1
EXHIBIT 10.27
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT, dated as of December 2, 1997, is
among SECURITY ASSOCIATES INTERNATIONAL, INC., a Delaware corporation ("SAI"),
SECURITY ASSOCIATES COMMAND CENTER II, L.L.C., a Michigan limited liability
company ("SACC"), MONITOR SERVICE GROUP, L.L.C., a Delaware limited liability
company ("MSG"), ALL-SECURITY MONITORING SERVICES, L.L.C., an Illinois limited
liability company ("ASMS"), AMJ CENTRAL STATION CORPORATION, INC., a Delaware
corporation ("AMJ"), TELECOMMUNICATIONS ASSOCIATES GROUP, INC., an Ohio
corporation ("ERC"),and FINOVA CAPITAL CORPORATION, a Delaware corporation
("FINOVA"), in its individual capacity and as agent for all Lenders (this and
all other capitalized terms used herein are defined in Section 1.1 below).
R E C I T A L S:
A. Borrowers and FINOVA are parties to a Loan Agreement dated December 31,
1996, as amended through the date hereof (the "Existing Loan Agreement")
pursuant to which FINOVA has made loans to Borrowers upon which there is a
principal balance owing of $14,934,730 (the "Existing Debt").
B. Borrowers have requested that FINOVA make additional loans to Borrowers
in the aggregate amount not to exceed $15,065,270 (the "Additional Loans").
C. FINOVA has agreed to make the Additional Loans upon the terms and
subject to the conditions set forth herein.
NOW, THEREFORE, it is agreed that the Existing Loan Agreement is Amended
and Restated as follows:
ARTICLE
1.
DEFINITIONS AND DETERMINATIONS
1.1. DEFINITIONS. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
Account Debtor: any Person who is obligated on or under an Account
Receivable.
Accountants: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or any other independent certified
public accounting firm selected by Borrowers and reasonably satisfactory to
Lenders.
Accounting Changes: has the meaning assigned to that term in Section 1.3.
2
Accounts Receivable: all presently existing and hereafter arising
accounts receivable and other rights to payment owing to any Borrower under
Security Monitoring Contracts and/or Central Station Contracts.
Accounts Receivable Decrease: for any period, the excess of the Eligible
Accounts at the beginning of such period over the Eligible Accounts at the end
of such period.
Accounts Receivable Increase: for any period, the excess of Eligible
Accounts at the end of such period over the Eligible Accounts at the beginning
of such period.
Acquisition: the acquisition by (i) MSG of Security Monitoring Contracts
or (ii) by any Permitted Subsidiary of a Central Station Business or (iii) by
SAI of all of the Equity Interests of a Person which owns and operates a
Central Station Business.
Acquisition Adjustment to Cash Flow: for any six-month period, the
product of (i)(A) if an Acquisition has been consummated during such period
an amount equal to the RMR of the Property that is the subject of such
Acquisition from the beginning of such period until the date such Acquisition
was consummated, and (B) in determining whether a proposed Acquisition
satisfies the conditions of subsection 4.3.2, an amount equal to the RMR of the
Property that is the subject of such Acquisition for such six-month period,
minus the aggregate of the pro forma expenses directly and indirectly related
to such RMR for the applicable period set forth in clause (A) or the six month
period set forth in clause (B), as determined to the satisfaction of Agent
based on financial and other information submitted to Agent by Borrowers and
subject to such adjustments for such period as Agent deems appropriate,
multiplied by (ii) two.
Acquisition Closing: the consummation of a Funded Acquisition.
Acquisition Closing Date: the date of an Acquisition Closing.
Acquisition Instruments: the purchase agreement and all other documents
executed in connection with an Acquisition.
Acquisition Loan Instruments: collectively, the following documents, as
applicable, to be executed and delivered in connection with each Acquisition:
(i) any amendments to the Loan Instruments and any mortgages,
security agreements, UCC Financing Statements and other
agreements reasonably required by Agent to (A) reflect the effect
of such Acquisition, (B)grant to Agent a perfected first Lien,
subject only to Permitted Prior Liens, upon all (x) Equity
Interests of any Subsidiary which is the subject of or is formed
to consummate such Acquisition, (y) existing and after-acquired
Property of such Subsidiary and (z) other Property acquired by any
Borrower pursuant to such Acquisition and (C) make any such
2
3
Subsidiary a "Borrower" under this Loan Agreement and a party to
the Contribution Agreement.
(ii) a Landlord Consent and Waiver executed by each Landlord under
each Lease assumed or executed by any Borrower in connection with
such Acquisition; and
(iii) such other instruments and documents as Agent may reasonably
require in connection with such Acquisition.
ADA: the Americans with Disabilities Act of 1990, as amended, any
successor statute thereto, and the rules and regulations issued thereunder, as
in effect from time to time.
Additional Loans: as defined in the Recitals.
Adjusted Annualized Operating Cash Flow: the Annualized Operating Cash
Flow for the applicable period, plus the Acquisition Adjustment to Cash
Flow for such period.
Adjusted Leverage Ratio: the ratio of the Adjusted Total Debt as of any
Funding Date to Adjusted Annualized Operating Cash Flow for the period ending
on the most recent date for which Borrowers have delivered to Lenders financial
statements pursuant to subsection 6.3.1.
Adjusted Total Debt: as of any Funding Date, the Total Debt as of such
date plus the requested Advance.
Advance: a disbursement of any portion of the Additional Loans.
Affiliate: any Person that directly or indirectly, through one or more
intermediaries, controls or is controlled by or is under common control with
another Person. The term "control" means possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or equity interests,
by contract or otherwise. For the purposes hereof, any Person which owns or
controls, directly or indirectly, 10% or more of the securities or equity
interests, as applicable, whether voting or non-voting, of any other Person
shall be deemed to "control" such Person.
Agent: FINOVA, as agent for all Lenders.
Alarm Licenses: a license or licenses issued by a state licensing
authority that authorize a Person to provide remote security monitoring
services to consumers and/or businesses within such state.
Amended and Restated Assignment of Leases: the Amended and Restated
Assignment of Leases of even date herewith executed by Borrowers in favor
of Agent with respect to each Lease under which any Borrower is the lessee, as
hereafter amended.
3
4
AMJ: as defined in the Preamble.
Annualized Operating Cash Flow: as of any applicable date, the product of
(i) the consolidated Operating Cash Flow of Borrowers for the six month period
ending on such date, multiplied by (ii) two.
Applicable Margin: as defined in subsection 2.4.1.
Applicable Margin Ratio: the ratio of Total Debt as of the last day of
any quarter to the Adjusted Annualized Operating Cash Flow of Borrowers for
the period ending on such day.
Applicable Ratio: on any day during a period set forth below, the ratio
set forth opposite such period:
Each Day During the Period Ratio
-------------------------- -----
Closing Date through 12/31/98 4.00
1/1/99 through 3/31/99 3.75
4/1/99 through 6/30/99 3.50
7/1/99 through 9/30/99 3.25
10/1/99 through 3/31/00 3.00
4/1/00 through 9/30/00 2.75
10/1/00 through 3/31/01 2.50
4/01/01 through 9/30/01 2.25
10/1/01 and thereafter 2.00
ASMS: has the meaning assigned to that term in the Preamble to this Loan
Agreement.
Assignee: any Person to which a Loan Assignment is made in compliance
with the provisions of subsection 9.1.1.
Assignment of Leases: the Amended and Restated Assignment of Leases
executed by Borrowers in favor of Agent of even date herewith.
Assignments of Acquisition Instruments: the assignments of Acquisition
Instruments executed by the applicable Borrower in connection with each
Acquisition made by such Borrower on or after the Closing Date, each such
assignment to be consented to by the applicable sellerDecember 1, 1997 if such
consent is required by the terms of the Acquisition Instruments, and each such
assignment and consent to be in form acceptable to Agent.
Assignments of Key Man Life Insurance: the assignments of each policy of
Key Man Life Insurance, each executed by SAI and in form and substance
acceptable to Agent.
4
5
Bankruptcy Code: the United States Bankruptcy Code and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Base Rate: the per annum rate of interest announced or published publicly
from time to time by Citibank, N.A. in New York, New York as its
corporate base (or equivalent) rate of interest, which rate shall change
automatically without notice and simultaneously with each change in such
corporate base rate. The Base Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to any customer
by Citibank, N.A. in New York, New York.
Basic Financial Statements: as defined in subsection 6.3.3.
Borrower: any of the Borrowers.
Borrowers: SAI, SACC, MSG, ASMS, AMJ, ERC and each Permitted Subsidiary.
Borrowers' Obligations: (i) any and all Indebtedness due or to become due,
now existing or hereafter arising, of Borrowers to Lenders and/or Agent
pursuant to the terms of this Loan Agreement or any other Loan Instrument and
(ii) the performance of the covenants of Borrowers contained in the Loan
Instruments.
▇▇▇▇▇▇▇: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
Business Day: any day other than a Saturday, Sunday or other day on which
banks in Phoenix, Arizona are required to close.
Business Insurance: such property, casualty, business interruption and
other insurance, other than the Key Man Life Insurance, as Agent from time to
time reasonably requires Borrowers to maintain.
Capital Expenditures: payments that are made or liabilities that are
incurred by any Borrower for the lease, purchase, improvement, construction or
use of any Property, the value or cost of which under GAAP is required to be
capitalized and appears on such Borrower's balance sheet in the category of
property, plant or equipment, without regard to the manner in which such
payments or the instruments pursuant to which they are made are characterized
by any Borrower or any other Person, but excluding payments made or liabilities
incurred in connection with an Acquisition. Except for the purpose of
determining Excess Cash Flow, a Capital Expenditure shall be deemed to be made
as of the time the Property which is the subject thereof is put into service by
the applicable Borrower.
Capitalized Lease: any lease of Property, the obligations for the rental
of which are required to be capitalized in accordance with GAAP.
5
6
Cash Equivalents: the aggregate of each Borrower's (i) cash on hand or in
any bank or trust company, and checks on hand and in transit, (ii) monies
on deposit in any money market account, and (iii) treasury bills, certificates
of deposit, commercial paper and readily marketable securities at current
market value having, in each instance, a maturity of not more than 180 days.
Cash Instruments: all cash, checks, drafts and other similar writings for
the payment of money.
Central Station Business: the business of owning and operating a central
monitoring station and businesses related thereto and providing service
pursuant to Central Station Contracts.
Central Station Contracts: contracts with Dealers to provide monitoring
services to the customers of the Dealers.
Chief Financial Officer: the chief financial officer of each Borrower, who
shall be a duly elected officer, member or manager of such Borrower.
Closing: the disbursement of the Initial Portion.
Closing Certificate: a closing certificate executed by Borrowers in form
and substance satisfactory to Agent.
Closing Date: the date of the Closing.
Code: the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Collateral: (i) all existing and after-acquired Property of each
Borrower, including without limitation all existing and after-acquired
Accounts Receivable, equipment, inventory and general intangibles, (ii) the
Membership Interests, (iii) the Pledged Capital Stock, (iv) the Key Man Life
Insurance, and (v) all proceeds of the foregoing.
Collected Funds: defined in subsection 2.11.1(b).
Compliance Certificate: a Compliance Certificate executed by Borrowers
in the form of EXHIBIT 1.1(A) attached hereto.
Contribution Agreement: the Amended and Restated Contribution Agreement
among Borrowers with respect to Borrowers' Obligations of even date herewith.
Covenant Leverage Ratio: the ratio of Total Debt as of the last day of
any period to Adjusted Annualized Operating Cash Flow for the period ending
on such day.
6
7
▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇.
Dealer: any Person whose primary business is the installation of
servicing alarm equipment and the sale of monitoring services.
Dealer Holdback Debt: any Indebtedness for Borrowed Money owed by MSG to
Dealers in connection with the purchase of Security Monitoring Contracts.
Dealer Holdback Report: the monthly report produced by Borrowers which
provides due dates and amounts owed to each Dealer to whom a portion of the
Dealer Holdback Debt is owed.
Debt Service: during any period, all payments of principal, interest,
premium, fees and other charges with respect to Indebtedness for Borrowed
Money, which payments are required or permitted to be made pursuant to this
Loan Agreement and are due and payable during such period, but excluding the
Loan Fee and any Prepayment Premium.
Debt Service Coverage Ratio: as of the last day of any quarter, the ratio
of the Adjusted Annualized Operating Cash Flow for the period ending on such
day to the Debt Service for the four quarter period ending on such day.
Default Rate: a per annum rate equal to the applicable Base Rate in effect
plus 4.0% per annum.
Default Rate Period: a period of time commencing on the date that an
Event of Default has occurred and ending on the date that such Event of Default
is cured or waived.
Eligible Accounts: at any given time, the aggregate of the face amount of
the accounts receivable of each Borrower not over 75 days past due.
Employee Benefit Plan: any employee benefit plan within the meaning of
Section 3(3) of ERISA which (i) is maintained for employees of any
Borrower or any ERISA Affiliate or (ii) has at any time within the preceding
six years been maintained for the employees of any Borrower or any current or
former ERISA Affiliate.
Environmental Audit: (i) a Phase I audit report with respect to a parcel
of real estate and such other studies and reports as Agent deems
necessary after review of the results of such Phase I audit report, including,
if reasonably required by Agent, soil and ground water tests, each such report
and study to be in form and content and issued by Persons reasonably acceptable
to Agent and (ii) a letter from each Person issuing each such report or study
entitling Lenders to rely thereon.
Environmental Certificate: an environmental certificate executed by
Borrowers in form and substance reasonably satisfactory to Agent.
7
8
Environmental Compliance Certificate: an Environmental Compliance
Certificate in the form of EXHIBIT 1.1(B).
Environmental Laws: any and all federal, state and local laws that relate
to or impose liability or standards of conduct concerning public or
occupational health and safety or protection of the environment, as now or
hereafter in effect and as have been or hereafter may be amended or
reauthorized, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Materials Transportation Act (42 U.S.C. Section 1802 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Toxic
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Clean Air Act (42
U.S.C. Section 7901 et seq.), the National Environmental Policy Act (42 U.S.C.
Section 4231, et seq.), the Refuse Act (33 U.S.C. Section 407, et seq.), the
Safe Drinking Water Act (42 U.S.C. Section 300(f) et seq.), the Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), and all rules,
regulations, codes, ordinances and guidance documents promulgated or published
thereunder, and the provisions of any licenses, permits, orders and decrees
issued pursuant to any of the foregoing.
Equity Interests: all of the outstanding capital stock of a corporation
and all of the membership interests of a limited liablity company.
ERC: as defined in the Preamble.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
any successor statute thereto, and the rules and regulations issued thereunder,
as in effect from time to time.
ERISA Affiliate: any Person who is a member of a group which is under
common control with any Borrower, who together with any Borrower is treated
as a single employer within the meaning of Section 414(b), (c) and (m) of the
Code.
Event of Default: any of the Events of Default set forth in Section 8.1.
Excess Cash Flow: for any period, (i) the consolidated Operating Cash
Flow of Borrowers for such period, (ii) plus, the Accounts Receivable
Decrease, if any, for such period and (iii) minus, the sum of the following for
such period: (A) Debt Service actually paid during such period, (B) all cash
payments made by Borrowers during such period with respect to Capital
Expenditures permitted pursuant to subsection 7.6, (C) all expenditures made by
Borrowers during such period for Non-Funded Acquisitions and (D) the Accounts
Receivable Increase, if any, for such period.
Excess Interest: as defined in subsection 2.4.3.
Existing Debt: as defined in the Recitals.
8
9
Existing Loan Agreement: as defined in the Recitals.
Funded Acquisition: an Acquisition that is funded with an Advance.
Funding Date: the date of the disbursement of an Advance.
Future Portion: the portion of the Additional Loans in excess of the
Initial Portion.
GAAP: generally accepted accounting principles as in effect from time to
time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Good Funds: United States Dollars available in Federal funds to (i)
FINOVA at or before 2:00 p.m., Phoenix time, on a Business Day and (ii) any
other Lender at the place and at or before the time designated in the written
direction delivered by such Lender to Borrowers pursuant to clause (ii) of
Section 2.11.2.
Governmental Body: any foreign, federal, state, municipal or other
government or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Hazardous Materials: any hazardous, toxic, dangerous or other waste,
substance or material defined as such in, regulated by or for purposes of any
Environmental Law.
Holding Companies: collectively, RMR Management Corp., Winnetka Investors,
Inc. and MCAP Investors, Inc., each a Delaware corporation.
Hurdle Amount: the monthly estimate of Borrowers' accrued interest on
the Principal Balance, as determined by Agent in its sole and absolute
discretion.
Incipient Default: any event or condition which, with the giving of notice
or the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet or would be required to be disclosed in a
financial statement, including, without duplication: (i) Indebtedness for
Borrowed Money, (ii) obligations secured by any Lien upon Property, (iii)
guaranties, letters of credit and other contingent obligations and (iv)
liabilities in respect of unfunded vested benefits under any Pension Plan or in
respect of withdrawal liabilities incurred under ERISA by any Borrower or any
ERISA Affiliate to any Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or
other like written obligation to pay money (including, without limitation, all
of Borrowers' Obligations, the Subordinated Debt and
9
10
Permitted Senior Indebtedness), (iii) in respect of rent or hire of
Property under Capitalized Leases or for the deferred purchase price of
Property, (iv) in respect of obligations under conditional sales or other title
retention agreements and (v) all guaranties of any or all of the foregoing.
Initial Portion: a portion of the Additional Loans in the amount of
$____________ to be disbursed on the Closing Date.
Instruments: collectively, the (i) Loan Instruments, (ii) Contribution
Agreement and (iii) Subordinated Debt Instruments.
Key Man Life Insurance: the life insurance on the lives of ▇▇▇▇▇▇▇ and
▇▇▇▇▇ required pursuant to subsection 6.6.1.
Landlord: a lessor under a lease of real property.
Landlord Consent and waiver: a landlord consent and waiver in the form of
EXHIBIT 1.1(D).
Leases: the leases of real property described in EXHIBIT 5.5.5.
Leasehold Property: any real estate which is the subject of a Lease under
which any Borrower is the lessee.
Lender Addition Agreement: an agreement executed by a Lender and an
Assignee pursuant to Section 9.1.
Lenders: FINOVA and each Assignee.
Lenders' Decisions: all determinations to be made by Lenders pursuant to
the terms of the Loan Instruments, including, without limitation, any
amendment or modification of any of the Loan Instruments, determinations with
respect to the declaration of Events of Default and acceleration of Borrowers'
Obligations or any other obligation of any Obligor, waivers of affirmative or
negative covenants or other provisions of the Loan Instruments, advancement of
funds pursuant to any of the Loan Instruments or the exercise of any rights or
remedies granted to Lenders or Agent pursuant to the terms of any of the Loan
Instruments.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention
agreement.
Loan: the Existing Debt and the Additional Loans.
Loan Agreement: this Amended and Restated Loan Agreement.
10
11
Loan Assignment: the assignment by a Lender of (i) any portion of such
Lender's interest in Borrowers' Obligations and (ii) any of such Lender's
other rights under any of the Loan Instruments.
Loan Fee: the fee to be paid by Borrowers to FINOVA in accordance with
Section 2.7.
Loan Instruments:
(i) Loan Agreement;
(ii) Note;
(iii) Security Instruments;
(iv) Subordination Agreement;
(v) Closing Certificate;
(vi) Solvency Certificate;
(vii) Environmental Certificate;
(viii) Uniform Commercial Code financing statements delivered to Agent
prior to the Closing and any such statements required by Agent on or
after the Closing Date;
(ix) Acquisition Loan Instruments when delivered pursuant to this Loan
Agreement; and
(x) such other instruments and documents as Agent reasonably may
require in connection with the transactions contemplated by this Loan
Agreement.
Loan Year: a period of time from the Closing Date or any anniversary of
the Closing Date to the immediately succeeding anniversary of the Closing Date.
Lockboxes: the lockboxes identified in the Lockbox Account Agreement into
which all Cash Instruments received by any Borrower from an Account Debtor
shall be deposited.
Lockbox Accounts: the accounts identified in the Lockbox Account
Agreement which shall be credited for all Cash Instruments deposited in the
Lockboxes.
Lockbox Account Agreement: the Amended and Restated Restricted Lockbox
and Cash Collateral Accounts Agreement among Lenders, Borrowers and Lockbox
Bank of even date herewith, as hereafter amended.
11
12
Lockbox Bank: shall mean American National Bank and Trust Company of
Chicago or any other financial institution acceptable to Lenders and Borrowers.
Manager: ▇▇▇▇▇▇▇.
Material Adverse Effect: (i) a material adverse effect upon the business,
operations, Property or financial condition of any Borrower or (ii) a material
impairment of the ability of any Obligor to perform its obligations under any
Loan Instrument to which it is a party.
Maximum Rate: as defined in subsection 2.4.3.
Membership Interests: all of the outstanding membership interests,
warrants, options and other equity interests of SACC, MSG, ASMS and any
Permitted Subsidiary.
MSG: as defined in the Preamble.
Multiemployer Plan: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which any Borrower or any ERISA Affiliate makes,
or accrues an obligation to make, contributions, or has made, or been obligated
to make, contributions within the preceding six years.
Non-Funded Acquisition: an Acquisition which is not funded with an
Advance, provided that immediately after such Acquisition, Borrowers have Cash
Equivalents of not less than $150,000.
Note: a promissory note in form and substance satisfactory to FINOVA in
the principal amount of $30,000,000 executed and delivered by Borrowers to
FINOVA to evidence the Loan, and any notes issued in substitution therefor
pursuant to subsection 9.1.3.
Obligor: any of the Obligors.
Obligors: collectively, Borrowers and the Holding Companies.
Operating Cash Flow: for any period for each Borrower, the net income of
such Borrower for such period:
(i) plus the sum of the following (without duplication), to the
extent deducted in determining such net income for such period:
(A) losses from sales, exchanges and other dispositions of
Property or other extraordinary losses not in the ordinary course of
business;
12
13
(B) interest paid or accrued on Indebtedness, including,
without limitation, interest on Capitalized Leases that is imputed
in accordance with GAAP and any other Debt Service, except interest
paid during such period on the Subordinated Debt;
(C) depreciation and amortization of assets;
(D) income taxes which are accrued but not paid during such
period; and
(E) any non-cash compensation to employees of any Borrower
and any non-cash compensation to dealers of Borrowers in connection
with incentive programs; and
(ii) minus the sum of the following (without duplication), to the
extent included in determining net income for such period:
(A) gains from sales, transactions, exchanges and other
dispositions of Property or other extraordinary gains not in the
ordinary course of business; and
(B) proceeds of any insurance other than business
interruption insurance.
Operating Lease: any lease which, under GAAP, is not required to be
capitalized.
Original Loan Year: a Loan Year as defined in the Existing Loan
Agreement.
Participant: any Person to which a Lender sells or assigns a
Participation.
Participation: a sale or an assignment by a Lender of a participating
interest in (i) any portion of such Lender's interest in Borrowers'
Obligations and (ii) any of such Lender's rights under any of the Loan
Instruments.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental Body
succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA, Title
IV of ERISA, or Section 412 of the Code and which (i) is maintained for
employees of any Borrower or any ERISA Affiliate, or (ii) has at any time
within the preceding six years been maintained for the employees of any
Borrower or any of their current or former ERISA Affiliates.
Permitted Liens: any of the following Liens:
13
14
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar charges, which
either are (A) not delinquent or (B) being contested diligently and
in good faith by appropriate proceedings, and as to which the applicable
Borrower has set aside reserves on its books which are satisfactory to
Agent;
(iv) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens, incurred in good faith
in the ordinary course of business, provided that the underlying
obligations relating to such Liens are paid in the ordinary course of
business, or are being contested diligently and in good faith by
appropriate proceedings and as to which the applicable Borrower has set
aside reserves on its books satisfactory to Agent, or the payment of which
obligations are otherwise secured in a manner reasonably satisfactory to
Agent;
(v) zoning ordinances, easements, licenses, reservations,
provisions, covenants, conditions, waivers or restrictions on the use of
Property and other title exceptions, in each case, that are reasonably
acceptable to Agent;
(vi) Liens in respect of judgments or awards with respect to which
no Event of Default would exist pursuant to subsection 8.1.6; and
(vii) Liens to secure payment of insurance premiums (A) to be paid
in accordance with applicable laws in the ordinary course of business
relating to payment of worker's compensation, or (B) that are required for
the participation in any fund in connection with worker's compensation,
unemployment insurance, old-age pensions or other social security
programs.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii) and (iv) of the
definition of Permitted Liens that are accorded priority to the
Security Interests by law; and
(iii) the Permitted Liens described in clauses (v) and (vii) of the
definition of Permitted Liens, subject to the limitations set forth
therein.
Permitted Senior Indebtedness: Indebtedness, other than Borrowers'
Obligations, incurred by any Borrower to purchase tangible personal
property or Indebtedness incurred to lease tangible personal property pursuant
to Capitalized Leases, provided that (i) the aggregate amount
14
15
of such Indebtedness of all Borrowers at any one time outstanding shall not
exceed $200,000, and (ii) no Event of Default exists at the time or will be
caused as a result of the incurrence of any Indebtedness described in clause
(i).
Permitted Senior Indebtedness Liens: Liens that secure Permitted Senior
Indebtedness, provided that (i) each such Lien attaches only to the
Property purchased or leased with the proceeds of the Permitted Senior
Indebtedness incurred with respect to such Property and (ii) Agent is granted a
Lien upon such Property, subject only to the Lien granted to the holder of the
applicable Permitted Senior Indebtedness.
Permitted Subsidiary: any Subsidiary (i) the Equity Interests of which
are the subject of a proposed Acquisition or which is formed to consummate such
Acquisition and (ii) the Equity Interests of which will be wholly owned by SAI
upon the consummation of such Acquisition, provided that Borrowers and such
Subsidiary (A) execute and deliver to Agent all applicable Acquisition Loan
Instruments in connection with such Acquisition and (B) satisfy the applicable
requirements of Section 4.2.
Person: any individual, firm, corporation, limited liability company,
business enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual, fiduciary
or other capacity.
Pledge Agreement: the Amended and Restated Pledge Agreement of even date
herewith executed by the Obligors pursuant to which Agent is granted a Lien
upon the Membership Interests and the Pledged Capital Stock, as hereafter
amended.
Pledged Capital Stock: all of the issued and outstanding capital stock,
warrants, options and other equity interests of AMJ, ERC and any Permitted
Subsidiary which is a corporation.
Prepayment Premium: defined in subsection 2.9.1(a).
Principal Balance: the unpaid principal balance of the Loan or any
specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all types of
tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve System having
a combined capital and surplus of at least $100,000,000.
Remainder Funds: defined in subsection 2.11.1(b).
RMR: the amount payable on Security Monitoring Contracts or Central
Station Contracts per month by an Account Debtor.
15
16
▇▇▇▇▇: ▇▇▇▇▇▇ ▇▇▇▇▇.
SAI: as defined in the Preamble.
Securities Act: the Securities Act of 1933, as amended, or any similar
Federal statute, and the rules and regulations of the Securities and
Exchange Commission promulgated thereunder, as in effect from time to time.
Security Agreement: the Amended and Restated Security Agreement executed
by Borrowers in favor of Agent of even date herewith, as hereafter amended.
Security Interests: the Liens in the Collateral granted to Agent pursuant
to the Security Instruments and any other document now or hereafter
executed by any Obligor which purports to ▇▇▇▇▇ ▇ ▇▇▇▇ on the Property of such
Obligor in favor of Agent.
Security Instruments: collectively, the Assignment of Leases, the
Assignments of Key Man Life Insurance, the Assignments of Acquisition
Instruments, the Security Agreement, the Pledge Agreement and the Lockbox
Account Agreement.
Security Monitoring Business: the business of providing remote
security monitoring services and operating Central Station Businesses.
Security Monitoring Contracts: any contract between MSG and a retail
customer involving the provision of remote security monitoring services to
such customer.
Solvency Certificate: a solvency certificate executed by Borrowers in
form and substance reasonably satisfactory to Agent.
Stated Rate: as defined in subsection 2.4.3.
Subordinated Debt: the Indebtedness in the principal amount of $5,000,000
owed by SAI to TJS Partners, as evidenced by the Subordinated Debt Instruments.
Subordinated Debt Instruments: all instruments and documents executed
and/or delivered in connection with the Subordinated Debt.
Subordination Agreement: the Amended and Restated Subordination Agreement
among Agent, TJS Partners and SAI of even date herewith.
Subsidiary: a corporation or a limited liability company which is not a
Borrower.
Termination Event: (i) a "Reportable Event" described in Section 4043 of
ERISA and the regulations issued thereunder; or (ii) the withdrawal of
any Borrower or any ERISA Affiliate from a Pension Plan during a plan year in
which it was a "substantial employer" as defined in
16
17
Section 4001(a)(2); or (iii) the termination of a Pension Plan, the filing of
a notice of intent to terminate a Pension Plan or the treatment of a Pension
Plan amendment as a termination under Section 4041 of ERISA; or (iv) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC; or (v) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan; or (vi) the partial or complete withdrawal of any Borrower or any ERISA
Affiliate from a Multiemployer Plan; or (vii) the imposition of a lien pursuant
to Section 412 of the Code or Section 302 of ERISA; or (viii) any event or
condition which results in the reorganization or insolvency of a Multiemployer
Plan under Sections 4241 or 4245 of ERISA; or (ix) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A of ERISA
or the institution by the PBGC of proceedings to terminate a Multiemployer Plan
under Section 4042 of ERISA.
TJS Partners: TJS Partners, L.P., a New York limited partnership.
Total Debt: as of any date, the sum of Borrowers' Obligations and Dealer
Holdback Debt as of such date.
UL Certification: underwriters laboratories approval of a Central Station
Business.
Unused Commitment Fee: the fee to be paid by Borrowers to FINOVA in
accordance with Section 2.8.
1.2. TIME PERIODS. In this Loan Agreement and the other Loan Instruments,
in the computation of periods of time from a specified date to a later
specified date, (i) the word "from" means "from and including," (ii) the words
"to" and "until" each mean "to, but excluding" and (iii) the words "through,"
"end of" and "expiration" each mean "through and including." Unless otherwise
specified, all references in this Loan Agreement and the other Loan Instruments
to (i) a "month" shall be deemed to refer to a calendar month, (ii) a "quarter"
shall be deemed to refer to a calendar quarter and (iii) a "year" shall be
deemed to refer to a calendar year.
1.3. ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In
the event that any "Accounting Changes" (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrowers and Lenders
agree to enter into negotiations to amend such provisions of this Loan
Agreement so as to reflect such Accounting Changes with the desired result that
the criteria for evaluating the financial condition of Borrowers shall be the
same after such Accounting Changes as if such Accounting Changes had not been
made. For purposes hereof, "Accounting Changes" shall mean (i) changes in
generally accepted accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants
17
18
(or any successor thereto) or other appropriate authoritative body and (ii)
changes in accounting principles as approved by the Accountants.
1.4. REFERENCES. All references contained in (i) this Loan Agreement to
"Article," "Section," "subsection," "subparagraph," "clause" or "Exhibit,"
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause or Exhibit, as applicable, of this Loan
Agreement, and (ii) any Loan Instrument to any Loan Instrument at any given
time shall be to such Loan Instrument as the same shall have been amended,
supplemented, restated or otherwise modified as of such time.
1.5. LENDER'S OR AGENT'S DISCRETION. Whenever the terms "satisfactory to
Lenders or Agent," "determined by Lenders or Agent," "acceptable to Lenders or
Agent," "Lenders or Agent shall elect," "Lenders or Agent shall request," "at
the option or election of Lenders or Agent," or similar terms are used in the
Loan Instruments, except as otherwise specifically provided therein, such terms
shall mean satisfactory to, at the election or option of, determined by,
acceptable to or requested by Lenders or Agent, as applicable, in their or its
sole and unlimited discretion.
1.6. BORROWERS' KNOWLEDGE. Any statements, representations or warranties
that are based upon the best knowledge of Borrowers or an officer or manager
thereof shall be deemed to have been made after due inquiry by Borrowers or an
officer or manager, as applicable, with respect to the matter in question.
ARTICLE
2.
LOAN AND TERMS OF PAYMENT
2.1. INITIAL PORTION.
2.1.1. AMOUNT AND DISBURSEMENT. The Initial Portion shall consist
of a disbursement to be made by Agent to Borrowers in the amount of
$__________ on the Closing Date, provided that all of the terms and conditions
set forth in Section 4.1 have been satisfied.
2.1.2. USE OF PROCEEDS. The proceeds of the Initial Portion shall
be used (i) to consummate a Funded Acquisition, (ii) to pay transaction costs
and (iii) for working capital.
2.2. FUTURE PORTION.
2.2.1. AMOUNT AND DISBURSEMENT. The Future Portion shall consist of
Advances to be made by Lenders to Borrowers up to the maximum amount of
$____________ from time to time after the Closing Date until the end of the
first Loan Year, provided that all of the terms and conditions set forth in
subsection 2.2.3 have been satisfied.
18
19
2.2.2. USE OF PROCEEDS. The proceeds of the Future Portion shall
be used to (i) consummate Funded Acquisitions, (ii) pay SAI all or a portion
of the amount which SAI has advanced in connection with a Non-Funded
Acquisition and (iii) pay transaction costs.
2.2.3. CONDITIONS PRECEDENT TO ADVANCES. The obligation of each
Lender to make any Advance shall be subject to the satisfaction of the
following conditions:
(A) no Incipient Default or Event of Default exists or would be
created by the disbursement of such Advance;
(B) each such Advance shall be in a minimum amount of $250,000 and
integral multiples of $50,000 in excess of that amount;
(C) Agent shall have received a Request for Advance from Borrowers
in the form of EXHIBIT 2.2.3 with respect to each such Advance no later
than 12:00 p.m., Chicago time, at least five (5) Business Days prior to
the proposed Funding Date with respect to such Advance, which Funding
Date shall be on a Business Day;
(D) the terms and conditions of Sections 4.2 and 4.3 shall have
been satisfied;
(E) the Property which has been or is being acquired and the terms
and conditions of the Acquisition to be consummated with such Advance
must be approved by Agent; and
(F) on the applicable Funding Date the representations and
warranties of each Obligor set forth in the Loan Instruments to which
such Obligor is a party shall be true and correct in all material respects
when made and at and as of the time of the Funding Date, except to the
extent that such representations and warranties expressly relate to an
earlier date.
2.3. NOTE AND REBORROWING.
2.3.1. NOTE. The Loan shall be evidenced by the Note.
2.3.2. REBORROWING. Borrowers shall not be entitled to reborrow any
portion of the Loan which is repaid or prepaid.
2.4. INTEREST.
2.4.1. INTEREST RATE. Except during a Default Rate Period as
provided in Section 2.10, Borrowers' Obligations shall bear
interest at the Base Rate in effect from time to time plus the Applicable
Margin. The "Applicable Margin" for any quarter shall be the percentage
set forth below opposite the Applicable Margin Ratio, determined as of the
last day of the second quarter immediately preceding such quarter:
19
20
Applicable Applicable
Margin Ratio Margin
------------ ----------
greater than 2.00%
or equal to 3.5
greater than 1.75%
or equal to 2.5
but less than 3.5
less than 2.5 1.50%
The Applicable Margin shall be 2.00% per annum until Lenders receive (i)
written notice from Borrowers requesting an adjustment in the Applicable Margin
accompanied by (ii) the financial statements indicating that the requested
adjustment is appropriate.
2.4.2. INTEREST COMPUTATION. Interest shall be computed on the
basis of a year consisting of 360 days and charged for the actual number
of days during the period for which interest is being charged. In computing
interest, the date of funding of an advance of the Loan shall be included and
the date of payment shall be excluded.
2.4.3. MAXIMUM INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, Lenders shall
not collect a rate of interest on any obligation or liability due and owing by
Borrowers to Lenders in excess of the maximum contract rate of interest
permitted by applicable law ("Excess Interest"). Lenders and Borrowers agree
that the interest laws of the State of Arizona govern the relationship among
them, but in the event of a final adjudication to the contrary, Borrowers shall
be obligated to pay, nunc pro tunc, to Lenders only such interest as then shall
be permitted by the laws of the state found to govern the contract relationship
among Lenders and Borrower. If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided for in
this Loan Agreement or any other Loan Instrument, then in such event (i) no
Obligor shall be obligated to pay such Excess Interest, (ii) any Excess
Interest collected by Lenders shall be, at Lenders' option, (A) applied to the
Principal Balance or to accrued and unpaid interest not in excess of the
maximum rate permitted by applicable law or (B) refunded to the payor thereof,
(iii) the interest rates provided for herein (collectively, the "Stated Rate")
shall be automatically reduced to the maximum rate allowed from time to time
under applicable law (the "Maximum Rate") and this Loan Agreement and the other
Loan Instruments, as applicable, shall be deemed to have been, and shall be,
modified to reflect such reduction, and (iv) neither any Borrower nor any other
Obligor shall have any action against Lenders for any damages arising out of
the payment or collection of such Excess Interest; provided, however, that if
at any time thereafter the Stated Rate is less than the Maximum Rate, Borrowers
shall, to the extent permitted by law, continue to pay interest at the Maximum
Rate until such time as the total interest received by Lenders is
20
21
equal to the total interest which Lenders would have received had the Stated
Rate been (but for the operation of this provision) the interest rate payable.
Thereafter, the interest rate payable shall be the Stated Rate unless and until
the Stated Rate again exceeds the Maximum Rate, in which event the provisions
contained in this subsection 2.4.3 shall again apply.
2.5. PRINCIPAL AND INTEREST PAYMENTS.
2.5.1. INTEREST. Except as otherwise provided in subsections
2.9.1(c) and 2.9.2(c), interest on the Principal Balance shall be payable
monthly in arrears on the first Business Day of each month beginning with the
month following the month in which the Closing Date occurs. PRINCIPAL. The
Principal balance shall be payable in consecutive quarterly installments on the
first Business Day of each quarter set forth below in an amount equal to the
product of (i) the percentage set forth below opposite such quarter, multiplied
by (ii) the outstanding Principal Balance as of the end of the first Loan Year
as follows:
Percentage of Outstanding
Principal Balance as of end
of first Loan Year Due as
Quarter Beginning an Installment
----------------- --------------
April, 1999 2.5%
July, 1999 2.5%
October, 1999 2.5%
January, 2000 2.5%
April, 2000 4.0%
July, 2000 4.0%
October, 2000 4.0%
January, 2001 4.0%
April, 2001 5.0%
July, 2001 5.0%
October, 2001 5.0%
January, 2002 5.0%
April, 2002 5.5%
July, 2002 5.5%
October, 2002 5.5%
The remaining Principal Balance, together with any other sums which then
are due and payable pursuant to the terms of the Loan Instruments, shall
be due and payable in full on the last Business Day of the quarter
commencing October, 2002.
2.6. LATE CHARGES. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of
five days, Borrowers shall pay on demand to Lenders a late charge of 2% of the
amount of such overdue payment.
21
22
2.7. LOAN FEE. Borrowers shall pay a loan fee to FINOVA in the amount of
$222,000, which shall be deemed to be fully earned and payable on the Closing
Date.
2.8. UNUSED COMMITMENT FEE. For the first Loan Year, Borrowers shall pay
to Agent a fee (the "Unused Commitment Fee") monthly in arrears on the first
Business Day of each month beginning with the month following the month in
which the Closing Date occurs in an amount equal to the product of (i) (A)
$30,000,000 minus (B) the average daily balance of the outstanding Principal
Balance during such preceding month, multiplied by (ii) one-half of one percent
(.50%) on a per annum basis. The Unused Commitment Fee expires at the end of
the first Loan Year.
2.9. PREPAYMENTS.
2.9.1. VOLUNTARY PREPAYMENT OF LOAN. Borrowers may at any time
voluntarily prepay in whole or in part the Principal Balance, subject to
the following conditions:
(A) PREPAYMENT PREMIUM. Except as provided in subsection
2.9.3, concurrently with any voluntary prepayment of all or any part
of the Principal Balance, Borrowers shall pay to Lenders a prepayment
premium (the "Prepayment Premium") equal to a percentage of the amount of
the Principal Balance prepaid, determined in accordance with the following
schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
First Original Loan Year 4.0%
Second Original Loan Year 3.0%
Third Original Loan Year 2.0%
Fourth Original Loan Year 1.0%
Thereafter 0.0%
(B) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF PREPAYMENTS.
Not less than 20 days prior to the date upon which Borrowers desire
to make any voluntary prepayment of the Principal Balance, Borrowers
shall deliver to Lenders notice of their intention to prepay, which
notice shall state the prepayment date and the amount of the
Principal Balance to be prepaid. The amount of any partial prepayment
of the Principal Balance shall be not less than $100,000 or integral
multiples thereof. A prepayment of the Principal Balance shall not be
made more frequently than once a month. If Borrowers deliver to
Lenders a notice of prepayment and fail to make such prepayment,
Borrowers shall reimburse Lenders on demand in the amount of any
loss, cost and/or expense reasonably incurred by Lenders as a result
of Lenders' reliance on such notice, including without limitation,
any loss, cost or expense resulting from Lenders'
22
23
contractual obligations in connection with the reinvestment of the
amount indicated in such notice of prepayment.
(C) ADDITIONAL PAYMENTS. Concurrently with any prepayment
of the Principal Balance pursuant to this subsection 2.9.1,
Borrowers shall pay to Lenders accrued and unpaid interest on the
PORTION of the Principal Balance which is being prepaid to the date
on which Lenders are in receipt of Good Funds, and any other sums
which are due and payable pursuant to the terms of any of the Loan
Instruments.
(D) APPLICATION OF PARTIAL PREPAYMENTS. Any partial
prepayment of the Principal Balance pursuant to this subsection 2.9.1
shall be applied to the installments of the Principal Balance in the
inverse order of maturity.
2.9.2. MANDATORY PREPAYMENTS OF THE LOAN.
(A) EXCESS CASH FLOW PAYMENTS. Until the Loan is paid in
full, for each year commencing with the year 1998 Borrowers shall
pay to Lenders not later than the earlier of (x) 30 days after
receipt by Lenders OF THE BASIC FINANCIAL STATEMENTS FOR SUCH YEAR
AND (Y) 120 DAYS AFTER THE END OF such year, an amount equal to the
lesser of (i) 75% of the Excess Cash Flow for such year and (ii) the
amount by which the Cash Equivalents as of the date such payment is
to be made exceeds $300,000.
(B) PROCEED OF KEY MAN LIFE INSURANCE. All proceeds of Key
Man Life Insurance received by Agent shall be applied as a
PREPAYMENT of Borrowers' Obligations in accordance with subparagraph
(c) below.
(C) APPLICATION OF MANDATORY PREPAYMENTS. Prepayments
received by Lenders pursuant to this subsection 2.9.2 shall be
applied in the following order of priority to the payment of: (i)
any and all sums which are due and payable pursuant to the terms of
the Loan Instruments, EXCEPT the Principal Balance and accrued
interest thereon, (ii) accrued and unpaid interest on the portion of
the Principal Balance being prepaid and (iii) the installments of the
Principal Balance in the inverse order of maturity.
2.9.3. NO PREPAYMENT PREMIUM. No Prepayment Premium shall be
payable with respect to prepayments pursuant to subsection 2.9.2.
2.9.4. INVOLUNTARY PREPAYMENT. Concurrently with any payment of the
Principal Balance received by Lenders resulting from the exercise by
Agent and/or Lenders of any remedy available to Agent and/or Lenders
subsequent to the occurrence of an Event of Default and the
acceleration of Borrowers' Obligations, Borrowers shall pay to
Lenders a Prepayment Premium in an amount
23
24
equal to the Prepayment Premium which would be payable if such
payment was made pursuant to subsection 2.9.1.
2.10. DEFAULT RATE PERIOD. During a Default rate period, (i) Borrowers'
Obligations shall bear interest at the Default Rate and (ii) all payments
received by Lenders shall be applied in accordance with Section 8.4.
2.11. METHOD OF PAYMENT.
2.11.1. LOCKBOXES AND LOCKBOX ACCOUNTS; PAYMENTS; APPLICATION OF
FUNDS.
(A) MAINTENANCE OF LOCKBOXES AND LOCKBOX ACCOUNTS. Borrowers
shall maintain at Lockbox Bank the Lockboxes and Lockbox
Accounts. The Lockboxes and Lockbox Accounts shall be under the
sole dominion and control of Agent and no Borrower shall have any
right of withdrawal therefrom. Promptly after the Closing Date, each
Borrower which has not previously done so shall notify such
Borrower's Account Debtors under Security Monitoring Contracts that
all payments shall be made directly to the applicable Lockbox or, if
by wire transfer, to the applicable Lockbox Account. All items
deposited in the applicable Lockbox shall be credited to the Lockbox
Account.
(B) HURDLE AMOUNT. On the first Business Day of each month,
Agent shall notify Lockbox Bank of the Hurdle Amount for such
month. Upon the opening of business on each Business Day of each
month, Lockbox Bank shall calculate the amount of collected funds on
deposit in the Lockbox Accounts for such month (the "Collected
Funds"). For each month, beginning with the second Business Day
following the Business Day on which the Lockbox Bank has determined
that the Collected Funds exceed the Hurdle Amount for such month
(the amount of such excess hereinafter is referred to as the
"Remainder Funds"), Lockbox Bank shall remit the Remainder Funds to
Borrowers until the end of such month.
(C) MONTHLY PAYMENTS FROM THE LOCKBOX. Beginning WITH the first
Business Day of the month following the month in which the Closing
occurs, Lockbox Bank shall remit the Hurdle Amount to Agent in Good
Funds prior to 1:00 P.M. Chicago time for application to Borrowers'
Obligations in the following order of priority: (i) first, to the
payment of all Borrowers' Obligations then due and payable other
than the Principal Balance and accrued and unpaid interest thereon,
and (ii) second, to the payment of accrued and unpaid interest then
due and payable on the Principal Balance. If no Event of Default
or Incipient Default then exists, the remainder, if any, shall be
remitted to Borrowers. If an Event of Default exists such
remainder may, at the option of Agent, be applied in accordance
with Section 8.4.
24
25
(D) CASH INSTRUMENTS RECEIVED BY BORROWERS. At the CLOSE of each
Business Day following the Closing Date, each Borrower shall
transmit, in the form received, all Cash Instruments received by
such Borrower since the close of business on the preceding Business
Day to the applicable Lockbox or directly to the Lockbox Bank for
deposit in the applicable Lockbox Account. All Cash Instruments
received by each Borrower shall be held in express trust for
Lenders until delivery thereof is made to the applicable Lockbox or
the Lockbox Bank for deposit in the applicable Lockbox Account and
shall not be commingled with any other Property of such Borrower.
2.11.2. OTHER PAYMENTS. All payments other than those specified in
subsection 2.11.1 to be made pursuant to the Loan Instruments by
Borrowers to (i) FINOVA shall be made by wire transfer of Good Funds to
the account of FINOVA at Citibank, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, Credit: FINOVA Capital Corporation, Credit Account
No. ▇▇▇▇▇▇▇▇, or to such other account as FINOVA shall have given five
Business Days prior written notice to Borrowers, and (ii) any other
Lender shall be made by wire transfer of Good Funds to such account as
such Lender shall notify Borrowers.
ARTICLE
3.
SECURITY
Borrowers' Obligations shall be secured by a Lien upon all of the
Collateral, which at all times shall be superior and prior to all other Liens,
except Permitted Prior Liens.
ARTICLE
4.
CONDITIONS OF CLOSING AND ACQUISITIONS
4.1. INITIAL PORTION. The obligation of FINOVA to disburse the Initial
Portion shall be subject to the satisfaction of all of the following conditions
on or before the Closing Date in a manner, form and substance reasonably
satisfactory to FINOVA:
4.1.1. REPRESENTATIONS AND WARRANTIES. On the Closing Date the
representations and warranties of each Obligor set forth in the
Instruments to which such Obligor is a party shall be true and correct in
all material respects.
4.1.2. DELIVERY OF DOCUMENTS. The following shall have been
delivered to FINOVA, except to the extent previously delivered to FINOVA,
each duly authorized and executed, where applicable:
(A) the Loan Instruments;
25
26
(B) a good standing or similar certificate, dated a recent date
prior to the Closing Date, for each Borrower from the Secretary of State
in each state in which such Borrower organized or is qualified to transact
business;
(C) copies of (i) the articles of ORGANIZATION and any amendments
thereto of ASMS, SACC and MSG, certified by the Secretary of State of
their respective states of organization, as of a recent date prior to the
Closing Date, (ii) the articles of incorporation and all amendments
thereto of SAI, AMJ and ERC and each of the Holding Companies, certified
by the Secretary of State of their respective states of incorporation as
of a recent date prior to the Closing Date, and (iii) the following, each
certified by the Manager or President of the applicable Borrower, as
applicable: (A) the operating agreements of each of ASMS, SACC and MSG,
(B) all other agreements among the holders of any Membership Interests,
(C) the by-laws of SAI, AMJ, ERC and each of the Holding Companies and (D)
all agreements among the shareholders of SAI, AMG and ERC;
(D) certified copies of resolutions ADOPTED by the board of
directors of each of SAI, AMJ and ERC authorizing the execution and
delivery of the Instruments to which each such Person is a party;
(E) certified copies of a CONSENT of the Manager and the members
of each of ASMS, SACC and MSG authorizing the execution and delivery of
each Instrument to which each such Person is a party.
(F) signature and incumbency CERTIFICATES of the members or
Manager of ASMS, SACC and MSG and the President of SAI executing any of
the Loan Instruments on behalf of such Persons;
(G) certified or executed original copies of each of the
following, the terms ad conditions of all of which shall be satisfactory
to FINOVA:
(i) the Contribution Agreement;
(ii) the Leases not previously delivered to FINOVA;
(iii) the Subordinated Debt Instruments; and
(iv) all instruments and documents evidencing Permitted
Senior Indebtedness existing as of the Closing Date; and
(H) such other instruments, documents, certificates, consents,
waivers and opinions as FINOVA may reasonably request; and
26
27
4.1.3. PERFORMANCE; NO DEFAULT. Each Obligor shall have, in all
material respects, performed and complied with all agreements and
conditions contained in the Instruments to be performed by or complied
with by such Person prior to or at the Closing, and no Event of Default or
Incipient Default then shall exist.
4.1.4. OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY. FINOVA shall have
received an opinion dated the Closing Date from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
in-house counsel to the Obligors, addressed to FINOVA, as a Lender and as
Agent, in such form and covering such matters as FINOVA may require.
4.1.5. APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. FINOVA shall
have received evidence that the approval or consent shall have been
obtained from all Governmental Bodies and all other Persons whose approval
or consent is required to enable (i) each Obligor to enter into and
perform their respective obligations under the Instruments to which each
such Person is a party and (ii) each Obligor to grant to Agent the
Security Interests contemplated in the Instruments to which such Obligor
is a party.
4.1.6. SECURITY INTERESTS. All filings of Uniform Commercial Code
financing statements and all other filings and actions necessary to
perfect and maintain the Security Interests as first, valid and perfected
Liens in the Property covered thereby, subject only to Permitted Prior
Liens, shall have been filed or taken and FINOVA shall have received such
UCC, state and federal tax Lien, pending suit, judgment and other Lien
searches as it deems necessary to confirm the foregoing.
4.1.7. MATERIAL ADVERSE CHANGE. No event shall have occurred which
has had or reasonably could be expected to have a Material Adverse
Effect since the end of the most recent period for which Borrowers have
delivered to FINOVA financial statements pursuant to Section 6.3.1 of the
Existing Loan Agreement.
4.1.8. PROCEEDINGS AND DOCUMENTS. All corporate, limited liability
company and other proceedings in connection with the transactions
contemplated by the Instruments and all documents and instruments incident
to such transactions shall be reasonably satisfactory to FINOVA, and
FINOVA shall have received all such counterpart originals or certified or
other copies as FINOVA may reasonably request.
4.1.9. USE OF ASSETS. FINOVA shall be reasonably satisfied that
Borrowers at all times shall be entitled to the use and quiet enjoyment
of all Property necessary for the continued ownership and operation of the
Security Monitoring Business conducted by Borrowers, including, without
limitation, the use of equipment, fixtures, licenses, offices and means of
ingress and egress thereto, and any easements or rights-of-way necessary
to reach any equipment or other items necessary for the operation of such
Security Monitoring Business.
27
28
4.1.10. BROKER FEES. If the services of a broker or other agent
have been used in connection with the Loan, all fees owed to such broker
or agent shall have been paid by Borrowers and FINOVA shall have received
evidence of such payment.
4.1.11. LANDLORD CONSENT AND WAIVER. FINOVA shall have received a
Landlord Consent and Waiver from each Landlord under each Lease
designated by Agent.
4.1.12. INSURANCE. At least three Business Days prior to the
Closing Date Borrowers shall have delivered to FINOVA evidence
satisfactory to FINOVA that all insurance coverage required pursuant to
Section 6.6 is in full force and effect and all premiums then due thereon
have been paid in full.
4.1.13. ENVIRONMENTAL AUDIT. At the request of Agent, Agent shall
have received an Environmental Audit with respect to any real estate
which is the subject of a Lease.
4.1.14. PAYMENT OF FEES AND EXPENSES. Borrowers shall have paid
the Loan Fee and all fees and expenses described in subsection 11.1.1
incurred in connection with the Loan.
4.1.15. SECURITY MONITORING CONTRACTS. FINOVA shall have received a
certified copy of the assignment assigning all the Security Monitoring
Contracts owned by SAI to MSG prior to or on the Closing Date.
4.1.16 UL CERTIFICATIONS. Agent shall have received (i) certified
copies of the UL Certifications which are necessary for the operation
of Borrowers' Security Monitoring Business and (ii) evidence that (A) such
UL Certifications are in full force and effect as of the Closing Date and
(B) no event has occurred which could result in the termination,
revocation or non-renewal of any such UL Certification.
4.1.17. ALARM LICENSES. Agent shall have received (i) certified
copies of the Alarm Licenses which are necessary for the operation of
Borrowers' Security Monitoring Business and (ii) evidence that (A) such
Alarm Licenses are in full force and effect as of the Closing Date and (B)
no event has occurred which could result in the termination, revocation or
non-renewal of any such Alarm License.
4.1.18. ADJUSTED COVENANT LEVERAGE RATIO. Agent shall have
received evidence that the Adjusted Covenant Leverage Ratio shall not
exceed 4.00:1 as calculated as of the Funding Date.
4.1.19. RMR. Agent shall have received evidence that the Adjusted
Total Debt as of the Closing Date does not exceed the sum of (i) 22
times the RMR for Security Monitoring Contracts which are owned by
Borrowers on the Closing Date and (ii) 12
28
29
times the RMR for Central Station Contracts which are owned by Borrowers
on the Closing Date.
4.2. ALL ACQUISITIONS. The right of any Borrower to make an Acquisition
shall be subject to the satisfaction of all of the following conditions in a
manner reasonably satisfactory to Agent:
4.2.1. CONSUMMATION OF ACQUISITIONS. Prior to or concurrently with
each Acquisition Closing, Agent shall have received evidence that
(i) such Acquisition is in accordance with the terms of the applicable
Acquisition Instruments with such modifications as are reasonably
satisfactory to Agent and (ii) (A) the Borrower consummating such
Acquisition will acquire concurrently with the Acquisition Closing, good
and marketable title to the Property which is the subject to such
Acquisition and (B) if the subject of such Acquisition is a Subsidiary,
such Subsidiary will on the Acquisition Closing Date own good and
marketable title to all of its Property, in each case free and clear of
all Liens and Indebtedness, except the Dealer Holdback Debt.
4.2.2. DELIVERY OF DOCUMENTS. The following shall have been
delivered to FINOVA, each duly authorized and executed where applicable:
(A) the Acquisition Loan Instruments;
(B) all documents required to make any Subsidiary which is the
subject of an Acquisition a Permitted Subsidiary, and if such
Subsidiary is a corporation, the certificates representing all of the
capital stock of such Subsidiary and stock powers for each
certificate in form acceptable to FINOVA;
(C) such certificates of incumbency, good-standing and
corporate and limited liability company resolutions as Agent may
reasonably require in connection with such Acquisition;
(D) certified or executed original copies of each of the
following, the terms and conditions of all of which shall be
reasonably satisfactory to Agent:
(i) the applicable Acquisition Instruments; and
(ii) the Leases assumed or entered into by any Borrower in
connection with such Acquisition; and
(E) such other instruments, documents, certificates, consents,
waivers and opinions as Agent may reasonably require.
29
30
4.2.3. OPINIONS OF COUNSEL. Agent shall have received such
opinions of counsel as Agent reasonably may require in connection
with such Acquisition and the Liens to be granted to Agent upon the
Property acquired in connection therewith.
4.2.4. UL CERTIFICATIONS. With respect to any Central Station
Business which is the subject of such Acquisition, Agent shall have
received evidence that the Borrower which will operate such Business has
acquired, or will ACQUIRE concurrently with the Acquisition Closing, the
UL Certification necessary for the operation of such Central Station
Business.
4.2.5. ALARM LICENSES. Agent shall have received (i) certified
copies of the Alarm Licenses which are necessary to own or operate the
Property which is the subject of such Acquisition and (ii) evidence that
(A) any transfer or assignment of such Alarm Licenses to the applicable
Borrower is final, (B) such Alarm LICENSES are in full force and effect as
of the Acquisition Closing Date and (C) no event has occurred which could
reasonably be expected to result in the termination, revocation or
non-renewal of any such Alarm License.
4.2.6. SECURITY INTEREST. Agent shall have received evidence that
it has or will acquire upon the Acquisition Closing Date a
perfected FIRST lien on all of the Property, and all the Property of any
Subsidiary, which is the subject of such Acquisition, in each case subject
only to Permitted Prior Liens.
4.2.7. ENVIRONMENTAL AUDIT. Agent shall have received an
Environmental Audit with respect to any real estate which is the
subject of an Acquisition and, at the request of Agent, any real estate
which is the subject of a Lease which is being assumed or entered into by
such Borrower in connection with such Acquisition.
4.2.8. INSURANCE; SURVEY. Borrower SHALL deliver to Agent such title
insurance and surveys with respect to each parcel of real estate being
acquired in connection with such Acquisition.
4.2.9. PAYMENT OF FEES. Borrowers SHALL have paid all fees and
expenses described in subsection 11.1.1 incurred in connection with such
Acquisition and any Advance made in connection therewith.
4.2.10. ACQUISITION OF A CENTRAL STATION BUSINESS. If the SUBJECT of
the Acquisition is a Central Station Business, SAI or a Permitted
Subsidiary are the only Persons permitted to consummate such Acquisition.
4.2.11. ACQUISITION OF SECURITY MONITORING CONTRACTS. If the SUBJECT
OF THE ACQUISITION IS SECURITY MONITORING CONTRACTS, MSG SHALL BE THE
BORROWER making such Acquisition.
30
31
4.3 FUNDED ACQUISITIONS. In addition to the satisfaction of the
conditions set forth in Section 4.2, the right of any Borrower to make a Funded
Acquisition or to receive an Advance pursuant to Section 2.2 shall be subject
to the satisfaction of all of the following conditions in a manner reasonably
satisfactory to Agent:
4.3.1. FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. Agent shall
have received such financial statements, reports and projections with
respect to the operation of the business which is the subject of the
Funded Acquisition as Agent may reasonably require.
4.3.2. COMPLIANCE WITH APPLICABLE RATIO. As of the Funding Date,
after giving effect to such Funded Acquisition, the Adjusted Leverage
Ratio shall not exceed the Applicable RATIO as calculated as of such
date.
4.3.3. MAXIMUM TIMES RMR. The Adjusted Total Debt as of the
requested Funding Date shall not exceed the sum of (i) 22 times the RMR
for Security Monitoring Contracts which are (A) the subject of the Funded
Acquisition and (B) owned by Borrowers prior to the consummation of such
Funded Acquisition, and (ii) 12 times the RMR for Central Station
Contracts which are (A) the subject of the Funded Acquisition and (B)
owned by Borrowers prior to the consummation of such Funded Acquisition.
ARTICLE
5.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Agent and Lenders as follows:
5.1. EXISTENCE AND POWER. Each Obligor is a corporation or limited
liability company duly formed and validly existing under the laws of the
state of its organization or incorporation. Each Obligor is in good standing
and qualified to transact business in each jurisdiction in which the failure so
to qualify could have a Material Adverse Effect. Each Obligor has all
requisite power and authority to own its Property and to carry on its business
as now conducted and as proposed to be conducted following the Closing Date.
5.2. AUTHORITY. Each Obligor has full power and authority to enter into,
execute, deliver and carry out the terms of the Instruments to which it is a
party and to incur the obligations provided for therein, all of which have been
duly authorized by all proper and necessary action and are not prohibited by
the organizational instruments of such Obligor.
5.3. CAPITAL STOCK, MEMBERSHIP INTERESTS AND RELATED MATTERS.
5.3.1. CAPITALIZATION. There is set forth in EXHIBIT 5.3.1 a complete
description of the Equity Interests of each Obligor other than SAI. All of the
Equity Interests of the
31
32
Obligors are validly issued, fully paid and non-assessable, and
have been issued and sold in compliance with all applicable federal and
state laws, rules and regulations, including, without limitation, all
so-called "Blue-Sky" laws, excepting only possible instances of
noncompliance which in the aggregate are not material. The Equity
Interests of the Obligors other than SAI are owned beneficially and of
record by the Persons and in the respective percentages set forth on
EXHIBIT 5.3.1, and are free and clear of all Liens except the Security
Interests.
5.3.2. RESTRICTIONS. Except as set forth on EXHIBIT 5.3.2, no Obligor
other than SAI (i) is a party to, or has knowledge of any agreements
restricting the transfer of the Equity Interests of any Obligor, except
the Loan Instruments, (ii) has issued any rights which can be convertible
into or exchangeable or exercisable for any of such Obligor's Equity
Interests, or any rights to subscribe for or to purchase, or any options
for the purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims of any
character relating to, any of such Obligor's Equity Interests or any
securities convertible into or exchangeable or exercisable for any of
such Obligor's Equity Interests and (iii) is subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire
any of such Obligor's Equity Interests or any convertible rights or
options. No Obligor, except SAI is required to file or has filed,
pursuant to the Securities Act of 1933 or Section 12 of the Securities
Exchange Act of 1934, as amended, a registration statement relating to
any class of debt or equity securities and SAI has duly and timely made
all necessary filings.
5.4. BINDING AGREEMENTS. This Loan Agreement and the other Instruments,
when executed and delivered, will constitute the valid and legally binding
obligations of each Obligor to the extent such Obligor is a party thereto,
enforceable against such Obligor in accordance with their respective terms,
except as such enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereafter in
effect affecting the enforcement of creditors' rights generally, and (ii)
equitable principles whether or not any action to enforce such document is
brought at law or in equity).
5.5. BUSINESS AND PROPERTY OF BORROWERS.
5.5.1. BUSINESS AND PROPERTY. Each Borrower is the owner of all
Property and the holder of all UL Certifications, Alarm Licenses,
Central Station Contracts and Security Monitoring Contracts necessary to
conduct such Borrower's Security Monitoring Business in the places where
it is now conducted. All of such UL Certifications, Alarm Licenses,
Central Station Contracts and Security Monitoring Contracts are in full
force and effect and no invalidity, default or breach exists thereunder.
There is set forth in EXHIBIT 5.5.1 a description of all UL Certifications
and Alarm Licenses which have been issued to any Borrower. Borrowers do
not engage or propose to engage in any business or activity other than the
Security Monitoring Business.
32
33
5.5.2. FACILITY SITES. There is set forth in EXHIBIT 5.5.2 the
location of the chief executive office of each Borrower and the
locations all central station monitoring operations, offices and other
Property used in the operation of each Borrower's Security Monitoring
Business.
5.5.3. LEASES. There is set forth in EXHIBIT 5.5.3 a list of all
leases of real property under which any Borrower is the lessee, together
with a complete and accurate address and legal description of each such
parcel of Leasehold Property and the current Landlord under each Lease.
Each Lease is in full force and effect, there has been no material default
in the performance of any of its terms or conditions by any party thereto,
and no claims of default have been asserted with respect thereto. To the
best knowledge of Borrowers, the present and contemplated use of the
Leasehold Property is in material compliance with all applicable zoning
ordinances and regulations and other laws and regulations.
5.5.4. REAL ESTATE. No Borrower owns any real property.
5.5.5. OPERATION AND MAINTENANCE OF EQUIPMENT. To the best
knowledge of each Borrower, no Person owning or operating any
equipment necessary for the operation of Borrowers' Security Monitoring
Business has used, operated or maintained the same in a manner which now
or hereafter could result in the cancellation or termination of the right
of any Borrower to use or make use of the same or which could result in
any material liability of any Borrower for damages in connection
therewith. All of the equipment and other tangible personal property
owned by each Borrower on the Closing Date is, in all material respects,
in good operating condition and repair (subject to normal wear and tear)
and has to the best knowledge of each Borrower, been used, operated and
maintained in substantial compliance with all applicable laws, rules and
regulations.
5.6. TITLE TO PROPERTY; LIENS. Upon the Closing each Borrower shall have
(i) good and marketable title to all of its Property, except (A) any UL
Certification which cannot be transferred without the consent of a Governmental
Body and (B) the portion thereof consisting of a leasehold estate and (ii) a
valid leasehold estate in each portion of its Property which consists of a
leasehold estate. Upon the Closing, all of such Property shall be free and
clear of all Liens, except Permitted Liens. Upon the proper filing with the
appropriate Governmental Bodies of appropriate Uniform Commercial Code
financing statements, the applicable Loan Instruments will create valid and
perfected Liens in the Property described therein, subject only to Permitted
Prior Liens.
5.7. PROJECTIONS AND FINANCIAL STATEMENTS.
5.7.1. FINANCIAL STATEMENTS. Borrowers have delivered to FINOVA the
financial statements described in EXHIBIT 5.7.1 pertaining to Borrowers'
Security Monitoring Business. Such financial statements present fairly in
all material respects the results of operations of Borrowers' Security
Monitoring Business for the periods covered
33
34
thereby and the financial condition of Borrowers' Security Monitoring
Business as of the dates indicated therein. All of such financial
statements have been prepared in conformity with GAAP. Since October 31,
1997 there has been no change which has had a Material Adverse Effect.
Borrowers also have delivered to FINOVA pro-forma consolidated and
consolidating balance sheets as of the Closing Date. Such pro-forma
balance sheets, which assume the consummation of the transactions
contemplated by the Loan Instruments, presents fairly in all material
respects the anticipated financial condition of Borrowers as of the
Closing Date.
5.7.2. PROJECTIONS. Borrowers have delivered to FINOVA the
projections described in EXHIBIT 5.7.2 of the future operations of
Borrowers. Such projections represent the best estimates of Borrowers as
of the Closing Date of Borrowers' future financial performance.
5.8. LITIGATION. There is set forth in EXHIBIT 5.8 a description of all
actions and suits, arbitration proceedings and claims pending or, to the best
knowledge of Borrowers, threatened against any Obligor or maintained by any
Obligor at law or in equity or before any Governmental Body. None of the
matters set forth in such EXHIBIT 5.8, if adversely determined, could have a
Material Adverse Effect.
5.9. DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS. No
Borrower is in default under any agreement to which such Borrower is a party or
by which such Borrower or any of the Property of such Borrower is bound, the
effect of which default could have a Material Adverse Effect. No authorization,
consent, approval or other action by, and no notice to or filing with, any
Governmental Body or any other Person which has not already been obtained,
taken or filed, as applicable, is required (i) for the due execution, delivery
or performance by any Borrower of any of the Loan Instruments to which such
Borrower is a party or (ii) as a condition to the validity or enforceability of
any of the Loan Instruments to which any Borrower is a party or any of the
transactions contemplated thereby or the priority of the Security Interests,
except for certain filings to establish and perfect the Security Interests. No
provision of any material mortgage, indenture, contract, agreement, statute,
rule, regulation, judgment, decree or order binding on any Borrower or
affecting the Property of any Borrower conflicts with, or requires any consent
which has not already been obtained under, or would in any way prevent the
execution, delivery or performance of the terms of any of the Loan Instruments
or affect the validity or priority of the Security Interests. The execution,
delivery or performance of the terms of the Loan Instruments will not
constitute a default under, or result in the creation or imposition of, or
obligation to create, any Lien upon the Property of Borrowers pursuant to the
terms of any such material mortgage, indenture, contract or agreement, other
than the Loan Instruments.
5.10. TAXES. Each Borrower has filed all tax returns required to be filed,
and has paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made against
any such Person, and no tax Liens have been filed and no claims are being
asserted in respect of such taxes which are required by GAAP to be reflected in
the financial statements of any Borrower and are not so reflected therein. The
34
35
charges, accruals and reserves on the books of each Borrower with respect to
all federal, state, local and other taxes are considered by the management of
such Borrower to be adequate, and there is no unpaid assessment which is or
might be due and payable by any Borrower or create a Lien against any
Borrower's Property, except such assessments as are being contested in good
faith and by appropriate proceedings diligently conducted, and for which
adequate reserves have been set aside in accordance with GAAP. None of the tax
returns of any Borrower are under audit.
5.11. COMPLIANCE WITH APPLICABLE LAWS. No Borrower is in default in
respect of any judgment, order, writ, injunction, decree or decision of
any Governmental Body, which default would have a Material Adverse Effect.
Except as otherwise provided herein, each Borrower is in compliance in all
material respects with all applicable statutes and regulations, including,
without limitation, all laws, statutes and regulations relating to UL
Certification, all Environmental Laws, ERISA, ADA and all laws and regulations
relating to unfair labor practices, equal employment opportunity and employee
safety, of all Governmental Bodies, a violation of which could have a Material
Adverse Effect. No material condemnation, eminent domain or expropriation has
been commenced or, to the best knowledge of Borrowers, threatened against the
Property which Borrowers will own upon the Closing.
5.12. PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. Upon the Closing,
Borrowers will own, possess or have the right to use all patents,
trademarks, service marks, tradenames, copyrights, franchises and rights with
respect thereto, necessary for the conduct of Borrowers' Security Monitoring
Business as proposed to be conducted by Borrowers after the Closing Date,
without any known conflict with the rights of others and, in each case, free of
any Liens.
5.13. ENVIRONMENTAL MATTERS. Each Borrower is in compliance with all
applicable Environmental Laws and no portion of the Leasehold Property has
been used as a land fill. There currently are not any known Hazardous
Materials generated, manufactured, released, stored, buried or deposited over,
beneath, in or on (or used in the construction and/or renovation of) the
Leasehold Property in violation of applicable Environmental Laws which could
have a Material Adverse Effect.
5.14. APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower or
Affiliate of any Borrower is:
5.14.1. INVESTMENT COMPANY ACT. An "investment company," or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
5.14.2. HOLDING COMPANY ACT. A "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company," as such
terms are defined in the Public Utility Holding Company Act of 1935, as
amended.
35
36
5.14.3. FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of an
enemy" within the meaning of Section 2 of the Trading with the Enemy
Act, (ii) a "national" of a foreign country designated in Executive Order
No. 8389, as amended, or of any "designated enemy country" as defined in
Executive Order No. 9095, as amended, of the President of the United
States of America, in each case within the meaning of such Executive
Orders, as amended, or of any regulation issued thereunder, (iii) a
"national of any designated foreign country" within the meaning of the
Foreign Assets Control Regulations or of the Cuban Assets Control
Regulations of the United States of America (Code of Federal Regulations,
Title 31, Chapter V, Part 515, Subpart B, as amended), or (iv) an alien or
a representative of any alien or foreign government within the meaning of
Section 310 of Title 47 of the United States Code.
5.14.4. REGULATIONS AS TO BORROWING. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for Borrowed
Money, including, without limitation, statutes or regulations relative to
common or interstate carriers or to the sale of electricity, gas, steam,
water, telephone, telegraph or other public utility services.
5.15. MARGIN REGULATIONS. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Instruments, including the use of the
proceeds of the Loan, will violate or result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued pursuant
thereto, including, without limitation, Regulations G, T, U and X, and no
Borrower owns or intends to carry or purchase any "margin security" within the
meaning of such Regulation U or G.
5.16. OTHER INDEBTEDNESS. Upon the Closing, no Borrower will have any
Indebtedness for Borrowed Money, except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness permitted to exist as of the Closing Date
pursuant to this Loan Agreement, (iii) the Subordinated Debt and (iv) the
Dealer Holdback Debt. There is set forth in EXHIBIT 5.16 a true, correct and
complete copy of the Dealer Holdback Report dated as of _____________, 1997.
5.17. NO MISREPRESENTATION. Neither this Loan Agreement nor any other Loan
Instrument, certificate, information or report furnished or to be furnished by
or on behalf of any Borrower to Agent or any Lender in connection with any of
the transactions contemplated hereby or thereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein, taken as a whole, not misleading in the light of the circumstances
under which such statements were made. There is no fact, other than
information known to the public generally, known to or reasonably foreseen by
Borrowers after diligent inquiry, that would be expected to have a Material
Adverse Effect that has not expressly been disclosed to FINOVA in writing.
36
37
5.18. EMPLOYEE BENEFIT PLANS.
5.18.1. NO OTHER PLANS. Neither any Borrower nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Employee
Benefit Plan other than those identified on EXHIBIT 5.18.1. Borrowers
have provided Agent accurate and complete copies of all Contracts,
agreements and documents described on EXHIBIT 5.18.1.
5.18.2. ERISA AND CODE COMPLIANCE AND LIABILITY. Each Borrower and
each ERISA Affiliate is in compliance with all applicable provisions of
ERISA with respect to all Employee Benefit Plans except where failure to
comply would not result in a material liability to any Borrower and except
for any required amendments for which the remedial amendment period as
defined in Section 401(b) of the Code has not yet expired. Each Employee
Benefit Plan that is intended to be qualified under Section 401(a) of the
Code has been determined by the Internal Revenue Service to be so
qualified, and each trust related to such plan has been determined to be
exempt under Section 501(a) of the Code, except for any amendments for
which the remedial amendment period as defined in Section 401(b) of the
Code has not yet expired. No material liability has been incurred by any
Borrower or ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer
Plan.
5.18.3 FUNDING. No Pension Plan has been terminated, nor has any
accumulated funding deficiency (as defined in Section 412 of the Code)
been insured (without regard to any waiver granted under Section 412 of
the Code), nor has any funding waiver from the Internal Revenue Service
been received or requested with respect to any Pension Plan, nor has any
Borrower or any ERISA Affiliate failed to make any contributions or to
pay any amounts due and owing as required by Section 412 of the Code,
Section 302 of ERISA or the terms of any Pension Plan prior to the due
dates of such contributions under Section 412 of the Code or Section 302
of ERISA, nor has there been any event requiring any disclosure under
Section 4041(c)(3)(C), 4063(a) or 4068 of ERISA with respect to any
Pension Plan.
5.18.4. PROHIBITED TRANSACTIONS AND PAYMENTS. Neither any Borrower
nor any ERISA Affiliate has: (i) engaged in a nonexempt "prohibited
transaction" as such term is defined in Section 406 of ERISA or Section
4975 of the Code; (ii) incurred any liability to the PBGC which remains
outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid; (iii) failed to make a required
contribution or payment to a Multiemployer Plan; or (iv) failed to make a
required installment or other required payment under Section 412 of the
Code.
5.18.5. NO TERMINATION EVENT. No Termination Event has occurred or
is reasonably expected to occur.
5.18.6. ERISA LITIGATION. No material proceeding, claim, lawsuit
and/or investigation is existing or, to the best knowledge of Borrowers,
threatened concerning or
37
38
involving any (i) employee welfare benefit plan (as defined in Section
3(1) of ERISA) currently maintained or contributed to by any Borrower, or
any ERISA Affiliate, (ii) Pension Plan or (iii) Multiemployer Plan.
5.19. EMPLOYEE MATTERS.
5.19.1. COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i) None of the
employees of any Borrower is subject to any collective bargaining
agreement, (ii) no petition for certification or union election is
pending with respect to the employees of any Borrower and no union or
collective bargaining unit has sought such certification or recognition
with respect to the employees of any Borrower and (iii) there are no
strikes, slowdowns, work stoppages, unfair labor practice complaints,
grievances, arbitration proceedings or controversies pending or, to the
best knowledge of Borrowers, threatened against any Borrower by any
Borrower's employees, other than employee grievances or controversies
arising in the ordinary course of business that could not in the
aggregate be expected to have a Material Adverse Effect.
5.19.2. CLAIMS RELATING TO EMPLOYMENT. Neither any Borrower nor, to
Borrower's best knowledge, any partner, shareholder or employee of any
Borrower, is subject to any employment agreement or non-competition
agreement with any former employer or any other Person which agreement
would have a Material Adverse Effect due to (i) any information which
such Borrower would be prohibited from using under the terms of such
agreement or (ii) any legal considerations relating to unfair
competition, trade secrets or proprietary information.
5.20. BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Loan Instruments, (i) neither Borrower (A) will be a party
to or be bound by any franchise, agreement, deed, lease or other instrument, or
be subject to any restriction, which is so unusual or burdensome so as to
cause, in the foreseeable future, a Material Adverse Effect and (B) intends to
incur, or believes that it will incur, debts beyond its ability to pay such
debts as they become due, and (ii) each Borrower (A) owns and will own
Property, the fair saleable value of which is (I) greater than the total amount
of its liabilities (including contingent liabilities) and (II) greater than the
amount that will be required to pay the probable liabilities of its then
existing debts as they become absolute and matured, and (B) has and will have
capital that is not unreasonably small in relation to its business as presently
conducted and as proposed to be conducted. No Borrower presently anticipates
that future expenditures needed to meet the provisions of federal or state
statutes, orders, rules or regulations will be so burdensome so as to have a
Material Adverse Effect.
5.21. HOLDING COMPANIES. The Holding Companies do not engage or propose to
engage in any business other than the ownership of the Membership Interests of
MSG.
38
39
ARTICLE
6.
AFFIRMATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full each
Borrower agrees that it will:
6.1. LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its good
standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify would have a Material Adverse
Effect, and in any event in each jurisdiction in which any portion of the
System owned or operated by such Borrower is located.
6.2. INSPECTION. Permit representatives of Agent and Lenders, upon two
Business Days prior notice if no Event of Default exists, or at any time if any
Event of Default exists, to (i) visit its offices, (ii) examine its books and
records and Accountants' reports relating thereto, (iii) make copies or
extracts therefrom, (iv) discuss its affairs with its employees, (v) examine
and inspect its Property and (vi) meet and discuss its affairs with the
Accountants, and such Accountants, as a condition to their retention by such
Borrower, are hereby irrevocably authorized by such Borrower to fully discuss
and disclose all such affairs with Agent and Lenders (the foregoing items (i)
through (vi) hereinafter are referred to collectively as an "Inspection").
Notwithstanding the foregoing, if no Event of Default exists, Agent shall not
(A) conduct an Inspection more than once a quarter and (B) charge the Borrowers
more than $2,000 on account of such Inspection. For purposes of this Section
6.2, Agent agrees to comply with the rules and regulations with respect to UL
Certifications.
6.3. FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a standard
system of accounting in accordance with GAAP and furnish to each Lender:
6.3.1. MONTHLY STATEMENTS. As soon as available and in any event
within 30 days after the close of each month:
(A) the consolidated balance sheet of Obligors and the
consolidating balance sheet for each Borrower as of the end of such
month,
(B) the consolidated statements of operations and Operating
Cash Flow of Obligors and the consolidating statements of operations
and Operating Cash Flow of each Borrower for such month and for the
period from the beginning of the then current year to the end of such
month, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding
year, and
(C) a report providing the following information as of the
end of such month: (i) the number of Security Monitoring
Contracts owned by each Borrower;
39
40
(ii) the number of Central Station Contracts monitored by each
Borrower; and (iii) the RMR for the Security Monitoring Contracts and
Central Station Contracts,
all in reasonable detail, containing such information as Lenders
reasonably may require, and certified by the Chief Financial Officer of
such Borrower as complete and correct, subject to normal year-end
adjustments.
6.3.2. QUARTERLY AGINGS. As soon as available and in any event
within 45 days after the close of each quarter of each year, an aging of
each Borrower's outstanding accounts payable and accounts receivable as of
the end of such quarter, all in reasonable detail, containing such
information as Lenders reasonably may require, and certified by the Chief
Financial Officer of such Borrower as complete and correct, subject to
normal year-end adjustments.
6.3.3. ANNUAL STATEMENTS. As soon as available and in any event
within 120 days after the close of each year:
(A) the consolidated balance sheet of Obligors as of the end
of such year and the consolidated statements of operations, cash
flows, shareholders' equity or members' equity of Obligors for such
year (collectively, the "Basic Financial Statements"), the
consolidating balance sheet of each Borrower as of the end of such
year, the consolidated statements of operations, cash flows and
shareholders' equity or members' equity, as applicable, of Obligors
for such year and the consolidated and consolidating statements of
Operating Cash Flow and Excess Cash Flow of Obligors for such year,
setting forth in each case in comparative form the corresponding
figures for the preceding year,
(B) an opinion of the Accountants which shall accompany the
Basic Financial Statements, which opinion shall be unqualified as
to going concern and scope of audit, stating that (i) the
examination by the Accountants in connection with such Basic
Financial Statements has been made in accordance with generally
accepted auditing standards, (ii) such Basic Financial Statements
have been prepared in conformity with GAAP and in a manner
consistent with prior periods, and (iii) such Basic Financial
Statements fairy present in all material respects the financial
position and results of operations of Borrowers, and
(C) a letter from the Accountants stating that the statements
of Operating Cash Flow and Excess Cash Flow were computed in
accordance with the requirements of this Loan Agreement.
6.3.4. COMPLIANCE CERTIFICATES. The financial statements described
in subsections 6.3.1, 6.3.2 and 6.3.3 shall be accompanied by a Compliance
Certificate.
40
41
6.3.5. ACCOUNTANTS' CERTIFICATE. Simultaneously with the delivery
of the certified Basic Financial Statements required by subsection
6.3.3, copies of a certificate of the Accountants stating that (i) they
have checked the computations delivered by Borrowers in compliance with
subsection 6.3.3, and (ii) in making the examination necessary for their
audit of the Basic Financial Statements of Borrowers for such year,
nothing came to their attention of a financial or accounting nature that
caused them to believe that (A) Borrowers were not in compliance with the
terms, covenants, provisions or conditions of any of the Loan Instruments,
or (B) there shall have occurred any condition or event which would
constitute an Event of Default, or, if so, specifying in such certificate
all such instances of non-compliance and the nature and status thereof.
6.3.6. AUDIT REPORTS. Promptly upon receipt thereof, a copy of each
report, other than the reports referred to in subsection 6.3.3, including
any so-called "Management Letter" or similar report, submitted to
Borrowers by the Accountants in connection with any annual, interim or
special audit made by the Accountants of the books of Borrowers.
6.3.7. BUSINESS PLANS. Before the end of each year, a business
plan for the following year setting forth in reasonable detail the
projected operations budget of the Borrower's business for such year and
such other information as Lenders reasonably may request, for such
following year.
6.3.8. NOTICE OF DEFAULTS; LOSS. Prompt notice if: (i) any
Indebtedness of any Borrower is declared or shall become due and
payable prior to its declared or stated maturity, or called and not paid
when due, (ii) an event has occurred that enables the holder of any note,
or other evidence of such Indebtedness, certificate or security evidencing
any such Indebtedness of any Borrower to declare such Indebtedness due and
payable prior to its stated maturity, (iii) there shall occur and be
continuing an Incipient Default or Event of Default, accompanied by a
statement setting forth what action Borrowers propose to take in respect
thereof, or (iv) any event shall occur which has a Material Adverse
Effect, including the amount or the estimated amount of any loss or
depreciation or adverse effect.
6.3.9. NOTICE OF SUITS, ADVERSE EVENTS. Prompt notice of: (i) any
citation, summons, subpoena, order to show cause or other order naming
any Borrower a party to any proceeding before any Governmental Body which
might reasonably be expected to have a Material Adverse Effect and
include with such notice a copy of such citation, summons, subpoena,
order to show cause or other order, (ii) any lapse or other termination
of any UL Certification, Alarm License, license, permit, franchise,
AGREEMENT or other authorization issued to any Borrower by any
Governmental Body or any other Person that is material to the operation
of Borrowers' Security Monitoring Business, (iii) any refusal by any
Governmental Body or any other Person to renew or extend any such UL
Certification, Alarm License, license, permit, franchise, agreement or
other authorization and (iv) any dispute between Borrowers and any
Governmental Body
41
42
or any other Person, which lapse, termination, refusal or dispute
referred to in clauses (ii) and (iii) above or in this clause (iv) could
reasonably be expected to have a Material Adverse Effect.
6.3.10. REPORTS TO SHAREHOLDERS, MEMBERS, CREDITORS AND
GOVERNMENTAL BODIES.
(A) Promptly upon becoming available, copies of all financial
statements, reports, notices and other statements sent or made
available generally by any Borrower to such Borrower's shareholders
or members to the extent the same contain any information not
included in any financial statements previously furnished to
Lenders pursuant to subsections 6.3.1, 6.3.2 or 6.3.3, of all
regular and periodic reports and all registration statements and
prospectuses filed by any Borrower with any securities exchange or
with the Securities and Exchange Commission or any Governmental
Body succeeding to any of its functions, and of all statements
generally made available by each Borrower or others concerning
material developments in the business of any Borrower.
(B) Promptly upon becoming available, copies of any
periodic or special reports filed by any Borrower with any
Governmental Body or Person, if such reports indicate any material
change in the business, operations, affairs or condition of such
Borrower, or if copies thereof are requested by Lender, and copies
of any material notices and other communications from any
Governmental Body or Person which specifically relate to any
Borrower.
6.3.11. ERISA NOTICES AND REQUESTS.
(A) With reasonable promptness, and in any event within 25
Business Days after occurrence of any of the following, Borrowers
will give notice of and/or deliver to Agent copies of: (i) the
establishment of any new Pension Plan or Multiemployer Plan; (ii)
the commencement of contributions to any Pension Plan or
Multiemployer Plan to which any Borrower or any of its ERISA
Affiliates was not previously contributing or any increase in the
benefits of any existing Pension Plan or Multiemployer Plan; (iii)
each funding waiver request filed with respect to any Pension Plan
and all communications received or sent by any Borrower or any
ERISA Affiliate with respect to such request; and (iv) the failure
of any Borrower or ERISA Affiliate to make a required installment
or payment to a Pension Plan under Section 302 of ERISA or Section
412 of the Code by the due date.
(B) Promptly and in any event within 10 BUSINESS Days of
becoming aware of the occurrence of or forthcoming occurrence of
any (i) Termination Event or (ii) non-exempt "prohibited
transaction", as such term is defined in Section 406 of ERISA or
Section 4975 of the Code, in connection with any
42
43
Pension Plan or any trust created thereunder, Borrowers will
deliver to Agent a notice specifying the nature thereof, what
action the applicable Borrower has taken, is taking or proposes to
take with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
(C) With reasonable promptness but in any event within 10
Business Days after the occurrence of, or receipt of, any
of the FOLLOWING, Borrowers will deliver to Agent copies of: (i)
any favorable or unfavorable determination letter from the
Internal Revenue Service regarding the qualification of an
Employee Benefit Plan under Section 401(a) of the Code; (ii) all
notices received by any Borrower or any ERISA Affiliate of the
PBGC's intent to terminate any Pension Plan or to have a trustee
appointed to administer any Pension Plan; (iii) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series)
filed by any Borrower or any ERISA Affiliate with the Internal
Revenue Service with respect to each Pension Plan; and (iv) all
notices received by any Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of
withdrawal liability pursuant to Section 4202 of ERISA. Borrowers
will notify Agent in writing within two Business Days of any
Borrower or any ERISA Affiliate that has filed a notice of intent
to terminate any Pension Plan under a distress termination within
the meaning of Section 4041(c) of ERISA.
6.3.12. OTHER INFORMATION.
(A) Immediate notice of any change in the location of any
Property of any Borrower, which is material to or necessary for
the continued operation of such Borrower's Security Monitoring
Business, any change in the name of any Borrower, any sale or
purchase of Property outside the regular course of business of any
Borrower, and any change in the business or financial affairs of
any Borrower, which change would have a Material Adverse Effect.
(B) Promptly upon request therefor, such other information
and reports relating to the past, present or future
financial condition, operations, plans and projections of
Borrowers as Lenders reasonably may request from time to time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file all
material reports, applications, documents, instruments and information
required to be filed pursuant to all rules, regulations or requests of any
Governmental Body or other Person having jurisdiction over the operation of
Borrowers' Security Monitoring Business, including, but not limited to, such of
the Loan Instruments as are required to be filed with any such Governmental
Body or other Person pursuant to applicable rules and regulations promulgated
by such Governmental Body or other Person.
43
44
6.5. MAINTENANCE OF UL CERTIFICATIONS, ALARM LICENSES, LICENSES,
FRANCHISES AND OTHER AGREEMENTS.
6.5.1. MAINTENANCE OF UL CERTIFICATIONS AND ALARM LICENSES.
Maintain in full force and effect at all times, and apply in a
timely manner for renewal of, all UL Certifications and Alarm Licenses
necessary for the operation of Borrowers' Security Monitoring Business,
the loss of any of which would have a Material Adverse Effect, and deliver
to Agent (i) at least 30 days prior notice of the proposed amendment of
any of such UL Certifications and Alarm Licenses and (ii) (A) evidence of
the filing of any application for renewal of such UL Certifications and
Alarm Licenses not less than the earlier of (x) 60 days prior to the
expiration of such UL Certifications and Alarm Licenses or (y) the last
day such application may be filed in accordance with applicable law and
(B) copies of any petition or other document filed to deny or object to
any such renewal application promptly after receipt thereof by Borrowers.
6.5.2. MAINTENANCE OF LICENSES, FRANCHISES AND AGREEMENTS. Maintain
in full force and effect at all times, and apply in a timely manner for
renewal of licenses, franchises, trademarks, tradenames and agreements
necessary for the operation of Borrowers' Security Monitoring Business,
the loss of any of which would have a Material Adverse Effect, and deliver
to Agent (i) at least 30 days prior notice of the proposed amendment of
any of such licenses, franchises, trademarks, tradenames and agreements
and (ii) (A) evidence of the filing of any application for renewal of such
licenses, franchises, trademarks, tradenames and agreements not less than
the earlier of (x) 60 days prior to the expiration of such licenses,
license or franchise or (y) the last day such application may be filed in
accordance with applicable law and (B) copies of any petition or other
document filed to deny or object to any such renewal application promptly
after receipt thereof by Borrowers.
6.6. INSURANCE.
6.6.1. KEY MAN LIFE INSURANCE. Maintain in full force and effect
at all times policies of insurance in such form and issued by such
insurers as shall be reasonably acceptable to Agent, insuring the life of
(i) ▇▇▇▇▇▇▇ in the amount of $1,250,000 and (ii) ▇▇▇▇▇ in the amount of
$500,000, and deliver to Agent, from time to time as Agent reasonably may
request, evidence of compliance with this subsection 6.6.1.
6.6.2. BUSINESS INSURANCE. Maintain in full force and effect at
all times Business Insurance as required by the insurance letter
agreement between Borrowers and FINOVA, a copy of which is attached hereto
as EXHIBIT 6.6.2, all of which shall be written by insurers and in amounts
and forms reasonably satisfactory to Agent and otherwise comply with the
terms of such insurance letter agreement, and deliver to Agent, from time
to time as Agent reasonably may request, evidence of compliance with this
subsection 6.6.2.
44
45
6.6.3. CLAIMS AND PROCEEDS. Each Borrower hereby directs all
insurers under all policies of Business Insurance to pay all proceeds
payable thereunder directly to Agent and each Borrower hereby authorizes
Agent to collect all such proceeds. Each Borrower irrevocably appoints
Agent (and all officers, employees or agents designated by Agent) as such
Borrower's true and lawful attorney and agent in fact for the purpose of
and with power to make, settle and adjust claims under such policies of
insurance, endorse the name of such Borrower on any check, draft,
instrument or other item of payment for the proceeds of such policies of
insurance, and to make all determinations and decisions with respect to
such policies of insurance. Each Borrower acknowledges that such
appointment of Agent as its attorney and agent in fact is a power coupled
with an interest and therefore is irrevocable. Each Borrower shall
promptly notify Agent of any loss, damage, destruction or other casualty
to the Collateral. The insurance proceeds received on account of any
loss, damage, destruction or other casualty shall, at the option of
Lenders, be (i) applied in reduction of Borrowers' Obligations in the
following order of priority: (A) first, to the payment of any and all sums
which are then due and payable pursuant to the terms of the Loan
Instruments, other than the Principal Balance and accrued and unpaid
interest thereon, (B) next, to accrued and unpaid interest on the
Principal Balance and (C) then to the Principal Balance in the inverse
order of the maturity of the installments thereof, or (ii) held by Agent
and applied to pay for the cost of repair or replacement of the Collateral
subject to such loss, damage, destruction or other casualty, in which
event such proceeds shall be made available in the manner and under such
conditions as Agent reasonably may require. Notwithstanding anything to
the contrary contained in this subsection 6.6.3, if the amount of the
proceeds from any loss, damage, destruction or other casualty to the
Collateral reasonably is expected to be less than $100,000 and neither an
Event of Default nor an Incipient Default then shall exist, Borrowers
shall have the right to make, settle and adjust any claim regarding such
proceeds and Agent shall collect such proceeds and make such proceeds
available to Borrowers to pay for the repair or replacement of the
Collateral which was the subject of such loss, damage, destruction or
other casualty in the manner and under such terms and conditions as Agent
reasonably may require. In the event the proceeds are to be applied to
the repair or replacement of Collateral, the Collateral shall be repaired
or replaced so as to be of at least equal value and substantially the same
character as prior to such loss, damage, destruction or other casualty.
6.7. FUTURE LEASES. Deliver to Agent, concurrently with the execution by
any Borrower, as lessee, of any lease pertaining to real property, (i) an
executed copy thereof, (ii) at the option of Agent, either a leasehold mortgage
upon or a collateral assignment of such lease in favor of Agent, in either
case in a form reasonably acceptable to Agent, and (iii) a Landlord Consent and
Waiver from the lessor under such lease.
6.8. FUTURE ACQUISITIONS OF REAL PROPERTY. Deliver to Agent concurrently
with the (i) execution by any Borrower of any contract relating to the
purchase by such Borrower of real property, an executed copy of such contract
and (ii) closing of the purchase of such real property,
45
46
(A) a first mortgage or deed of trust in favor of Agent on such real property,
in form and content satisfactory to Agent, (B) a lender's policy of title
insurance, in such form and amount and containing such endorsements as shall be
reasonably satisfactory to Agent, (C) an ALTA/ACSM survey of such real property
and (D) such other documents and assurances with respect to such real property
as Agent may require.
6.9. ENVIRONMENTAL MATTERS.
6.9.1. COMPLIANCE. At all times comply with, and be responsible for,
its obligations under all Environmental Laws applicable to the
Leasehold Property, any parcel of real estate acquired in connection with
an Acquisition and any other Property owned by such Borrower or used by
such Borrower in the operation of its business. At its sole cost and
expense, each Borrower shall (i) comply in all respects with (A) any
notice of any violation or administrative or judicial complaint or order
having been filed against such Borrower, any portion of the Leasehold
Property, any parcel of real estate acquired in connection with an
Acquisition or any other Property owned by such Borrower or used by such
Borrower in the operation of its business alleging violations of any law,
ordinance and/or regulation requiring such Borrower to take any action in
connection with the release, transportation and/or clean-up of any
Hazardous Materials, and (B) any notice from any Governmental Body or any
other Person alleging that such Borrower is or may be liable for costs
associated with a response or clean-up of any Hazardous Materials or any
damages resulting from such release or transportation, or (ii) diligently
contest in good faith by appropriate proceedings any demands set forth in
such notices, provided (A) reserves in an amount satisfactory to Agent to
pay the costs associated with complying with any such notice are
established by such Borrower and (B) no Lien would or will attach to the
Property which is the subject of any such notice as a result of any
compliance by such Borrower which is delayed during any such contest.
Promptly upon receipt of any notice described in the foregoing clause (i),
Borrowers shall deliver to Agent a copy thereof.
6.9.2. CERTIFICATION. Deliver to Agent, not later than January 1 of
each year, an Environmental Compliance Certificate.
6.10. COMPLIANCE WITH LAWS. Comply with all laws, statutes and regulations
relating to UL Certification and all other federal, state and local laws,
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to such Borrower and its operations, the failure to
comply with which would have a Material Adverse Effect.
6.11. TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits,
or upon any Property belonging to it, prior to the date on which penalties
attach thereto, and all lawful claims which, if unpaid, might become a Lien
(other than a Permitted Lien) upon the Property of such Borrower, provided that
so long as no Lien has attached to the Property of any Borrower as a result of
any of the foregoing, no Borrower shall be required by this Section 6.11 to pay
any such amount if the same
46
47
is being contested diligently and in good faith by appropriate proceedings
and as to which the applicable Borrower has set aside reserves on its books
satisfactory to Agent.
6.12. MAINTENANCE OF PROPERTIES. Maintain all of its Property necessary
in the operation of such Borrower's Security Monitoring Business in GOOD
working order and condition.
6.13. GOVERNMENTAL APPROVALS. Upon the exercise by Agent and/or Lenders
of any power, right or privilege pursuant to the provisions of any of the Loan
Instruments requiring any consent, approval or authorization of any
Governmental Body (including, without limitation, transfers of UL
Certifications), promptly execute and cause the execution of all applications,
certificates, instruments and other documents that Agent and/or Lenders may
reasonably be required to obtain for such consent, approval or authorization.
6.14. NON-FUNDED ACQUISITION. Promptly after the consummation of each
Non-Funded Acquisition, Borrowers shall notify Agent of the terms and
CONDITIONS of such acquisition and provide Agent with any other information
with respect thereto as Agent may reasonably request.
ARTICLE
7.
NEGATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full, no
Borrower, except SAI as to Section 7.15, shall:
7.1. BORROWING. Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness, (iii) the Subordinated Debt and (iv) the Dealer
Holdback Debt.
7.2. LIENS. Create, incur, assume or suffer TO exist any Lien upon any of
its Property, whether now owned or hereafter acquired, except Permitted Liens.
7.3. MERGER AND ACQUISITION. Consolidate with or merge with or into any
Person, or acquire directly or indirectly all or substantially all of the
capital stock, equity interests, membership interests or Property of any
Person, except Acquisitions made in compliance with this Loan Agreement.
7.4. CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently
agree to purchase, become liable in respect of any letter of credit, or
otherwise become liable upon the obligation of any Person, except (i) Dealer
Holdback DEBT, (ii) liabilities arising from the endorsement of negotiable
instruments for deposit or collection (iii) the posting of bonds to secure
performance to the extent necessary in connection with Borrowers' Security
Monitoring Business and similar transactions in the ordinary course of business
and (iv) guaranties by SAI of the obligations of any other Borrower under any
Lease.
47
48
7.5. DISTRIBUTIONS. Pay any dividends or make any distributions with
respect to, or purchase or redeem all or any portion of its Equity Interests,
except that any Borrower other than SAI, may pay dividends or make
distributions to SAI.
7.6. CAPITAL EXPENDITURES. Make or incur any Capital Expenditures in
any year set forth in EXHIBIT 7.6 if the aggregate amount of all Capital
Expenditures made by Borrowers with respect to such year would exceed the
amount set forth opposite such year.
7.7. PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY. Make any (i)
voluntary or optional prepayment of any Indebtedness for Borrowed Money
other than Borrowers' Obligations and payments made in the ordinary course of
business with respect TO the Dealer Holdback Debt or (ii) any payments with
respect to the Subordinated Debt, except as permitted pursuant to the
Subordination Agreement.
7.8. OBLIGATIONS AS LESSEE UNDER OPERATING LEASES. Enter into any
arrangement as lessee of Property under any Operating Lease if the
aggregate rentals for Borrowers for all such Operating Leases during any year
would exceed $750,000.
7.9. INVESTMENTS, LOANS. At any time PURCHASE or otherwise acquire, hold
or invest in the capital stock of, or any other interest in, any Person, or make
any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) investments in
commercial or finance paper which, at the time of investment, is rated either
"A" or better by ▇▇▇▇▇'▇ Investors Service, Inc., or Standard & Poor's
Corporation, respectively, or at the equivalent rate by any of their respective
successors, (iii) any interests in any money market account maintained, at the
time of investment, with a Qualified Depository, the investments of which, at
the time of investment, are restricted to the types specified in clause (i)
above, (iv) in connection with an Acquisition, (v) the formation and
capitalization of Permitted Subsidiaries and (vi) an investment by SAI in an
amount not to exceed $500,000 in the capital stock of Alarm Funding
Corporation, 60% of the Equity Interests of which will at all times be owned by
SAI. All investments permitted pursuant to clauses (i), (ii) and (iii) of this
Section 7.9 shall have a maturity not exceeding one year.
7.10. FUNDAMENTAL BUSINESS CHANGES. MATERIALLY change the nature of its
business or engage in any business other than the Security Monitoring Business.
7.11. FACILITY SITES. Change the locations of its chief executive office,
Central Station Businesses, studios, offices or other Property used in the
operation of such Borrower's Security Monitoring Business unless (i) Agent
shall have received at least 30 days' prior notice thereof, (ii) Borrowers
shall have complied with all applicable laws, rules and regulations and shall
have received all required consents and approvals from any Governmental Body,
(iii) Agent shall have
48
49
received satisfactory evidence that such change could not reasonably be
expected to affect adversely the operations or business prospects of Borrowers
and (iv) Borrowers shall have executed and delivered to Agent any documents
Agent may reasonably require in order to maintain the validity and priority of
the Security Interests.
7.12. SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of any Property (other than in the ordinary course of
business) except for the sale or disposition of (i) Property which is not
material to or necessary for the continued operation of its business and (ii)
obsolete or unusable items of equipment which promptly are replaced with new
items of equipment of like function and comparable value to the unusable items
of equipment when the same were new or not obsolete or unusable, provided such
replacement items of equipment shall become subject to the Security Interests.
7.13. AMENDMENT OF CERTAIN DOCUMENTS. Amend, modify or waive any term or
provision of the (i) the articles of organization or operating agreements of
SACC, MSG or ASMS or any Permitted Subsidiary which is a limited liability
company, (ii) the articles of incorporation or by-laws of SAI, AMJ, ERC, the
Holding Companies or any Permitted Subsidiary which is a corporation (iii) the
Contribution Agreement or (iv) the Subordinated Debt Instruments except to make
any covenant contained therein less restrictive.
7.14. ACQUISITION OF ADDITIONAL PROPERTIES. Acquire any additional
Property except (i) such Property as is necessary to or useful in the
operation of such Borrower's Security Monitoring Business, provided such
acquisitions shall be subject to the conditions and limitations set forth in
this Loan Agreement, (ii) Funded Acquisitions and (iii) Non-Funded
Acquisitions.
7.15. ISSUANCE OF EQUITY INTERESTS. Issue or sell, permit to be issued or
sold, or otherwise consent to the transfer of, any additional Equity
Interests or any interests convertible into or exercisable for any such
additional Equity Interests, other than Equity Interests issued by a Permitted
Subsidiary upon its formation.
7.16. TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Obligor or any Affiliate of any
Obligor, lease Property, render or receive services or purchase assets from any
Obligor or any such Affiliate, or otherwise enter into any contractual
relationship with any Obligor or any Affiliate of any Obligor, except that (i)
subject to the restrictions contained in Section 7.21, Borrowers may pay annual
salaries to ▇▇▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇ and (ii) Borrowers may engage in the
transactions described on EXHIBIT 7.16.
7.17. COMPLIANCE WITH ERISA.
(A) Permit the occurrence of any Termination Event which would
result in a liability to any Borrower or ERISA Affiliate in excess
of $50,000;
49
50
(B) Permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$50,000;
(C) Permit any accumulated funding deficiency in excess of
$50,000 (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived;
(D) Fail to make any contribution or payment to any
Multiemployer Plan which any Borrower or ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto which results in or is likely to
result in a liability in excess of $50,000;
(E) Engage, or permit any Borrower or ERISA Affiliate to
engage, in any "prohibited transaction" as such term is
defined in Section 406 of ERISA or Section 4975 of the Code for
which a civil penalty pursuant to Section 502(i) of ERISA or a tax
pursuant to Section 4975 Of the Code in excess of $50,000 is
imposed;
(F) Permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend
any Employee Benefit Plan which establishment or amendment could
result in liability to any Borrower or ERISA Affiliate or increase
the obligation of any Borrower or ERISA Affiliate to a Multiemployer
Plan which liability or increase, individually or together with all
similar liabilities and increases, is material to any Borrower or
ERISA Affiliate; or
(G) Fail, or permit any Borrower or ERISA Affiliate to fail, to
establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with ERISA, the Code and all
other applicable laws and regulations and interpretations thereof.
7.18. COVENANT LEVERAGE RATIO. Permit the Covenant Leverage Ratio as of
the last day of any quarter to be greater than the Applicable Ratio for such
day.
7.19. DEBT SERVICE COVERAGE RATIO. Permit the Debt Service Coverage Ratio
for each four quarter period ending as of each quarter to be less than the
ratio of 1.35:1. For the purpose of determining compliance with this Section
7.19 there shall be deducted from the Operating Cash Flow for any six-month
period used in making such determination the interest paid during such period
on the Subordinated Debt.
7.20. MINIMUM RMR.
50
51
7.20.1. MINIMUM RMR FOR SECURITY MONITORING CONTRACTS. Permit the
RMR with respect to Security Monitoring Contracts for any quarter set
forth in EXHIBIT 7.20.1 to be less than the amount set forth opposite such
quarter.
7.20.2. MINIMUM RMR FOR CENTRAL STATION CONTRACTS. Permit the RMR
with respect to Central Station Contracts for any quarter set forth
in EXHIBIT 7.20.2 to be less than the amount set forth opposite such
quarter.
7.21. COMPENSATION. Pay any salary, bonuses, fees or other forms of
compensation in cash to ▇▇▇▇▇▇▇, ▇▇▇▇▇ or ▇▇▇▇▇ if the aggregate amount
thereof paid by all Borrowers to (i) ▇▇▇▇▇▇▇ would exceed $250,000 per year,
(ii) ▇▇▇▇▇ would exceed $250,000 per year and (iii) ▇▇▇▇▇ would exceed $200,000
per year.
7.22. HOLDING COMPANIES. Permit any Holding Company to engage in any
business other than the ownership of the MSG Membership Interests.
7.23. NON-FUNDED ACQUISITION. Consummate a Non-Funded Acquisition if Cash
Equivalents after such consummation are less than $150,000.
ARTICLE
8.
DEFAULT AND REMEDIES
8.1. EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Instruments:
8.1.1. DEFAULT IN PAYMENT. If any Borrower shall fail to pay all or
any portion of Borrowers' Obligations when the same become due and payable.
8.1.2. BREACH OF COVENANTS.
(A) If any Borrower shall fail to observe or perform any
covenant or agreement made by such Borrower contained in Section
6.1, 6.2, 6.5.1, 6.6, 6.9 or in Article VII;
(B) If any Obligor shall fail to observe or perform any
covenant or agreement (other than those referred to in
subparagraph (a) above or specifically addressed elsewhere in this
Section 8.1) made by such Person in any of the Loan Instruments to
which such Person is a party, and such failure shall continue for a
period of 30 days after notice of such failure is given by Lenders,
provided that, if such failure is in connection with subsection
6.5.2, such Obligor shall have an additional 30 days to cure such
failure, if such Obligor (i) is diligently pursuing a
51
52
cure for such failure and (ii) provides Agent with evidence to that
effect in form and substance reasonably satisfactory to Agent.
8.1.3. BREACH OF WARRANTY. If any representation or warranty made
by or on behalf of any Obligor in or pursuant to any of the Loan
Instruments or in any instrument or document furnished in compliance with
the Loan Instruments shall prove to be false or misleading in any material
respect on the date as of which made.
8.1.4. DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If (i) any
Borrower at any time shall be in default (as principal or guarantor or
other surety) in the payment of any principal of or premium or interest
on any Indebtedness for Borrowed Money (other than Borrowers'
Obligations) beyond the grace period, if any, applicable thereto and the
aggregate amount of such payments then in default beyond such grace
period shall exceed $25,000 or (ii) any default shall occur in respect of
any issue of Indebtedness for Borrowed Money of any Borrower (other than
Borrowers' Obligations) outstanding in a principal amount of at least
$50,000, or in respect of any agreement or instrument relating to any
such issue of Indebtedness for Borrowed Money, and such default shall
continue beyond the grace period, if any, applicable thereto.
8.1.5. BANKRUPTCY.
(A) If any Obligor shall (i) generally not be paying its, his
or her debts as they become due, (ii) file, or consent, by
answer or otherwise, to the filing against it, him or her of a
petition for relief or reorganization or arrangement or any other
petition in bankruptcy or insolvency under the laws of any
jurisdiction, (iii) make an assignment for the benefit of creditors,
(iv) consent to the appointment of a custodian, receiver, trustee or
other officer with similar powers for such Obligor, or for any
substantial part of the Property of such Obligor or (v) be
adjudicated insolvent.
(B) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of such Obligor, a
custodian, receiver, trustee or other officer with similar powers
with respect to such Obligor, or with respect to any substantial part
of the Property belonging to any such Person, or if an order for
relief shall be entered in any case or proceeding for liquidation or
reorganization or otherwise to take advantage of any bankruptcy or
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of any Obligor or if any petition for any
such relief shall be filed against any Obligor and such petition
shall not be dismissed or stayed within 60 days.
8.1.6. JUDGMENTS. If there shall exist a final judgment or award
against any Borrower which shall have been outstanding for a period of
30 days or more from the date of the entry thereof and shall not have been
discharged or paid in full or stayed
52
53
pending appeal, if the aggregate amount of all such judgments and awards
exceeds $50,000.
8.1.7. IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify
any UL Certification or Alarm License of any Borrower, the
non-continuation of which could reasonably be expected to have a Material
Adverse Effect, or (ii) there shall exist any violation or default in the
performance of, or a material failure to comply with any agreement, or
condition or term of any UL Certification or Alarm License, which
violation, default or failure has a Material Adverse Effect, or any such
UL Certification or Alarm Licenses shall cease to be in full force and
effect, or (iii) any agreement which is necessary to the operation of any
Borrower's Security Monitoring Business shall be revoked or terminated and
not replaced by a substitute acceptable to Lenders within 30 days after
the date of such revocation or termination, and such revocation or
termination and non-replacement could reasonably be expected to have a
Material Adverse Effect.
8.1.8. COLLATERAL. If any material portion of the Collateral shall
be seized or taken by a Governmental Body or Person, or Borrowers shall
fail to maintain or cause to be maintained the Security Interests and
priority of the Loan Instruments as against any Person, or the title
and rights of any Obligor to any material portion of the Collateral shall
have become the subject matter of litigation which could reasonably be
expected to result in impairment or loss of the security provided by the
Loan Instruments.
8.1.9. INTERRUPTION OF OPERATIONS. If the operations of any portion
of Borrowers' Security Monitoring Business is interrupted at any time for
more than 48 hours during any period of 10 consecutive days, unless
Borrowers shall be entitled to receive during such period of interruption
proceeds of business interruption insurance sufficient to assure that the
per diem Operating Cash Flow of such portion of Borrowers' Security
Monitoring Business during such period is at least equal to its per diem
Operating Cash Flow for the month preceding the initial date of
interruption.
8.1.10 PLANS. If an event or condition specified in subsection 6.3.11
hereof shall occur or exist with respect to any Pension Plan or
Multiemployer Plan and, as a result of such event or condition, together
with all other such events or conditions, Borrowers or any member of a
Controlled Group shall incur, or in the opinion of Lender be reasonably
likely to incur, a liability to a Pension Plan or Multiemployer Plan or
the PBGC (or any of them) which, in the reasonable judgment of Lender,
would have a Material Adverse Effect.
8.1.11. CHANGE IN CONTROL. If at any time (i) SAI ceases to be the
sole shareholder of each of the Holding Companies, AMJ, ERC and each
Permitted Subsidiary which is a corporation, (ii) SAI and SACC cease to be
the only members in ASMS, (iii) SAI and MSG cease to be the only members
in SACC (iv) the Holding
53
54
Companies cease to be the only members in MSG or (v) SAI ceases to be
the only member of a Permitted Subsidiary which is a limited liability
company.
8.1.12. CHANGE IN MANAGEMENT. If at any time (i) ▇▇▇▇▇▇▇, or any
successor to ▇▇▇▇▇▇▇ reasonably acceptable to Agent, ceases to (A) be the
President and Chief Executive Officer of SAI, (B) be the Manager of any
Borrower which is a limited liability company, or (C) manage the
day-to-day operation of Borrowers' Security Monitoring Business or (ii)
▇▇▇▇▇, or any successor to ▇▇▇▇▇ reasonably acceptable to Agent, ceases to
be the Chairman of SAI.
8.2. ACCELERATION OF BORROWERS' OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii),
(iv) and (v) of subsection 8.1.5(a) or in 8.1.5(b), all of
Borrowers' Obligations at that time outstanding automatically shall
mature and become due, and
(b) any other Event of Default, Lenders, at any time
(unless such Event of Default shall have been waived in writing or
remedied), at their option, without further notice or demand, may
declare all of Borrowers' Obligations due and payable, whereupon
Borrowers' Obligations immediately shall mature and become due and
payable,
all without presentment, demand, protest or notice (other than the declaration
referred to in clause (b) above), all of which hereby are waived.
8.3. REMEDIES ON DEFAULT. If Borrowers' Obligations have been accelerated
pursuant to Section 8.2, Lenders, at their option, may:
8.3.1. ENFORCEMENT OF SECURITY INTERESTS. Enforce their rights and
remedies under the Loan Instruments in accordance with their respective
terms.
8.3.2. OTHER REMEDIES. Enforce any of the rights or remedies
accorded to Lenders and/or Agent at equity or law, by virtue of statute
or otherwise.
8.4. APPLICATION OF FUNDS. Any funds received by Lenders or Agent
pursuant to the exercise of any rights accorded to Lenders and/or Agent
pursuant to, or by the operation of any of the terms of, any of the Loan
Instruments, including, without limitation, insurance proceeds, condemnation
proceeds or proceeds from the sale of Collateral, shall be applied to
Borrowers' Obligations in the following order of priority:
8.4.1. EXPENSES. First, to the payment of (i) all reasonable fees and
expenses actually incurred, including, without limitation, court costs,
fees of appraisers, title charges, costs of maintaining and preserving
the Collateral, costs of sale, and all other costs incurred by Lenders
and Agent in exercising any rights accorded to such Persons
54
55
pursuant to the Loan Instruments or by applicable law, including,
without limitation, reasonable attorneys' fees, and (ii) all Liens
(excluding Permitted Liens other than the Security Interests) superior to
the Liens of Agent except such superior Liens subject to which any sale of
the Collateral may have been made.
8.4.2. BORROWERS' OBLIGATIONS. Next, to the payment of the remaining
portion of Borrowers' Obligations in such order as Lenders may determine.
8.5. SURPLUS. Any surplus, to the Person or Persons entitled thereto.
8.6. PERFORMANCE OF BORROWERS' OBLIGATIONS. If any Borrower fails to (i)
maintain in force and pay for any insurance policy or bond which such Borrower
is required to provide pursuant to any of the Loan Instruments, (ii) keep the
Collateral free from all Liens except for Permitted Liens, (iii) pay when due
all taxes, levies and assessments on or in respect of the Collateral, except as
otherwise permitted pursuant to the terms hereof, (iv) make all payments and
perform all acts on the part of such Borrower to be paid or performed in the
manner required by the terms hereof and by the terms of the other Loan
Instruments with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral, (v) keep fully and perform promptly
any other of the obligations of such Borrower hereunder or under any of the
other Loan Instruments, and (vi) keep fully and perform promptly the
obligations of such Borrower with respect to any issue of Indebtedness for
Borrowed Money secured by a Permitted Prior Lien, then Agent or Lenders may
(but shall not be required to) procure and pay for such insurance policy or
bond, place such Collateral in good repair and operating condition, pay,
contest or settle such Liens or taxes or any judgments based thereon or
otherwise make good any other aforesaid failure of such Borrower. Borrowers
shall reimburse Agent and Lenders immediately upon demand for all reasonable
sums paid or advanced on behalf of any Borrower for any such purpose, together
with reasonable and/or necessary costs and expenses (including reasonable
attorneys' fees) paid or incurred by Agent and Lenders in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
Agent and Lenders at the Default Rate. All such sums advanced by Agent and
Lenders, with interest thereon, immediately upon advancement thereof, shall be
deemed to be part of Borrowers' Obligations.
ARTICLE
9.
ADDITIONAL LENDERS AND PARTICIPANTS
9.1. ASSIGNMENT TO OTHER LENDERS.
9.1.1. ASSIGNMENT. FINOVA may make one or more Loan Assignments, and
each Assignee, with the prior written consent of FINOVA (which may
be given or denied in the sole discretion of FINOVA), may make a Loan
Assignment of the rights and obligations which were assigned to such
Assignee. Each Person making a Loan
55
56
Assignment shall give notice thereof to Borrowers within 10 Business
Days thereafter. Notwithstanding the foregoing, FINOVA shall not assign
at any one time or collectively during the term of the Loan more than
49.9% of FINOVA's interest in Borrowers' Obligations.
9.1.2. EFFECT OF LOAN ASSIGNMENT. Each Assignee to which FINOVA
makes a Loan Assignment, and each subsequent Assignee, to the extent of
such Loan Assignment, shall have the same rights, benefits and obligations
under the Loan Instruments as such Assignee would have had if such
Assignee were an original party to the Loan Instruments. Borrowers shall
not incur any costs or expenses in connection with any Loan Assignment.
9.1.3. SUBSTITUTION OF NOTE. Simultaneously with the delivery by any
Lender to Borrowers of any Note which is the subject of a Loan
Assignment and which is marked "canceled," Borrowers shall execute and
deliver to such Lender for delivery to (i) the Assignee to which such Loan
Assignment is made, a promissory note payable to the order of such
Assignee in an amount equal to the amount assigned to such Assignee, and
(ii) such Lender making such Loan Assignment, a promissory note payable to
the order of such assigning Lender in an amount equal to the amount
retained by such Lender, each such Note to be substantially in the form of
the canceled Note.
9.1.4. INSPECTIONS. Any action which any Assignee shall desire to
undertake pursuant to Section 6.2 of the Loan Agreement shall be
coordinated by such Assignee through Agent, and Agent shall accompany each
such Assignee which desires to undertake any such action pursuant to such
Section 6.2.
9.2. PARTICIPATIONS. Each Lender shall have the right to sell
Participations. In the event of the sale of a Participation, the obligations of
the Lender selling such a Participation shall remain unchanged, such Lender
shall remain solely responsible for the performance thereof, such Lender shall
remain the holder of any Note which previously has been delivered to Lender
pursuant to the terms of this Loan Agreement, and Borrowers shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Loan Agreement. Notwithstanding the sale of
any Participation, all amounts payable by Borrowers pursuant to the terms of
the Loan Instruments shall be determined as if no such Participation had been
sold. No Participant shall be entitled to require a Lender to take or omit to
take any action pursuant to the Loan Instruments except as provided in the
Participation Agreement executed by and between the Participant and such
Lender.
9.3. APPOINTMENT AND FUNCTION OF AGENT. FINOVA is hereby appointed as
Agent hereunder to act in such capacity on behalf of all Lenders under this
Loan Agreement and the other Loan Instruments. FINOVA agrees that it shall
continue to act as Agent throughout the term of the Loan. In performing its
functions and duties under this Agreement, Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any other
Person.
56
57
Notwithstanding the appointment of FINOVA as Agent hereunder, Agent shall have
the same rights hereunder as any other Lender, and may exercise such rights as
though FINOVA had not been appointed as Agent hereunder.
9.4. SET OFF AND SHARING OF PAYMENTS. Upon the occurrence of any Event of
Default and the acceleration of Borrowers' Obligations, each Lender is
authorized by Borrowers, at any time or from time to time thereafter, without
notice to Borrowers or to any other Person, to set off and to appropriate and
apply any and all balances held by such Lender for the account of Borrowers,
and any other Property at any time held or owing by such Lender to or for the
credit or for the account of Borrowers, against and on account of any of
Borrowers' Obligations which are not paid when due. Borrowers agree that (i)
each Lender may exercise its right to set off with respect to amounts in excess
of such Lender's share of Borrowers' Obligations and may sell Participations in
such excess to other Lenders and (ii) any Lender so purchasing a Participation
in the Loan made or other of Borrowers' Obligations held by other Lenders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such Participation as fully as if such Lender were a direct
holder of the Loan and other of Borrowers' Obligations in the amount of such
Participation.
9.5. LENDERS' DECISIONS. Until a Loan Assignment is made, all Lenders'
Decisions shall be made solely by FINOVA. After a Loan Assignment is made, any
Lenders' Decisions which may be made pursuant to the Loan Instruments by
Lenders or as to which the Lenders shall have the right to consent shall be
made as set forth in the applicable Lender Addition Agreements.
ARTICLE
10.
CLOSING
The Closing Date shall be such date as the parties shall determine, and
the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by FINOVA. The Closing shall take place at the office of Altheimer &
▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or such other place as the
parties hereto shall agree. Unless the Closing occurs on or before December
31, 1997, this Loan Agreement shall terminate and be of no further force or
effect and, except for any obligation of Borrowers to FINOVA pursuant to
Article XI, none of the parties hereto shall have any further obligation to any
other party.
57
58
ARTICLE
11.
EXPENSES AND INDEMNITY
11.1. ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any of
the transactions contemplated by this Loan Agreement shall be consummated,
Borrowers agree to pay to Lenders on demand all reasonable expenses incurred by
Lenders in connection with the transactions contemplated hereby (including,
without limitation, any appraisal fees, environmental audit fees and title and
recording charges) and in connection with any amendments, modifications or
waivers (whether or not the same become effective) under or in respect of any
of the Loan Instruments, including, without limitation:
11.1.1. FEES AND EXPENSES FOR PREPARATION OF LOAN INSTRUMENTS. All
reasonable expenses, disbursements and reasonable attorneys' fees,
actually incurred (including, without limitation, charges for required
mortgagee's title insurance, lien searches, reproduction of documents,
long distance telephone calls and overnight express carriers) of special
counsel and other counsel retained by Lenders in connection with the
preparation and negotiation of the Loan Instruments or any amendments,
modifications or waivers hereto or thereto.
11.1.2. FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
INSTRUMENTS. Any reasonable expenses or other costs, including reasonable
attorneys' fees and expert witness fees, actually incurred by Agent or
Lenders in connection with the enforcement or collection against any
Obligor of any provision of any of the Loan Instruments, and in
connection with or arising out of any litigation, investigation or
proceeding instituted by any Governmental Body or any other Person with
respect to any of the Loan Instruments, whether or not suit is
instituted, including, but not limited to, such costs or expenses arising
from the enforcement or collection against any Obligor of any provision
of any of the Loan Instruments in any state or federal bankruptcy or
reorganization proceeding.
11.2. INDEMNITY. Borrowers agree to indemnify and save Agent and Lenders
harmless of and from the following:
11.2.1. BROKERAGE FEES. The fees, if any, of brokers and finders
engaged by Borrowers.
11.2.2. GENERAL. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by Agent or
Lenders in investigating, preparing for, defending against, providing
evidence, producing documents or taking other action in respect of any
commenced or threatened litigation, administrative proceeding, suit
instituted by any Person or investigation under any law, including any
federal securities law, the Bankruptcy Code, any relevant state corporate
statute or any other securities law, bankruptcy law or law affecting
creditors generally of any
58
59
jurisdiction, or any regulation pertaining to any of the foregoing,
or at common law or otherwise, relating to the transactions contemplated
by or referred to in, or any other matter related to, the Loan
Instruments, whether or not Agent or any Lender is a party to such
litigation, proceeding or suit, or is subject to such investigation.
11.2.3. OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of Agent or any Lender and
Borrowers as having the relationship of joint venturers or partners or the
determination that Agent or any Lender has acted as agent for Borrowers.
11.2.4. ENVIRONMENTAL INDEMNITY. Any and all claims, losses, damages,
out of pocket response costs, clean-up costs and expenses suffered
and/or incurred at any time by Agent or any Lender arising out of or in
any way relating to the existence at any time of any Hazardous Materials
in, on, under, at, transported to or from, or used in the construction
and/or renovation of, any of the Leasehold Property, any parcel of real
estate acquired in connection with an Acquisition, or otherwise with
respect to any Environmental Law, and/or the failure of Borrowers to
perform its obligations and covenants hereunder with respect to
environmental matters, including, but not limited to: (i) claims of any
Persons for damages, penalties, response costs, clean-up costs, injunctive
or other relief, (ii) costs of removal and restoration, including fees of
attorneys and experts, and costs of reporting the existence of Hazardous
Materials to any Governmental Body, and (iii) any expenses or obligations,
including reasonable attorneys' fees and expert witness fees, incurred at,
before and after any trial or other proceeding before any Governmental
Body or appeal therefrom whether or not taxable as costs, including,
without limitation, witness fees, deposition costs, copying and telephone
charges and other expenses, all of which shall be paid by Borrowers to
Agent or such Lender when incurred by Agent or such Lender, except where
such costs were directly caused by the gross negligence or willful
misconduct of FINOVA, any Lender, or by any agent, or third party acting
on behalf of and at the direction of FINOVA or any Lender.
ARTICLE
12.
MISCELLANEOUS
12.1 NOTICES. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, (ii) sent by
facsimile, or (iii) mailed, postage prepaid, either by registered or certified
mail, return receipt requested, or by overnight express carrier, addressed in
each case as follows:
To Borrowers: Security Associates International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
59
60
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Facsimile No.: 847/956-9360
Copy to: ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Ltd.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile No.: 312/207-6400
To Lender: FINOVA Capital Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: 312/322-3530
Copy to: FINOVA Capital Corporation
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Law
Facsimile No.: 602/207-5036
Copy to: Altheimer & ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile No.: 312/715-4000
or to any other address or facsimile number, as to any of the parties hereto,
as such party shall designate in a notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 12.1 shall be deemed
received (i) if personally delivered, then on the Business Day of delivery,
(ii) if sent by facsimile before 2:00 p.m. Phoenix time, on the day sent if a
Business Day or if such day is not a Business Day or if sent after 2:00 p.m.
Phoenix time, then on the next Business Day, (iii) if sent by overnight,
express carrier, on the next Business Day immediately following the day sent,
or (iv) if sent by registered or certified mail, on the earlier of the fifth
Business Day following the day sent or when actually received. Any notice by
facsimile shall be followed by delivery on the next Business Day by overnight,
express carrier or by hand.
12.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lenders of the Note and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrowers' Obligations remain outstanding, unperformed or unpaid.
60
61
Notwithstanding the repayment of all amounts due under the Loan Instruments,
the cancellation of the Note and the release and/or cancellation of any and all
of the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrowers to indemnify Agent and Lenders with respect to the
expenses, damages, losses, costs and liabilities described in Section 11.2
shall survive until all applicable statute of limitations periods with respect
to actions which may be brought against Agent or any Lender have run.
12.3. FURTHER ASSURANCE. From time to time, Borrowers shall execute and
deliver to Agent and Lenders such additional documents as Lenders reasonably may
require to carry out the purposes of the Loan Instruments and to protect
Lenders' rights thereunder, including, without limitation, using its best
efforts in the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments.
12.4. TAXES AND FEES. Should any tax (other than taxes based upon the net
income of any Lender), recording or filing fees become payable in respect of
any of the Loan Instruments, or any amendment, modification or supplement
thereof, Borrowers agree to pay the same on demand, together with any interest
or penalties thereon attributable to any delay by Borrowers in meeting any
Lender's demand, and agree to hold Lenders harmless with respect thereto.
12.5. SEVERABILITY. In the event that any provision of this Loan Agreement
is deemed to be invalid by reason of the operation of any law, this Loan
Agreement shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
12.6. WAIVER. No delay on the part of Agent or any Lender in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, and no
single or partial exercise of any right, power or privilege hereunder shall
preclude other or further exercise thereof, or be deemed to establish a custom
or course of dealing or performance between the parties hereto, or preclude the
exercise of any other right, power or privilege.
12.7. MODIFICATION OF LOAN INSTRUMENTS. No modification or waiver of any
provision of any of the Loan Instruments shall be effective unless the same
shall be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand on Borrowers in any case shall entitle Borrowers to any other or further
notice or demand in the same, similar or other circumstances.
12.8. CAPTIONS. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
12.9. SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors and
assigns of the parties hereto.
61
62
12.10. REMEDIES CUMULATIVE. All rights and remedies of Agent and Lenders
pursuant to this Loan Agreement, any other Loan Instruments or
otherwise, shall be cumulative and non-exclusive, and may be exercised
singularly or concurrently. Neither Agent nor any Lender shall be required to
prosecute collection, enforcement or other remedies against any Obligor before
proceeding against any other Obligor or to enforce or resort to any security,
liens, collateral or other rights of Agent or Lenders. One or more
successive actions may be brought against Borrowers and/or any other Obligor,
either in the same action or in separate actions, as often as Lenders deem
advisable, until all of Borrowers' Obligations are paid and performed in full.
12.11. ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other Loan
Instruments executed pursuant hereto constitute the entire agreement among the
parties hereto with respect to the transactions contemplated hereby or thereby
and supersede any prior agreements, whether written or oral, relating to the
subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
12.12. APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF
ARIZONA. FOR PURPOSES OF THIS SECTION 12.12, THE LOAN INSTRUMENTS SHALL BE
DEEMED TO BE PERFORMED AND MADE IN THE STATE OF ARIZONA.
12.13. JURISDICTION AND VENUE. EACH BORROWER HEREBY AGREES THAT ALL
ACTIONS OR PROCEEDINGS INITIATED BY SUCH BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT
OF MARICOPA COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA OR, IF AGENT OR ANY LENDER INITIATES SUCH ACTION, IN ADDITION TO THE
FOREGOING COURTS, ANY COURT IN WHICH AGENT OR SUCH LENDER SHALL INITIATE OR TO
WHICH AGENT OR SUCH LENDER SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT
HAS JURISDICTION. EACH BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY AGENT OR
ANY LENDER IN OR REMOVED BY AGENT OR ANY LENDER TO ANY OF SUCH COURTS, AND
HEREBY AGREES THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER
PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED IN THE MANNER PROVIDED FOR
NOTICES HEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
SUCH BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO
SECTION 12.1. EACH BORROWER WAIVES ANY CLAIM THAT MARICOPA COUNTY, ARIZONA OR
THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON
LACK OF
62
63
VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD ANY BORROWER, AFTER BEING
SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR
PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING
THEREOF, SUCH BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT
MAY BE ENTERED BY THE COURT AGAINST SUCH BORROWER AS DEMANDED OR PRAYED FOR IN
SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR
BORROWERS SET FORTH IN THIS SECTION 12.13 SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM
OR THE TAKING BY AGENT OR ANY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY
OTHER APPROPRIATE JURISDICTION, AND EACH BORROWER HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
12.14. WAIVER OF RIGHT TO JURY TRIAL. AGENT, LENDERS AND BORROWERS
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE
LOAN INSTRUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD
BE BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE
THAT ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT
OF COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.15. TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY
BORROWERS OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER LOAN
INSTRUMENTS.
12.16. ESTOPPEL CERTIFICATE. Within 15 days after Agent or any Lender
reasonably requests any Borrower to do so, such Borrower will execute and
deliver to Agent or such Lender a statement certifying (i) that this Loan
Agreement is in full force and effect and has not been modified except as
described in such statement, (ii) the date to which interest on the Note has
been paid, (iii) the Principal Balance, (iv) whether or not to its knowledge an
Incipient Default or Event of Default has occurred and is continuing, and, if
so, specifying in reasonable detail each such Incipient Default or Event of
Default of which it has knowledge, (v) whether to its knowledge it has any
defense, setoff or counterclaim to the payment of the Note in accordance with
its terms, and, if so, specifying each defense, setoff or counterclaim of which
it has knowledge in reasonable detail (including where applicable the amount
thereof), and (vi) as to any other matter reasonably requested by Agent or such
Lender.
12.17. CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender nor any agent or
attorney of Agent or such Lender shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment,
63
64
administration or collection of the Borrowers' Obligations, except in the case
of such Person's gross negligence or willful misconduct.
12.18. COUNTERPARTS. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed
to be an original, but all such counterparts shall together constitute one and
the same agreement.
12.19. NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement or
in any other Loan Instrument, and no course of dealing among the parties
hereto, shall be deemed to create any fiduciary duty by Agent or any Lender to
any Borrower.
12.20. NO STRICT CONSTRUCTION. The language used in this Loan Agreement
shall be deemed to be the language chosen by the parties hereto to express
their mutual intent, and no rule of strict construction shall be applied
against any party hereto.
[remainder of this page intentionally left blank]
IN WITNESS WHEREOF, this Amended and Restated Loan Agreement has been
executed and delivered by each of the parties hereto by a duly authorized
officer of each such party on the date first set forth above.
SECURITY ASSOCIATES INTERNATIONAL, INC. and, AMJ
CENTRAL STATION CORPORATION, INC., each a
Delaware corporation
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President of each of
the foregoing corporations President
SECURITY ASSOCIATES COMMAND CENTER II, L.L.C., a
Michigan limited liability company, ALL-SECURITY
MONITORING SERVICES, L.L.C., an Illinois limited
liability company, and MONITOR SERVICE GROUP,
L.L.C., a Delaware limited liability company
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Manager of each of
the foregoing limited liability companies
64
65
TELECOMMUNICATIONS ASSOCIATES GROUP, INC., an
Ohio corporation d/b/a ERC
By:
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
President
FINOVA CAPITAL CORPORATION, a Delaware
corporation, in its individual capacity and as
agent for all Lenders
By:
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
65