by Secured
Party and any liability (including penalties, interest and reasonable expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted;

 

(d)           Certificate.  In the event Pledgor pays any Taxes or Other
Taxes, within 30 days after the date of any such payment, Pledgor shall furnish
to Secured Party, the original or a certified copy of a receipt evidencing
payment thereof; and

 

(e)           Survival.  Without prejudice to the survival of any
other agreement of Pledgor hereunder, the agreements and obligations of Pledgor
contained in clauses (a) through (d) shall survive the payment
in full of principal and interest under any Note, the termination of the
Revolving Credit Commitments and the termination of the Credit Agreement.

 

13.          Judgment Currency.

 

(a)           If
for the purposes of obtaining judgment in any court it is necessary to convert
a sum due under this Agreement in any currency (the “Original Currency”) into
another currency (the “Other Currency”), Pledgor hereby agrees, to the fullest
extent permitted by Law, that the rate of exchange used shall be that at which
in accordance with normal banking procedures Secured Party could purchase the
Original Currency with the Other Currency after 

 

12

 

any
premium and costs of exchange on the Business Day preceding that on which final
judgment is given; and

 

(b)           The
obligation of Pledgor in respect of any sum due from Pledgor to Secured Party
under this Agreement shall, notwithstanding any judgment in an Other Currency,
whether pursuant to a judgment or otherwise, be discharged only to the extent
that, on the business day (being a day on which Secured Party is open for
business at its principal office in the United States) following receipt by
Secured Party of any sum adjudged to be so due in such Other Currency, Secured
Party may in accordance with normal banking procedures purchase the Original
Currency with such Other Currency.  If
the amount of the Original Currency so purchased is less than the sum originally
due to Secured Party in the Original Currency, Pledgor agrees, as a separate
obligation and notwithstanding any such judgment or payment, that Pledged
Collateral secures payment to Secured Party to indemnify it against such loss.

 

14.          Waiver of Sovereign Immunity.

 

To
the extent that Pledgor has or hereafter may acquire any immunity from the
jurisdiction of any court or from any legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property, and to the extent
permitted by applicable law, Pledgor hereby irrevocably waives such immunity in
respect of its obligations under this Agreement and any other document or
agreement executed or given in connection therewith, and Pledgor agrees that it
will not raise or claim any such immunity at or in respect of any such action
or proceeding.

 

15.          Assignment.

 

All
rights of Secured Party under this Agreement shall inure to the benefit of its
successors and assigns.  All obligations
of Pledgor shall bind its successors and assigns; provided, however,
Pledgor may not assign or transfer any of its rights and obligations hereunder
or any interest herein.

 

16.          Severability.

 

Any
provision (or portion thereof) of this Agreement which shall be held invalid or
unenforceable shall be ineffective without invalidating the remaining
provisions hereof or portions thereof.

 

17.          Governing Law.

 

This
Agreement shall be deemed a contract under the Laws of the State of New York
and shall, pursuant to New York General Obligations Law Section 5-1401,
for all purposes be construed and enforced in accordance with, and governed by
the laws of the State of, New York, except to the extent of any provision of
the Code which applies the law of the jurisdiction in which the Pledged
Collateral is located; provided, however, that in no event shall
this Section be applied or interpreted to defeat a perfected security
interest in the Pledged Collateral that would be valid under an otherwise
applicable law.

 

13

 

18.          Notices.

 

All
notices, requests, demands, directions and other communications (collectively, “notices”)
given to or made upon any party under the provisions of this Agreement shall be
by telephone or in writing (including telex or facsimile communication) unless
otherwise expressly permitted hereunder and shall be delivered or sent by telex
or facsimile to the respective parties at the addresses and numbers set forth
below 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 in the case of
telex or facsimile, when received, in the case of hand delivered notice, when
hand delivered, or in the case of telephone when telephoned, provided, however,
that in order to be effective, telephonic notices must be confirmed in writing
no later than the next day by letter, facsimile or telex.

 

Secured Party:

 

Siemens
First Capital Commercial Finance, LLC

3520 N.W. 58th Street

Oklahoma City, OK 73112

Attention: Lee Elmore, Senior Vice President

Telecopier No.:  405-917-9660

 

with a copy to:

 

Buchanan
Ingersoll & Rooney PC

One Oxford Centre

301 Grant Street, 20th Floor

Pittsburgh, PA 15219

Attention: Hugh G. Van der Veer

Telecopier No.: 412-562-1041

 

Pledgor:

Alarm Funding, LLC

800 Connecticut Avenue

Suite E-403

Norwalk, CT 06854

Attention: Westin Lovy

Telecopier No.: 203-656-1994

 

with a copy to:

 

Hanson Bridgett LLP

425 Market Street, 26th Floor

San Francisco, CA  94105

Attention: Michael Y. Lateef, Esq.

Telecopier No. 415-995-3467

 

14

 

19.          Specific Performance.

 

Pledgor
acknowledges and agrees that, in addition to the other rights of Secured Party
hereunder and under the other Credit Documents, because Secured Party’s
remedies at law for failure of Pledgor to comply with the provisions hereof
relating to Secured Party’s rights: 
(a) to inspect the books and records related to the Pledged
Collateral, (b) to receive the various notifications Pledgor is required
to deliver hereunder, (c) to obtain copies of agreements and documents as
provided herein with respect to the Pledged Collateral, (d) to enforce the
provisions hereof pursuant to which Pledgor has appointed Secured Party its
attorney-in-fact, and (e) to enforce Secured Party’s remedies hereunder,
would be inadequate and that any such failure would not be adequately
compensable in damages, Pledgor agrees that each such provision hereof may be
specifically enforced.

 

20.          Voting Rights in Respect of the Pledged Collateral.

 

(a)           So
long as no Event of Default shall occur and be continuing under the Credit
Agreement, Pledgor may exercise any and all voting and other consensual rights
pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the other Credit Documents; provided,
however, that no vote shall be cast, and no consent shall be given or
action taken, which would have a material adverse effect on the position or
interest of Secured Party with respect to the Pledged Collateral; and

 

(b)           Pledgor shall be entitled, from time
to time, to collect and receive for its own use all cash dividends in respect
of its interests in the Ownership Interests to the extent not in violation of
the Credit Agreement other than any and all: (A) dividends and
other distributions paid or payable other than in cash in respect of any
Pledged Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral; (B) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in capital of Borrower; and (C) cash paid, payable
or otherwise distributed, in respect of the redemption of, or in exchange for,
any Pledged Collateral; provided, however, that until actually
paid all rights to such distributions shall remain subject to the Lien of
Secured Party; and (ii) all dividends (other than such cash dividends as
are permitted to be paid to Pledgor in accordance with clause (i) above)
and all other distributions in respect of any of the Pledged Collateral,
whenever paid or made, shall be delivered to Secured Party to hold as Pledged
Collateral and shall, if received by Pledgor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Pledgor, and be forthwith delivered to Secured Party as Pledged Collateral in
the same form as so received (with any necessary endorsement).  Without limiting the generality of the foregoing
and in addition thereto, except as otherwise permitted by the Credit Agreement
in connection with the Equity Raise and/or the Equity Incentive Issuance,
Pledgor shall not vote to enable, or take any other action to permit, Company
to issue any Ownership Interests of any nature or to issue any other Ownership
Interests convertible into or granting the right to purchase or exchange for
any Ownership Interests of any nature of Company or to enter into any agreement
or undertaking restricting the right or ability of Pledgor or Secured Party to sell,
assign or transfer any of the Pledged Collateral.

 

15

 

21.          Consent to Jurisdiction.

 

Pledgor
and Company hereby irrevocably submit to the nonexclusive jurisdiction of any
New York state or federal court sitting in New York City, New York, in any
action or proceeding arising out of or relating to this Agreement, and Pledgor
and Company hereby irrevocably agree that all claims in respect of such action
or proceeding may be heard and determined in such state or federal court.  Pledgor and Company hereby waive to the
fullest extent it may effectively do so under applicable law, the defense of an
inconvenient forum to the maintenance of any such action or proceeding.  Pledgor and Company hereby appoint the process
agent identified below (the “Process Agent”) as its agent to receive on behalf
of each such party 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 Pledgor or Company in care of
the Process Agent at the Process Agent’s address, and Pledgor and Company
hereby authorize and direct the Process Agent to receive such service on its
behalf.  Pledgor and Company agree 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, rule or
regulation.  Pledgor and Company further
agree that it shall, for so long as any Commitment or any obligation of
Borrower to the Lenders remains outstanding, continue to retain Process Agent
for the purposes set forth in this Section 21. The Process Agent is Alarm
Funding, LLC, c/o Managing Director, with an office on the date hereof at 800
Connecticut Avenue, Suite E-403, Norwalk, CT  06854 United States.  Pledgor and Company shall produce to Secured
Party evidence of the acceptance by Process Agent of such appointment.

 

22.          Waiver of Jury Trial.

 

EXCEPT
AS PROHIBITED BY LAW, PLEDGOR AND COMPANY HEREBY WAIVE ANY RIGHT THEY 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 AGREEMENT OR ANY OTHER
DOCUMENTS OR TRANSACTIONS RELATING THERETO.

 

23.          Subrogation.

 

Pledgor
shall not exercise any rights against Company arising in connection with the
Debt (including rights of subrogation, contribution, and the like) until the
Debt has been paid in full and the Credit Agreement has been terminated.  If any amount shall be paid to Pledgor by or
on behalf of Company by virtue of any right of subrogation, contribution, or
the like, such amount shall be deemed to have been paid to Company for the
benefit of, and shall be held in trust for the benefit of, Agent and the
Lenders and shall forthwith be paid to Agent to be credited and applied upon
the Debt, whether matured or unmatured, in accordance with the terms of the
Credit Agreement.

 

24.          Entire Agreement; Amendments.

 

This
Agreement constitutes the entire agreement among the parties with respect to
the subject matter and supersedes all prior agreements relating to a grant of a
Lien in the Pledged 

 

16

 

Collateral
by Pledgor to Secured Party, but solely to the extent irreconcilably
inconsistent with this Agreement.  This
Agreement may not be amended or supplemented except by a writing signed by
Secured Party and Pledgor.

 

25.          Counterparts; Telecopy Signatures.

 

This
Agreement may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which when so executed shall
be deemed an original and all of which when taken together shall constitute but
one and the same agreement.  Pledgor
acknowledges and agrees that a telecopy transmission to the Secured Party of
the signature pages hereof purporting to be signed on behalf of Pledgor
shall constitute effective and binding execution and delivery hereof by Pledgor.

 

26.          Descriptive Headings.

 

The
descriptive headings which are used in this Agreement are for the convenience
of the parties only and shall not affect the meaning of any provision of this
Agreement.

 

27.          Non-Recourse to Pledgor.

 

Notwithstanding
anything in this Agreement, except for Pledgor’s covenants herein, the maximum
liability of Pledgor to the Secured Party or Lenders pursuant to this Agreement
regarding any Obligation, Debt or Event of Default shall be limited to the
Ownership Interest of Pledgor in Company and Pledgor shall not be liable
pursuant to this Agreement for any Obligation, Debt or other monetary damage,
loss, cost or expense of Secured Party, Lenders or any other Person; provided,
however, in the event Pledgor breaches this Agreement, Pledgor shall be
liable for all reasonable damages, losses, costs and expenses to Secured Party
caused by any such breach.

 

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

[SIGNATURE PAGE 1 OF 1 TO PLEDGE AGREEMENT]

 

IN
WITNESS WHEREOF, and intending to be legally bound, the parties have caused
this Agreement to be duly executed as of the date first above written.

 

 

	
  SECURED
  PARTY:

  	
  PLEDGOR:

  
	
   

  	
   

  
	
  SIEMENS
  FIRST CAPITAL COMMERCIAL

  FINANCE, LLC, as Agent

  	
  ALARM
  FUNDING, LLC,

  a Delaware limited liability company

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /
  s /    Anthony Casciano

  	
   

  	
  By:

  	
  /
  s /    Westin Lovy

  
	
  Name: 
  Anthony Casciano

  	
   

  	
  Westin
  Lovy, Managing Director

  
	
  Title: 
  Senior Vice President

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  and

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /
  s /    Matthew R. Begley

  	
   

  	
   

  
	
  Name:  Matthew
  R. Begley

  	
   

  
	
  Title:  President

  	
   

  

 

 

ACKNOWLEDGEMENT AND CONSENT

 

The
undersigned hereby acknowledges receipt of a copy of the Pledge Agreement,
dated as of October 20, 2010, made by ALARM FUNDING, LLC, a Delaware
limited liability company (“Pledgor”) for the benefit of SIEMENS FIRST CAPITAL
COMMERCIAL FINANCE, LLC, a Delaware limited liability company, as Secured Party
(the “Pledge Agreement”).  Company,
intending to be legally bound, agrees for the benefit of Secured Party and
Lenders as follows:

 

1.             Company will be bound by the terms
of the Pledge Agreement and will comply with such terms insofar as such terms
are applicable to Company, including those terms in Sections 21 and 22 of
the Pledge Agreement.

 

2.             Company will notify Secured Party
promptly in writing of the occurrence of any of the events described in Section 5(g) of
the Pledge Agreement.

 

3.             The terms of Section 3 of the
Pledge Agreement shall apply to Company, mutatis mutandis, with respect
to all actions that may facilitate, in the reasonable judgment of Secured
Party, the carrying out of Section 3 of the Pledge Agreement.

 

4.             To the extent that Company has or
hereafter may acquire any immunity from the jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid of execution, execution, or otherwise) with respect
to itself or its property, and to the extent permitted by applicable law,
Company hereby irrevocably waives such immunity in respect of its obligations
under the Pledge Agreement and any other document or agreement executed in
connection therewith, and Company agrees that it will not raise or claim any
such immunity at or in respect of any such action or proceeding.

 

5.             Company acknowledges and agrees
that any notices sent to Pledgor regarding any of the Pledged Collateral shall
also be sent to Secured Party in the manner and at the address of Secured Party
as indicated in Section 18 of the Pledge Agreement.

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN
WITNESS WHEREOF, and intending to be legally bound, Company has caused this
Acknowledgement and Consent to be duly executed as of the date first above
written.

 

 

	
   

  	
  CASTLEROCK
  SECURITY HOLDINGS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s /    Brian E. Johnson

  
	
   

  	
  Name:  Brian E. Johnson

  
	
   

  	
  Title:  President

  
	
   

  	
   

  
	
   

  	
  Address
  for Notices:

  
	
   

  	
  2101 S. Arlington Heights Road, Suite 150

  Arlington Heights, IL  60005

  Attention:  Brian E. Johnson

  Fax:  847-890-6688

  

 

 

SCHEDULE A

TO

PLEDGE AGREEMENT

 

Description of Pledged Collateral

 

 

	
  Pledgor and

  Pledgor’s jurisdiction of formation

  	
   

  	
  Pledged Collateral

  	
   

  	
  Type and Amount

  of Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Alarm
  Funding, LLC, a Delaware limited liability company

  	
   

  	
  CastleRock
  Security Holdings, Inc., a Delaware corporation

  	
   

  	
  2,262,000
  shares of common stock, representing 94.25% of the outstanding capital stock

  

 

Shareholder Agreements:

 

Contribution Agreement dated September 24, 2010

 

Right of First Refusal Agreement dated September 24, 2010Exhibit 10.19

 

FOURTH AMENDMENT TO CREDIT AGREEMENT

 

This
FOURTH AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is
dated as of November 2, 2010, by and among ALARM FUNDING, LLC, a Delaware
limited liability company (sometimes referred to herein as “Alarm Funding”),
CASTLEROCK SECURITY HOLDINGS, INC., a Delaware corporation (sometimes
referred to herein as “NewCo”, and together with Alarm Funding, “Borrower”),
and CASTLEROCK SECURITY, INC., a Delaware corporation (sometimes referred
to herein as “CastleRock”, and together with Alarm Funding and NewCo,
the “Credit Parties”), LENDERS (as defined in the Credit Agreement, as
defined below),  and SIEMENS FIRST CAPITAL COMMERCIAL FINANCE, LLC,
a Delaware limited liability company, as successor in interest to FCC, LLC in
its capacity as agent for Lenders (hereinafter referred to in such capacity as “Agent”).

 

W  I  T 
N  E  S  S  E 
T  H:

 

WHEREAS, reference is made 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 (the “First Amendment”),
as further amended by that Amended and Restated Forbearance Agreement and
Amendment to Credit Agreement, dated as of February 16, 2008 (the “Forbearance
Agreement”), and as further amended by that Consent, Limited Waiver and
Third Amendment to Credit Agreement and Credit Documents by and among Alarm
Funding, the Lenders party thereto, and Agent (collectively, the “Credit
Agreement”); and

 

WHEREAS, Alarm Funding has requested that Agent and Lenders
amend certain terms of the Credit Agreement as hereinafter provided, and Agent
and Lenders are willing to make such
modifications, subject to the terms and conditions of this Amendment.

 

NOW, THEREFORE, the parties hereto, in consideration of
their mutual covenants and agreements hereinafter set forth and intending to be
legally bound hereby, covenant and agree as follows:

 

1.                                      Capitalized
Terms; Construction.  All
capitalized terms used and not defined herein shall have the meanings given
them in the Credit Agreement and the rules of construction set forth in Section 1.2
[Construction] of the Credit Agreement shall apply to this Amendment.

 

2.                                      Amendment of Section 7.2.18
[Maximum Funded Debt to Tangible Net Worth Ratio; Senior Funded Debt] of the
Credit Agreement.

 

Section 7.2.18 [Maximum Funded Debt to Tangible
Net Worth Ratio; Senior Funded Debt] of the Credit Agreement is hereby amended
and restated to read as follows:

 

 

“7.2.18 Senior Funded Debt to Tangible Net Worth
Ratio; Senior Funded Debt to EBITDA Ratio.

 

(a)                                 Borrower shall not at any
time permit the ratio of Senior Funded Debt to Tangible Net Worth of NewCo and
its consolidated Subsidiaries (but in no event including any Permitted
Subsidiary) to exceed (i) 14.0 to 1 for the period commencing on the Third
Amendment Effective Date and continuing until the Deposit Date, and (ii) 2.25
for the period commencing on the Deposit Date and continuing thereafter.

 

(b)                                 Borrower shall not at any
time permit the ratio of Senior Funded Debt to EBITDA of NewCo and its
consolidated Subsidiaries (but in no event including any Permitted Subsidiary)
to exceed (i) 5.0 to 1 for the period commencing November 1, 2010 and
continuing through September 30, 2011, and (ii) 4.25 for the period
commencing on October 1, 2011 and continuing thereafter.”

 

3.                                      Amendment of Section 8.1.17  [Evidence of Equity Raise Commitment]of the
Credit Agreement.

 

Section 8.1.17
[Evidence of Equity Raise Commitment] shall be amended and restated as follows:

 

“8.1.17  Evidence
of Equity Raise Commitment.

 

Borrower shall fail to deliver to Agent either (x) executed
commitment letters with respect to a private Equity Raise (including from
Whitecap or any of its Affiliates) or (y) evidence of the filing of an S-1
with respect to a public Equity Raise, no later than November 5, 2010.”

 

4.                                      Conditions of
Effectiveness of this Amendment.  The effectiveness of this Amendment is
expressly conditioned upon satisfaction of each of the following conditions
precedent:

 

(a)                                 Credit
Documents.  Borrower
shall or shall have caused to be delivered to Agent this fully executed
Amendment.

 

(b)                                 Fees and
Expenses.  Borrower
shall pay or cause to be paid to Agent for itself the reasonable costs and
expenses of Agent, including reasonable fees of Agent’s counsel in connection
with this Amendment.

 

(c)                                  No Violation of
Laws, No Actions or Proceedings. The  execution
of this Amendment shall not contravene any Law applicable to Borrower, any
Guarantor, any Pledgor, Agent or any of the Lenders.  No action, proceeding, investigation,
regulation or legislation shall have been instituted, threatened or proposed
before any court, governmental agency or legislative body to enjoin, restrain
or prohibit, or to obtain damages in respect of this Amendment or the consummation
of the transactions 

 

2

 

contemplated hereby, which, in Agent’s sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Amendment or any of the other Credit Documents.

 

(d)                                 Legal Details;
Counterparts.  All legal
details and proceedings in connection with the transactions contemplated by
this Amendment shall be in form and substance satisfactory to Agent; Agent
shall have received from Alarm Funding, CastleRock,  NewCo and the Lenders a fully executed
original of this Amendment; and Agent shall have received all such other
counterpart originals or certified or other copies of such documents and
proceedings in connection with such transactions; in each case, in form and
substance satisfactory to Agent.

 

5.                                      Joinder of CastleRock.  CastleRock acknowledges and agrees that it
has executed and delivered a Guaranty and Suretyship Agreement in favor of
Agent for the benefit of the Lenders in connection with this Amendment.  CastleRock joins in this Amendment to
evidence its consent to the Credit Agreement and the amendment of the Credit
Agreement pursuant to this Amendment.

 

6.                                      Force and
Effect. The Credit Agreement and each of the other Credit Documents, as
amended through and including this Amendment, are hereby ratified and confirmed
and are and shall remain in full force and effect on and after the date of this
Amendment in accordance with their respective terms.  The parties hereto do not amend any
provisions of the Credit Agreement or the other Credit Documents except for the
amendments as expressly set forth herein. 
Neither Borrower nor Guarantor has any defense or counterclaim
whatsoever to any action or proceeding that may be brought to enforce the
rights and remedies of the Agent and Lenders under the Credit Agreement and the
other Credit Documents. No novation to any Credit Document is intended or shall
occur by or as a result of this Amendment.

 

7.                                      Governing Law.  This Amendment 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 Section 5-1401, for all purposes be governed
by, and construed and enforced in accordance with, the Laws of the State of New
York.

 

8.                                      Counterparts.  This Amendment may be executed in separate
counterparts, each of which when executed and delivered shall be an original,
but all of which when taken together shall constitute one and the same
instrument.  Delivery by facsimile or
other electronic transmission of executed signature pages hereof from one
party hereto to another party hereto shall be deemed to constitute due
execution and delivery by such party. 
Any party that delivers its original counterpart signature to this
Amendment by facsimile or other electronic transmission hereby covenants to
personally deliver five (5) original counterpart signatures promptly
thereafter to Agent.

 

[SIGNATURE PAGES FOLLOW]

 

3

 

[SIGNATURE PAGE TO FOURTH  AMENDMENT TO CREDIT AGREEMENT]

 

IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered by their respective officers hereunto duly authorized, as of the
date first above written.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ALARM
  FUNDING, LLC,

  
	
   

  	
  a
  Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s / Westin Lovy

  
	
   

  	
   

  	
  Westin
  Lovy, Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CASTLEROCK
  SECURITY HOLDINGS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s
  / Brian E. Johnson

  
	
   

  	
   

  	
  Brian
  E. Johnson, President

  

 

 

[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT
AGREEMENT]

 

	
   

  	
  GUARANTOR:

  
	
   

  	
   

  
	
   

  	
  CASTLEROCK
  SECURITY, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s / Brian E. Johnson

  
	
   

  	
   

  	
  Brian
  E. Johnson, President

  

 

 

[SIGNATURE PAGE TO FOURTH  AMENDMENT TO CREDIT 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

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FCC,
  LLC, as a Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /
  s / Lee Elmore

  
	
   

  	
  Name:

  	
  Lee
  Elmore

  
	
   

  	
  Title:

  	
  Senior
  Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00180-of-00352.parquet"}]]