Document:

EX-4.7

     

     

    
      

      

    

     

    PLEDGE
      AGREEMENT

     

    

     

    THIS
      PLEDGE AGREEMENT (the "Agreement"), dated November 16, 2004, is made and entered
      into by and between INTEGRATED
      ALARM SERVICES GROUP, INC.,
      a
      Delaware corporation ("IASG"), and MADISON
      PROTECTION, INC.,
      a
      Delaware corporation ("Madison" and, together with IASG, herein collectively
      referred to as the "Pledgor"), and LASALLE
      BANK NATIONAL ASSOCIATION,
      in its
      capacity as Agent for the Banks under the Credit Agreement referred to below
      (the "Secured Party").

     

    WHEREAS,
      pursuant to that certain Credit Agreement (as it may hereafter from time to
      time
      be restated, amended, modified or supplemented, the "Credit Agreement") of
      even
      date herewith, by and among Pledgor, Criticom International Corporation, a
      New Jersey corporation, Monital Signal Corporation, a New Jersey
      corporation, Integrated Alarm Services, Inc., a Delaware corporation, Payne
      Security Group, L.L.C., a New Jersey limited liability company, and
      American Home Security, Inc., a Nevada corporation (collectively, the
      "Borrower"), the Banks and the Secured Party, the Banks have agreed to provide
      certain loans to the Borrower; 

     

    WHEREAS,
      as part of the security for such loans, and as required by the Credit Agreement,
      Pledgor's membership interests and shares of capital stock in the Borrower
      are
      to be pledged to the Secured Party in accordance herewith; and

     

    WHEREAS,
      Pledgor owns
      one
      hundred percent (100%) of the outstanding membership interests and shares of
      capital stock in each of the Borrower except Monital Signal Corporation in
      which
      Pledgor owns ninety-nine and two tenths percent (99.2%) of the outstanding
      shares of capital stock, as more fully described on Schedule A
      hereto.

     

    NOW,
      THEREFORE, intending to be legally bound hereby, the parties hereto 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 the Uniform Commercial Code as enacted in each applicable
      jurisdiction and as may be amended from time to time (the "Code").

     

    (b)  "Capital
      Stock" means, with respect to any Person, any and all shares, interests,
      participations or other equivalents (however designated, whether voting or
      non-voting) in equity of such Person, including, without limitation, all common
      stock and preferred stock.

     

    (c)  "Foreign
      Subsidiary Voting Stock" means the Voting Stock of any Foreign Subsidiary.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (d)  "Foreign
      Subsidiary" means any Subsidiary of Pledgor organized under the laws of any
      jurisdiction outside the United States of America. 

     

    (e)  "Voting
      Stock" means, with respect to any Person, Capital Stock of any class or kind
      ordinarily having the power to vote for the election of directors, managers
      or
      other voting members of the governing body of such Person.

     

    (f)  "Pledged
      Collateral" shall mean and include the following: (i) the membership interests
      and shares of capital stock listed on Schedule A
      attached
      hereto and made a part hereof, together with all rights and privileges
      pertaining thereto, including, without limitation, all securities and additional
      securities receivable in respect of or in exchange for such securities, all
      rights to subscribe for securities incident to or arising from ownership of
      such
      securities, all cash, interest, membership interests, stock and other dividends
      or distributions paid or payable on such securities, and all books and records
      owned by and in the possession of Pledgor pertaining to the foregoing,
      including, without limitation, all membership interest and stock record and
      transfer books; (ii) any and all other securities hereafter pledged
      by
      Pledgor to Secured Party to secure the Secured Obligations (as hereinafter
      defined) of the Borrower, and all rights and privileges pertaining thereto,
      including, without limitation, all securities and additional securities
      receivable in respect of or in exchange for such securities, all rights to
      subscribe for securities incident to or arising from ownership of such
      securities, all cash, interest, membership interests, stock and other dividends
      or distributions paid or payable on such securities, and all books and records
      owned by and in the possession of Pledgor pertaining to the foregoing and
      (iii) whatever is received when any of the foregoing is sold, exchanged
      or
      otherwise disposed of, including any proceeds as such term is defined in the
      Code, provided that, to the extent that and for so long as adverse tax
      consequences for Pledgor and its Subsidiaries organized under the laws of any
      jurisdiction within the United States of America would otherwise result from
      a
      pledge of all of the shares of capital stock of any Foreign Subsidiary, not
      more
      than 65% of the total outstanding Foreign Subsidiary Voting Stock of such
      Foreign Subsidiary shall be deemed pledged under the Collateral
      Documents.

     

    
      	2.  	
              Grant
                of Security Interests.

            

    

     

    Pledgor,
      to secure on a first priority basis the payment and performance of all the
      Obligations of Borrower under the Loan Documents (the "Secured Obligations"),
      hereby grants to Secured Party a first priority security interest in all of
      Pledgor's now existing and hereafter acquired and/or arising right, title and
      interest in, to and under the Pledged Collateral owned by Pledgor, whether
      now
      or hereafter existing and wherever located.

     

    
      	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
      deliver to Secured Party all financing statements, continuation financing
      statements, and termination statements reasonably requested by the Secured
      Party, and shall execute and deliver all assignments, certificates and documents
      of title, affidavits, reports, notices, schedules of account, letters of
      authority, further pledges, 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 

     

     

    
      
        
        

      

      
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      consummate
        the transactions contemplated under the Credit Agreement, the other Loan
        Documents and this Agreement. Upon the occurrence of an Event of Default,
        Pledgor 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 power to sign the name of Pledgor
        on all
        or any of the Security Documents which Secured Party determines must be
        executed, filed, recorded or sent in order to perfect or continue perfected
        Secured Party's security interest in the Pledged Collateral. Such power,
        being
        coupled with an interest, is irrevocable until all of the Secured Obligations
        (other than contingent indemnification obligations to the extent no claims
        relating thereto have been asserted) have been paid in full.

    

     

    
    

    
      	4.  	
              Representations
                and Warranties.

            

    

     

    Pledgor
      hereby represents and warrants to Secured Party as follows:

     

    (a)  Pledgor
      has, and will continue to have (or, in the case of after-acquired Pledged
      Collateral, at the time it acquires rights in such Pledged Collateral, will
      have), title to the Pledged Collateral, free and clear of all Liens except
      Liens
      created under this Agreement and the Liens of the Second Lien Noteholders (as
      defined in the Credit Agreement);

     

    (b)  The
      membership interests and capital stock constituting the Pledged Collateral
      have
      been duly authorized and validly issued to Pledgor (as set forth on Schedule
      A
      hereto);

     

    (c)  The
      security interests in the Pledged Collateral granted hereunder and the delivery
      to and possession by the Secured Party thereof will create security interests
      that are valid, perfected and of first priority;

     

    (d)  There
      are
      no restrictions upon the pledge of the Pledged Collateral and Pledgor has the
      power and authority and right to pledge the Pledged Collateral free of any
      encumbrances;

     

    (e)  There
      are
      no actions, suits, or proceedings pending or, to its best knowledge after due
      inquiry, threatened against or affecting Pledgor with respect to the 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 its performance hereunder;
      and

     

    (f)  The
      address of Pledgor's principal place of business is as set forth in
      Section 13 hereof.

     

    
      
        
        

      

      
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      	5.  	
              General
                Covenants.

            

    

     

    Pledgor
      hereby covenants and agrees as follows:

     

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

     

    (b)  Pledgor
      shall appear in and defend any action or proceeding of which it is aware which
      could reasonably be expected to affect its title to, or the Secured Party's
      interest in, the Pledged Collateral owned by it and the proceeds thereof;
provided,
      however,
      that it
      may settle such actions or proceedings with respect to the Pledged Collateral
      it
      owns with the consent of Secured Party.

     

    (c)  Pledgor
      shall keep accurate and complete records of the Pledged Collateral owned by
      it;

     

    (d)  Pledgor
      shall pay any and all taxes, duties, fees or imposts of any nature imposed
      by
      any state, federal or local authority on any of the Pledged
      Collateral.

     

    (e)  Pledgor
      shall permit Secured Party, its officers, employees and agents, during regular
      business hours, to inspect all books and records of the Pledgor related to
      the
      Pledged Collateral, provided that upon and during the continuance of an Event
      of
      Default, such inspections and visits shall not be confined to regular business
      hours.

     

    (f)  During
      the term of this Agreement, Pledgor shall not sell, assign, transfer or
      otherwise dispose of the Pledged Collateral, except as permitted by the Credit
      Agreement.

     

    
      	6.  	
              Other
                Rights With Respect to Pledged
                Collateral.

            

    

     

    In
      addition to the other rights with respect to the Pledged Collateral granted
      to
      the Secured Party hereunder, at any time and from time to time, after an Event
      of Default, Secured Party, at its option and at the expense of Pledgor, may:
      (a) transfer into its own name, or into the name of its nominee, all
      or any
      part of the Pledged Collateral, thereafter receiving all dividends, income
      or
      other distributions upon the Pledged Collateral; (b) take control of
      and
      manage all or any of the Pledged Collateral; (c) apply to the payment
      of
      any of the Secured Obligations, whether any be due and payable or not, any
      moneys, including cash dividends and income from any Pledged Collateral, now
      or
      hereafter in the hands of Secured Party or any Affiliate of Secured Party,
      on
      deposit or otherwise, belonging to Pledgor, as Secured Party, in its sole
      discretion, shall determine; and (d) take any action related to the
      protection of the Pledged Collateral which Pledgor is required but fails to
      do
      hereunder.

     

    
      	7.  	
              Additional
                Remedies Upon Event of
                Default.

            

    

     

    Upon
      the
      occurrence of any Event of Default, 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 above and under the other
      Loan Documents, the following rights and remedies:

     

    (a)  Secured
      Party may, after ten (10) days advance notice to Pledgor, sell, assign,
      give an option or options to purchase or otherwise dispose of the Pledged
      Collateral, or any part thereof at public or private sale in accordance with
      securities laws, 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 ten (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 

     

    
      
        
        

      

      
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      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
        securities for their own account for investment and not with a view to the
        distribution or resale thereof.

    

     

    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
      expenses, including, but not limited to, reasonable attorneys' fees and other
      out-of-pocket 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
      in
      any insolvency, bankruptcy or reorganization proceedings, be applied against
      the
      Secured Obligations, whether or not all the same be then due and payable in
      the
      manner set forth in Section 8.2.5 of the Credit Agreement.

     

    
      	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 and preservation 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. The remedies herein provided are cumulative and not exclusive
      of
      any remedies provided under the other Loan Documents or by applicable Law or
      in
      any other written instrument or agreement relating to the Secured Obligations
      or
      any security therefor. 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 Secured Obligations or to pursue any remedy in Secured
      Party's power.

     

    
      	10.  	
              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;
      provided, however, Pledgor may not assign or transfer any of its rights and
      obligations hereunder or any interest herein.

     

    
      
        
        

      

      
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      	11.  	
              Severability.

            

    

     

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

     

    
      	12.  	
              Governing
                Law.

            

    

     

    This
      Agreement shall be construed in accordance with and governed by the internal
      laws of the State of Illinois without regard to its conflicts of law principles,
      except to the extent the validity or perfection of the security interests or
      the
      remedies hereunder in respect of any Pledged Collateral are governed by the
      law
      of a jurisdiction other than the State of Illinois.

     

    
      	13.  	
              Notices.

            

    

     

    All
      notices, requests, demands, directions and other communications (as used in
      this
      Section 13, collectively referred to as "notices") given to or made
      upon
      any party hereto under the provisions of this Agreement shall be in writing
      (including facsimile communication), unless otherwise expressly permitted
      hereunder, and shall be delivered or sent by facsimile or via
      nationally-recognized overnight courier, by hand or U.S. mail to the respective
      parties at the addresses and numbers set forth under their respective names
      provided in the Credit Agreement or in accordance with any subsequent unrevoked
      written direction from any party to the other parties and delivered pursuant
      to
      the requirements of this Section 13. All notices shall, except as otherwise
      expressly herein provided, be effective: (a) in the case of facsimile,
      when
      received, (b) in the case of hand-delivered notice, when hand-delivered,
      (c) if given by mail, four (4) days after such communication is deposited
      in the mail with first-class postage prepaid, return receipt requested, and
      (d) if given by any other means (including by air courier), when delivered.
      Any Bank giving any notice to any Loan Party shall simultaneously send a copy
      thereof to Secured Party, and Secured Party shall promptly notify the other
      Banks of the receipt by it of any such notice.

     

    
      	14.  	
              Specific
                Performance.

            

    

     

    Pledgor
      acknowledges and agrees that, in addition to the other rights of Secured Party
      hereunder and under the other Loan 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.

     

    
      
        
        

      

      
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      	15.  	
              Voting
                Rights and Rights to Receive Dividends or Distributions in Respect
                of the
                Pledged Collateral.

            

    

     

    This
      Agreement is given as Security to secure performance of the Secured Obligations.
      So long as no Event of Default shall occur and be continuing under the Credit
      Agreement: 

     

    (a)  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 Loan Documents; provided,
      however,
      that
      Pledgor will not exercise or will refrain from exercising any such right, as
      the
      case may be, if such action would have a material adverse effect on the grant
      of
      a security interest in the Pledged Collateral; and

     

    (b)  Pledgor
      shall be entitled to receive cash dividends or other distributions in the
      ordinary course made in respect of the Pledged Collateral, to the extent
      permitted to be paid pursuant to the Credit Agreement, so long as no Event
      of
      Default shall occur and be continuing. 

     

    
      	16.  	
              Entire
                Agreement; Amendments.

            

    

     

    This
      Agreement constitutes the entire agreement between the parties with respect
      to
      the subject matter hereof and supersedes all prior agreements relating to a
      grant of a security interest in the Pledged Collateral by Pledgor. This
      Agreement may not be amended or supplemented except by a writing signed by
      Secured Party and Pledgor.

     

    
      	17.  	
              Reconveyance.

            

    

     

    Upon
      the
      payment in full of the Loans and the termination of the Commitments, this
      Agreement and all of Secured Party's right, title and interest hereunder with
      respect to the Pledged Collateral shall terminate and be discharged in full
      and
      Secured Party shall take such action and execute and deliver such documents
      and
      instruments necessary to terminate, release and discharge this Agreement and
      the
      security interest created hereby, and to reconvey the Pledged Collateral to
      Pledgor.

     

    
      	18.  	
              Counterparts.

            

    

     

    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 taken together shall constitute but one
      and
      the same agreement.

     

    
      	19.  	
              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.

     

    [SIGNATURE
      PAGE FOLLOWS]

    

    
      
        
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    [SIGNATURE
      PAGE - PLEDGE AGREEMENT]

     

    

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed with the intention that it constitutes a sealed instrument as of the
      date first above written.

     

     

     

     

     

    
                                                              INTEGRATED
        ALARM
        SERVICES GROUP, INC.,

                                                              a
        Delaware corporation

       

       

       

                                                              By:
 /s/
        Timothy M. McGinn  

                                                              Timothy
        M. McGinn,
Chairman
        and CEO

       

       

      
                                                                MADISON
          PROTECTION,
          INC.,

                                                                a
          Delaware
          corporation

         

         

         

                                                                By: 
/s/
          Timothy
          M. McGinn

                                                                Timothy
          M. McGinn,
Authorized
          Person

      

       

       

    

     

     

    
      
        
        

      

      
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    SCHEDULE
      A TO PLEDGE AGREEMENT

     

    

     

    (To
      Be Completed by Borrower)

    

    

    

    DESCRIPTION
      OF PLEDGED COLLATERAL

     

    

    

    
      	
              Pledgor

            	
              Issuer

            	
              Percentage

            	
              Certificate
                Number

            	
              Units/Shares

               

            
	
               

              INTEGRATED
                ALARM

              SERVICES
                GROUP,INC.

               

            	 	 	 	
               

              1000

               

            
	
               

              MADISON
                PROTECTION, 

              INC..EX-4.8

    
      

      

    

    

      PLEDGE
        AGREEMENT

       

      THIS
        PLEDGE AGREEMENT (this "Agreement"),
        dated
        November 16, 2004, is made and entered into by and between INTEGRATED
        ALARM SERVICES GROUP, INC.,
        a
        Delaware corporation ("Parent"),
        MADISON
        PROTECTION, INC.,
        a
        Delaware corporation ("Madison
        Protection",
        together with Parent, the "Pledgors"),
        and
WELLS
        FARGO BANK, N.A.,
        in its
        capacity as collateral trustee for the Secured Parties (as defined below)
        (in
        such capacity, the "Collateral
        Trustee").
        

       

      WHEREAS,
        the Pledgors have entered into an Indenture dated as of November 16,
        2004
        (as it may be amended, amended and restated, supplemented or otherwise modified
        from time to time, the "Indenture")
        with
        Wells Fargo Bank, N.A., as trustee (in such capacity, the "Trustee"),
        pursuant to which Parent has authorized the issuance of its 12% Senior Secured
        Notes due 2011 (as such notes may hereafter be amended, amended and restated,
        supplemented or otherwise modified from time to time, the "Notes");

       

      WHEREAS,
        pursuant to the Indenture, each Pledgor is entering into this Agreement in
        order
        to grant to the Collateral Trustee for the ratable benefit of the Holders,
        the
        Collateral Trustee and the Trustee (collectively, the "Secured
        Parties")
        a
        second priority security interest in the Pledged Collateral (as defined below);
        

       

      WHEREAS,
        the Notes will be issued in reliance on each Pledgor's execution and delivery
        of
        this Agreement to the Collateral Trustee; and 

       

      WHEREAS,
        each Pledgor owns the outstanding membership interests, partnership interests
        and shares of capital stock in each of the entities set forth on Schedule
        A
        hereto.

       

      NOW,
        THEREFORE, intending to be legally bound hereby, the parties hereto 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 Indenture. 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 the Uniform Commercial Code as from in effect from time to time in the
        State
        of New York. 

       

      (b)  "Capital
        Stock" means, with respect to any Person, any and all shares, interests,
        participations or other equivalents (however designated, whether voting or
        non-voting) in equity of such Person, including, without limitation, all
        common
        stock and preferred stock.

       

      (c)  "Foreign
        Subsidiary Voting Stock" means the Voting Stock of any Foreign Subsidiary.
        

       

      
        
          
            

             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

       

      (d)  "Foreign
        Subsidiary" means any Subsidiary of Parent organized under the laws of any
        jurisdiction outside the United States of America. 

       

      (e)  "Voting
        Stock" means, with respect to any Person, Capital Stock of any class or kind
        ordinarily having the power to vote for the election of directors, managers
        or
        other voting members of the governing body of such Person.

       

      (f)  "Pledged
        Collateral" shall mean and include the following: (i) the membership interests
        and shares of capital stock listed on Schedule A
        attached
        hereto and made a part hereof, together with all rights and privileges
        pertaining thereto, including, without limitation, all securities and additional
        securities receivable in respect of or in exchange for such securities, all
        rights to subscribe for securities incident to or arising from ownership
        of such
        securities, all cash, interest, membership interests, stock and other dividends
        or distributions paid or payable on such securities, and all books and records
        owned by and in the possession of each Pledgor pertaining to the foregoing,
        including, without limitation, all membership interest and stock record and
        transfer books; (ii) any and all other securities hereafter pledged
        by each
        Pledgor to the Collateral Trustee to secure the Note Obligations, and all
        rights
        and privileges pertaining thereto, including, without limitation, all securities
        and additional securities receivable in respect of or in exchange for such
        securities, all rights to subscribe for securities incident to or arising
        from
        ownership of such securities, all cash, interest, membership interests, stock
        and other dividends or distributions paid or payable on such securities,
        and all
        books and records owned by and in the possession of each Pledgor pertaining
        to
        the foregoing and (iii) whatever is received when any of the foregoing
        is
        sold, exchanged or otherwise disposed of, including any proceeds as such
        term is
        defined in the Code, provided that, to the extent that and for so long as
        adverse tax consequences for Parent and its Subsidiaries organized under
        the
        laws of any jurisdiction within the United States of America would otherwise
        result from a pledge of all of the shares of capital stock of any Foreign
        Subsidiary, not more than 65% of the total outstanding Foreign Subsidiary
        Voting
        Stock of such Foreign Subsidiary shall be deemed pledged under the Collateral
        Documents.

       

      
        	2.  	
                Grant
                  of Security Interests.

              

      

       

      Each
        Pledgor, to secure on a second priority basis the full and prompt payment
        and
        performance of all Note Obligations, hereby grants to the Collateral Trustee
        for
        the ratable benefit of the Secured Parties a security interest in all of
        such
        Pledgor's now existing and hereafter acquired and/or arising right, title
        and
        interest in, to and under the Pledged Collateral owned by such Pledgor, whether
        now or hereafter existing and wherever located.

       

      
        	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 the Collateral Trustee,
        each
        Pledgor shall deliver to the Collateral Trustee all financing statements,
        continuation statements and termination statements reasonably requested by
        the
        Collateral Trustee, and shall execute and deliver
        all assignments, certificates and documents of title, affidavits, reports,
        notices, schedules of account, letters of authority, further pledges and
        all
        other documents (collectively, the "Transfer
        Documents")
        which
        the Collateral Trustee may reasonably request, in form reasonably
        satisfactory to the Collateral Trustee, and take such other action 

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

        which
          the
          Collateral Trustee may reasonably request, to perfect and continue perfected
          and
          to create and maintain the second priority status (or, after the Discharge
          of
          First Priority Claims (as defined in the Intercreditor Agreement), the
          first
          priority status) of the Collateral Trustee's security interest in the Pledged
          Collateral and to fully consummate the transactions contemplated under
          this
          Agreement, the other Collateral Documents, the Intercreditor Agreement,
          the
          Indenture and the Notes. Upon the occurrence of an Event of Default, subject
          to
          the provisions set forth in the Intercreditor Agreement, each Pledgor
          irrevocably makes, constitutes and appoints the Collateral Trustee (and
          any of
          Collateral Trustee's officers or employees or agents designated by Collateral
          Trustee) as such Pledgor's true and lawful attorney with power to sign
          the name
          of Pledgor on all or any of the Transfer Documents which the Collateral
          Trustee
          determines must be executed, filed, recorded or sent in order to perfect
          or
          continue perfected the Collateral Trustee's security interest in the Pledged
          Collateral, in accordance with the Intercreditor Agreement. Such power,
          being
          coupled with an interest, is irrevocable until the security interest of
          the
          Collateral Trustee in the Pledged Collateral is released pursuant to this
          Agreement and the other Collateral Documents. 

      

       

      
        	4.  	
                Representations
                  and Warranties.

              

      

       

      Each
        Pledgor hereby represents and warrants to the Collateral Trustee as
        follows:

       

      (a)  Such
        Pledgor has, and will continue to have (or, in the case of after-acquired
        Pledged Collateral, at the time it acquires rights in such Pledged Collateral,
        will have), title to the Pledged Collateral, free and clear of all Liens
        except
        Liens created under this Agreement and First Priority Liens (as defined in
        the
        Intercreditor Agreement);

       

      (b)  The
        membership interests, partnership interests and capital stock constituting
        the
        Pledged Collateral have been duly authorized and validly issued to such Pledgor
        (as set forth on Schedule
        A
        hereto);

       

      (c)  The
        security interests in the Pledged Collateral granted hereunder and the delivery
        to and possession by the Collateral Trustee thereof (or a bailee therefor)
        will
        create security interests that are valid, perfected and of second
        priority;

       

      (d)  Subject
        to the provisions of the Intercreditor Agreement, there are no restrictions
        upon
        the pledge of the Pledged Collateral and each Pledgor has the power and
        authority and right to pledge the Pledged Collateral free of any
        encumbrances;

       

      (e)  There
        are
        no actions, suits, or proceedings pending or, to its best knowledge, threatened
        against or affecting any Pledgor with respect to the Pledged Collateral,
        at law
        or in equity or before or by any governmental authority, and no Pledgor is
        in
        default with respect to any judgment, writ, injunction, decree, rule or
        regulation which could adversely affect its performance hereunder;
        and

       

      (f)  The
        address of each Pledgor's principal place of business is as set forth in
        the
        Security Agreement. 

       

      
        
          
          

        

        
          3

          
            

          

        

         

         

        
          
          

        

      

      
        	
                5.  

              	
                General
                  Covenants.

              

      

       

      Each
        Pledgor hereby covenants and agrees as follows:

       

      (a)  Each
        Pledgor shall do all acts that may be necessary and appropriate to maintain,
        preserve and protect the Pledged Collateral.

       

      (b)  Each
        Pledgor shall appear in and defend any action or proceeding of which it is
        aware
        which could reasonably be expected to affect its title to, or the Collateral
        Trustee's interest in, the Pledged Collateral and the proceeds thereof;
provided,
        however,
        that it
        may settle such actions or proceedings with respect to the Pledged Collateral
        with the consent of Collateral Trustee.

       

      (c)  Each
        Pledgor shall keep accurate and complete records of the Pledged
        Collateral.

       

      (d)  Each
        Pledgor shall pay any and all taxes, duties, fees or imposts of any nature
        imposed by any state, federal or local authority on any of the Pledged
        Collateral.

       

      (e)  Each
        Pledgor shall permit the Collateral Trustee, its officers, employees and
        agents,
        during regular business hours, to inspect all books and records of such Pledgor
        related to the Pledged Collateral, provided that upon and during the continuance
        of an Event of Default, such inspections and visits shall not be confined
        to
        regular business hours. 

       

      (f)  During
        the term of this Agreement, each Pledgor shall not sell, assign, transfer
        or
        otherwise dispose of the Pledged Collateral, except as permitted by the
        Indenture. 

       

      
        	6.  	
                Other
                  Rights With Respect to Pledged
                  Collateral.

              

      

       

      In
        addition to the other rights with respect to the Pledged Collateral granted
        to
        the Collateral Trustee hereunder, at any time and from time to time, after
        an
        Event of Default, the Collateral Trustee, at its option and at the expense
        of
        the Pledgors, may, subject to the provisions set forth in the Intercreditor
        Agreement: (a) transfer into its own name, or into the name of its
        nominee,
        all or any part of the Pledged Collateral, thereafter receiving all dividends,
        income or other distributions upon the Pledged Collateral; (b) take
        control
        of and manage all or any of the Pledged Collateral; (c) apply to the
        payment of any of the Note Obligations, whether any be due and payable or
        not,
        any moneys, including cash dividends and income from any Pledged Collateral,
        now
        or hereafter in the hands of the Collateral Trustee (or a bailee therefor),
        on
        deposit or otherwise, belonging to any Pledgor, as the Collateral Trustee,
        in
        its sole discretion, shall determine; and (d) take any action related
        to
        the protection of the Pledged Collateral which such Pledgor is required but
        fails to do hereunder.

       

      
        	7.  	
                Additional
                  Remedies Upon Event of
                  Default.

              

      

       

      Upon
        the
        occurrence of any Event of Default, subject to the provisions set forth in
        the
        Intercreditor Agreement, the Collateral Trustee shall have, in addition to
        all
        rights and remedies of the Collateral Trustee under the Code or other applicable
        law, and in addition to its rights under Section 6 above and under
        the
        other Collateral Documents, the following rights and remedies:

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (a)  Subject
        to the provisions set forth in the Intercreditor Agreement, the Collateral
        Trustee may, after ten days' advance notice to each Pledgor, sell, assign,
        give
        an option or options to purchase or otherwise dispose of the Pledged Collateral,
        or any part thereof at public or private sale in accordance with securities
        laws, at any of the Collateral Trustee's offices or elsewhere, for cash,
        on
        credit or for future delivery, and upon such other terms as the Collateral
        Trustee may deem commercially reasonable. Each Pledgor agrees that ten 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.
        The
        Collateral Trustee shall not be obligated to make any sale of the Pledged
        Collateral regardless of notice of sale having been given. The Collateral
        Trustee 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. Each Pledgor
        recognizes that the Collateral Trustee 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 securities
        for
        their own account for investment and not with a view to the distribution
        or
        resale thereof.

       

      The
        proceeds of any collection, sale or other disposition of the Pledged Collateral,
        or any part thereof, shall, after the Collateral Trustee has made all deductions
        of expenses, including, but not limited to, reasonable attorneys' fees and
        other
        out-of-pocket expenses incurred in connection with repossession, collection,
        sale or disposition of such Pledged Collateral or in connection with the
        enforcement of the Collateral Trustee's rights with respect to the Pledged
        Collateral in any insolvency, bankruptcy or reorganization proceedings, be
        applied against the Note Obligations, whether or not all the same be then
        due
        and payable in the manner set forth in the Indenture and the Security Agreement.
        

       

      
        	8.  	
                Collateral
                  Trustee's Duties.

              

      

       

      The
        powers conferred on the Collateral Trustee 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 and preservation of
        any
        Pledged Collateral in its possession and the accounting for moneys actually
        received by it hereunder, the Collateral Trustee 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 the Collateral
        Trustee, 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. The remedies herein provided are cumulative
        and
        not exclusive of any remedies provided under the other Collateral Documents
        or
        the Indenture or by applicable Law or in any other written instrument or
        agreement relating to the Note Obligations or any security therefor. Each
        Pledgor waives any right to require the Collateral Trustee to proceed against
        any other Person or to exhaust any of the Pledged Collateral or other security
        for the Note Obligations or to pursue any remedy in the Collateral Trustee's
        power.

       

      
        
          
          

        

        
          5

          
            

          

        

         

         

        
          
          

        

      

      
        	10.  	
                Assignment.

              

      

       

      All
        rights of Collateral Trustee under this Agreement shall inure to the benefit
        of
        its successors and assigns. All obligations of the Pledgors shall bind its
        successors; provided, however, no Pledgor may assign or transfer any of its
        rights and obligations hereunder or any interest herein.

       

      
        	11.  	
                Severability.

              

      

       

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

       

      
        	12.  	
                Governing
                  Law.

              

      

       

      This
        Agreement shall be construed in accordance with and governed by the internal
        laws of the State of New York, except to the extent the validity or perfection
        of the security interests or the remedies hereunder in respect of any Pledged
        Collateral are governed by the law of a jurisdiction other than the State
        of New
        York.

       

      
        	13.  	
                Notices.

              

      

       

      All
        notices, requests, demands, directions and other communications (as used
        in this
        Section 13, collectively referred to as "notices") given to or made
        upon
        any party hereto under the provisions of this Agreement shall be in writing
        (including facsimile communication), unless otherwise expressly permitted
        hereunder, and shall be delivered or sent by facsimile or via
        nationally-recognized overnight courier, by hand or U.S. mail to the respective
        parties at the addresses and numbers set forth under their respective names
        provided in the Indenture or in accordance with any subsequent unrevoked
        written
        direction from any party to the other parties and delivered pursuant to the
        requirements of this Section 13. All notices shall, except as otherwise
        expressly herein provided, be effective: (a) in the case of facsimile,
        when
        received, (b) in the case of hand-delivered notice, when hand-delivered,
        (c) if given by mail, four days after such
        communication is deposited in the mail with first-class postage prepaid,
        return
        receipt requested, and (d) if given by any other means (including
        by air
        courier), when delivered. 

       

      
        	14.  	
                Specific
                  Performance.

              

      

       

      Each
        Pledgor acknowledges and agrees that, in addition to the other rights of
        the
        Collateral Trustee hereunder and under the other Collateral Documents and
        the
        Indenture, because the Collateral Trustee's remedies at law for failure of
        such
        Pledgor to comply with the provisions hereof relating to Collateral Trustee's
        rights: (a) to inspect the books and records related to the Pledged
        Collateral, (b) to receive the various notifications such Pledgor
        is
        required to deliver hereunder, (c) to obtain copies of agreements
        and

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

         

        documents
          as provided herein with respect to the Pledged Collateral, (d) to
          enforce
          the provisions hereof pursuant to which such Pledgor has appointed Collateral
          Trustee its attorney-in-fact, and (e) to enforce Collateral Trustee's
          remedies hereunder, would be inadequate and that any such failure would
          not be
          adequately compensable in damages, such Pledgor agrees that each such provision
          hereof may be specifically enforced, subject to the provisions set forth
          in the
          Intercreditor Agreement.

      

       

      
        	15.  	
                Voting
                  Rights and Rights to Receive Dividends or Distributions in Respect
                  of the
                  Pledged Collateral.

              

      

       

      This
        Agreement is given as security to secure performance of the Note Obligations.
        So
        long as no Event of Default shall occur and be continuing under the Indenture:
        

       

      (a)  Each
        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, the other Collateral Documents, the Indenture
        or the Intercreditor Agreement; provided,
        however,
        that
        such Pledgor will not exercise or will refrain from exercising any such right,
        as the case may be, if such action would have a material adverse effect on
        the
        grant of a security interest in the Pledged Collateral; and

       

      (b)  Each
        Pledgor shall be entitled to receive cash dividends or other distributions
        in
        the ordinary course made in respect of the Pledged Collateral, to the extent
        permitted to be paid pursuant to the Indenture and the Intercreditor Agreement,
        so long as no Event of Default shall occur and be continuing. 

       

      
        	16.  	
                Entire
                  Agreement; Amendments.

              

      

       

      This
        Agreement constitutes the entire agreement between the parties with respect
        to
        the subject matter hereof and supersedes all prior agreements relating to
        a
        grant of a security interest in the Pledged Collateral by each Pledgor. This
        Agreement may not be amended or supplemented except by a writing signed by
        the
        Collateral Trustee and each Pledgor and except in accordance with the Indenture
        and the Intercreditor Agreement.

       

      
        	17.  	
                Reconveyance.

              

      

       

      The
        Collateral Trustee's right, title and interest hereunder with respect to
        the
        Pledged Collateral shall terminate and be discharged upon payment in full
        of the
        Note Obligations and the Collateral Trustee shall, upon such termination
        and
        discharge and at the request and sole expense of each Pledgor, take such
        action
        and execute and deliver, such documents and instruments necessary to terminate,
        release and discharge this Agreement and the security interest created hereby,
        and to reconvey the Pledged Collateral to such Pledgor.

       

      
        
          
          

        

        
          7

          
            

          

        

         

         

        
          
          

        

      

      
        	18.  	
                Counterparts.

              

      

       

      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 taken together shall constitute but one
        and
        the same agreement.

       

      
        	19.  	
                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.

       

      
        	20.  	
                Intercreditor
                  Agreement.

              

      

       

      Notwithstanding
        anything herein to the contrary, the lien and security interest granted to
        the
        Collateral Trustee pursuant to this Agreement and the exercise of any right
        or
        remedy by the Collateral Trustee hereunder are subject to the provisions
        of the
        Intercreditor Agreement. In the event of any conflict between the terms of
        the
        Intercreditor Agreement and this Agreement, the terms of the Intercreditor
        Agreement shall govern and control.

       

      

      

      [SIGNATURE
        PAGE FOLLOWS]

      

      

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      
      

      
        SIGNATURE
          PAGE - PLEDGE AGREEMENT

         

        IN
          WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
          executed with the intention that it constitutes a sealed instrument as
          of the
          date first above written.

         

                                                                        INTEGRATED
          ALARM
          SERVICES GROUP, INC.,
          

                                                                        a
Delaware
          corporation

        

                                                                        By: /s/
          Timothy M. McGinn

                                                                        Title:  Chairman
          of the Board & CEO

                                                                        Name: Timothy
          M. McGinn

         

        

                                                                        WELLS
          FARGO BANK,
          N.A., as
          Collateral Trustee

        

                                                                        By: /s/ Joseph
          P. O'Donnell   

                                                                        Title: Assistant
          Vice President   

                                                                        Name: Joseph
          P. O'Donnell     

        

        

                                                                        MADISON
          PROTECTION,
          INC.

        

                                                                        By: /s/
          Timothy M. McGinn   

                                                                        Title: Authorized
          Person    

                                                                        Name: Timothy
          M. McGinn    

        

        
        

      
        
          
            

             

          

          
          

        

        
          S-1

          
            

          

        

        
          
          

        

      

      
      

      SCHEDULE
        A TO
        PLEDGE AGREEMENT

       

      

       

      (To
        Be Completed by Pledgor)

      

      

      

      DESCRIPTION
        OF PLEDGED COLLATERAL

       

      

      

      
        	
                Pledgor

              	
                Issuer

              	
                Percentage

              	
                Certificate
                  Number

              	
                Units/Shares

              
	
                 

                INTEGRATED
                  ALARM

                SERVICES
                  GROUP, INC.

                 

              	 	 	 	
                 

                1000

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