Exhibit 99.3
EXECUTION COPY
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "AGREEMENT") is executed by NUMEREX CORP.
("NUMEREX"), NUMEREX INVESTMENT CORP. ("NI"), NUMEREX SOLUTIONS LLC ("NS"), DCX
SYSTEMS, INC. ("DCX"), BNI SOLUTIONS LLC ("BNI"), BROADBAND NETWORKS, INC.
("BROADBAND"), MOBILE GUARDIAN LLC ("MG"), DATA1SOURCE LLC ("DATA1SOURCE"),
CELLEMETRY LLC ("CELLEMETRY") and UPLINK SECURITY, INC. ("UPLINK" and,
collectively with NI, NS, DCX, BNI, Broadband, MG, Cellemetry and Uplink, the
"SUBSIDIARIES", and the Subsidiaries together with Numerex, "DEBTORS") in favor
of BELLSOUTH PERSONAL COMMUNICATIONS, LLC, a wholly owned subsidiary of CINGULAR
WIRELESS LLC ("SECURED PARTY").
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged:
1. SECURITY INTEREST. Except as set forth in this SECTION 1, each of the
Debtors hereby grants, assigns, transfers, pledges and conveys to
Secured Party, a present and continuing security interest in and lien
on all now existing or hereafter arising rights, titles and interests
of Debtors in, to or under any and all of their respective assets,
including all inventory, machinery, equipment, accounts, contract
rights and general intangibles (the "DEBTORS' ASSETS"), and Numerex and
NI hereby grant, assign, transfer, pledge and conveys to Secured Party
all stock certificates and membership units of the Subsidiaries owned
by Numerex and NI in the Subsidiaries (the "PLEDGED SHARES"), in each
case together with all substitutions, replacements, products and
proceeds of each of the foregoing (including cash and non-cash)
(collectively, the "PROCEEDS"; Debtors' Assets, Pledged Shares and the
Proceeds are hereinafter referred to collectively as the "COLLATERAL").
Numerex and Secured Party each acknowledge and agree that the
Collateral hereunder shall not include any of the assets or stock
certificates of Numerex's subsidiary, Digilog, Inc., a Pennsylvania
corporation.
2. SECURED LIABILITIES. This Agreement and the security interest and lien
granted hereby to Secured Party secures the payment of all obligations
of Numerex to Secured Party arising under that certain Secured
Promissory Note of even date herewith (the "NOTE"), executed and issued
by Numerex in favor of Secured Party (the "OBLIGATIONS").
3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF DEBTORs. Each
of the Debtors hereby represents, warrants, covenants and agrees that:
(A) it is a corporation or
a limited liability company, as applicable, duly organized, validly
existing and in good standing under the laws of the state of its
incorporation or formation; (B) it has all requisite corporate or
limited liability company, as applicable, power and authority, and has
obtained all approvals and consents necessary, to execute, deliver and
perform this Agreement; (C) the execution, delivery and performance of
this Agreement have been duly authorized by all requisite corporate or
limited liability company action, as applicable, on its part; (D) this
Agreement constitute its valid, legal and binding obligation and is
enforceable against it in accordance with the terms hereof and grants
to Secured Party a valid and enforceable security interest in or other
lien in the Collateral; (E) it has good and marketable title to the
respective Collateral owned or leased by it (or in the case of any
after-acquired Collateral, it will have good and marketable title to
the respective Collateral owned or leased by it at the time it acquires
rights in such Collateral); (F) except for the security interest and
lien granted hereby in favor of Secured Party by Debtors, it is, or to
the extent of any Collateral acquired after the date hereof, will be,
the owner or holder of the Collateral free from any adverse lien,
security interest or encumbrances except liens, security interests or
encumbrances that are expressly subordinate to the rights of Secured
Party; (G) any and all records concerning the respective Collateral
owned or leased by it will be kept at its principal address indicated
below; (H) all records with respect to the Collateral at any time
furnished by it to Secured Party are and will be true and correct as of
the date furnished; (I) it hereby authorizes Secured Party to file UCC
Financial Statements evidencing the security interest and lien granted
by it hereby; (J) all risk of loss of the Collateral shall at all time
be and remain upon it irrespective of whether such Collateral is then
in its or Secured Party's possession; (K) it shall do all acts that may
be necessary to maintain, preserve and protect the respective
Collateral owned or leased by it, including appear in and defend any
action or proceeding that may adversely affect its title to or Secured
Party's interest in the Collateral; (L) it shall not use or permit any
Collateral owned or leased by it to be used in violation of any
applicable law, rule, or regulation or any provision of this Agreement,
the Stock Purchase Agreement or the Note; (M) it shall pay promptly
when due all taxes, assessments, charges and liens now or hereafter
imposed upon or affecting the Collateral owned or leased by it; (N) it
shall not sell, encumber, lease, rent or otherwise dispose of or
transfer any Collateral owned or leased by it, or any right or interest
therein, except as expressly provided in SECTION 4 below; (N) upon the
occurrence and during the continuance of an Event of Default (as
defined below), Numerex shall reimburse Secured Party upon demand for
all costs and expense, including, without limitation, reasonable
attorneys' fees and disbursements, Secured Party may now or hereafter
incur while exercising or enforcing any right, power or remedy provided
to Secured Party by this Agreement or by law, all of which costs and
expenses shall constitute part of the Obligations secured hereunder;
(O) upon request of Secured Party, it will do all acts and things, and
will execute all instruments (including security agreement, financing
statements, amendments, statements of change, etc.) necessary under
applicable law to establish, maintain and continue Secured Party's
perfected security interest in the Collateral; and (P) it will
immediately give written notice to Secured Party of any change in its
name, state of incorporation or principal place of business.
4. ADMINISTRATION OF COLLATERAL. Unless and until an Event of Default
shall have occurred and be continuing, each Debtor may manage, collect
and administer the Collateral (including, without limitation, voting
its interests in the Pledged Shares, and collecting and retaining all
dividends and distributions made in respect thereof) only in the
ordinary course of its business, and consistent with its past practices
and covenants and obligations hereunder. Provided that no Event of
Default has occurred, in no event shall any Debtor have a right to
sell, transfer, assign, convey or otherwise dispose of (a "SALE") any
of the Collateral owned or leased by it without prior written consent
of Secured Party, which consent could not be unreasonably withheld.
Notwithstanding the foregoing and subject to the requirements below,
Secured Party hereby consents to (i) a Sale by Numerex of all of its
ownership interest in DCX, BNI, Broadband and Data1Source, and (ii) a
Sale by DCX, BNI and Data1Source of all of their respective assets, in
each case in any one or more transactions (individually, an "INDIVIDUAL
PERMITTED SALE", and collectively, the "PERMITTED SALE"), provided that
the consideration received by Numerex or any other Debtor as a result
of each Individual Permitted Sale is paid in cash. To the extent any
Individual Permitted Sale is proposed which includes any consideration
other than cash, such Individual Permitted Sale will require the
consent of the Secured Party, which consent will not be unreasonably
withheld; provided, however, that Secured Party shall retain a security
interest in the proceeds of any such Sale regardless of the type of
consideration received thereunder. The Permitted Sale shall also be
subject to the mandatory prepayment provisions contained in the Note.
5. PERFORMANCE OF DEBTORS' OBLIGATIONS. Upon occurrence or during the
continuance of an Event of Default, in addition to and not in
limitation of all the rights under SECTION 7 below, Secured Party may,
at its sole discretion, take any action that is necessary for the
maintenance or preservation of any of the Collateral or its interest
therein.
6. EVENT OF DEFAULT. An "EVENT OF DEFAULT" shall mean (A) each Event of
Default under the Note; (B) material breach by any Debtor of any
representation or warranty made by it in SECTION 3 of this Agreement;
(C) failure of any Debtor to perform or comply with, in any material
respect, any of its covenants set forth in SECTION 3 of this Agreement,
which failure is not cured within twenty (20) days of the giving by
Secured Party to such Debtor of written notice of same; (D) failure of
any Debtor to perform and comply with any other covenants set forth in
this Agreement, including covenants in SECTION 4; or (E) if all or any
material portion of the Collateral is seized or levied upon or a
receiver or other custodian is appointed for it.
7. REMEDIES UPON DEFAULT. If an Event of Default shall occur and be
continuing, then Secured Party may: (A) declare any or all of the
Obligations to be immediately due and payable and foreclose or
otherwise enforce Secured Party's security interest in or other lien
hereunder on any or all of the Collateral in any manner permitted by
law or provided for in this Agreement; (B) sell or otherwise dispose of
any of the Collateral; (C) demand that any Debtor assemble the records
relating to the Collateral owned by it and make them available to
Secured Party at a place designated by Secured Party which is
reasonably convenient for Secured Party and such Debtor; (D) instruct
any Debtor in writing to deliver to Secured Party, upon such Debtor's
receipt thereof, all cash, checks,
drafts, chattel paper and other instruments in writing for the payment
of money (properly endorsed, where required, so that such items may be
collected by Secured Party) that are thereafter received by such Debtor
in full or partial payment or otherwise as proceeds of any of the
Collateral; (E) collect all accounts receivable, including, without
limitation, notifying the account debtors in its name or in the name of
any Debtor, as its attorney-in-fact, to make payments directly to
Secured Party; and (F) exercise all other rights of a secured party
under the UCC (as defined below).
8. EXPENSES INCURRED BY SECURED PARTY. In the Secured Party's reasonable
discretion, if any Debtor fails to do so, the Secured Party may
discharge taxes and other encumbrances at any time levied or placed on
any of the Collateral, maintain any of the Collateral and pay any
necessary filing fees or insurance premiums. Numerex agrees to
reimburse the Secured Party on demand for all expenditures so made. The
Secured Party shall have no obligation to Debtors or any other person
to make any such expenditures, nor shall the making thereof be
construed as a waiver or cure of any Event of Default.
9. SURETYSHIP WAIVERS BY DEBTORS. The Debtors waive demand, notice,
protest, notice of acceptance of this Agreement, notice of loans made,
credit extended, Collateral received or delivered or other action taken
in reliance hereon and all other demands an notices of each
description. With respect to both the Obligations and the Collateral,
the Debtors assent to any extension or postponement of the time of
payment or any other indulgence, to any substitution, exchange or
release of or failure to perfect any security interest in any
Collateral, to the addition or release of any party or person primarily
or secondarily liable, to the acceptance of partial payment thereon and
the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as the Secured Party may deem
advisable. The Secured Party, to the extent allowed by law, shall have
no duty as to the collection or protection of the Collateral or any
income therefrom, the preservation of rights against prior parties, or
the preservation of any rights pertaining thereto. The Debtors further
waive any and all other suretyship defenses.
10. PROCEEDS OF DISPOSITIONS; EXPENSES. Upon the occurrence and during the
continuance of an Event of Default, the Debtors agree to pay to Secured
Party on demand any and all expenses, including reasonable attorneys'
fees and disbursements, incurred or paid by the Secured Party in
protecting, preserving or enforcing the Secured Party's rights and
remedies under or in respect of any of the Obligations or any of the
Collateral. After deducting all of said expenses, the residue of any
proceeds of collection or sale or other disposition of Collateral
shall, to the extent actually received in cash, be applied to the
payment of the Obligations in such order or preference as Secured Party
may determine. Upon the final payment and satisfaction in full of all
of the Obligations and after making any payments required by Sections
9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code of the
State of Georgia, any excess shall be returned to the Debtors. In the
absence of final payment and satisfaction in full of all of the
Obligations, the Debtors shall remain liable for any deficiency.
11. NOTICE OF INTENDED DISPOSITION. If any notification of intended
disposition of any Collateral is required by law, reasonable
notification shall be deemed given if written
notice is either given by express courier or deposited in the U.S.
Mail, certified postage prepaid, addressed to Debtors and such other
persons or entities as Secured Party deems to be appropriate, stating
the time and place of any public sale or the time after which any
private sale or disposition is to be made, at least twenty (20) days
prior thereto.
12. MISCELLANEOUS. (A) This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed to be an original,
but all of which together shall constitute one agreement; (B) this
Agreement shall in all respects be construed in accordance with and
governed by the laws of the state of Georgia without regard to the
conflicts of laws principles thereof; (C) the captions of the sections
of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part hereof or used in construing the intent of
the parties; (D) if any part of any provision of this Agreement shall
be invalid or unenforceable under applicable law, said part shall be
ineffective to the extent of such invalidity only, without in any way
effecting the remaining parts of said provision or the remaining
provisions; (E) this Agreement shall not be modified or amended except
in writing signed by each of the parties hereto; (F) this Agreement
shall bind and inure to the benefit of the parties, their successors,
legal representatives, heirs and, where permitted, assigns; (G) this
Agreement may be executed in any number of counterparts, each of which
when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument; (H) TIME
IS OF THE ESSENCE; (I) any waiver, forbearance or delay by Secured
Party in exercising any of its right, powers or remedies hereunder
shall not preclude the further exercise thereof, and every right, power
or remedy of Secured Party hereunder shall continue in full force and
effect until such right, power or remedy is specifically waived in
writing executed by Secured Party; (J) this Agreement, the Note and the
Stock Purchase Agreement contain the entire agreement between Secured
Party and Debtors with respect to the Collateral and the Obligations
and supersedes all prior agreements, commitments, understandings,
negotiations or correspondence between them with respect thereto; (K)
the rights, powers and remedies of Secured Party under this Agreement
shall be in addition to and not in limitation of all other rights,
powers or remedies given to Secured Party by applicable law and the
Note, all of which rights, powers, and remedies shall be cumulative and
may be exercised successively or concurrently without impairing Secured
Party's security interest in or other lien on any of the Collateral;
(L) Secured Party may assign or transfer this Agreement, but this
Agreement shall not be assignable or transferable, in whole or in part,
by any Debtor without the prior written consent of Secured Party; (M)
all notices or communications shall be given to Debtors at the
addresses set forth below following the caption "Principal Address" and
shall be given to Secured Party at the address set forth below
following the caption "Address of Secured Party"; and (N) unless
otherwise specifically provided herein to the contrary, such written
notices and communications shall be delivered by facsimile, email, and
hand or overnight courier service, or mailed, postage prepaid,
addressed to the parties hereto at the addresses referred to above in
subsection (M) or to such other addresses as any party may designate to
the other party by a written notice given in accordance with the
provisions hereof. Any written notice delivered by facsimile or email
shall be deemed given upon transmission. Any notice delivered by hand
or by overnight courier service shall be deemed given or received
upon receipt. As used herein, the "UCC" shall mean the Uniform
Commercial Code, as enacted in the State of Georgia, and as amended
from time to time. Capitalized terms used but not defined herein
(including, without limitation, the descriptions of the Collateral in
SECTION 1 hereof) shall have the meanings given to them in the UCC.
13. JURY WAIVER. EACH OF THE DEBTORS AND SECURED PARTY HEREBY KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVE TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE RIGHT ANY OF THE PARTIES MAY HAVE TO A
TRIAL BY JURY IN RESPECT TO ANY LITIGATION, WHETHER IN CONTRACT OR
TORT, AT LAW OR IN EQUITY, BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, THE COLLATERAL, THE OBLIGATIONS SECURED
HEREBY, AND ANY OTHER DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE
EXECUTED IN CONJUNCTION HEREWITH, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY
HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SECURED PARTY
ENTERING INTO THIS AGREEMENT. FURTHER, EACH DEBTOR HEREBY CERTIFIES
THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY, NOR SECURED PARTY'S
COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY
WOULD NOT, IN THE EVEN OF SUCH LITIGATION, SEEK TO ENFORCE THIS WAIVER
OF RIGHT TO JURY TRIAL PROVISIONS. NO REPRESENTATIVE OR AGENT OF
SECURED PARTY NOR SECURED PARTY'S COUNSEL HAS THE AUTHORITY TO WAIVE,
CONDITION, OR MODIFY THIS PROVISION.
EACH DEBTOR EXPRESSLY AND IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING AGAINST IT UNDER, ARISING OUT OF, OR IN ANY MANNER RELATING TO
THIS AGREEMENT SHALL BE BROUGHT IN THE STATE OR DISTRICT COURTS OF THE
STATE OF GEORGIA. EACH DEBTOR, BY ITS EXECUTION AND DELIVERY OF THIS
AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE PERSONAL
JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING AND
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH
ACTION OR PROCEEDING BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS OR ANY SIMILAR BASIS.
IN WITNESS WHEREOF, this Agreement has been signed, sealed,
and delivered by each Debtor on this 28th day of March, 2003.
NUMEREX CORP.
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: Chairman and Chief Executive Officer
NUMEREX INVESTMENT CORP.
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
BNI SOLUTIONS LLC
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
DCX SYSTEMS, INC.
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
NUMEREX SOLUTIONS, LLC
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
BROADBAND NETWORKS, INC.
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
MOBILE GUARDIAN LLC
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
DATA1SOURCE LLC
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
CELLEMETRY LLC
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
UPLINK SECURITY, INC.
By: /s/ Stratton J. Nicolaides
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Name: Stratton J. Nicolaides
Title: President
Principal Address of Numerex:
1600 Parkway Circle
Suite 200
Atlanta, GA 30339
Principal Address of each of the Subsidiaries:
BNI Solutions LLC Numerex Solutions, LLC
2820 E. College Ave. 1600 Parkwood Circle
Suite B Suite 200
State College, PA 16801-7548 Atlanta, Georgia 30339-2119
Uplink Security, Inc. DCX Systems, Inc.
1600 Parkwood Circle 2360 Maryland Road
Suite 200 Willow Grove, PA 19090
Atlanta, Georgia 30339-2119
Broadband Networks, Inc. Mobile Guardian LLC
2820 E. College Ave. 1600 Parkwood Circle
Suite B Suite 200
State College, PA 16801-7548 Atlanta, Georgia 30339-2119
Data1Source LLC Numerex Investment Corp.
1600 Parkwood Circle 1600 Parkwood Circle
Suite 200 Suite 200
Atlanta, Georgia 30339-2119 Atlanta, Georgia 30339-2119
Cellemetry LLC
1600 Parkwood Circle
Suite 200
Atlanta, Georgia 30339-2119
Address of Secured Party:
5565 Glenridge Connector
Suite 2000
Atlanta, Georgia 30342
Facsimile No. 404-236-6324