Exhibit
10.3
AMENDED AND RESTATED
SECURITY AGREEMENT
THIS AMENDED AND
RESTATED SECURITY AGREEMENT is entered into as of December 10, 2008
by and among COSTAR VIDEO SYSTEMS, LLC, a Delaware limited
liability company (“Costar”) and SIELOX, LLC, a
Delaware limited liability company (“ Sielox, LLC
” and, together with Costar, the “ Debtor
”), and BANK OF TEXAS, N.A., a national banking association
(“ Lender ”) on behalf of itself and its
Affiliates (“ Secured Party ”).
RECITALS
A.
Costar executed that
certain Commercial Security Agreement dated August 16, 2007, which
was renewed effective as of August 16, 2008 (the “
Original Security Agreement ”).
B.
Costar has requested
that Lender amend that certain Business Loan Agreement (Asset
Based) dated on or about August 16, 2008 executed by Costar and
Lender pursuant to the terms of that certain Amended and Restated
Loan Agreement (as may be amended from time to time, the “
Loan Agreement ”) dated of even date herewith executed
by Lender, Debtor and Sielox, Inc. a Delaware corporation (
“Parent” and, together with Debtor, the “
Borrower ”). In connection therewith, Borrower desires
to amend and restate the Original Security Agreement as set forth
herein (as it may be amended, restated or modified from time to
time, this “ Agreement ”).
AGREEMENT
ACCORDINGLY, Debtor and
Secured Party hereby agree as follows:
ARTICLE
1.
DEFINITIONS
Section 1.1
Definitions .
Terms used in this
Agreement, to the extent not otherwise defined herein, shall have
the same meanings as in the Loan Agreement. Terms used herein which
are defined in the Uniform Commercial Code as adopted by the State
of Texas, unless otherwise defined herein or in the Loan Agreement,
shall have their meanings as set forth in the Uniform Commercial
Code as adopted by the State of Texas (the “ Texas UCC
”).
Section 1.2
Other Definitional
Provisions .
References to “
Sections ”, “ Subsections ”,
“ Exhibits ”, and “ Schedules
” shall be to Sections, Subsections, Exhibits, and Schedules,
respectively, of this Agreement unless otherwise specifically
provided. All definitions contained in this Agreement are equally
applicable in the singular and plural forms of the terms defined.
All references to statutes and regulations shall include any
amendments of the same and any successor statutes and regulations.
References to particular sections of the UCC should be read to
refer also to parallel sections of the Uniform Commercial Code as
enacted in each state where any portion of the Collateral is or may
be located.
ARTICLE
2.
OBLIGATIONS
SECURED
The security interest
granted hereby is to secure punctual payment and performance of the
following: (1) the payment and performance when due of the
“Obligations”, as defined in the Loan Agreement, and
any and all renewals, extensions and/or rearrangements of any or
all of the Obligations (the liabilities and indebtedness described
above are herein called the “ Indebtedness ”);
(2) the reimbursement when due of all amounts which might be
advanced by Secured Party to satisfy amounts
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Security Agreement – Page 1
required to be paid by
Debtor or any other Borrower under this Agreement, the Loan
Agreement and each other Loan Document or to pay any taxes,
insurance premiums, liens, claims and charges against any or all of
the Collateral, or any properties covered by any instrument
executed or to be executed by Debtor or any other Borrower to
secure the Indebtedness or any amount secured hereby. together with
interest thereon, to the extent provided; and all costs, charges,
commissions, attorneys’ fees and expenses owing or to be
owing in connection with the Indebtedness or any amount secured
hereby and those owing or to be owing in connection with the
operation, maintenance or foreclosure of any or all of Collateral
or other properties; (3) the performance and payment by Debtor and
any other Borrower of all of its obligations in this Agreement, the
Loan Agreement and each other Loan Document; (4) the payment when
due of any and all other indebtedness, obligations and liabilities
of Borrower to Secured Party now outstanding or owing or which may
hereafter be executed or incurred, directly between Borrower and
Secured Party or acquired outright, as a participation,
conditionally or as collateral security from another by Secured
Party, absolute or contingent, joint and/or several, secured or
unsecured, due or not due, arising by operation of law or
otherwise. or direct or indirect, including indebtedness,
obligations and liabilities to Secured Party of Borrower as a
member of any partnership, syndicate, association or other group,
and whether incurred by Debtor as principal, surety. endorser,
guarantor, accommodation party or otherwise, and (5) any and all
extensions, renewals, and/or rearrangements of any and all of the
foregoing (the obligations described in (1), (2), (3). (4) and (5)
above are hereinafter called the “ Obligations
”).
ARTICLE
3.
SECURITY
INTEREST
Section 3.1
Security
Interest .
As collateral security for the prompt payment
and performance in full when due of the Obligations (whether at
stated maturity, by acceleration, or otherwise), Debtor hereby
pledges and assigns to Secured Party, and grants to Secured Party a
continuing lien on and security interest in, all of Debtor’s
right, title, and interest in and to the following, whether now
owned or hereafter arising or acquired and wherever located
(collectively, the “ Collateral ”):
Accounts
.
All accounts of Debtor,
as the term “accounts” is defined in Section 9.102 of
the Texas UCC, now owned or hereafter acquired by Debtor, and in
any event, shall include, without limitation, and of the following,
whether now owned or hereafter acquired by Debtor: (a) all rights
of Debtor to payment for goods sold or leased or services rendered,
whether or not earned by performance, (b) all accounts receivable
of Debtor, (c) all rights of Debtor to receive any payment of money
or other form of consideration, (d) all security pledged, assigned,
or granted to or held by Debtor to secure any of the foregoing. (e)
all guaranties of, or indemnification with respect to, any of the
foregoing, and (f) all rights of Debtor as an unpaid seller of
goods or services, including, but not limited to, all rights of
stoppage in transit, replevin, reclamation, and resale.
Inventory
.
All inventory of Debtor,
as the term “inventory” is defined in Section 9.102 of
the Texas UCC, now owned or hereafter acquired by Debtor, and, in
any event, shall include, without limitation, each of the
following, whether now owned or hereafter acquired by Debtor: (a)
all goods and other personal property of Debtor that are held for
sale or lease or to be furnished under any contract of service, (b)
all raw materials, work-in-process, finished goods, inventory,
supplies, and materials of Debtor, (c) all wrapping packaging,
advertising, and shipping materials of Debtor, (d) all goods that
have been returned to. repossessed by, or stopped in transit by
Debtor, and (e) all Documents evidencing any of the
foregoing.
Equipment
.
All equipment of Debtor,
as the term “equipment” is defined in Section 9.102 of
the Texas UCC, now owned or hereafter acquired by Debtor and, in
any event, shall include, without limitation, all machinery,
equipment, furniture, fixtures, trade fixtures,
trailers,
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Security Agreement – Page 2
rolling stock, vessels,
aircraft, and vehicles now owned or hereafter acquired by Debtor
and any and all additions, substitutions, and replacements of any
of the foregoing, wherever located, together with all attachments,
components, parts, equipment, and accessories installed thereon or
affixed thereto.
General
Intangibles .
All general intangibles
of Debtor, as the term “general intangibles’ is defined
in Section 9.102 of the Texas UCC, now owned or hereafter acquired
by Debtor and, in any event, shall include, each of the following,
whether now owned or hereafter acquired by Debtor: (a) all of
Debtor’s service marks, trade names, trade secrets,
registrations, goodwill, franchises, licenses, permits, inventions,
designs, patents, patent applications, trade marks, trade mark
applications, copyrights, proprietary information, and customer
lists, (b) all of Debtor’s books, records, data, plans,
manuals, computer software computer disks, computer programs,
source codes, object codes, and all rights of Debtor to retrieve
data and other information from third parties, (c) all of
Debtor’s contract rights, partnership interests, joint
venture interests, securities, deposit accounts, investment
accounts, and certificates of deposit, (d) all right of Debtor to
payment under letters of credit and similar agreements, (e) all tax
refunds and tax refund claims of Debtor, (f) all choses in action
and causes of action of Debtor (whether arising in contract, tort,
or otherwise and whether or not currently in litigation) and all
judgments in favor of Debtor, (g) all rights and claims of Debtor
under warranties and indemnities, and (h) all rights of Debtor
under any insurance, surety, or similar contract or
agreement.
Chattel
Paper .
All chattel paper of
Debtor, as the term “chattel paper” is defined in
Section 9.102 of the Texas UCC, now owned or hereafter acquired by
Debtor.
Instruments .
All instruments of
Debtor, as the term “instruments” is defined in Section
9.102 of the Texas UCC, now owned or hereafter acquired by Debtor,
and, in any event, shall include all promissory notes, drafts,
bills of exchange, and trade acceptance of Debtor, whether now
owned or hereafter acquired.
Documents
.
All documents of Debtor,
as the term “documents” is defined in Section 9.102 of
the Texas UCC, now owned or hereafter acquired by Debtor,
including, without limitation, all documents of title and all
receipts covering, evidencing or representing goods now owned or
hereafter acquired by Debtor.
Software
.
All present and future
software of Debtor, as the term “software” is defined
in Section 9.102 of the Texas UCC.
The term “
Collateral ” as used in this Agreement shall mean and
include, and the security interest shall cover, all of the
foregoing property, as well as any accessions, additions and
attachments thereto and the proceeds and products thereof including
without limitation, all cash, general intangibles, accounts,
inventory, equipment, fixtures, notes, drafts, acceptances,
securities, instruments, chattel paper, insurance proceeds payable
because of loss or damage, or other property, benefits or rights
arising therefrom, and in and to all returned or repossessed goods
arising from or relating to any of the property described herein or
other proceeds of any sale, rental, lease or other disposition of
such property.
Section 3.2
Financing
Statements .
Debtor hereby
irrevocably authorizes Secured Party at any time and from time to
time to file in any relevant jurisdiction any financing statements
and amendments thereto that contain the information required by
Article 9 of the Uniform Commercial Code of each applicable
jurisdiction for the filing of any financing statement or
amendment, including whether Debtor is an organization, the type of
organization and any organizational identification number issued to
Debtor. Debtor agrees to provide such information to Secured Party
promptly upon request.
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Security Agreement – Page 3
Debtor also ratifies its
authorization for Secured Party to file in any relevant
jurisdiction any financing statements or amendments thereto if
filed prior to the date hereof.
Secured Party is further
authorized to file with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office)
such documents as may be necessary or advisable for the purpose of
perfecting, confirming continuing, enforcing or protecting the
security interest granted by Debtor, without the signature of
Debtor, and naming Debtor as debtor and Secured Party as secured
party.
Section 3.3
Debtor Remains
Liable .
Notwithstanding anything
to the contrary contained herein, Debtor shall remain liable under
the contracts. agreements, documents and instruments included in
the Collateral to the extent set forth therein to perform all of
its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, the exercise by Secured Party of
any of its rights hereunder shall not release Debtor from any of
its duties or obligations under the contracts, agreements,
documents and instruments included in the Collateral, and Secured
Party shall not have any indebtedness, liability or obligation
under any of the contracts, agreements, documents and instruments
included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or
duties of Debtor thereunder or to take any action to collect or
enforce any claim for payment assigned hereunder.
Section 3.4
Delivery of
Collateral .
All certificates or
instruments representing or evidencing any of the Collateral,
promptly upon Debtor gaining any rights therein, shall be delivered
to and held by or on behalf of Secured Party pursuant hereto in
suitable form for transfer by delivery, or accompanied by duly
executed instruments of transfer or assignment in blank, all in
form and substance satisfactory to Secured Party. After the
occurrence and during the continuation of an Event of Default,
Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing any
Collateral in its possession for certificates or instruments of
smaller or larger denominations.
Section 3.5
Limited
License .
Debtor irrevocably
grants Secured Party a non-exclusive license to use all present and
future Intellectual Property of Debtor, together with goodwill
associated therewith, in connection with the maintenance,
preservation. preparation, sale, disposition. collection,
foreclosure, or other realization of, upon, or with respect to the
Collateral. Secured Party’s rights with respect to such
license are fully prepaid, and no royalties or other compensation
shall be payable by Secured Party to Debtor with respect to such
license. Without limiting the foregoing, upon Secured Party’s
request, Debtor shall execute a License Agreement, granting Secured
Party a limited license in the Intellectual Property as may be
described therein.
ARTICLE
4.
REPRESENTATIONS AND
WARRANTIES
To induce Secured Party
to enter into this Agreement and the Loan Agreement, Debtor
represents and warrants to Secured Party that:
Section 4.1
Title
.
Debtor is, and with
respect to Collateral acquired after the date hereof Debtor will
be, the legal and beneficial owner of the Collateral free and clear
of all charges, liens, security interests, adverse claims and
encumbrances of any nature whatsoever, other than the security
interest granted hereby.
Section 4.2
Accounts
.
Unless Debtor has given
Secured Party written notice to the contrary, whenever the security
interest granted hereunder attaches to an account, Debtor shall be
deemed to have represented and warranted to Secured Party as to
each and all of its accounts that each account is
genuine
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Security Agreement – Page 4
and in all respects what
it purports to be, each account represents the legal, valid, and
binding obligation of the account debtor evidencing indebtedness
unpaid and owed by such account debtor arising out of the
performance of labor or services by Debtor or the sale or lease of
goods by Debtor, the amount of each account represented as owing is
the correct amount actually and unconditionally owing except for
normal trade discounts granted in the ordinary course of business,
and no account is subject to any offset, counterclaim, or other
defense.
Section 4.3
Financing
Statements .
No financing statement,
security agreement, or other lien instrument covering all or any
part of the Collateral is on file in any public office, except as
may have been filed in favor of Secured Party pursuant to this
Agreement.
Section 4.4
Principal Place of
Business .
The principal place of
business and chief executive office of Debtor, and the office where
Debtor keeps its books and records, is located at the address of
Debtor shown in Schedule 6.21 of the Loan Agreement
Section 4.5
Location of
Collateral .
All inventory and
equipment of Debtor are located at the places specified on Schedule
1 hereto. If any such location is leased by Debtor, the name and
address of the landlord leasing such location is identified on
Schedule 1 hereto. Debtor has exclusive possession and control of
its inventory and equipment None of the inventory or equipment of
Debtor is evidenced by a document (including, without limitation, a
negotiable document of title). All instruments and chattel paper of
Debtor have been delivered to Secured Party.
Section 4.6
Perfection
.
Upon the filing of
Uniform Commercial Code financing statements in the State of
Delaware, the security interest in favor of Secured Party created
herein will constitute a valid and perfected lien upon and security
interest in the Collateral, subject to no equal or prior liens,
security interests or encumbrances.
Section 4.7
Inventory
.
All inventory has been
produced in compliance with all requirements of the Fair Labor
Standards Act.
Section 4.8
Benefit to
Debtor .
The value of the
consideration received and to be received by Debtor as a result of
Borrower and Secured Party entering into the Loan Agreement and
Debtor executing and delivering this Agreement is reasonably worth
at least as much as the liability and obligation of Debtor
hereunder, and such liability and obligation and Borrower’s
entering into the Loan Agreement have benefited and may reasonably
be expected to benefit Debtor directly and indirectly.
ARTICLES.
COVENANTS
Debtor covenants and
agrees with Secured Party that until the Obligations are paid and
performed in full and all commitments of Secured Party to Debtor
have terminated:
Section 5.1
Encumbrances .
Debtor shall not create,
permit, or suffer to exist, and shall defend the Collateral
against, any charge, lien, security interest, adverse claim or
encumbrance on the Collateral and shall defend Debtor’s
rights in the Collateral and Secured Party’s security
interest in the Collateral against the claims and demands of all
Persons. Debtor shall do nothing to impair the rights of Secured
Party in the Collateral.
Section 5.2
Modification of
Accounts .
Debtor shall, in
accordance with prudent business practices, endeavor to collect or
cause to be collected from each account debtor under its accounts,
as and when due, any and all amounts owing under such accounts.
Except in the ordinary course of business
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Security Agreement – Page 5
consistent with prudent
business practices and industry standards, without the prior
written consent of Secured Party Debtor shall not grant any
extension of time for any payment with respect to any of the
accounts, compromise, compound, or settle any of the accounts for
less than the full amount thereof, release, in whole or in part,
any person liable for payment of any of the accounts, allow any
credit or discount for payment with respect to any account other
than trade discounts granted in the ordinary course of business, or
release any lien or guaranty securing any account
Section 5.3
Disposition of
Collateral .
Debtor shall not sell,
lease, assign (by operation of law or otherwise), or otherwise
dispose of, or grant any option with respect to, the Collateral or
any part thereof without the prior written consent of Secured
Party, except Debtor may sell its inventory in the ordinary course
of business.
Section 5.4
Further
Assurances .
At any time and from
time to time, upon the request of Secured Party, and at the sole
expense of Debtor, Debtor shall promptly execute and deliver all
such further agreements, documents and instruments and take such
further action as Secured Party may deem necessary or desirable to
preserve and perfect its security interest in and pledge and
assignment of the Collateral and carry out the provisions and
purposes of this Agreement or to enable Secured Party to exercise
and enforce its rights and remedies hereunder with respect to any
of the Collateral. Debtor agrees to defend the title to the
Collateral and the lien and security interest thereon of Secured
Party against the claim of any other person and to maintain and
preserve such lien and security interest until payment in full of
the Obligations. Without limiting the generality of
