Exhibit 10.46
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CREDIT AGREEMENT
Dated as of June 28, 2002
among
GUARDIAN INTERNATIONAL, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
Page
1. AMOUNT AND TERMS OF CREDIT...............................................................................1
1.1 Revolving Credit Facility.......................................................................1
1.2 Reduction in Commitments........................................................................2
1.3 Use of Proceeds.................................................................................4
1.4 Interest and Applicable Margins.................................................................4
1.5 Cash Management Systems.........................................................................7
1.6 Fees............................................................................................7
1.7 Receipt of Payments.............................................................................7
1.8 Application and Allocation of Payments..........................................................7
1.9 Loan Account and Accounting.....................................................................8
1.10 Indemnity.......................................................................................8
1.11 Access..........................................................................................9
1.12 Taxes..........................................................................................10
1.13 Capital Adequacy; Increased Costs; Illegality..................................................11
1.14 Single Loan....................................................................................12
2. CONDITIONS PRECEDENT....................................................................................12
2.1 Conditions to the Initial Loans................................................................12
2.2 Further Conditions to Each Loan................................................................13
3. REPRESENTATIONS AND WARRANTIES..........................................................................14
3.1 Corporate Existence; Compliance with Law.......................................................14
3.2 Executive Offices, Collateral Locations, FEIN..................................................14
3.3 Corporate Power, Authorization, Enforceable Obligations........................................14
3.4 Financial Statements and Projections...........................................................15
3.5 Material Adverse Effect........................................................................16
3.6 Ownership of Property; Liens...................................................................16
3.7 Labor Matters..................................................................................16
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness......................17
3.9 Government Regulation..........................................................................17
3.10 Margin Regulations.............................................................................17
3.11 Taxes..........................................................................................18
3.12 ERISA..........................................................................................18
3.13 No Litigation..................................................................................19
3.14 Brokers........................................................................................19
3.15 Intellectual Property..........................................................................19
3.16 Full Disclosure................................................................................19
3.17 Environmental Matters..........................................................................20
3.18 Insurance......................................................................................21
3.19 Deposit and Disbursement Accounts..............................................................21
3.20 Government Contracts...........................................................................21
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3.21 Customer and Trade Relations...................................................................21
3.22 Agreements and Other Documents.................................................................21
3.23 Solvency.......................................................................................22
4. FINANCIAL STATEMENTS AND INFORMATION....................................................................22
4.1 Reports and Notices............................................................................22
4.2 Communication with Accountants.................................................................22
5. AFFIRMATIVE COVENANTS...................................................................................22
5.1 Maintenance of Existence and Conduct of Business...............................................22
5.2 Payment of Charges.............................................................................23
5.3 Books and Records..............................................................................23
5.4 Insurance; Damage to or Destruction of Collateral..............................................23
5.5 Compliance with Laws...........................................................................25
5.6 Supplemental Disclosure........................................................................25
5.7 Intellectual Property..........................................................................25
5.8 Environmental Matters..........................................................................26
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and Real Estate Purchases..........26
5.10 Further Assurances.............................................................................27
6. NEGATIVE COVENANTS......................................................................................27
6.1 Mergers, Subsidiaries, Etc.....................................................................27
6.2 Investments; Revolving Loans and Advances......................................................30
6.3 Indebtedness...................................................................................30
6.4 Employee Loans and Affiliate Transactions......................................................31
6.5 Business and Capital Structure.................................................................31
6.6 Guaranteed Indebtedness........................................................................32
6.7 Liens..........................................................................................32
6.8 Sale of Stock and Assets.......................................................................33
6.9 ERISA..........................................................................................33
6.10 Financial Covenants............................................................................33
6.11 Hazardous Materials............................................................................33
6.12 Sale-Leasebacks................................................................................33
6.13 Cancellation of Indebtedness...................................................................33
6.14 Restricted Payments............................................................................33
6.15 Change of Corporate Name or Location; Change of Fiscal Year....................................34
6.16 No Impairment of Intercompany Transfers........................................................34
6.17 No Speculative Transactions....................................................................34
6.18 Changes Relating to Preferred Stock............................................................34
6.19 Permitted Portfolio Purchases..................................................................34
6.20 RMR Policies and Procedures....................................................................35
7. TERM....................................................................................................36
7.1 Termination....................................................................................36
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7.2 Survival of Obligations Upon Termination of Financing Arrangements.............................36
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES..................................................................37
8.1 Events of Default..............................................................................37
8.2 Remedies.......................................................................................38
8.3 Waivers by Credit Parties......................................................................39
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT.....................................................39
9.1 Assignment and Participations..................................................................39
9.2 Appointment of Agent...........................................................................42
9.3 Agent's Reliance, Etc..........................................................................42
9.4 GE Capital and Affiliates......................................................................43
9.5 Lender Credit Decision.........................................................................43
9.6 Indemnification................................................................................43
9.7 Successor Agent................................................................................44
9.8 Setoff and Sharing of Payments.................................................................44
9.9 Revolving Credit Advances; Payments; Non-Funding Lenders; Information; Actions in Concert......45
10. SUCCESSORS AND ASSIGNS..................................................................................47
10.1 Successors and Assigns.........................................................................47
11. MISCELLANEOUS...........................................................................................47
11.1 Complete Agreement; Modification of Agreement..................................................47
11.2 Amendments and Waivers.........................................................................48
11.3 Fees and Expenses..............................................................................49
11.4 No Waiver......................................................................................50
11.5 Remedies.......................................................................................51
11.6 Severability...................................................................................51
11.7 Conflict of Terms..............................................................................51
11.8 Confidentiality................................................................................51
11.9 GOVERNING LAW..................................................................................51
11.10 Notices........................................................................................52
11.11 Section Titles.................................................................................53
11.12 Counterparts...................................................................................53
11.13 WAIVER OF JURY TRIAL...........................................................................53
11.14 Press Releases and Related Matters.............................................................53
11.15 Reinstatement..................................................................................53
11.16 Advice of Counsel..............................................................................54
11.17 No Strict Construction.........................................................................54
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INDEX OF APPENDICES
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Annex A (Recitals) - Definitions
Annex B (Section 1.5) - Cash Management System
Annex C (Section 2.1(a)) - Closing Checklist
Annex D (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex E (Section 4.1(b)) - Collateral Reports
Annex F (Section 6.10) - Financial Covenants
Annex G (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex H (Section 11.10) - Notice AddressesAnnex I (from Annex A-
Commitments definition) - Commitments as of Closing Date
Exhibit 1.1(a) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(b) - Form of Revolving Note
Exhibit 1.4(e) - Form of Notice of Conversion/Continuation
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 7.1(b) - Form of Extension Request
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.1 - Agent's Representatives
Disclosure Schedule 1.3 - Sources and Uses; Funds Flow Memorandum
Disclosure Schedule 3.1 - Type of Entity; State of Organization
Disclosure Schedule 3.2 - Executive Offices, Collateral Locations, FEIN
Disclosure Schedule 3.4(a) - Financial Statements
Disclosure Schedule 3.4(b) - Projections
Disclosure Schedule 3.6 - Real Estate and Leases
Disclosure Schedule 3.7 - Labor Matters
Disclosure Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Disclosure Schedule 3.11 - Tax Matters
Disclosure Schedule 3.12 - ERISA Plans
Disclosure Schedule 3.13 - Litigation
Disclosure Schedule 3.15 - Intellectual Property
Disclosure Schedule 3.17 - Hazardous Materials
Disclosure Schedule 3.18 - Insurance
Disclosure Schedule 3.19 - Deposit and Disbursement Accounts
Disclosure Schedule 3.20 - Government Contracts
Disclosure Schedule 3.22 - Material Agreements
Disclosure Schedule 5.1 - Trade Names
Disclosure Schedule 6.3 - Indebtedness
Disclosure Schedule 6.4(a) - Transactions with Affiliates
Disclosure Schedule 6.4(c) - Compensation Levels
Disclosure Schedule 6.7 - Existing Liens
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This CREDIT AGREEMENT (this "Agreement"), dated as of June 28,
2002 among GUARDIAN INTERNATIONAL, INC., a Florida corporation ("Borrower"); the
other Credit Parties signatory hereto; GENERAL ELECTRIC CAPITAL CORPORATION, a
Delaware corporation (in its individual capacity, "GE Capital"), for itself, as
Lender, and as Agent for Lenders, and the other Lenders signatory hereto from
time to time.
RECITALS
WHEREAS, Borrower has requested that Lenders extend revolving
credit facilities to Borrower of up to Twenty Million Dollars ($20,000,000) in
the aggregate for the purpose of refinancing certain indebtedness of Borrower
and to provide (a) working capital financing for Borrower, (b) funds for other
general corporate purposes of Borrower and (c) funds for other purposes
permitted hereunder; and for these purposes, Lenders are willing to make certain
loans and other extensions of credit to Borrower of up to such amount upon the
terms and conditions set forth herein; and
WHEREAS, Borrower has agreed to secure all of its obligations
under the Loan Documents by granting to Agent, for the benefit of Agent and
Lenders, a security interest in and lien upon all of its existing and
after-acquired personal and real property; and
WHEREAS, capitalized terms used in this Agreement shall have
the meanings ascribed to them in Annex A and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in Annex A shall
govern. All Annexes, Disclosure Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants hereinafter contained, and for other good and valuable
consideration, the parties hereto agree as follows:
1. AMOUNT AND TERMS OF CREDIT
1.1 Revolving Credit Facility.
(a) Subject to the terms and conditions hereof, each Lender agrees to
make available to Borrower from time to time until the Commitment Termination
Date its Pro Rata Share of advances (each, a "Revolving Credit Advance"). The
Pro Rata Share of the Revolving Loan of any Lender shall not at any time exceed
its separate Revolving Loan Commitment. The obligations of each Lender hereunder
shall be several and not joint. Until the Commitment Termination Date, Borrower
may from time to time borrow, repay and reborrow (each a "Revolver Event") under
this Section 1.1(a); provided, that (i) no more than four (4) Revolver Events
may occur in any month, (ii) no mandatory prepayment made pursuant to Section
1.2(b) shall be treated as a Revolver Event and (iii) the amount of any
Revolving Credit Advance to be made at any time shall not exceed Borrowing
Availability at such time. Each Revolving Credit Advance shall be made on notice
by Borrower to the representative of Agent identified on Schedule 1.1 at the
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address specified thereon. These notices must be given no later than (A) noon
(New York time) on the Business Day of the proposed Revolving Credit Advance, in
the case of an Index Rate Loan, or (B) noon (New York time) on the date which is
three (3) Business Days prior to the proposed Revolving Credit Advance, in the
case of a LIBOR Loan. Each such notice (a "Notice of Revolving Credit Advance")
must be substantially in the form of Exhibit 1.1(a), and must specify the
requested date, the amount (at least $50,000 and multiples of $5,000 in excess
thereof) and type of such Revolving Credit Advance, if in respect of a Revolving
Credit Advance made after the Closing Date, whether such Revolving Credit
Advance is to be made in connection with a Permitted Acquisition, a Permitted
Portfolio Purchase or for other general corporate purposes, and such other
information as may be required by Agent and must be accompanied by a Borrowing
Base Certificate giving effect to the proposed Revolving Credit Advance. All
such notices must be given in writing (by telecopy or overnight courier) or by
telephone confirmed immediately in writing.
(b) Borrower shall execute and deliver to each Lender a note to
evidence the Revolving Loan Commitment of that Lender. Each note shall be in the
principal amount of the Revolving Loan Commitment of the applicable Lender,
dated the Closing Date and substantially in the form of Exhibit 1.1(b) (each a
"Revolving Note" and, collectively, the "Revolving Notes"). Each Revolving Note
shall represent the obligation of Borrower to pay the amount of Lender's
Revolving Loan Commitment or, if less, such Lender's Pro Rata Share of the
aggregate unpaid principal amount of all Revolving Credit Advances made to
Borrower together with interest thereon as prescribed in Section 1.4. The entire
unpaid balance of the Revolving Loan and all other non-contingent Obligations
shall be due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(c) (i) Each of the conditions set forth in Section 6.1 shall be
satisfied prior to the making of any Revolving Credit Advance, the
proceeds of which are to be used in whole or in part to finance a
Permitted Acquisition.
(ii) Each of the conditions set forth in Section 6.19 shall be
satisfied prior to the making of any Revolving Credit Advance, the
proceeds of which are to be used in whole or in part to finance a
Permitted Portfolio Purchase.
1.2 Reduction in Commitments.
(a) Voluntary Reductions in Commitments. Borrower may at any time on at
least five days' prior written notice to Agent permanently reduce (but not
terminate) the Commitment; provided that (A) any such reduction shall be in a
minimum amount of $100,000 and integral multiples of $5,000 in excess of such
amount, (B) the Commitment shall not be reduced to an amount less than the
amount of the Revolving Loan then outstanding, and (C) after giving effect to
such reductions, Borrower shall comply with Section 1.2(b)(i). Borrower may at
any time on at least ten days' prior written notice to Agent terminate the
Commitment, provided that upon such termination all Revolving Loans and other
Obligations shall be immediately due and payable in full. Any voluntary
prepayment and any reduction or termination of the Commitment must be
accompanied by the payment of the Fee required by the GE Capital Fee Letter, if
any, plus the payment of any LIBOR funding breakage costs in accordance with
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Section 1.10(b) if in respect of a LIBOR Loan. Upon any such reduction or
termination of the Commitment, Borrower's right to request Revolving Credit
Advances shall simultaneously be permanently reduced or terminated, as the case
may be.
(b) Mandatory Prepayments.
(i) If at any time the outstanding balance of the Revolving
Loan exceeds the lesser of (A) the Maximum Amount and (B) the Borrowing
Base, Borrower shall immediately repay the aggregate outstanding
Revolving Credit Advances to the extent required to eliminate such
excess.
(ii) Immediately upon receipt by any Credit Party of proceeds
of any asset disposition (excluding proceeds of asset dispositions
permitted by Section 6.8(a)) or any sale of Stock of any Subsidiary of
any Credit Party, Borrower shall prepay the Revolving Loans in an
amount equal to all such proceeds, net of (A) commissions and other
reasonable and customary transaction costs, fees and expenses properly
attributable to such transaction and payable by Borrower in connection
therewith (in each case, paid to non-Affiliates), (B) transfer taxes,
(C) amounts payable to holders of senior Liens (to the extent such
Liens constitute Permitted Encumbrances hereunder), if any, and (D) an
appropriate reserve for income taxes in accordance with GAAP in
connection therewith. Any such prepayment shall be applied in
accordance with Section 1.2(c).
(iii) If Borrower issues Stock (or securities convertible into
Stock) or Debt securities, no later than the Business Day following the
date of receipt of the proceeds thereof (excluding proceeds of Stock
issuances permitted by Section 6.5(c)(ii)), Borrower shall prepay the
Revolving Loans in an amount equal to all such proceeds, net of
underwriting discounts and commissions and other reasonable costs paid
to non-Affiliates in connection therewith; provided, that the proceeds
of any issuance of preferred stock and/or debt securities evidencing
unsecured Subordinated Debt, yielding gross proceeds not to exceed
$8,400,000 in the aggregate, need not be applied in repayment of the
Obligations so long as (A) no Default or Event of Default has occurred
and is continuing or would result after giving effect to such issuance
of Stock or debt securities, (B) all proceeds received from the
issuance of such Stock or debt securities are applied to the redemption
of the Series C Preferred Stock, (C) the terms and conditions of such
Stock or debt securities are acceptable to the Agent in its sole
discretion and (D) the earliest maturity, mandatory prepayment or
mandatory redemption date of any such debt securities or Stock is at
least ninety (90) days after the Commitment Termination Date (as of the
date of such issuance). Any such prepayment shall be applied in
accordance with Section 1.2(c).
(iv) Until the Termination Date, Borrower shall prepay the
Obligations on the date that is ten days after the earlier of (A) the
date on which Borrower's annual audited Financial Statements for the
immediately preceding Fiscal Year are delivered pursuant to Annex D or
(B) the date on which such annual audited Financial Statements were
required to be delivered pursuant to Annex D, in an amount equal to
fifty percent (50%) of Excess Cash Flow for the immediately preceding
Fiscal Year. Any prepayments from Excess Cash Flow paid pursuant to
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this clause (iv) shall be applied in accordance with Section 1.2(c).
Each such prepayment shall be accompanied by a certificate signed by
Borrower's vice president - finance certifying the manner in which
Excess Cash Flow and the resulting prepayment were calculated, which
certificate shall be in form and substance satisfactory to Agent.
(c) Application of Certain Mandatory Prepayments. Any prepayments made
by Borrower pursuant to Sections 1.2(b)(ii), (b)(iii), or (b)(iv) above shall be
applied as follows: first, to Fees and reimbursable expenses of Agent then due
and payable pursuant to any of the Loan Documents; second, to interest then due
and payable on the Revolving Loan; and third, to the outstanding principal
balance of Revolving Credit Advances until the same has been paid in full.
(d) Application of Prepayments from Insurance Proceeds and Condemnation
Proceeds. Prepayments from insurance or condemnation proceeds in accordance with
Section 5.4(c) shall be applied in accordance with Section 1.2(c).
(e) No Implied Consent. Nothing in this Section 1.2 shall be construed
to constitute Agent's or any Lender's consent to any transaction that is not
permitted by other provisions of this Agreement or the other Loan Documents.
1.3 Use of Proceeds. Borrower shall utilize the proceeds of (a) the
initial Revolving Credit Advance solely for the Refinancing (and to pay any
related transaction expenses) and for the financing of Borrower's ordinary
working capital and general corporate needs, and (b) subsequent Revolving Credit
Advances in connection with Permitted Acquisitions and Permitted Portfolio
Purchases and to provide funds for other general corporate purposes. Disclosure
Schedule (1.3) contains a description of Borrower's sources and uses of funds as
of the Closing Date, including Revolving Loans to be made or incurred on that
date.
1.4 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Revolving Loans being made by each
Lender, in arrears on each applicable Interest Payment Date, at the following
rates: (i) the Index Rate plus the Applicable Index Margin per annum or, at the
election of Borrower, the applicable LIBOR Rate plus the Applicable LIBOR Margin
per annum. The Applicable LIBOR Margin shall initially be 3.25% and shall be
adjusted (up or down) prospectively on a quarterly basis as determined by
Borrower's consolidated financial performance, commencing with the first day of
the first calendar month that occurs more than five days after delivery of
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Borrower's quarterly unaudited or annual audited Financial Statements to Lenders
for the Fiscal Quarter ending September 30, 2002. Adjustments in the Applicable
LIBOR Margin will be determined by reference to the following grid:
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Debt to RMR Ratio Applicable Margins
----------------- ------------------
-------------------------------------- ------------------------------
> 17.0 3.75%
-------------------------------------- ------------------------------
> 13.0, but < 17.0 3.50%
- -
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< 13.0 3.25%
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All adjustments in the Applicable LIBOR Margin after September 30, 2002
shall be implemented quarterly on a prospective basis, for each calendar month
commencing at least five days after the date of delivery to Lenders of the
quarterly unaudited or annual audited (as applicable) Financial Statements
evidencing the need for an adjustment. Concurrently with the delivery of those
Financial Statements, Borrower shall deliver to Agent and Lenders a certificate,
signed by its vice president - finance, setting forth in reasonable detail the
basis for the continuance of, or any change in, the Applicable LIBOR Margin.
Failure to timely deliver such Financial Statements shall, in addition to any
other remedy provided for in this Agreement, result in an increase in the
Applicable LIBOR Margin to the highest level set forth in the foregoing grid,
until the first day of the first calendar month following the delivery of those
Financial Statements demonstrating that such an increase is not required. If a
Default or an Event of Default has occurred and is continuing at the time any
reduction in the Applicable LIBOR Margin is to be implemented, that reduction
shall be deferred until the first day of the first calendar month following the
date on which such Default or Event of Default is waived or cured.
(b) If any payment on any Revolving Loan becomes due and payable on a
day other than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period)
and, with respect to payments of principal, interest thereon shall be payable at
the then applicable rate during such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a 360-day year, in each case for
the actual number of days occurring in the period for which such interest and
Fees are payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
final, binding and conclusive on Borrower, absent manifest error.
(d) So long as an Event of Default has occurred and is continuing under
Section 8.1(a), (h) or (i), or so long as any other Event of Default has
occurred and is continuing and at the election of Agent (or upon the written
request of Requisite Lenders) confirmed by written notice from Agent to
Borrower, the interest rates applicable to the Revolving Loans shall be
increased by two percentage points (2%) per annum above the rates of interest or
the rate of such Fees otherwise applicable hereunder ("Default Rate"), and all
outstanding Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest at the Default Rate shall accrue from the initial
date of such Event of Default until that Event of Default is cured or waived and
shall be payable upon demand.
(e) Subject to the conditions precedent set forth in Section 2.2,
Borrower shall have the option to (i) request that any Revolving Credit Advance
be made as a LIBOR Loan, (ii) convert at any time all or any part of outstanding
Revolving Loans from Index Rate Loans to LIBOR Loans, (iii) convert any LIBOR
Loan to an Index Rate Loan, subject to payment of LIBOR breakage costs in
accordance with Section 1.10(b) if such conversion is made prior to the
5
expiration of the LIBOR Period applicable thereto, or (iv) continue all or any
portion of any Revolving Loan as a LIBOR Loan upon the expiration of the
applicable LIBOR Period and the succeeding LIBOR Period of that continued
Revolving Loan shall commence on the first day after the last day of the LIBOR
Period of the Revolving Loan to be continued. Any Revolving Loan or group of
Revolving Loans having the same proposed LIBOR Period to be made or continued
as, or converted into, a LIBOR Loan must be in a minimum amount of $50,000 and
integral multiples of $5,000 in excess of such amount. Any such election must be
made by noon (New York time) on the 3rd Business Day prior to (1) the date of
any proposed Revolving Credit Advance which is to bear interest at the LIBOR
Rate, (2) the end of each LIBOR Period with respect to any LIBOR Loans to be
continued as such, or (3) the date on which Borrower wishes to convert any Index
Rate Loan to a LIBOR Loan for a LIBOR Period designated by Borrower in such
election. If no election is received with respect to a LIBOR Loan by noon (New
York time) on the 3rd Business Day prior to the end of the LIBOR Period with
respect thereto (or if a Default or an Event of Default has occurred and is
continuing or the additional conditions precedent set forth in Section 2.2 shall
not have been satisfied), that LIBOR Loan shall be converted to an Index Rate
Loan at the end of its LIBOR Period. Borrower must make such election by notice
to Agent in writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a written
notice (a "Notice of Conversion/Continuation") in the form of Exhibit 1.4(e).
(f) Notwithstanding anything to the contrary set forth in this Section
1.4, if a court of competent jurisdiction determines in a final order that the
rate of interest payable hereunder exceeds the highest rate of interest
permissible under law (the "Maximum Lawful Rate"), then so long as the Maximum
Lawful Rate would be so exceeded, the rate of interest payable hereunder shall
be equal to the Maximum Lawful Rate; provided, however, that if at any time
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
Agreement. Thereafter, interest hereunder shall be paid at the rate(s) of
interest and in the manner provided in Sections 1.4(a) through (e), unless and
until the rate of interest again exceeds the Maximum Lawful Rate, and at that
time this paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the amount that such
Lender could lawfully have received had the interest due hereunder been
calculated for the full term hereof at the Maximum Lawful Rate. If the Maximum
Lawful Rate is calculated pursuant to this paragraph, such interest shall be
calculated at a daily rate equal to the Maximum Lawful Rate divided by the
number of days in the year in which such calculation is made. If,
notwithstanding the provisions of this Section 1.4(f), a court of competent
jurisdiction shall finally determine that a Lender has received interest
hereunder in excess of the Maximum Lawful Rate, Agent shall, to the extent
permitted by applicable law, promptly apply such excess in the order specified
in Section 1.8 and thereafter shall refund any excess to Borrower or as a court
of competent jurisdiction may otherwise order.
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1.5 Cash Management Systems. Borrower will establish, within 180 days
after the Closing Date, and will maintain until the Termination Date, the cash
management systems described in Annex B (the "Cash Management Systems").
1.6 Fees.
(a) Borrower shall pay to GE Capital, individually, the Fees specified
in that certain fee letter of even date herewith between Borrower and GE Capital
(the "GE Capital Fee Letter"), at the times specified for payment therein.
(b) As additional compensation for the Lenders, Borrower shall pay to
Agent, for the ratable benefit of such Lenders, in arrears, on the first
Business Day of each quarter prior to the Commitment Termination Date and on the
Commitment Termination Date, a Fee for Borrower's non-use of available funds in
an amount equal to 0.375% per annum (calculated on the basis of a 360 day year
for actual days elapsed) multiplied by the difference between (x) the Maximum
Amount (as it may be reduced from time to time) and (y) the average for the
period of the daily closing balances of the Revolving Loan outstanding during
the period for which the such Fee is due.
(c) If the Commitment Termination Date is extended pursuant to Section
7.1(b), Borrower shall pay to Agent, for the benefit of the Lenders, an
extension fee (the "Extension Fee") in the amount of (i) one-quarter of one
percent (.25%) of the Commitments in the event that the Commitment Termination
Date is extended by one (1) year or (ii) one-half of one percent (.50%) of the
Commitments in the event the Commitment Termination Date is extended by two (2)
years.
1.7 Receipt of Payments. Borrower shall make each payment under this
Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees and determining Borrowing Availability as of any
date, all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection Account
prior to 2:00 p.m. New York time. Payments received after 2:00 p.m. New York
time on any Business Day or on a day that is not a Business Day shall be deemed
to have been received on the following Business Day.
1.8 Application and Allocation of Payments. So long as no Default or
Event of Default has occurred and is continuing, (i) voluntary prepayments shall
be applied as determined by Borrower, subject to the provisions of Section
1.2(a); and (ii) mandatory prepayments shall be applied as set forth in Section
1.2(c). All payments and prepayments applied to a particular Revolving Loan
shall be applied ratably to the portion thereof held by each Lender as
determined by its Pro Rata Share. As to any other payment, and as to all
payments made when a Default or Event or Default has occurred and is continuing
or following the Commitment Termination Date, Borrower hereby irrevocably waives
the right to direct the application of any and all payments received from or on
7
behalf of Borrower, and Borrower hereby irrevocably agrees that Agent shall have
the continuing exclusive right to apply any and all such payments against the
Obligations as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records. In the absence of a
specific determination by Agent with respect thereto, payments shall be applied
to amounts then due and payable in the following order: (1) to Fees and Agent's
expenses reimbursable hereunder; (2) to interest on the Revolving Loan; (3) to
principal payments on the Revolving Loan; and (4) to all other Obligations
including expenses of Lenders to the extent reimbursable under Section 11.3.
1.9 Loan Account and Accounting. Agent shall maintain a loan account
(the "Loan Account") on its books to record: all Revolving Credit Advances, all
payments made by Borrower, and all other debits and credits as provided in this
Agreement with respect to the Revolving Loans or any other Obligations. All
entries in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall, absent manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Agent shall render to Borrower a monthly accounting of
transactions with respect to the Revolving Loans setting forth the balance of
the Loan Account for the immediately preceding month. Unless Borrower notifies
Agent in writing of any objection to any such accounting (specifically
describing the basis for such objection), within 60 days after the date thereof,
each and every such accounting shall, absent manifest error, be deemed final,
binding and conclusive on Borrower in all respects as to all matters reflected
therein. Only those items expressly objected to in such notice shall be deemed
to be disputed by Borrower. Notwithstanding any provision herein contained to
the contrary, any Lender may elect (which election may be revoked) to dispense
with the issuance of Revolving Notes to that Lender and may rely on the Loan
Account as evidence of the amount of Obligations from time to time owing to it.
1.10 Indemnity.
(a) Each Credit Party that is a signatory hereto shall jointly and
severally indemnify and hold harmless each of Agent, Lenders and their
respective Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an "Indemnified
Person"), from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements and other costs of investigation or defense, including those
incurred upon any appeal) that may be instituted or asserted against or incurred
by any such Indemnified Person as the result of credit having been extended,
suspended or terminated under this Agreement and the other Loan Documents and
the administration of such credit, and in connection with or arising out of the
transactions contemplated hereunder and thereunder and any actions or failures
to act in connection therewith, including any and all Environmental Liabilities
and legal costs and expenses arising out of or incurred in connection with
disputes between or among any parties to any of the Loan Documents
(collectively, "Indemnified Liabilities"); provided, that no such Credit Party
shall be liable for any indemnification to an Indemnified Person to the extent
that any such suit, action, proceeding, claim, damage, loss, liability or
expense results from that Indemnified Person's gross negligence or willful
misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE TO ANY OTHER
PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY
8
OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH
PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED
UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER TRANSACTION CONTEMPLATED
HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in part prior to
the last day of any applicable LIBOR Period (whether that repayment is made
pursuant to any provision of this Agreement or any other Loan Document or occurs
as a result of acceleration, by operation of law or otherwise); (ii) Borrower
shall default in payment when due of the principal amount of or interest on any
LIBOR Loan; (iii) Borrower shall refuse to accept any borrowing of, or shall
request a termination of, any borrowing of, conversion into or continuation of,
LIBOR Loans after Borrower has given notice requesting the same in accordance
herewith; or (iv) Borrower shall fail to make any prepayment of a LIBOR Loan
after Borrower has given a notice thereof in accordance herewith, then Borrower
shall indemnify and hold harmless each Lender from and against all losses, costs
and expenses resulting from or arising from any of the foregoing. Such
indemnification shall include any loss (including loss of margin) or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Revolving Notes
and all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.10(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within ten Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.11 Access. Each Credit Party that is a party hereto shall, during
normal business hours, from time to time upon one Business Day's prior notice as
frequently as Agent determines to be appropriate: (a) provide Agent and any of
its officers, employees and agents access to its properties, facilities,
advisors and employees (including officers) of each Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and agents, to
inspect, audit and make extracts from any Credit Party's books and records, and
(c) permit Agent, and its officers, employees and agents, to inspect, review,
evaluate and make test verifications and counts of the Collateral provided by
any Credit Party. If a Default or Event of Default has occurred and is
continuing or if access is necessary to preserve or protect the Collateral as
determined by the Agent, each such Credit Party shall provide such access to
Agent and to each Lender at all times and without advance notice. Furthermore,
9
so long as any Event of Default has occurred and is continuing, Borrower shall
provide Agent and each Lender with access to its suppliers and customers. Each
Credit Party shall make available to Agent and its counsel, as quickly as is
possible under the circumstances, originals or copies of all books and records
that Agent may reasonably request. Each Credit Party shall deliver any document
or instrument necessary for Agent, as it may from time to time reasonably
request, to obtain records from any service bureau or other Person that
maintains records for such Credit Party, and shall maintain duplicate records or
supporting documentation on media, including computer tapes and discs owned by
such Credit Party. Agent will give Lenders at least five days' prior written
notice of regularly scheduled audits. Representatives of other Lenders may
accompany Agent's representatives on regularly scheduled audits at no charge to
Borrower.
1.12 Taxes.
(a) Any and all payments by Borrower hereunder or under the Revolving
Notes shall be made, in accordance with this Section 1.12, free and clear of and
without deduction for any and all present or future Taxes. If Borrower shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Revolving Notes, (i) the sum payable shall be increased
as much as shall be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
1.12) Agent or Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxing or other authority in accordance with applicable law. Within 30
days after the date of any payment of Taxes, Borrower shall furnish to Agent the
original or a certified copy of a receipt evidencing payment thereof. Agent and
Lenders shall not be obligated to return or refund any amounts received pursuant
to this Section.
(b) Each Credit Party that is a signatory hereto shall indemnify and,
within ten days of demand therefor, pay Agent and each Lender for the full
amount of Taxes (including any Taxes imposed by any jurisdiction on amounts
payable under this Section 1.12) paid by Agent or such Lender, as appropriate,
and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto, whether or not such Taxes were correctly or legally
asserted; provided, that if Agent or such Lender believes that there is a
reasonable basis to contest any such Taxes as being incorrectly or illegally
asserted, then it shall (x) contact Borrower prior to paying such Taxes and (y)
cooperate with Borrower in seeking to have such Taxes reduced or eliminated.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "Foreign Lender") as to which payments to be made under this
Agreement or under the Revolving Notes are exempt from United States withholding
tax under an applicable statute or tax treaty shall provide to Borrower and
Agent a properly completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or the United
States certifying as to such Foreign Lender's entitlement to such exemption (a
"Certificate of Exemption"). Any foreign Person that seeks to become a Lender
under this Agreement shall provide a Certificate of Exemption to Borrower and
Agent prior to becoming a Lender hereunder. No foreign Person may become a
Lender hereunder if such Person fails to deliver a Certificate of Exemption in
advance of becoming a Lender.
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1.13 Capital Adequacy; Increased Costs; Illegality.
(a) If any Lender shall have determined that any law, treaty,
governmental (or quasi-governmental) rule, regulation, guideline or order
regarding capital adequacy, reserve requirements or similar requirements or
compliance by any Lender with any request or directive regarding capital
adequacy, reserve requirements or similar requirements (whether or not having
the force of law), in each case, adopted after the Closing Date, from any
central bank or other Governmental Authority increases or would have the effect
of increasing the amount of capital, reserves or other funds required to be
maintained by such Lender and thereby reducing the rate of return on such
Lender's capital as a consequence of its obligations hereunder, then Borrower
shall from time to time upon demand by such Lender (with a copy of such demand
to Agent) pay to Agent, for the account of such Lender, additional amounts
sufficient to compensate such Lender for such reduction. A certificate as to the
amount of that reduction and showing the basis of the computation thereof
submitted by such Lender to Borrower and to Agent shall, absent manifest error,
be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii) the
compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining any Revolving Loan,
then Borrower shall from time to time, upon demand by such Lender (with a copy
of such demand to Agent), pay to Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such increased cost. A
certificate as to the amount of such increased cost, submitted to Borrower and
to Agent by such Lender, shall be conclusive and binding on Borrower for all
purposes, absent manifest error. Each Lender agrees that, as promptly as
practicable after it becomes aware of any circumstances referred to above which
would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application, use reasonable commercial efforts to minimize costs and expenses
incurred by it and payable to it by Borrower pursuant to this Section 1.13(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any change in the
interpretation thereof) shall make it unlawful, or any central bank or other
Governmental Authority shall assert that it is unlawful, for any Lender to agree
to make or to make or to continue to fund or maintain any LIBOR Loan, then,
unless that Lender is able to make or to continue to fund or to maintain such
LIBOR Loan at another branch or office of that Lender without, in that Lender's
opinion, adversely affecting it or its Revolving Loans or the income obtained
therefrom, on notice thereof and demand therefor by such Lender to Borrower
through Agent, (i) the obligation of such Lender to agree to make or to make or
to continue to fund or maintain LIBOR Loans shall terminate and (ii) Borrower
shall forthwith prepay in full all outstanding LIBOR Loans owing to such Lender,
together with interest accrued thereon, unless Borrower, within five Business
Days after the delivery of such notice and demand, converts all LIBOR Loans into
Index Rate Loans.
(d) Within 15 days after receipt by Borrower of written notice and
demand from any Lender (an "Affected Lender") for payment of additional amounts
or increased costs as provided in Sections 1.12(a), 1.13(a) or 1.13(b), Borrower
11
may, at its option, notify Agent and such Affected Lender of its intention to
replace the Affected Lender. So long as no Default or Event of Default has
occurred and is continuing, Borrower may obtain, at Borrower's expense, a
replacement Lender ("Replacement Lender") for the Affected Lender, which
Replacement Lender must be reasonably satisfactory to Agent. If Borrower obtains
a Replacement Lender within 90 days following notice of its intention to do so,
the Affected Lender must sell and assign its Revolving Loans and Commitments to
such Replacement Lender for an amount equal to the principal balance of all
Revolving Loans held by the Affected Lender and all accrued interest and Fees
with respect thereto through the date of such sale; provided, that Borrower
shall have reimbursed such Affected Lender for the additional amounts or
increased costs that it is entitled to receive under this Agreement through the
date of such sale and assignment. Notwithstanding the foregoing, Borrower shall
not have the right to obtain a Replacement Lender if the Affected Lender
rescinds its demand for increased costs or additional amounts within 15 days
following its receipt of Borrower's notice of intention to replace such Affected
Lender. Furthermore, if Borrower gives a notice of intention to replace and does
not so replace such Affected Lender within 90 days thereafter, Borrower's rights
under this Section 1.13(d) with respect to such Lender shall terminate and
Borrower shall promptly pay all increased costs or additional amounts demanded
by such Affected Lender pursuant to Sections 1.12(a), 1.13(a) and 1.13(b).
1.14 Single Loan. All Revolving Loans to Borrower and all of the other
Obligations of Borrower arising under this Agreement and the other Loan
Documents shall constitute one general obligation of Borrower secured, until the
Termination Date, by all of the Collateral.
2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans. No Lender shall be obligated to
make any Revolving Loan on the Closing Date, or to take, fulfill, or perform any
other action hereunder, until the following conditions have been satisfied or
provided for in a manner satisfactory to Agent, or waived in writing by Agent
and Lenders:
(a) Credit Agreement; Loan Documents. This Agreement or counterparts
hereof shall have been duly executed by, and delivered to, Borrower, each other
Credit Party, Agent and Lenders; and Agent shall have received such documents,
instruments, agreements and legal opinions as Agent shall reasonably request in
connection with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist attached
hereto as Annex C, each in form and substance reasonably satisfactory to Agent.
(b) Repayment of Prior Lender Obligations. Agent shall have received a
fully executed original of a pay-off letter reasonably satisfactory to Agent
confirming that all of the Prior Lender Obligations will be repaid in full from
the proceeds of the initial Revolving Credit Advance and all Liens upon any of
the property of Borrower or any of its Subsidiaries in favor of Prior Lender
shall be terminated by Prior Lender immediately upon such payment.
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(c) Approvals. Agent shall have received (i) satisfactory evidence that
the Credit Parties have obtained all required consents and approvals of all
Persons including all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents or (ii)
an officer's certificate in form and substance reasonably satisfactory to Agent
affirming that no such consents or approvals are required.
(d) Opening Availability. The RMR supporting the initial Revolving
Credit Advance shall be sufficient in value, as determined by Agent, to provide
Borrower with Borrowing Availability, after giving effect to the initial
Revolving Credit Advance (on a pro forma basis, with trade payables being paid
currently, and expenses and liabilities being paid in the ordinary course of
business and without acceleration of sales), of at least $2,500,000.
(e) Payment of Fees. Borrower shall have paid the Fees required to be
paid on the Closing Date in the respective amounts specified in Section 1.6
(including the Fees specified in the GE Capital Fee Letter), and shall have
reimbursed Agent for all fees, costs and expenses of closing presented as of the
Closing Date.
(f) Capital Structure: Other Indebtedness. The capital structure of
each Credit Party and the terms and conditions of all Indebtedness of each
Credit Party shall be acceptable to Agent in its sole discretion.
2.2 Further Conditions to Each Loan. Except as otherwise expressly
provided herein, no Lender shall be obligated to fund any Revolving Credit
Advance or convert or continue any Revolving Loan as a LIBOR Loan, if, as of the
date thereof:
(a) any representation or warranty by any Credit Party contained herein
or in any other Loan Document is untrue or incorrect as of such date, except to
the extent that such representation or warranty expressly relates to an earlier
date and except for changes therein expressly permitted or expressly
contemplated by this Agreement, and Agent or Requisite Lenders have determined
not to make such Revolving Credit Advance or convert or continue any Revolving
Loan as a LIBOR Loan as a result of the fact that such warranty or
representation is untrue or incorrect;
(b) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite Lenders, and Agent
or Requisite Lenders have determined not to make such Revolving Credit Advance
or convert or continue any Revolving Loan as a LIBOR Loan as a result of the
fact that such event or circumstance has occurred;
(c) any Default or Event of Default has occurred and is continuing or
would result after giving effect to any Revolving Credit Advance, and Agent or
Requisite Lenders shall have determined not to make any Revolving Credit Advance
13
or convert or continue any Revolving Loan as a LIBOR Loan as a result of that
Default or Event of Default; or
(d) after giving effect to any Revolving Credit Advance, the
outstanding principal amount of the Revolving Loan would exceed the lesser of
the Borrowing Base and the Maximum Amount.
The request and acceptance by Borrower of the proceeds of any Revolving Credit
Advance or the conversion or continuation of any Revolving Loan into, or as, a
LIBOR Loan shall be deemed to constitute, as of the date thereof, (i) a
representation and warranty by Borrower that the conditions in this Section 2.2
have been satisfied and (ii) a reaffirmation by Borrower of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant to the
Collateral Documents.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Revolving Loans, the Credit Parties
executing this Agreement, jointly and severally, make the following
representations and warranties to Agent and each Lender with respect to all
Credit Parties, each and all of which shall survive the execution and delivery
of this Agreement.
3.1 Corporate Existence; Compliance with Law. Each Credit Party (a) is
a corporation, limited liability company or limited partnership duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization set forth in Disclosure Schedule
(3.1); (b) is duly qualified to conduct business and is in good standing in each
other jurisdiction where its ownership or lease of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not result in exposure to losses, damages or liabilities in
excess of $100,000; (c) has the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease and to conduct its business as
now, heretofore and proposed to be conducted; (d) subject to specific
representations regarding Environmental Laws, has all material licenses,
permits, consents or approvals from or by, and has made all material filings
with, and has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct;
(e) is in compliance with its charter and bylaws or partnership or operating
agreement, as applicable; and (f) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in compliance
with all applicable provisions of law, except where the failure to comply,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
3.2 Executive Offices, Collateral Locations, FEIN. As of the Closing
Date, the current location of each Credit Party's chief executive office and the
warehouses and premises at which any Collateral is located are set forth in
Disclosure Schedule (3.2), and none of such locations has changed within 12
months preceding the Closing Date. In addition, Disclosure Schedule (3.2) lists
the federal employer identification number of each Credit Party.
3.3 Corporate Power, Authorization, Enforceable Obligations. The
execution, delivery and performance by each Credit Party of the Loan Documents
to which it is a party and the creation of all Liens provided for therein: (a)
are within such Person's power; (b) have been duly authorized by all necessary
14
corporate, limited liability company or limited partnership action; (c) do not
contravene any provision of such Person's charter, bylaws or partnership or
operating agreement as applicable; (d) do not violate any law or regulation, or
any order or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default under or
accelerate or permit the acceleration of any performance required by, any
indenture, mortgage, deed of trust, lease, agreement or other instrument to
which such Person is a party or by which such Person or any of its property is
bound; (f) do not result in the creation or imposition of any Lien upon any of
the property of such Person other than those in favor of Agent, on behalf of
itself and Lenders, pursuant to the Loan Documents; and (g) do not require the
consent or approval of any Governmental Authority or any other Person, except
those referred to in Section 2.1(c), all of which will have been duly obtained,
made or complied with prior to the Closing Date. Each of the Loan Documents
shall be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and binding
obligation of such Credit Party enforceable against it in accordance with its
terms.
3.4 Financial Statements and Projections. Except for the Projections,
all Financial Statements concerning Borrower and its Subsidiaries that are
referred to below have been prepared in accordance with GAAP consistently
applied throughout the periods covered (except as disclosed therein and except,
with respect to unaudited Financial Statements, for the absence of footnotes and
normal year-end audit adjustments) and present fairly in all material respects
the financial position of the Persons covered thereby as at the dates thereof
and the results of their operations and cash flows for the periods then ended.
(a) Financial Statements. The following Financial Statements attached
hereto as Disclosure Schedule (3.4(a)) have been delivered on the date hereof:
(i) The audited consolidated and consolidating balance sheets
at December 31, 2000 and 2001 and the related statements of income and
cash flows of Borrower and its Subsidiaries for the Fiscal Years then
ended, certified by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP; and
(ii) The unaudited balance sheet at March 31, 2002 and the
related statements of income and cash flows of Borrower and its
Subsidiaries for the Fiscal Quarter then ended.
(b) Projections. The Projections delivered on the date hereof and
attached hereto as Disclosure Schedule (3.4(b)) have been prepared by Borrower
in light of the past operations of its businesses, but including future payments
of known contingent liabilities and reflect projections for the 30 month period
beginning on July 1, 2002 on a month-by-month basis for the first 6 months and
on a year-by-year basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrower believes to be reasonable and
fair in light of current conditions and current facts known to Borrower and, as
of the Closing Date, reflect Borrower's good faith and reasonable estimates of
the future financial performance of Borrower and of the other information
projected therein for the period set forth therein.
15
3.5 Material Adverse Effect. Between December 31, 2001 and the Closing
Date, (a) no Credit Party has incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term leases or unusual
forward or long-term commitments that are not reflected in the Financial
Statements and that, alone or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become binding upon
any Credit Party's assets and no law or regulation applicable to any Credit
Party has been adopted that has had or could reasonably be expected to have a
Material Adverse Effect, and (c) no Credit Party is in default and to the best
of Borrower's knowledge no third party is in default under any material
contract, lease or other agreement or instrument, that alone or in the aggregate
could reasonably be expected to have a Material Adverse Effect. Between December
31, 2001 and the Closing Date no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse Effect.
3.6 Ownership of Property; Liens. As of the Closing Date, the real
estate ("Real Estate") listed in Disclosure Schedule (3.6) constitutes all of
the real property owned, leased, subleased, or used by any Credit Party. Each
Credit Party owns good and marketable fee simple title to all of its owned Real
Estate, and valid leasehold interests in all of its leased Real Estate, all as
described on Disclosure Schedule (3.6), and copies of all such leases or a
summary of terms thereof reasonably satisfactory to Agent have been delivered to
Agent. Disclosure Schedule (3.6) further describes any Real Estate with respect
to which any Credit Party is a lessor, sublessor or assignor as of the Closing
Date. Each Credit Party also has good and marketable title to, or valid
leasehold interests in, all of its personal property and assets. As of the
Closing Date, none of the properties and assets of any Credit Party are subject
to any Liens other than Permitted Encumbrances, and there are no facts,
circumstances or conditions known to any Credit Party that may result in any
Liens (including Liens arising under Environmental Laws) other than Permitted
Encumbrances. Each Credit Party has received all deeds, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills of sale and
other documents, and has duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Credit Party's right, title and
interest in and to all such Real Estate and other properties and assets.
Disclosure Schedule (3.6) also describes any purchase options, rights of first
refusal or other similar contractual rights pertaining to any Real Estate. As of
the Closing Date, no portion of any Credit Party's Real Estate has suffered any
material damage by fire or other casualty loss that has not heretofore been
repaired and restored in all material respects to its original condition or
otherwise remedied. As of the Closing Date, all material permits required to
have been issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently occupied and
used have been lawfully issued and are in full force and effect.
3.7 Labor Matters. As of the Closing Date (a) no strikes or other
material labor disputes against any Credit Party are pending or, to any Credit
Party's knowledge, threatened; (b) hours worked by and payment made to employees
of each Credit Party comply with the Fair Labor Standards Act and each other
federal, state, local or foreign law applicable to such matters; (c) all
payments due from any Credit Party for employee health and welfare insurance
have been paid or accrued as a liability on the books of such Credit Party; (d)
except as set forth in Disclosure Schedule (3.7), no Credit Party is a party to
16
or bound by any collective bargaining agreement, management agreement,
consulting agreement, employment agreement, bonus, restricted stock, stock
option, or stock appreciation plan or agreement or any similar plan, agreement
or arrangement (and true and complete copies of any agreements described on
Disclosure Schedule (3.7) have been delivered to Agent); (e) there is no
organizing activity involving any Credit Party pending or, to any Credit Party's
knowledge, threatened by any labor union or group of employees; (f) there are no
representation proceedings pending or, to any Credit Party's knowledge,
threatened with the National Labor Relations Board, and no labor organization or
group of employees of any Credit Party has made a pending demand for
recognition; and (g) except as set forth in Disclosure Schedule (3.7), there are
no material complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by any Credit
Party of any individual.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. Except as set forth in Disclosure Schedule (3.8), as of the
Closing Date, no Credit Party has any Subsidiaries, is engaged in any joint
venture or partnership with any other Person, or is an Affiliate of any other
Person. Except as set forth in Disclosure Schedule (3.8), there are no
outstanding rights to purchase, options, warrants or similar rights or
agreements pursuant to which any Credit Party may be required to issue, sell,
repurchase or redeem any of its Stock or other equity securities or any Stock or
other equity securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date (except for
the Obligations) is described in Section 6.3 (including Disclosure Schedule
(6.3)).
3.9 Government Regulation. No Credit Party is an "investment company"
or an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. No Credit Party is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, or any other federal or state
statute that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Revolving Loans by Lenders to
Borrower, the application of the proceeds thereof and the repayment thereof will
not violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission.
3.10 Margin Regulations. No Credit Party is engaged, nor will it
engage, principally or as one of its important activities, in the business of
extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" as such terms are defined in Regulation U of the Federal Reserve Board as
now and from time to time hereafter in effect (such securities being referred to
herein as "Margin Stock"). No Credit Party owns any Margin Stock, and none of
the proceeds of the Revolving Loans or other extensions of credit under this
Agreement will be used, directly or indirectly, for the purpose of purchasing or
carrying any Margin Stock, for the purpose of reducing or retiring any
Indebtedness that was originally incurred to purchase or carry any Margin Stock
or for any other purpose that might cause any of the Revolving Loans or other
extensions of credit under this Agreement to be considered a "purpose credit"
within the meaning of Regulations T, U or X of the Federal Reserve Board. No
17
Credit Party will take or permit to be taken any action that might cause any
Loan Document to violate any regulation of the Federal Reserve Board.
3.11 Taxes. All tax returns, reports and statements, including
information returns, required by any Governmental Authority to be filed by any
Credit Party have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty, interest or
late charge may be added thereto for nonpayment thereof (or any such fine,
penalty, interest, late charge or loss has been paid), excluding Charges or
other amounts being contested in accordance with Section 5.2(b). Proper and
accurate amounts have been withheld by each Credit Party from its respective
employees for all periods in full and complete compliance with all applicable
federal, state, local and foreign laws and such withholdings have been timely
paid to the respective Governmental Authorities. Disclosure Schedule (3.11) sets
forth as of the Closing Date those taxable years for which any Credit Party's
tax returns are currently being audited by the IRS or any other applicable
Governmental Authority and any assessments or threatened assessments in
connection with such audit, or otherwise currently outstanding. Except as
described in Disclosure Schedule (3.11), no Credit Party has executed or filed
with the IRS or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for assessment or
collection of any Charges. None of the Credit Parties and their respective
predecessors are liable for any Charges: (a) under any agreement (including any
tax sharing agreements) or (b) to each Credit Party's knowledge, as a
transferee. As of the Closing Date, no Credit Party has agreed or been requested
to make any adjustment under IRC Section 481(a), by reason of a change in
accounting method or otherwise, which would have a Material Adverse Effect.
3.12 ERISA.
(a) Disclosure Schedule (3.12) lists all Plans and separately
identifies all Pension Plans, including Title IV Plans, Multiemployer Plans,
ESOPs and Welfare Plans, including all Retiree Welfare Plans. Copies of all such
listed Plans, together with a copy of the latest form IRS/DOL 5500-series for
each such Plan have been delivered to Agent. Except with respect to
Multiemployer Plans, each Qualified Plan has been determined by the IRS to
qualify under Section 401 of the IRC, the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and nothing has occurred that would cause the loss of such qualification or
tax-exempt status. Each Plan is in compliance with the applicable provisions of
ERISA and the IRC, including the timely filing of all reports required under the
IRC or ERISA, including the statement required by 29 CFR Section 2520.104-23.
Neither any Credit Party nor ERISA Affiliate has failed to make any contribution
or pay any amount due as required by either Section 412 of the IRC or Section
302 of ERISA or the terms of any such Plan. Neither any Credit Party nor ERISA
Affiliate has engaged in a "prohibited transaction," as defined in Section 406
of ERISA and Section 4975 of the IRC, in connection with any Plan, that would
subject any Credit Party to a material tax on prohibited transactions imposed by
Section 502(i) of ERISA or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any Unfunded Pension Liability; (ii) no ERISA Event or event described
in Section 4062(e) of ERISA with respect to any Title IV Plan has occurred or is
reasonably expected to occur; (iii) there are no pending, or to the knowledge of
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any Credit Party, threatened claims (other than claims for benefits in the
normal course), sanctions, actions or lawsuits, asserted or instituted against
any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party
or ERISA Affiliate has incurred or reasonably expects to incur any liability as
a result of a complete or partial withdrawal from a Multiemployer Plan; (v)
within the last five years no Title IV Plan of any Credit Party or ERISA
Affiliate has been terminated, whether or not in a "standard termination" as
that term is used in Section 404(b)(1) of ERISA, nor has any Title IV Plan of
any Credit Party or ERISA Affiliate (determined at any time within the past five
years) with Unfunded Pension Liabilities been transferred outside of the
"controlled group" (within the meaning of Section 4001(a)(14) of ERISA) of any
Credit Party or ERISA Affiliate; (vi) except in the case of any ESOP, Stock of
all Credit Parties and their ERISA Affiliates makes up, in the aggregate, no
more than 10% of fair market value of the assets of any Plan measured on the
basis of fair market value as of the latest valuation date of any Plan; and
(vii) no liability under any Title IV Plan has been satisfied with the purchase
of a contract from an insurance company that is not rated AAA by the Standard &
Poor's Corporation or an equivalent rating by another nationally recognized
rating agency.
3.13 No Litigation. No action, claim, lawsuit, demand, investigation or
proceeding is now pending or, to the knowledge of any Credit Party, threatened
against any Credit Party, before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "Litigation"), (a) that
challenges any Credit Party's right or power to enter into or perform any of its
obligations under the Loan Documents to which it is a party, or the validity or
enforceability of any Loan Document or any action taken thereunder, or (b) that
has a reasonable risk of being determined adversely to any Credit Party and
that, if so determined, could reasonably be expected to have a Material Adverse
Effect. Except as set forth on Disclosure Schedule (3.13), as of the Closing
Date there is no Litigation pending or threatened that seeks damages in excess
of $250,000 or injunctive relief against, or alleges criminal misconduct of, any
Credit Party.
3.14 Brokers. No broker or finder acting on behalf of any Credit Party
or Affiliate thereof brought about the obtaining, making or closing of the
Revolving Loans, and no Credit Party or Affiliate thereof has any obligation to
any Person in respect of any finder's or brokerage fees in connection therewith.
3.15 Intellectual Property. As of the Closing Date, each Credit Party
owns or has rights to use all Intellectual Property necessary to continue to
conduct its business as now or heretofore conducted by it or proposed to be
conducted by it, and each Patent, Trademark, Copyright and License is listed,
together with application or registration numbers, as applicable, in Disclosure
Schedule (3.15). Each Credit Party conducts its business and affairs without
infringement of or interference with any Intellectual Property of any other
Person in any material respect. Except as set forth in Disclosure Schedule
(3.15), no Credit Party is aware of any infringement claim by any other Person
with respect to any Intellectual Property.
3.16 Full Disclosure. No information contained in this Agreement, any
of the other Loan Documents, any Projections, Financial Statements or Collateral
Reports or other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent or any
19
Lender pursuant to the terms of this Agreement (including without limitation
information provided to Agent and Lenders prior to the Closing Date regarding
historical Attrition, historical changes in RMR and historical RMR) contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
The Liens granted to Agent, on behalf of itself and Lenders, pursuant to the
Collateral Documents will at all times be fully perfected first priority Liens
in and to the Collateral described therein, subject, as to priority, only to
Permitted Encumbrances.
3.17 Environmental Matters.
(a) Except as set forth in Disclosure Schedule (3.17), as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed $250,000; (ii) no Credit
Party has caused or suffered to occur any Release of Hazardous Materials on, at,
in, under, above, to, from or about any of its Real Estate; (iii) the Credit
Parties are and have been in compliance with all Environmental Laws, except for
such noncompliance that would not result in Environmental Liabilities which
could reasonably be expected to exceed $250,000; (iv) the Credit Parties have
obtained, and are in compliance with, all Environmental Permits required by
Environmental Laws for the operations of their respective businesses as
presently conducted or as proposed to be conducted, except where the failure to
so obtain or comply with such Environmental Permits would not result in
Environmental Liabilities that could reasonably be expected to exceed $250,000,
and all such Environmental Permits are valid, uncontested and in good standing;
(v) no Credit Party is involved in operations or knows of any facts,
circumstances or conditions, including any Releases of Hazardous Materials, that
are likely to result in any Environmental Liabilities of such Credit Party which
could reasonably be expected to exceed $250,000, and no Credit Party has
permitted any current or former tenant or occupant of the Real Estate to engage
in any such operations; (vi) there is no Litigation arising under or related to
any Environmental Laws, Environmental Permits or Hazardous Material that seeks
damages, penalties, fines, costs or expenses in excess of $250,000 or injunctive
relief against, or that alleges criminal misconduct by, any Credit Party; (vii)
no notice has been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or analogous state
statutes, and to the knowledge of the Credit Parties, there are no facts,
circumstances or conditions that may result in any Credit Party being identified
as a "potentially responsible party" under CERCLA or analogous state statutes;
and (viii) the Credit Parties have provided to Agent copies of all existing
environmental reports, reviews and audits and all written information pertaining
to actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been, in control of any of the Real Estate or any
Credit Party's affairs, and (ii) does not have the capacity through the
provisions of the Loan Documents or otherwise to influence any Credit Party's
conduct with respect to the ownership, operation or management of any of its
Real Estate or compliance with Environmental Laws or Environmental Permits.
20
3.18 Insurance. Disclosure Schedule (3.18) lists all insurance policies
of any nature maintained, as of the Closing Date, for current occurrences by
each Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts. Disclosure Schedule (3.19)
lists all banks and other financial institutions at which any Credit Party
maintains deposit or other accounts as of the Closing Date, including any
Disbursement Accounts, and such Schedule correctly identifies the name, address
and telephone number of each depository, the name in which the account is held,
a description of the purpose of the account, and the complete account number
therefor.
3.20 Government Contracts. Except as set forth in Disclosure Schedule
(3.20), as of the Closing Date, no Credit Party is a party to any contract or
agreement with any Governmental Authority and no Credit Party's Accounts are
subject to the Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any
similar state or local law.
3.21 Customer and Trade Relations. As of the Closing Date, there exists
no actual or, to the knowledge of any Credit Party, threatened termination or
cancellation of, or any material adverse modification or change in: the business
relationship of any Credit Party with any customer or group of customers whose
purchases during the preceding 12 months caused them to be ranked among the ten
largest customers of such Credit Party; or the business relationship of any
Credit Party with any supplier material to its operations. No contract between
Borrower and any central monitoring station is in default as of the Closing Date
3.22 Agreements and Other Documents. As of the Closing Date, each
Credit Party has provided to Agent or its counsel, on behalf of Lenders,
accurate and complete copies (or summaries) of all of the following agreements
or documents to which it is subject and each of which is listed in Disclosure
Schedule (3.22): (a) supply agreements and purchase agreements not terminable by
such Credit Party within 60 days following written notice issued by such Credit
Party and involving transactions in excess of $500,000 per annum; (b) leases of
Equipment having a remaining term of one year or longer and requiring aggregate
rental and other payments in excess of $200,000 per annum; (c) licenses and
permits held by the Credit Parties, the absence of which could be reasonably
likely to have a Material Adverse Effect; (d) instruments and documents
evidencing any Indebtedness or Guaranteed Indebtedness of such Credit Party and
any Lien granted by such Credit Party with respect thereto; (e) instruments and
agreements evidencing the issuance of any equity securities, warrants, rights or
options to purchase equity securities of such Credit Party; (f) all agreements
between Borrower and the central monitoring stations which provide service to
the ten largest groups of Borrower's customers as of the date hereof; (g)
agreements evidencing loans made by Borrower (i) with an outstanding principal
amount in excess of $50,000 or (ii) otherwise to Affiliates of Borrower; (h) any
agreements regarding services provided by members of Borrower's management to
other Persons; (i) any agreements regarding the purchase of Alarm Contracts by
Borrower from Borrower's Affiliates; (j) all employment, noncompete and
management agreements regarding Borrower or any member of its management; and
(k) any other outstanding agreements, proposals, letters of intent or similar
understandings regarding acquisitions of businesses or portfolios of Alarm
Contracts by Borrower.
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3.23 Solvency. Both before and after giving effect to (a) the Revolving Loans to
be made on the Closing Date or such other date as Revolving Loans requested
hereunder are made, (b) the disbursement of the proceeds of such Revolving Loans
pursuant to the instructions of Borrower, (c) the Refinancing and (d) the
payment and accrual of all transaction costs in connection with the foregoing,
each Credit Party is and will be Solvent.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices.
(a) Each Credit Party executing this Agreement hereby agrees that from
and after the Closing Date and until the Termination Date, it shall deliver to
Agent or to Agent and Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and in the manner
set forth in Annex D.
(b) Each Credit Party executing this Agreement hereby agrees that from
and after the Closing Date and until the Termination Date, it shall deliver to
Agent or to Agent and Lenders, as required, the various Collateral Reports
(including Borrowing Base Certificates in the form of Exhibit 4.1(b)) at the
times, to the Persons and in the manner set forth in Annex E.
4.2 Communication with Accountants. Each Credit Party executing this
Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including ▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & Co., and authorizes and, at Agent's request, shall instruct those
accountants and advisors to disclose and make available to Agent and each Lender
any and all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies of any
issued management letters) with respect to the business, financial condition and
other affairs of any Credit Party.
5. AFFIRMATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof and until the
Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Each Credit Party
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; continue
to conduct its business substantially as now conducted or as otherwise permitted
hereunder; at all times maintain, preserve and protect all of its assets and
properties used or useful in the conduct of its business, and keep the same in
good repair, working order and condition in all material respects (taking into
consideration ordinary wear and tear) and from time to time make, or cause to be
made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and transact business only in such
corporate names as are set forth in Disclosure Schedule (5.1).
22
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), each Credit Party shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
storage or rental charges payable to warehousemen and bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, in accordance with
GAAP; (ii) no Lien shall be imposed to secure payment of such Charges (other
than payments to warehousemen and/or bailees) that is superior to any of the
Liens securing payment of the Obligations and such contest is maintained and
prosecuted continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral becomes subject to
forfeiture or loss as a result of such contest, and (iv) such Credit Party shall
promptly pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and shall deliver
to Agent evidence reasonably acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to such
Credit Party or the conditions set forth in this Section 5.2(b) are no longer
met.
5.3 Books and Records. Each Credit Party shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Disclosure Schedule
(3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral.
(a) The Credit Parties shall, at their sole cost and expense, maintain
the policies of insurance described on Disclosure Schedule (3.18) as in effect
on the date hereof or otherwise in form and amounts and with insurers reasonably
acceptable to Agent. Such policies of insurance (or the loss payable and
additional insured endorsements delivered to Agent) shall contain provisions
pursuant to which the insurer agrees to provide 30 days prior written notice to
Agent in the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter shall fail
to obtain or maintain any of the policies of insurance required above or to pay
all premiums relating thereto, Agent may at any time or times thereafter obtain
and maintain such policies of insurance and pay such premiums and take any other
action with respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any premiums
therefor. By doing so, Agent shall not be deemed to have waived any Default or
Event of Default arising from any Credit Party's failure to maintain such
insurance or pay any premiums therefor. All sums so disbursed, including
reasonable attorneys' fees, court costs and other charges related thereto, shall
23
be payable on demand by Borrower to Agent and shall be additional Obligations
hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix maintained by any
Credit Party or any laws affecting the potential liability of such Credit Party)
to require additional forms and limits of insurance to, in Agent's opinion,
adequately protect both Agent's and Lenders' interests in all or any portion of
the Collateral and to ensure that each Credit Party is protected by insurance in
amounts and with coverage customary for its industry. If reasonably requested by
Agent, each Credit Party shall deliver to Agent from time to time a report of a
reputable insurance broker, reasonably satisfactory to Agent, with respect to
its insurance policies.
(c) Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All Risk" and
business interruption insurance naming Agent, on behalf of itself and Lenders,
as loss payee, and (ii) all general liability and other liability policies
naming Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and all
officers, employees or agents designated by Agent), so long as any Event of
Default has occurred and is continuing or the anticipated insurance proceeds
exceed $1,000,000, as each Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting claims under
such "All Risk" policies of insurance, endorsing the name of each Credit Party
on any check or other item of payment for the proceeds of such "All Risk"
policies of insurance and for making all determinations and decisions with
respect to such "All Risk" policies of insurance. Agent shall have no duty to
exercise any rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower shall promptly notify Agent of any loss, damage, or
destruction to the Collateral in the amount of $250,000 or more, whether or not
covered by insurance. After deducting from such proceeds the expenses, if any,
incurred by Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in accordance
with Section 1.2(d), provided that in the case of insurance proceeds pertaining
to any Credit Party other than Borrower, such insurance proceeds shall be
applied to the Revolving Loans owing by Borrower, or permit or require each
Credit Party to use such money, or any part thereof, to replace, repair, restore
or rebuild the Collateral in a diligent and expeditious manner with materials
and workmanship of substantially the same quality as existed before the loss,
damage or destruction. Notwithstanding the foregoing, if the casualty giving
rise to such insurance proceeds could not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed $750,000 in
the aggregate, Agent shall permit the applicable Credit Party to replace,
restore, repair or rebuild the property; provided that if such Credit Party has
not completed or entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty, Agent may
apply such insurance proceeds to the Obligations in accordance with Section
1.3(d); provided further that in the case of insurance proceeds pertaining to
any Credit Party other than Borrower, such insurance proceeds shall be applied
to the Revolving Loans owing by Borrower. All insurance proceeds made available
to any Credit Party that is not a Borrower to replace, repair, restore or
rebuild Collateral shall be deposited in a cash collateral account. Thereafter,
such funds shall be made available to such Credit Party to provide funds to
replace, repair, restore or rebuild the Collateral as follows: (i) Borrower
shall request an Revolving Credit Advance or release from the cash collateral
24
account be made to such Credit Party in the amount requested to be released; and
(ii) so long as the conditions set forth in Section 2.2 have been met, Lenders
shall make such Revolving Credit Advance or Agent shall release funds from the
cash collateral account. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied in accordance
with Section 1.2(d); provided that in the case of insurance proceeds pertaining
to any Credit Party other than Borrower, such insurance proceeds shall be
applied to the Revolving Loans owing by Borrower.
(d) The Credit Parties will also cause (i) each Dealer from whom any
Credit Party has acquired an Alarm Contract and with which such Credit Party has
any continuing business relationship (i.e. from whom such Credit Party typically
buys Alarm Contracts at least quarterly) to maintain insurance against claims
for bodily injury, death or property damage, with a $500,000 minimum limit per
occurrence for combined bodily injury and property damage, and to provide that
such Credit Party is an additional insured with respect to such insurance, and
(ii) each central monitoring station that monitors security alarm systems in
connection with any Alarm Contract owned by any Credit Party to maintain
insurance against claims for bodily injury, death or property damage, with a
$500,000 minimum limit per occurrence for combined bodily injury and property
damage, and to provide that such Credit Party is an additional insured with
respect to such insurance.
5.5 Compliance with Laws. Each Credit Party shall comply with all
federal, state, local and foreign laws and regulations applicable to it,
including those relating to alarm monitoring, financing, ERISA and labor matters
and Environmental Laws and Environmental Permits, except to the extent that the
failure to comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. From time to time as may be reasonably
requested by Agent (which request will not be made more frequently than once
each year absent the occurrence and continuance of a Default or an Event of
Default), the Credit Parties shall supplement each Disclosure Schedule hereto,
or any representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of this
Agreement, would have been required to be set forth or described in such
Disclosure Schedule or as an exception to such representation or that is
necessary to correct any information in such Disclosure Schedule or
representation which has been rendered inaccurate thereby (and, in the case of
any supplements to any Disclosure Schedule, such Disclosure Schedule shall be
appropriately marked to show the changes made therein); provided that (a) no
such supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation, or be
or be deemed a waiver of any Default or Event of Default resulting from the
matters disclosed therein, except as consented to by Agent and Requisite Lenders
in writing, and (b) no supplement shall be required or permitted as to
representations and warranties that relate solely to the Closing Date.
5.7 Intellectual Property. Each Credit Party will conduct its business
and affairs without infringement of or interference with any Intellectual
Property of any other Person in any material respect.
25
5.8 Environmental Matters. Each Credit Party shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are appropriate or necessary to maintain the
value and marketability of the Real Estate or to otherwise comply with
Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate; (c) notify Agent promptly after such Credit Party becomes aware of any
violation of Environmental Laws or Environmental Permits or any Release on, at,
in, under, above, to, from or about any Real Estate that is reasonably likely to
result in Environmental Liabilities in excess of $100,000; and (d) promptly
forward to Agent a copy of any order, notice, request for information or any
communication or report received by such Credit Party in connection with any
such violation or Release or any other matter relating to any Environmental Laws
or Environmental Permits that could reasonably be expected to result in
Environmental Liabilities in excess of $250,000, in each case whether or not the
Environmental Protection Agency or any Governmental Authority has taken or
threatened any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there may be
a violation of any Environmental Laws or Environmental Permits by any Credit
Party or any Environmental Liability arising thereunder, or a Release of
Hazardous Materials on, at, in, under, above, to, from or about any of its Real
Estate, that, in each case, could reasonably be expected to have a Material
Adverse Effect, then each Credit Party shall, upon Agent's written request (i)
cause the performance of such environmental audits including subsurface sampling
of soil and groundwater, and preparation of such environmental reports, at
Borrower's expense, as Agent may from time to time reasonably request, which
shall be conducted by reputable environmental consulting firms reasonably
acceptable to Agent and shall be in form and substance reasonably acceptable to
Agent, and (ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting such environmental audits and testing as
Agent deems appropriate, including subsurface sampling of soil and groundwater.
Borrower shall reimburse Agent for the costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters and
Real Estate Purchases. Each Credit Party shall obtain a landlord's agreement,
mortgagee agreement or bailee letter, as applicable, from the lessor of each
leased property, mortgagee of owned property or bailee with respect to any
warehouse, processor or converter facility or other location where Collateral is
stored or located, which agreement or letter shall contain a waiver or
subordination of all Liens or claims that the landlord, mortgagee or bailee may
assert against the Collateral at that location, and shall otherwise be
reasonably satisfactory in form and substance to Agent. After the Closing Date,
no real property or warehouse space shall be leased by any Credit Party under
arrangements established after the Closing Date without the prior written
consent of Agent or, unless and until a satisfactory landlord agreement or
bailee letter, as appropriate, shall first have been obtained with respect to
such location. Each Credit Party shall timely and fully pay and perform its
obligations under all leases and other agreements with respect to each leased
location or public warehouse where any Collateral is or may be located. To the
extent permitted hereunder, if any Credit Party proposes to acquire a fee
26
ownership interest in Real Estate after the Closing Date, it shall first provide
to Agent a mortgage or deed of trust granting Agent a first priority Lien on
such Real Estate, together with environmental audits, mortgage title insurance
commitment, real property survey, local counsel opinion(s), and, if required by
Agent, supplemental casualty insurance and flood insurance, and such other
documents, instruments or agreements reasonably requested by Agent, in each
case, in form and substance reasonably satisfactory to Agent.
5.10 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and shall cause each other Credit Party to, at such Credit
Party's expense and upon request of Agent, duly execute and deliver, or cause to
be duly executed and delivered, to Agent such further instruments and do and
cause to be done such further acts as may be necessary or proper in the
reasonable opinion of Agent to carry out more effectively the provisions and
purposes of this Agreement or any other Loan Document.
6. NEGATIVE COVENANTS
Each Credit Party executing this Agreement jointly and severally agrees
as to all Credit Parties that from and after the date hereof until the
Termination Date:
6.1 Mergers, Subsidiaries, Etc. No Credit Party shall directly or
indirectly, by operation of law or otherwise, (a) form or acquire any
Subsidiary, or (b) merge with, consolidate with, acquire all or substantially
all of the assets or Stock of, or otherwise combine with or acquire, any Person
except a wholly-owned Subsidiary; provided, that in the event Borrower merges,
consolidates or otherwise combines with a wholly-owned Subsidiary, Borrower must
be the surviving entity; provided, further, that any acquisition of all or
substantially all of the assets or Stock of a Person (the "Target") (in each
case, a "Permitted Acquisition") must be made by Borrower and may only be made
subject to the satisfaction of each of the following conditions:
(i) Agent shall receive at least 15 Business Days' prior
written notice of such proposed Permitted Acquisition, which notice
shall include a reasonably detailed description of such proposed
Permitted Acquisition;
(ii) such Permitted Acquisition shall only involve assets
located in the United States or Canada and comprising a business, or
those assets of a business, of the type engaged in by Borrower as of
the Closing Date, which assets, to the extent consisting of Alarm
Contracts, shall be in compliance with the requirements set forth in
Section 6.19(a), and which business would not subject Agent or any
Lender to regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or any other
Loan Documents other than approvals applicable to the exercise of such
rights and remedies with respect to Borrower prior to such Permitted
Acquisition;
(iii) such Permitted Acquisition shall be consensual and shall
have been approved by the Target's board of directors;
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(iv) no additional Indebtedness, Guaranteed Indebtedness,
contingent obligations or other liabilities shall be incurred, assumed
or otherwise be reflected on a consolidated balance sheet of Borrower
and Target after giving effect to such Permitted Acquisition, except
(A) Revolving Loans made hereunder and (B) ordinary course trade
payables and accrued expenses;
(v) absent the prior written consent of Agent and Requisite
Lenders, the sum of all amounts payable in connection with any
Permitted Acquisition (including all transaction costs and all
Indebtedness, liabilities and contingent obligations incurred or
assumed in connection therewith or otherwise reflected on a
consolidated balance sheet of Borrower and Target) shall not exceed
$2,500,000 for any such Permitted Acquisition.
(vi) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than, in
respect of assets other than Accounts, Alarm Contracts and related
property, Permitted Encumbrances);
(vii) at or prior to the closing of any Permitted Acquisition,
Agent will be granted a first priority perfected Lien (subject to, in
respect of assets other than Accounts, Alarm Contracts and related
property, other Permitted Encumbrances) in all assets acquired pursuant
thereto or in the assets and Stock of the Target, and Borrower and the
Target shall have executed such documents and taken such actions as may
be required by Agent in connection therewith;
(viii) Concurrently with delivery of the notice referred to in
clause (i) above, Borrower shall have delivered to Agent, in form and
substance reasonably satisfactory to Agent:
(A) a pro forma consolidated balance sheet, income
statement and cash flow statement of Borrower and its
Subsidiaries (the "Acquisition Pro Forma"), based on recent
financial statements, which shall be complete and shall fairly
present in all material respects the assets, liabilities,
financial condition and results of operations of Borrower and
its Subsidiaries in accordance with GAAP consistently applied,
but taking into account such Permitted Acquisition and the
funding of all Revolving Loans in connection therewith, and
indicate the estimated RMR related to the Alarm Contracts
owned by the Target and expected to be acquired in such
Acquisition, and such Acquisition Pro Forma shall reflect that
(x) on a pro forma basis, Borrower and its Subsidiaries would
have had a ratio of Funded Debt to EBITDA not in excess of the
maximum permitted Debt to RMR Ratio as of such date as
specified in paragraph (a) of Annex F for the four quarter
period reflected in the Compliance Certificate most recently
delivered to Agent pursuant to Annex D prior to the
consummation of such Permitted Acquisition (after giving
effect to such Permitted Acquisition and all Revolving Loans
funded in connection therewith as if made on the first day of
such period), (y) average daily Borrowing Availability for the
90-day period preceding the consummation of such Permitted
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Acquisition would have exceeded $250,000 on a pro forma basis
(after giving effect to such Permitted Acquisition and all
Revolving Loans funded in connection therewith as if made on
the first day of such period) and the Acquisition Projections
(as hereinafter defined) shall reflect that such Borrowing
Availability of $250,000 shall continue for at least 90 days
after the consummation of such Permitted Acquisition, and (z)
on a pro forma basis, no Event of Default has occurred and is
continuing or would result after giving effect to such
Permitted Acquisition and Borrower would have been in
compliance with the financial covenants set forth in Annex F
for the four quarter period reflected in the Compliance
Certificate most recently delivered to Agent pursuant to Annex
D prior to the consummation of such Permitted Acquisition
(after giving effect to such Permitted Acquisition and all
Revolving Loans funded in connection therewith as if made on
the first day of such period);
(B) updated versions of the most recently delivered
Projections covering the one year period commencing on the
date of such Permitted Acquisition and otherwise prepared in
accordance with the Projections (the "Acquisition
Projections") and based upon historical financial data of a
recent date reasonably satisfactory to Agent, taking into
account such Permitted Acquisition; and
(C) a certificate of the vice president - finance of
Borrower to the effect that: (w) Borrower will be Solvent upon
the consummation of the Permitted Acquisition; (x) the
Acquisition Pro Forma fairly presents the financial condition
of Borrower (on a consolidated basis) as of the date thereof
after giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the future
financial performance of Borrower subsequent to the date
thereof based upon the historical performance of Borrower and
the Target and show that Borrower shall continue to be in
compliance with the financial covenants set forth in Annex F
for the 3-year period thereafter; and (z) Borrower has
completed its due diligence investigation with respect to the
Target and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have been
conducted by a prudent purchaser of a comparable business and
the results of which investigation were delivered to Agent and
Lenders;
(ix) on or prior to the date of such Permitted Acquisition,
Agent shall have received, in form and substance reasonably
satisfactory to Agent, copies of the acquisition agreement and related
agreements and instruments, and all opinions, certificates, lien search
results and other documents reasonably requested by Agent, including
those specified in the last sentence of Section 5.9; and
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(x) at the time of such Permitted Acquisition and after giving
effect thereto, no Default or Event of Default shall have occurred and
be continuing.
6.2 Investments; Revolving Loans and Advances. Except as otherwise
expressly permitted by this Section 6, no Credit Party shall make or permit to
exist any investment in, or make, accrue or permit to exist loans or advances of
money to, any Person, through the direct or indirect lending of money, holding
of securities or otherwise, except that: (a) Borrower may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to Borrower pursuant to negotiated agreements with respect to settlement
of such Account Debtor's Accounts in the ordinary course of business, so long as
the aggregate amount of such Accounts so settled by Borrower does not exceed
$100,000; (b) each Credit Party may maintain its existing investments in its
Subsidiaries as of the Closing Date; (c) Borrower may make investments not to
exceed $50,000 in the aggregate in joint ventures; (d) so long as Agent has not
delivered an Activation Notice, Borrower may make investments, subject to
Control Letters in favor of Agent for the benefit of Lenders or otherwise
subject to a perfected security interest in favor of Agent for the benefit of
Lenders, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Ratings Group or ▇▇▇▇▇'▇
Investors Service, Inc., (iii) certificates of deposit maturing no more than one
year from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $300,000,000 and having a senior
unsecured rating of "A" or better by a nationally recognized rating agency (an
"A Rated Bank"), (iv) time deposits maturing no more than 30 days from the date
of creation thereof with A Rated Banks and (v) mutual funds that invest solely
in one or more of the investments described in clauses (i) through (iv) above;
(e) Borrower may hold that certain warrant to purchase 250,000 shares of common
stock of Protection One, Inc.; and (e) the Credit Parties may make other
investments for aggregate consideration not exceeding $250,000 in the aggregate,
after the date hereof.
6.3 Indebtedness.
(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured by purchase
money security interests and Capital Leases permitted in Section 6.7(c), (ii)
the Revolving Loans and the other Obligations, (iii) unfunded pension fund and
other employee benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (iv) existing Indebtedness
described in Disclosure Schedule (6.3) and refinancings thereof or amendments or
modifications thereof that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions not materially less
favorable to any Credit Party, Agent or any Lender, as determined by Agent, than
the terms of the Indebtedness being refinanced, amended or modified, (v)
Indebtedness specifically permitted under Section 6.1, (vi) Indebtedness
specifically permitted under Section 6.17, (vii) Indebtedness consisting of
intercompany loans and advances made by Borrower to any other Credit Party that
is a Guarantor or by any such Guarantor to Borrower; provided, that: (A)
Borrower shall record all intercompany transactions on its books and records in
30
a manner reasonably satisfactory to Agent; (B) at the time any such intercompany
loan or advance is made by Borrower and after giving effect thereto, Borrower
shall be Solvent; (C) no Default or Event of Default would occur and be
continuing after giving effect to any such proposed intercompany loan; and (D)
the aggregate balance of all such intercompany loans owing to Borrower or any of
its Subsidiaries by any Subsidiary thereof made after the Closing Date shall not
exceed $750,000 at any one time outstanding, (viii) Indebtedness consisting of
repayment obligations relating to surety bonds in an amount not to exceed
$500,000 in the aggregate at any one time outstanding, and (ix) Indebtedness
described in the proviso to Section 1.2(b)(iii).
(b) No Credit Party shall, directly or indirectly, voluntarily
purchase, redeem, defease or prepay any principal of, premium, if any, interest
or other amount payable in respect of any Indebtedness, other than (i) the
Obligations; (ii) Indebtedness secured by a Permitted Encumbrance if the asset
securing such Indebtedness has been sold or otherwise disposed of in accordance
with Section 6.8; (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any
refinancing thereof in accordance with Section 6.3(a)(iv); (iv) other
Indebtedness (excluding Subordinated Debt) not in excess of $100,000; and (v) as
otherwise permitted in Section 6.14.
6.4 Employee Loans and Affiliate Transactions.
(a) No Credit Party shall enter into or be a party to any transaction
with any Affiliate thereof which is not a Credit Party except in the ordinary
course of and pursuant to the reasonable requirements of such Credit Party's
business and upon fair and reasonable terms that are no less favorable to such
Credit Party than would be obtained in a comparable arm's length transaction
with a Person not an Affiliate of such Credit Party. All such transactions
existing as of the date hereof are described in Disclosure Schedule (6.4(a)).
(b) No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to its
respective employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel and entertainment expenses, relocation
costs and similar purposes up to a maximum of $50,000 to any employee and up to
a maximum of $100,000 in the aggregate at any one time outstanding.
(c) Borrower shall immediately notify Agent in the event that any
Credit Party shall increase the direct or indirect aggregate compensation
(excluding stock options) of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and his relatives, taken as a
whole, by more than 20% per annum in excess of the current compensation level
for all Credit Parties for those employees, expressed as an aggregate dollar
amount, and set forth in Disclosure Schedule (6.4(c)).
6.5 Business and Capital Structure. No Credit Party shall:
(a) engage in any business other than the businesses currently engaged
in by it or businesses reasonably related thereto;
31
(b) make any changes in any of its business objectives, purposes or
operations that could in any way adversely affect the repayment of the Revolving
Loans or any of the other Obligations or could reasonably be expected to have or
result in a Material Adverse Effect;
(c) make any change in its capital structure as described in Disclosure
Schedule (3.8), including the issuance or sale of any Debt securities or of any
shares of Stock or any warrants or other securities convertible into Stock or
any revision of the terms of its outstanding Stock but excluding changes
permitted pursuant to Section 6.18; provided, that (i) Borrower may issue debt
securities or Stock for cash so long as (A) the requisite amount of proceeds of
such issuance is applied in prepayment of the Obligations as required by Section
1.2(b)(iii), and (B) no Change of Control occurs after giving effect thereto and
(ii) Borrower may issue Stock as consideration for a Permitted Acquisition so
long as no Change of Control occurs after giving effect thereto ; or
(d) amend its charter or bylaws in a manner that would adversely affect
Agent or Lenders or such Credit Party's duty or ability to repay the
Obligations.
6.6 Guaranteed Indebtedness. No Credit Party shall create, incur,
assume or permit to exist any Guaranteed Indebtedness except (a) by endorsement
of instruments or items of payment for deposit to the general account of any
Credit Party, and (b) for Guaranteed Indebtedness incurred for the benefit of
any other Credit Party if the primary obligation is expressly permitted by this
Agreement.
6.7 Liens. No Credit Party shall create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or Alarm Contracts or related
property or any of its other properties or assets (whether now owned or
hereafter acquired) except for (a) Permitted Encumbrances; (b) Liens in
existence on the date hereof and summarized on Disclosure Schedule (6.7)
securing Indebtedness described on Disclosure Schedule (6.3) and permitted
refinancings, extensions and renewals thereof, including extensions or renewals
of any such Liens; provided that the principal amount so secured is not
increased and the Lien does not attach to any other property; (c) Liens created
after the date hereof by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money Indebtedness
with respect to Equipment and Fixtures acquired by any Credit Party in the
ordinary course of business, involving the incurrence of an aggregate amount of
purchase money Indebtedness and Capital Lease Obligations of not more than
$1,000,000 (plus any amounts financed by GE Capital or any of its Affiliates)
outstanding at any one time for all such Liens (provided that such Liens attach
only to the assets subject to such purchase money debt and such Indebtedness is
incurred within 20 days following such purchase and does not exceed 100% of the
purchase price of the subject assets); and (d) other Liens securing Indebtedness
not exceeding $150,000 in the aggregate at any time outstanding; provided, that
no Liens created pursuant to clause (a), (b), (c) or (d) may attach to any
Accounts, Alarm Contracts or related property. In addition, no Credit Party
shall become a party to any agreement, note, indenture or instrument, or take
any other action, that would prohibit the creation of a Lien on any of its
properties or other assets in favor of Agent, on behalf of itself and Lenders,
as additional collateral for the Obligations, except operating leases, Capital
Leases or Licenses which prohibit Liens upon the assets that are subject
thereto.
32
6.8 Sale of Stock and Assets. No Credit Party shall sell, transfer,
convey, assign or otherwise dispose of any of its properties or other assets,
including the Stock of any of its Subsidiaries (whether in a public or a private
offering or otherwise) or any of its Accounts, other than (a) the sale,
transfer, conveyance or other disposition by a Credit Party of Equipment and
Fixtures that are obsolete or no longer used or useful in such Credit Party's
business and having a sales price not exceeding $250,000 in any single
transaction or $500,000 in the aggregate in any Fiscal Year and (b) transfers of
Alarm Contracts in the ordinary course of business. With respect to any
disposition of assets or other properties permitted pursuant to clauses (a) and
(b) above, subject to Section 1.2(b), Agent agrees on reasonable prior written
notice to release its Lien on such assets or other properties in order to permit
the applicable Credit Party to effect such disposition and to execute and
deliver to Borrower, at Borrower's expense, appropriate UCC-3 termination
statements and other releases as reasonably requested by Borrower.
6.9 ERISA. No Credit Party shall, or shall cause or permit any ERISA
Affiliate to, cause or permit to occur an event that could result in the
imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such ERISA Event
could reasonably be expected to have a Material Adverse Effect.
6.10 Financial Covenants. Borrower shall not breach or fail to comply
with any of the Financial Covenants.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate where such Release would (a) violate in any respect, or
form the basis for any Environmental Liabilities under, any Environmental Laws
or Environmental Permits or (b) otherwise adversely impact the value or
marketability of any of the Real Estate or any of the Collateral, other than
such violations or Environmental Liabilities that could not reasonably be
expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. No Credit Party shall engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except for reasonable consideration negotiated on an
arm's-length basis and in the ordinary course of its business consistent with
past practices.
6.14 Restricted Payments. No Credit Party shall make any Restricted
Payment, except: (a) intercompany loans and advances between Borrower and
Guarantors to the extent permitted by Section 6.3; (b) dividends and
distributions by Borrower with respect to the Series C Preferred Stock and the
Series E Preferred Stock; (c) dividends and distributions by Subsidiaries of
Borrower paid to Borrower; (d) employee loans permitted under Section 6.4(b);
and (e) scheduled payments of interest with respect to Subordinated Debt;
provided, that (i) no Default or Event of Default has occurred and is continuing
or would result after giving effect to any Restricted Payment pursuant to
clauses (b) and (e) above, (ii) Borrower shall have Borrowing Availability of at
33
least $1,000,000 after giving effect to any Restricted Payment pursuant to
clause (b) above; and (iii) the timing of the payments referred to in clauses
(b) and (e) above shall be set at dates that permit the delivery of Financial
Statements necessary to determine current compliance with the Financial
Covenants prior to each such payment.
6.15 Change of Corporate Name or Location; Change of Fiscal Year. No
Credit Party shall (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) change
its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least 30 days prior written notice to
Agent and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the perfection
of any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has
been completed or taken, and provided that any such new location shall be in the
continental United States. No Credit Party shall change its Fiscal Year.
6.16 No Impairment of Intercompany Transfers. No Credit Party shall
directly or indirectly enter into or become bound by any agreement, instrument,
indenture or other obligation (other than this Agreement and the other Loan
Documents) that could directly or indirectly restrict, prohibit or require the
consent of any Person with respect to the payment of dividends or distributions
or the making or repayment of intercompany loans by a Subsidiary of Borrower to
Borrower.
6.17 No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except solely to hedge against fluctuations in the prices of
commodities owned or purchased by it and the values of foreign currencies
receivable or payable by it and interest swaps, caps or collars.
6.18 Changes Relating to Preferred Stock. No Credit Party shall change
or amend the terms of any Preferred Stock (or any agreement in connection
therewith) if the effect of such amendment is to: (a) increase the dividend rate
on such Preferred Stock; (b) change the dates upon which dividend payments are
due on such Preferred Stock other than to extend such dates; (c) change any
default or event of default other than to delete or make less restrictive any
default provision therein, or add any covenant with respect to such Preferred
Stock; (d) change the redemption or prepayment provisions of such Preferred
Stock other than to extend the dates therefor or to reduce the premiums payable
in connection therewith; (e) grant any security or collateral to secure payment
of such Preferred Stock; or (f) change or amend any other term if such change or
amendment would materially increase the obligations of the Credit Party
thereunder or confer additional material rights on the holder of such Preferred
Stock in a manner adverse to any Credit Party, Agent or any Lender.
6.19 Permitted Portfolio Purchases. No Credit Party shall acquire any
Alarm Contracts; provided that Borrower may acquire portfolios of Alarm
Contracts (in each case, a "Permitted Portfolio Purchase") subject to the
satisfaction of each of the following conditions:
34
(a) such Alarm Contracts shall comply in all material respects with all
of Borrower's existing criteria for the acquisition of Alarm Contracts,
including, without limitation, Borrower's existing requirements (i) relating to
telephonic confirmation that the subscribers with respect to such Alarm
Contracts are satisfied with the service provided thereunder, (ii) that billing
information be obtained with respect to such Alarm Contracts, (iii) regarding
monitoring station information, (iv) that it shall have received a
fully-executed original copy of such Alarm Contracts (which provide that the
Borrower's rights thereunder are freely assignable), and (v) requiring transfer
of the account relationship under such Alarm Contracts to a telephone line
controlled or utilized by Borrower;
(b) the purchase agreement entered into between Borrower and the seller
of such Alarm Contracts shall:
(i) be substantially in the form of the standard purchase
agreement furnished to Agent prior to the date hereof, with such
reasonable modifications as Borrower may agree in the ordinary course
of business (but in any event requiring that the seller have good title
to such Alarm Contracts, that such Alarm Contracts are freely
assignable and that such Alarm Contracts are not in default);
(ii) either:
(A) contain a provision (an "Attrition Guarantee")
pursuant to which the seller shall agree to replace any such
Alarm Contract (an "Attritted Contract") with an equivalent
Alarm Contract if such Attritted Contract shall be terminated,
or the subscriber thereunder shall have defaulted thereunder,
prior to 12 months after the date on which Borrower acquired
such Attritted Contract, or
(B) reflect that Borrower has negotiated reasonably
favorable adjustments to the purchase price of such Alarm
Contracts and/or other reasonable consideration (including
deferred purchase price) to mitigate the risk associated with
such Alarm Contracts; and
(iii) provide that at least 10% of the purchase price for such
Alarm Contracts shall be retained by Borrower at the closing of such
acquisition (and that Borrower shall be permitted to offset against
this portion of the purchase price any amount owing by the seller under
the related Attrition Guarantee); and
(c) if the aggregate consideration paid to purchase such Alarm
Contracts is greater than $2,500,000, Agent shall have approved such
acquisition.
6.20 RMR Policies and Procedures. Borrower shall not change, amend,
revise or otherwise modify the practices, policies and procedures followed by
Transferor for the calculation of RMR or any component thereof from those
practices, policies and procedures which are in effect on the Closing Date. In
addition, Borrower shall not change, amend, revise or otherwise modify, in any
35
material respect, Borrower's policies and procedures for the cancellation of
Alarm Contracts from those which are in effect on the Closing Date.
7. TERM
7.1 Termination.
(a) The financing arrangements contemplated hereby shall be in effect
until the Commitment Termination Date, and the Revolving Loans and all other
Obligations shall be automatically due and payable in full on such date.
(b) The Borrower may extend the initial Commitment Termination Date for
an additional period of either one (1) or two (2) years by executing and
delivering to the Agent at least ninety (90) days prior to the initial
Commitment Termination Date, a written request in the form of Exhibit 7.1(b) (an
"Extension Request"). So long as (i) the earliest maturity, mandatory prepayment
or mandatory redemption date, as applicable, with respect to any outstanding
Preferred Stock and Subordinated Debt, shall be at least ninety (90) days after
the proposed Commitment Termination Date, (ii) Borrower's chief executive
officer or vice president - finance certifies in writing that no Default or
Event of Default has occurred and is continuing as of the initial Commitment
Termination Date and (iii) Borrower pays the appropriate Extension Fee on such
date, the Commitment Termination Date shall be extended to the date either one
(1) year or two (2) years following the initial Commitment Termination Date, as
selected by Borrower in its Extension Request, without any further act or
authorization by Borrower, the Agent or any Lender and "Commitment Termination
Date" shall mean the date specified in such Extension Request. In the event that
Borrower elects to extend the initial Commitment Termination Date by only one
year, then Borrower may elect to extend the new Commitment Termination Date for
an additional year by following the procedure set forth above with respect to
such extension.
7.2 Survival of Obligations Upon Termination of Financing Arrangements.
Except as otherwise expressly provided for in the Loan Documents, no termination
or cancellation (regardless of cause or procedure) of any financing arrangement
under this Agreement shall in any way affect or impair the obligations, duties
and liabilities of the Credit Parties or the rights of Agent and Lenders
relating to any unpaid portion of the Revolving Loans or any other Obligations,
due or not due, liquidated, contingent or unliquidated or any transaction or
event occurring prior to such termination, or any transaction or event, the
performance of which is required after the Commitment Termination Date. Except
as otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided, that the provisions of Section
11, the payment obligations under Sections 1.12 and 1.13, and the indemnities
contained in the Loan Documents shall survive the Termination Date.
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8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) fails to make any payment of principal of, or interest
on, or Fees owing in respect of, the Revolving Loans or any of the other
Obligations when due and payable, or (ii) fails to pay or reimburse Agent or
Lenders for any expense reimbursable hereunder or under any other Loan Document
within ten (10) days following Agent's written demand for such reimbursement or
payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.2, 1.4, 5.4 or 6, or any of the provisions set
forth in Annexes B or F, respectively.
(c) Borrower fails or neglects to perform, keep or observe any of the
provisions of Section 4 or any provisions set forth in Annexes D or E,
respectively, and the same shall remain unremedied for ten (10) days or more.
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents (other
than any provision embodied in or covered by any other clause of this Section
8.1) and the same shall remain unremedied for 20 days or more.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of any Credit Party in
excess of $500,000 in the aggregate (including (x) undrawn committed or
available amounts and (y) amounts owing to all creditors under any combined or
syndicated credit arrangements), or (ii) causes, or permits any holder of such
Indebtedness or Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof in excess of $500,000 in the
aggregate to become due prior to its stated maturity or prior to its regularly
scheduled dates of payment, or cash collateral to be demanded in respect
thereof, in each case, regardless of whether such default is waived, or such
right is exercised, by such holder or trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any material respect, or any representation or warranty
herein or in any Loan Document or in any written statement, report, financial
statement or certificate (other than a Borrowing Base Certificate) made or
delivered to Agent or any Lender by any Credit Party is untrue or incorrect in
any material respect as of the date when made or deemed made.
(g) Assets of any Credit Party with a fair market value of $100,000 or
more are attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian or
37
assignee for the benefit of creditors of any Credit Party and such condition
continues for 30 days or more.
(h) A case or proceeding is commenced against any Credit Party seeking
a decree or order in respect of such Credit Party (i) under the Bankruptcy Code
or any other applicable federal, state or foreign bankruptcy or other similar
law, (ii) appointing a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or similar official) for such Credit Party or for any substantial
part of any such Credit Party's assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Credit Party, and such case or proceeding
shall remain undismissed or unstayed for 60 days or more or a decree or order
granting the relief sought in such case or proceeding shall be entered by a
court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) consents to or fails to contest in a timely and
appropriate manner to the institution of proceedings thereunder or to the filing
of any such petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, or (iv)
takes any action in furtherance of any of the foregoing, or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(j) A final judgment or judgments for the payment of money in excess of
$250,000 in the aggregate at any time are outstanding against one or more of the
Credit Parties and the same are not, within 30 days after the entry thereof,
discharged or execution thereof stayed or bonded pending appeal, or such
judgments are not discharged prior to the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason ceases
to be valid, binding and enforceable in accordance with its terms (or any Credit
Party shall challenge the enforceability of any Loan Document or shall assert in
writing, or engage in any action or inaction based on any such assertion, that
any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in any of the
Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
(m) Any default or breach by Borrower occurs and is continuing under
the terms of any document, contract or agreement governing any series of the
Preferred Stock.
8.2 Remedies.
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders shall), without
38
notice, suspend the Revolving Loan facility with respect to additional Revolving
Credit Advances, whereupon any additional Revolving Credit Advances shall be
made or incurred in Agent's sole discretion (or in the sole discretion of the
Requisite Lenders, if such suspension occurred at their direction) so long as
such Default or Event of Default is continuing. If any Event of Default has
occurred and is continuing, Agent may (and at the written request of Requisite
Lenders shall), without notice except as otherwise expressly provided herein,
increase the rate of interest applicable to the Revolving Loans to the Default
Rate.
(b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without notice: (i)
terminate the Revolving Loan facility with respect to further Revolving Credit
Advances; (ii) declare all or any portion of the Obligations, including all or
any portion of any Revolving Loan to be forthwith due and payable, all without
presentment, demand, protest or further notice of any kind, all of which are
expressly waived by Borrower and each other Credit Party; or (iii) exercise any
rights and remedies provided to Agent under the Loan Documents or at law or
equity, including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(h) or (i) in respect
of Borrower, the Revolving Loan facility shall be immediately terminated and all
of the Obligations, including the Revolving Loan, shall become immediately due
and payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in this
Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sale of participations in, at any time
or times, the Loan Documents, Revolving Loans and any Commitment or any portion
thereof or interest therein, including any Lender's rights, title, interests,
remedies, powers or duties thereunder. Any assignment by a Lender shall: (i)
require the consent of Agent (which consent shall not be unreasonably withheld
or delayed with respect to a Qualified Assignee) and the execution of an
assignment agreement (an "Assignment Agreement" substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Revolving Loans to be assigned to it for its own
39
account, for investment purposes and not with a view to the distribution
thereof; (iii) after giving effect to any such partial assignment, the assignee
Lender shall have Commitments in an amount at least equal to $2,500,000 and the
assigning Lender shall have retained Commitments in an amount at least equal to
$2,500,000; (iv) include a payment to Agent of an assignment fee of $3,500 and
(v) so long as no Event of Default has occurred and is continuing, require the
consent of Borrower, which shall not be unreasonably withheld or delayed;
provided that no such consent shall be required for an assignment to a Qualified
Assignee. In the case of an assignment by a Lender under this Section 9.1, the
assignee shall have, to the extent of such assignment, the same rights, benefits
and obligations as all other Lenders hereunder. The assigning Lender shall be
relieved of its obligations hereunder with respect to its Commitments or
assigned portion thereof from and after the date of such assignment. Borrower
hereby acknowledges and agrees that any assignment shall give rise to a direct
obligation of Borrower to the assignee and that the assignee shall be considered
to be a "Lender". In all instances, each Lender's liability to make Revolving
Loans hereunder shall be several and not joint and shall be limited to such
Lender's Pro Rata Share of the applicable Commitment. In the event Agent or any
Lender assigns or otherwise transfers all or any part of the Obligations, Agent
or any such Lender shall so notify Borrower and Borrower shall, upon the request
of Agent or such Lender, execute new Revolving Notes in exchange for the
Revolving Notes, if any, being assigned. Notwithstanding the foregoing
provisions of this Section 9.1(a), any Lender may at any time pledge the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to a Federal Reserve Bank, and any lender that is an
investment fund may assign the Obligations held by it and such Lender's rights
under this Agreement and the other Loan Documents to another investment fund
managed by the same investment advisor; provided, that no such pledge to a
Federal Reserve Bank shall release such Lender from such Lender's obligations
hereunder or under any other Loan Document.
(b) Any participation by a Lender of all or any part of its Commitments
shall be made with the understanding that all amounts payable by Borrower
hereunder shall be determined as if that Lender had not sold such participation,
and that the holder of any such participation shall not be entitled to require
such Lender to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest rate or Fees
payable with respect to, any Revolving Loan in which such holder participates,
(ii) any extension of the scheduled amortization of the principal amount of any
Revolving Loan in which such holder participates or the final maturity date
thereof, and (iii) any release of all or substantially all of the Collateral
(other than in accordance with the terms of this Agreement, the Collateral
Documents or the other Loan Documents). Solely for purposes of Sections 1.10,
1.12, 1.13 and 9.8, Borrower acknowledges and agrees that a participation shall
give rise to a direct obligation of Borrower to the participant and the
participant shall be considered to be a "Lender". Except as set forth in the
preceding sentence neither Borrower nor any other Credit Party shall have any
obligation or duty to any participant. Neither Agent nor any Lender (other than
the Lender selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation as if no
such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between Borrower and that Lender, or Agent and that Lender, be relieved of
any of its obligations hereunder as a result of any sale, assignment, transfer
40
or negotiation of, or granting of participation in, all or any part of the
Revolving Loans, the Revolving Notes or other Obligations owed to such Lender.
(d) Each Credit Party executing this Agreement shall assist any Lender
permitted to sell assignments or participations under this Section 9.1 as
reasonably required to enable the assigning or selling Lender to effect any such
assignment or participation, including the execution and delivery of any and all
agreements, notes and other documents and instruments as shall be requested and
the preparation of informational materials for, and the participation of
management in meetings with, potential assignees or participants. Each Credit
Party executing this Agreement shall certify the correctness, completeness and
accuracy of all descriptions of the Credit Parties and their respective affairs
contained in any selling materials provided by it and all other information
provided by it and included in such materials, except that any Projections
delivered by Borrower shall only be certified by Borrower as having been
prepared by Borrower in compliance with the representations contained in Section
3.4(c).
(e) A Lender may furnish any information concerning Credit Parties in
the possession of such Lender from time to time to assignees and participants
(including prospective assignees and participants); provided that such Lender
shall obtain from assignees or participants confidentiality covenants
substantially equivalent to those contained in Section 11.8.
(f) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Lender"), may grant to a special purpose funding vehicle (an
"SPC"), identified as such in writing by the Granting Lender to Agent and
Borrower, the option to provide to Borrower all or any part of any Revolving
Loans that such Granting Lender would otherwise be obligated to make to Borrower
pursuant to this Agreement; provided, that (i) nothing herein shall constitute a
commitment by any SPC to make any Revolving Loan; and (ii) if an SPC elects not
to exercise such option or otherwise fails to provide all or any part of such
Revolving Loan, the Granting Lender shall be obligated to make such Revolving
Loan pursuant to the terms hereof. The making of an Revolving Loan by an SPC
hereunder shall utilize the Commitment of the Granting Lender to the same
extent, and as if such Revolving Loan were made by such Granting Lender. No SPC
shall be liable for any indemnity or similar payment obligation under this
Agreement (all liability for which shall remain with the Granting Lender). Any
SPC may (i) with notice to, but without the prior written consent of, Borrower
and Agent and without paying any processing fee therefor assign all or a portion
of its interests in any Revolving Loans to the Granting Lender or to any
financial institutions (consented to by Borrower and Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Revolving Loans and (ii) disclose on a confidential basis any
non-public information relating to its Revolving Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC. This Section 9.1(f) may not be amended
without the prior written consent of each Granting Lender, all or any of whose
Revolving Loans are being funded by an SPC at the time of such amendment. For
the avoidance of doubt, the Granting Lender shall for all purposes, including
without limitation, the approval of any amendment or waiver of any provision of
any Loan Document or the obligation to pay any amount otherwise payable by the
Granting Lender under the Loan Documents, continue to be the Lender of record
hereunder.
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9.2 Appointment of Agent. GE Capital is hereby appointed to act on
behalf of all Lenders as Agent under this Agreement and the other Loan
Documents. The provisions of this Section 9.2 are solely for the benefit of
Agent and Lenders and no Credit Party nor any other Person shall have any rights
as a third party beneficiary of any of the provisions hereof. In performing its
functions and duties under this Agreement and the other Loan Documents, Agent
shall act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or trust
with or for any Credit Party or any other Person. Agent shall have no duties or
responsibilities except for those expressly set forth in this Agreement and the
other Loan Documents. The duties of Agent shall be mechanical and administrative
in nature and Agent shall not have, or be deemed to have, by reason of this
Agreement, any other Loan Document or otherwise a fiduciary relationship in
respect of any Lender. Except as expressly set forth in this Agreement and the
other Loan Documents, Agent shall not have any duty to disclose, and shall not
be liable for failure to disclose, any information relating to any Credit Party
or any of their respective Subsidiaries or any Account Debtor that is
communicated to or obtained by GE Capital or any of its Affiliates in any
capacity. Neither Agent nor any of its Affiliates nor any of their respective
officers, directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or under any
other Loan Document, or in connection herewith or therewith, except for damages
caused by its or their own gross negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by reason
of so refraining. Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Loan Document (a) if such action would,
in the opinion of Agent, be contrary to law or the terms of this Agreement or
any other Loan Document, (b) if such action would, in the opinion of Agent,
expose Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement or the other Loan Documents, except for damages caused by
its or their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, Agent: (a) may treat the payee of any Note as the
holder thereof until Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form reasonably satisfactory to Agent; (b)
may consult with legal counsel, independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts; (c) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
42
representations made in or in connection with this Agreement or the other Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement or the other Loan Documents on the part of any Credit Party or to
inspect the Collateral (including the books and records) of any Credit Party;
(e) shall not be responsible to any Lender for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
the other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (f) shall incur no liability under or in respect of this
Agreement or the other Loan Documents by acting upon any notice, consent,
certificate or other instrument or writing (which may be by telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates. With respect to its Commitments
hereunder, GE Capital shall have the same rights and powers under this Agreement
and the other Loan Documents as any other Lender and may exercise the same as
though it were not Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include GE Capital in its individual capacity. GE
Capital and its Affiliates may lend money to, invest in, and generally engage in
any kind of business with, any Credit Party, any of their Affiliates and any
Person who may do business with or own securities of any Credit Party or any
such Affiliate, all as if GE Capital were not Agent and without any duty to
account therefor to Lenders. GE Capital and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders. An
Affiliate of GE Capital also holds certain equity interests in Borrower. Each
Lender acknowledges the potential conflict of interest between GE Capital as a
Lender holding disproportionate interests in the Loans, GE Capital as an
Affiliate of a Stockholder of Borrower and GE Capital as Agent.
9.5 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
the Financial Statements referred to in Section 3.4(a) and such other documents
and information as it has deemed appropriate, made its own credit and financial
analysis of the Credit Parties and its own decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Revolving Loans, and
expressly consents to, and waives any claim based upon, such conflict of
interest.
9.6 Indemnification. Lenders agree to indemnify Agent (to the extent
not reimbursed by Credit Parties and without limiting the obligations of
Borrower hereunder), ratably according to their respective Pro Rata Shares, from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
43
nature whatsoever that may be imposed on, incurred by, or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted to be taken by Agent in connection
therewith; provided, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from Agent's gross negligence or
willful misconduct. Without limiting the foregoing, each Lender agrees to
reimburse Agent promptly upon demand for its ratable share of any out-of-pocket
expenses (including reasonable counsel fees) incurred by Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement and each other Loan Document, to the extent that Agent is not
reimbursed for such expenses by Credit Parties.
9.7 Successor Agent. Agent may resign at any time by giving not less
than 30 days' prior written notice thereof to Lenders and Borrower. Upon any
such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent. If no successor Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Agent's giving notice of resignation, then the resigning Agent
may, on behalf of Lenders, appoint a successor Agent, which shall be a Lender,
if a Lender is willing to accept such appointment, or otherwise shall be a
commercial bank or financial institution or a subsidiary of a commercial bank or
financial institution if such commercial bank or financial institution is
organized under the laws of the United States of America or of any State thereof
and has a combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, within 30 days after the
date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided
that such approval shall not be required if a Default or an Event of Default has
occurred and is continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder
by a successor Agent or the effective date of the resigning Agent's resignation,
the resigning Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Agent shall continue. After any
resigning Agent's resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was acting as Agent under this Agreement and the other Loan Documents.
9.8 Setoff and Sharing of Payments. In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default
and subject to Section 9.9(f), each Lender is hereby authorized at any time or
from time to time, without notice to any Credit Party or to any other Person,
any such notice being hereby expressly waived, to offset and to appropriate and
to apply any and all balances held by it at any of its offices for the account
of Borrower or any Guarantor (regardless of whether such balances are then due
to Borrower or any Guarantor) and any other properties or assets at any time
held or owing by that Lender or that holder to or for the credit or for the
account of Borrower or any Guarantor against and on account of any of the
Obligations that are not paid when due. Any Lender exercising a right of setoff
44
or otherwise receiving any payment on account of the Obligations in excess of
its Pro Rata Share thereof shall purchase for cash (and the other Lenders or
holders shall sell) such participations in each such other Lender's or holder's
Pro Rata Share of the Obligations as would be necessary to cause such Lender to
share the amount so offset or otherwise received with each other Lender or
holder in accordance with their respective Pro Rata Shares, (other than offset
rights exercised by any Lender with respect to Sections 1.10, 1.12 or 1.13).
Borrower and each Guarantor agrees, to the fullest extent permitted by law, that
(a) any Lender may exercise its right to offset with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations in
such amounts so offset to other Lenders and holders and (b) any Lender so
purchasing a participation in the Revolving Loans made or other Obligations held
by other Lenders or holders may exercise all rights of offset, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of the Revolving Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
9.9 Revolving Credit Advances; Payments; Non-Funding Lenders;
Information; Actions in Concert.
(a) Revolving Credit Advances; Payments.
(i) Each Lender shall make the amount of such Lender's Pro
Rata Share of such Revolving Credit Advance available to Agent in same
day funds by wire transfer to Agent's account as set forth in Annex G
not later than 3:00 p.m. (New York time) on the requested funding date,
in the case of an Index Rate Loan and not later than 11:00 a.m. (New
York time) on the requested funding date in the case of a LIBOR Loan.
After receipt of such wire transfers (or, in the Agent's sole
discretion, before receipt of such wire transfers), subject to the
terms hereof, Agent shall make the requested Revolving Credit Advance
to Borrower. All payments by each Lender shall be made without setoff,
counterclaim or deduction of any kind.
(ii) On the second Business Day of each calendar week or more
frequently at Agent's election (each a "Settlement Date"), Agent shall
advise each Lender by telephone, or telecopy of the amount of such
Lender's Pro Rata Share of principal, interest and Fees paid for the
benefit of Lenders with respect to the Revolving Loan. Provided that a
Lender has funded all payments and Revolving Credit Advances required
to be made by it and purchased all participations required to be
purchased by it under this Agreement and the other Loan Documents,
Agent shall pay to such Lender such Lender's Pro Rata Share of
principal, interest and Fees paid by Borrower promptly following its
receipt thereof for the benefit of such Lender on the Revolving Loans
held by it. To the extent that any Lender (a "Non-Funding Lender") has
failed to fund all such payments and Revolving Credit Advances or
failed to fund the purchase of all such participations, Agent shall be
entitled to set off the funding short-fall against that Non-Funding
Lender's Pro Rata Share of all payments received from Borrower. Such
payments shall be made by wire transfer to such Lender's account (as
specified by such Lender in Annex G or the applicable Assignment
45
Agreement) not later than 2:00 p.m. (New York time) on the next
Business Day following the date of receipt.
(b) Availability of Lender's Pro Rata Share. Agent may assume that each
Lender will make its Pro Rata Share of each Revolving Credit Advance available
to Agent on each funding date. If such Pro Rata Share is not, in fact, paid to
Agent by such Lender when due, Agent will be entitled to recover such amount on
demand from such Lender without setoff, counterclaim or deduction of any kind.
If any Lender fails to pay the amount of its Pro Rata Share forthwith upon
Agent's demand, Agent shall promptly notify Borrower and Borrower shall
immediately repay such amount to Agent. Nothing in this Section 9.9(b) or
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require Agent to advance funds on behalf of any Lender or to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to prejudice any
rights that Borrower may have against any Lender as a result of any default by
such Lender hereunder. To the extent that Agent advances funds to Borrower on
behalf of any Lender and is not reimbursed therefor on the same Business Day as
such Revolving Credit Advance is made, Agent shall be entitled to retain for its
account all interest accrued on such Revolving Credit Advance until reimbursed
by the applicable Lender.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this Agreement
in the belief or expectation that a related payment has been or will be
received by Agent from Borrower and such related payment is not
received by Agent, then Agent will be entitled to recover such amount
from such Lender on demand without setoff, counterclaim or deduction of
any kind.
(ii) If Agent determines at any time that any amount received
by Agent under this Agreement must be returned to Borrower or paid to
any other Person pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement or any
other Loan Document, Agent will not be required to distribute any
portion thereof to any Lender. In addition, each Lender will repay to
Agent on demand any portion of such amount that Agent has distributed
to such Lender, together with interest at such rate, if any, as Agent
is required to pay to Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders. The failure of any Non-Funding Lender to make
any Revolving Credit Advance or any payment required by it hereunder on the date
specified therefor shall not relieve any other Lender (each such other Lender,
an "Other Lender") of its obligations to make such Revolving Credit Advance or
purchase such participation on such date, but neither any Other Lender nor Agent
shall be responsible for the failure of any Non-Funding Lender to make an
Revolving Credit Advance, purchase a participation or make any other payment
required hereunder. Notwithstanding anything set forth herein to the contrary, a
Non-Funding Lender shall not have any voting or consent rights under or with
respect to any Loan Document or constitute a "Lender" (or be included in the
calculation of "Requisite Lenders" hereunder) for any voting or consent rights
under or with respect to any Loan Document. At Borrower's request, Agent or a
Person acceptable to Agent shall have the right with Agent's consent and in
Agent's sole discretion (but shall have no obligation) to purchase from any
Non-Funding Lender, and each Non-Funding Lender agrees that it shall, at Agent's
46
request, sell and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of all Revolving
Loans held by such Non-Funding Lender and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be
consummated pursuant to an executed Assignment Agreement.
(e) Dissemination of Information. Agent shall use reasonable efforts to
provide Lenders with any notice of Default or Event of Default received by Agent
from, or delivered by Agent to, any Credit Party, with notice of any Event of
Default of which Agent has actually become aware and with notice of any action
taken by Agent following any Event of Default; provided, that Agent shall not be
liable to any Lender for any failure to do so, except to the extent that such
failure is attributable to Agent's gross negligence or willful misconduct.
Lenders acknowledge that Borrower is required to provide Financial Statements
and Collateral Reports to Lenders in accordance with Annexes D and E hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert. Anything in this Agreement to the contrary
notwithstanding, each Lender hereby agrees with each other Lender that no Lender
shall take any action to protect or enforce its rights arising out of this
Agreement or the Revolving Notes (including exercising any rights of setoff)
without first obtaining the prior written consent of Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Revolving Notes shall be taken in
concert and at the direction or with the consent of Agent or Requisite Lenders.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents without
the prior express written consent of Agent and Lenders. Any such purported
assignment, transfer, hypothecation or other conveyance by any Credit Party
without the prior express written consent of Agent and Lenders shall be void.
The terms and provisions of this Agreement are for the purpose of defining the
relative rights and obligations of each Credit Party, Agent and Lenders with
respect to the transactions contemplated hereby and no Person shall be a third
party beneficiary of any of the terms and provisions of this Agreement or any of
the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan Documents
constitute the complete agreement between the parties with respect to the
subject matter thereof and may not be modified, altered or amended except as set
forth in Section 11.2. Any letter agreement between any Credit Party and Agent
or any Lender or any of their respective Affiliates, predating this Agreement
47
and relating to a financing of substantially similar form, purpose or effect
shall be superseded by this Agreement.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of this
Agreement or any other Loan Document, or any consent to any departure by any
Credit Party therefrom, shall in any event be effective unless the same shall be
in writing and signed by Agent and Borrower, and by Requisite Lenders or all
affected Lenders, as applicable. Except as set forth in clauses (b) and (c)
below, all such amendments, modifications, terminations or waivers requiring the
consent of any Lenders shall require the written consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent
with respect to any provision of this Agreement that increases the percentage
advance rates set forth in the definition of the Borrowing Base shall be
effective unless the same shall be in writing and signed by Agent, Requisite
Lenders and Borrower. No amendment, modification, termination or waiver of or
consent with respect to any provision of this Agreement that waives compliance
with the conditions precedent set forth in Section 2.2 to the making of any
Revolving Loan shall be effective unless the same shall be in writing and signed
by Agent, Requisite Lenders and Borrower. Notwithstanding anything contained in
this Agreement to the contrary, no waiver or consent with respect to any Default
or any Event of Default shall be effective for purposes of the conditions
precedent to the making of Revolving Loans set forth in Section 2.2 unless the
same shall be in writing and signed by Agent, Requisite Lenders and Borrower.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected thereby: (i)
increase the principal amount of any Lender's Commitment (which action shall be
deemed to directly affect all Lenders); (ii) reduce the principal of, rate of
interest on or Fees payable with respect to any Revolving Loan of any affected
Lender; (iii) extend any scheduled payment date (other than payment dates of
mandatory prepayments under Section 1.2(b)(ii)-(iv)) or final maturity date of
the principal amount of any Revolving Loan of any affected Lender (other than an
extension pursuant to Section 7.1(b)); (iv) waive, forgive, defer, extend or
postpone any payment of interest or Fees as to any affected Lender; (v) release
any Guaranty or, except as otherwise permitted herein or in the other Loan
Documents, release, or permit any Credit Party to sell or otherwise dispose of,
any Collateral with a value exceeding $5,000,000 in the aggregate (which action
shall be deemed to directly affect all Lenders); (vi) change the percentage of
the Commitments or of the aggregate unpaid principal amount of the Revolving
Loans that shall be required for Lenders or any of them to take any action
hereunder; and (vii) amend or waive this Section 11.2 or the definition of the
term "Requisite Lenders" insofar as such definition affects the substance of
this Section 11.2. Furthermore, no amendment, modification, termination or
waiver affecting the rights or duties of Agent under this Agreement or any other
Loan Document shall be effective unless in writing and signed by Agent in
addition to Lenders required hereinabove to take such action. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No amendment,
modification, termination or waiver shall be required for Agent to take
additional Collateral pursuant to any Loan Document. No amendment, modification,
48
termination or waiver of any provision of any Revolving Note shall be effective
without the written concurrence of the holder of that Revolving Note. No notice
to or demand on any Credit Party in any case shall entitle such Credit Party or
any other Credit Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Revolving Notes at the time outstanding and each future holder of the
Revolving Notes.
(d) If, in connection with any proposed amendment, modification, waiver
or termination (a "Proposed Change") requiring (i) the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained or (ii) requiring the consent
of Requisite Lenders, the consent of Lenders holding 51% or more of the
aggregate Commitments is obtained, but the consent of Requisite Lenders is not
obtained (any such Lender whose consent is not obtained as described in this
paragraph (d) and in clause (ii) being referred to as a "Non-Consenting
Lender"), then, so long as Agent is not a Non-Consenting Lender, at Borrower's
request Agent, or a Person reasonably acceptable to Agent, shall have the right
with Agent's consent and in Agent's sole discretion (but shall have no
obligation) to purchase from such Non-Consenting Lenders, and such
Non-Consenting Lenders agree that they shall, upon Agent's request, sell and
assign to Agent or such Person, all of the Commitments of such Non-Consenting
Lenders for an amount equal to the principal balance of all Revolving Loans held
by the Non-Consenting Lenders and all accrued interest and Fees with respect
thereto through the date of sale, such purchase and sale to be consummated
pursuant to an executed Assignment Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than indemnification Obligations), termination of the
Commitments and a release of all claims against Agent and Lenders, and so long
as no suits, actions proceedings, or claims are pending or threatened against
any Indemnified Person asserting any damages, losses or liabilities that are
Indemnified Liabilities, Agent shall deliver to Borrower termination statements,
mortgage releases and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse Agent for all fees,
costs and expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants (including environmental and management
consultants and appraisers) and auditors) incurred in connection with the
negotiation and preparation of the Loan Documents and incurred in connection
with:
(a) any amendment, modification or waiver of, or consent with respect
to, or termination of, any of the Loan Documents or advice in connection with
the administration of the Revolving Loans made pursuant hereto or its rights
hereunder;
(b) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, Borrower or any other Person and
whether as a party, witness or otherwise) in any way relating to the Collateral,
any of the Loan Documents or any other agreement to be executed or delivered in
connection herewith or therewith, including any litigation, contest, dispute,
49
suit, case, proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against Borrower or any other Person that
may be obligated to Agent by virtue of the Loan Documents, including any such
litigation, contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Revolving Loans during the pendency of
one or more Events of Default; provided, that no Person shall be entitled to
reimbursement under this clause (b) in respect of any litigation, contest,
dispute, suit, proceeding or action to the extent any of the foregoing results
from such Person's gross negligence or willful misconduct;
(c) any attempt to enforce any remedies of Agent or any Lender against
any or all of the Credit Parties or any other Person that may be obligated to
Agent or any Lender by virtue of any of the Loan Documents, including any such
attempt to enforce any such remedies in the course of any work-out or
restructuring of the Revolving Loans during the pendency of one or more Events
of Default;
(d) any workout or restructuring of the Revolving Loans during the
pendency of one or more Events of Default; and
(e) efforts to (i) monitor the Revolving Loans or any of the other
Obligations, (ii) evaluate, observe or assess any of the Credit Parties or their
respective affairs, and (iii) verify, protect, evaluate, assess, appraise,
collect, sell, liquidate or otherwise dispose of any of the Collateral;
including, as to each of clauses (a) through (e) above, all reasonable
attorneys' and other professional and service providers' fees arising from such
services and other advice, assistance or other representation, including those
in connection with any appellate proceedings, and all expenses, costs, charges
and other fees reasonably incurred by such counsel and others in connection with
or relating to any of the events or actions described in this Section 11.3, all
of which shall be payable, on demand, by Borrower to Agent. Without limiting the
generality of the foregoing, such expenses, costs, charges and fees may include:
fees, costs and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses; photocopying and duplication expenses; court reporter fees, costs
and expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
11.4 No Waiver. Agent's or any Lender's failure, at any time or times,
to require strict performance by the Credit Parties of any provision of this
Agreement or any other Loan Document shall not waive, affect or diminish any
right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
50
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this Agreement
and the other Loan Documents shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or any other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement
conflicts with any provision in any of the other Loan Documents, the provision
contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use commercially
reasonable efforts (equivalent to the efforts Agent or such Lender applies to
maintain the confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by the Credit Parties
and designated as confidential for a period of two years following receipt
thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender; (b) to any bona fide
assignee or participant or potential assignee or participant that has agreed to
comply with the covenant contained in this Section 11.8 (and any such bona fide
assignee or participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause (a)
above); (c) as required or requested by any Governmental Authority or reasonably
believed by Agent or such Lender to be compelled by any court decree, subpoena
or legal or administrative order or process; (d) as, on the advice of Agent's or
such Lender's counsel, is required by law; (e) in connection with the exercise
of any right or remedy under the Loan Documents or in connection with any
Litigation to which Agent or such Lender is a party; or (f) that ceases to be
confidential through no fault of Agent or any Lender.
11.9 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF
THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE
GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF
THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE
AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY
HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
51
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE CREDIT PARTIES, AGENT AND LENDERS
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS;
PROVIDED, THAT AGENT, LENDERS AND THE CREDIT PARTIES ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇; PROVIDED, FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED
OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR
THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF
AGENT. EACH CREDIT PARTY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT
PARTY HEREBY WAIVES ANY OBJECTION THAT SUCH CREDIT PARTY MAY HAVE BASED UPON
LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. EACH CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF
THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND
AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET
FORTH IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF SUCH CREDIT PARTY'S ACTUAL RECEIPT THEREOF OR
THREE DAYS AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and three
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one Business Day after deposit with a reputable overnight courier
with all charges prepaid or (d) when delivered, if hand-delivered by messenger,
all of which shall be addressed to the party to be notified and sent to the
address or facsimile number indicated in Annex H or to such other address (or
facsimile number) as may be substituted by notice given as herein provided. The
giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice. Failure or delay in delivering copies of any
52
notice, demand, request, consent, approval, declaration or other communication
to any Person (other than Borrower or Agent) designated in Annex H to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party executing
this Agreement agrees that neither it nor its Affiliates will in the future
issue any press releases or other public disclosure using the name of GE Capital
or its affiliates or referring to this Agreement, the other Loan Documents
without at least two Business Days' prior notice to GE Capital and without the
prior written consent of GE Capital unless (and only to the extent that) such
Credit Party or Affiliate is required to do so under law and then, in any event,
such Credit Party or Affiliate will consult with GE Capital before issuing such
press release or other public disclosure. Each Credit Party consents to the
publication by Agent or any Lender of a tombstone or similar advertising
material relating to the financing transactions contemplated by this Agreement.
Agent or such Lender shall provide a draft of any such tombstone or similar
advertising material to each Credit Party for review and comment prior to the
publication thereof. Agent reserves the right to provide to industry trade
organizations information necessary and customary for inclusion in league table
measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
Borrower for liquidation or reorganization, should Borrower become insolvent or
make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of Borrower's
assets, and shall continue to be effective or to be reinstated, as the case may
be, if at any time payment and performance of the Obligations, or any part
53
thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must
otherwise be restored or returned by any obligee of the Obligations, whether as
a "voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any payment, or
any part thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not so
rescinded, reduced, restored or returned.
11.16 Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
[signature page follows]
54
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first written above.
BORROWER
GUARDIAN INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title: President and Chief Executive Officer
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
-------------------------------------
Title: Authorized Signatory
55
The following Persons are signatories to this Agreement in
their capacity as Credit Parties and not as Borrowers.
MUTUAL CENTRAL ALARM SERVICES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Authorized Signatory
STAT-LAND BURGLAR ALARM SYSTEMS & DEVICES INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Title: Authorized Signatory
56
ANNEX A (Recitals)
to
CREDIT AGREEMENT
DEFINITIONS
-----------
Capitalized terms used in the Loan Documents shall have
(unless otherwise provided elsewhere in the Loan Documents) the following
respective meanings and all references to Sections, Exhibits, Schedules or
Annexes in the following definitions shall refer to Sections, Exhibits,
Schedules or Annexes of or to the Agreement:
"Account Debtor" means any Person who may become obligated to
any Credit Party under, with respect to, or on account of, an Account, Chattel
Paper or General Intangibles (including a payment intangible).
"Accounting Changes" has the meaning ascribed thereto in Annex
F.
"Accounts" means all "accounts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, including (a) all
accounts receivable, other receivables, book debts and other forms of
obligations (other than forms of obligations evidenced by Chattel Paper or
Instruments), (including any such obligations that may be characterized as an
account or contract right under the Code), (b) all of each Credit Party's rights
in, to and under all purchase orders or receipts for goods or services, (c) all
of each Credit Party's rights to any goods represented by any of the foregoing
(including unpaid sellers' rights of rescission, replevin, reclamation and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all right to payment due to any Credit Party for property sold, leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred for energy
provided or to be provided, for the use or hire of a vessel under a charter or
other contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection with
any other transaction (whether or not yet earned by performance on the part of
such Credit Party), (e) all healthcare insurance receivables, and (f) all
collateral security of any kind, now or hereafter in existence, given by any
Account Debtor or any other Person with respect to any of the foregoing.
"Affiliate" means, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude Agent and each Lender.
A-1
"Agent" means GE Capital in its capacity as Agent for Lenders
or its successor appointed pursuant to Section 9.7.
"Agreement" means the Credit Agreement by and among Borrower,
the other Credit Parties party thereto, GE Capital, as Agent and Lender and the
other Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Alarm Contracts" means contracts and agreements (a) which
have been duly executed by and between a Credit Party (as assignee of a Dealer)
and its customers for regular and ongoing electrical monitoring protection,
closed circuit television and access control services, maintenance, fire and
sprinkler inspection and testing and/or other related services, and (b) which
(i) have not been canceled by a Credit Party substantially in accordance with
such Credit Party's cancellation policies and procedures in effect on the
Closing Date, (ii) are not subject to cancellation by a Credit Party in
accordance with such Credit Party's policies and procedures or (iii) have not
otherwise been canceled or terminated by a Credit Party or a customer.
"Appendices" has the meaning ascribed to it in the recitals to
the Agreement.
"Applicable Margins" means collectively the Applicable Unused
Line Fee Margin, the Applicable Index Margin and the Applicable LIBOR Margin.
"Applicable Index Margin" means 1.75% per annum.
"Applicable LIBOR Margin" means the per annum interest rate
from time to time in effect and payable in addition to the LIBOR Rate, as
determined by reference to Section 1.4(a).
"Applicable Percentage" has the meaning ascribed to it in
Section 1.6(c).
"Applicable Unused Line Fee Margin" means the per annum fee,
from time to time in effect, payable in respect of Borrower's non-use of
committed funds pursuant to Section 1.6(b), which fee is determined by reference
to Section 1.4(a).
"Assignment Agreement" has the meaning ascribed to it in
Section 9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the
United States Code, 11 ▇.▇.▇.▇▇.▇▇. 101 et seq.
"Blocked Accounts" has the meaning ascribed to it in Annex B.
"Borrower" has the meaning ascribed thereto in the preamble to
the Agreement.
"Borrower Pledge Agreement" means the Pledge Agreement of even
date herewith executed by Borrower in favor of Agent, on behalf of itself and
Lenders, pledging all Stock of its Subsidiaries.
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"Borrowing Availability" means as of any date of determination
the lesser of (i) the Maximum Amount and (ii) the Borrowing Base, in each case,
less the aggregate principal amount of the Revolving Loans then outstanding.
"Borrowing Base" means, as of any date of determination by
Agent, from time to time, an amount equal to the lesser of (a) (i) the maximum
permitted Debt to RMR Ratio as of such date as specified in paragraph (a) of
Annex F, times (ii) the RMR generated by all Alarm Contracts owned by Borrower
on such date after giving effect, to the extent applicable, to the RMR generated
by Alarm Contracts to be purchased with the proceeds of the proposed Revolving
Loan upon the making of such Revolving Loan; and (b) (i) the maximum permitted
Leverage Ratio as of such date as specified in paragraph (d) of Annex F, times
(ii) Borrower's EBITDA for the period of 12 months ending immediately prior to
such date.
"Borrowing Base Certificate" means a certificate to be
executed and delivered from time to time by Borrower in the form attached to the
Agreement as Exhibit 4.1(b).
"Business Day" means any day that is not a Saturday, a Sunday
or a day on which banks are required or permitted to be closed in the States of
Florida and/or New York and in reference to LIBOR Loans shall mean any such day
that is also a LIBOR Business Day.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for any fixed assets or improvements
(other than any fixed assets or improvements installed at a customer location)
or for replacements, substitutions or additions thereto, that have a useful life
of more than one year and that are required to be capitalized under GAAP.
"Capital Lease" means, with respect to any Person, any lease
of any property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted for as
a capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital
Lease of any Person, the amount of the obligation of the lessee thereunder that,
in accordance with GAAP, would appear on a balance sheet of such lessee in
respect of such Capital Lease.
"Cash Management Systems" has the meaning ascribed to it in
Section 1.5.
"Change of Control" means any of the following: (a) any person
or group of persons (within the meaning of the Securities Exchange Act of 1934)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the issued and outstanding shares of
capital Stock of Borrower having the right to vote for the election of directors
of Borrower under ordinary circumstances, other than any such acquisition
arising from the conversion of the Series D Preferred Stock by Western
Resources, Inc. and/or any of its Affiliates, directors and officers; (b) during
any period of twelve consecutive calendar months, individuals who at the
beginning of such period constituted the board of directors of Borrower
(together with any new directors whose election by the board of directors of
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Borrower or whose nomination for election by the Stockholders of Borrower was
approved by a vote of at least a majority of the directors then still in office
who either were directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason other
than death or disability to constitute a majority of the directors then in
office; (c) Borrower ceases to own and control all of the economic and voting
rights associated with all of the outstanding capital Stock of any of its
Subsidiaries; or (d) the occurrence of (i) any "Change in Control", as defined
in either Section 6(c)(v) or 7(e)(ii) of Article III of Borrower's Articles of
Incorporation or (ii) any event specified in Section 7(c)(ii) or in Section
8(c)(ii) of Article III of Borrower's Articles of Incorporation.
"Charges" means all federal, state, county, city, municipal,
local, foreign or other governmental taxes (including taxes owed to the PBGC at
the time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is
defined in the Code, including electronic chattel paper, now owned or hereafter
acquired by any Credit Party, wherever located.
"Closing Checklist" means the schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Agreement, the other Loan
Documents and the transactions contemplated thereunder, substantially in the
form attached hereto as Annex C.
"Closing Date" means June 28, 2002.
"Code" means the Uniform Commercial Code as the same may, from
time to time, be enacted and in effect in the State of New York; provided, that
to the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code, the definition of such term contained in Article or Division 9
shall govern; provided further, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of, or
remedies with respect to, Agent's or any Lender's Lien on any Collateral is
governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "Code" shall mean the
Uniform Commercial Code as enacted and in effect in such other jurisdiction
solely for purposes of the provisions thereof relating to such attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
"Collateral" means the property covered by the Security
Agreement, and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
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"Collateral Documents" means the Security Agreements, the
Pledge Agreements, the Guaranties, the Trademark Security Agreements, the
Telephone Number Assignment Agreement and all similar agreements entered into
guaranteeing payment of, or granting a Lien upon property as security for
payment of, the Obligations.
"Collateral Reports" means the reports with respect to the
Collateral referred to in Annex E.
"Collection Account" means that certain account of Agent,
account number ▇▇▇-▇▇▇-▇▇ in the name of Agent at Deutsche Bank Trust Company
Americas in New York, New York ABA No. 021 001 033, or such other account as may
be specified in writing by Agent as the "Collection Account."
"Commitment Termination Date" means, subject to Section
7.1(b), the earliest of (a) July 3, 2004, (b) the date of termination of
Lenders' obligations to make Revolving Credit Advances or permit existing
Revolving Loans to remain outstanding pursuant to Section 8.2(b), and (c) the
date of indefeasible prepayment in full by Borrower of the Revolving Loans, and
the permanent reduction of the Commitments to zero dollars ($0).
"Commitments" means (a) as to any Lender, the aggregate
commitment of such Lender to make Revolving Credit Advances as set forth on
Annex I to the Agreement or in the most recent Assignment Agreement executed by
such Lender and (b) as to all Lenders, the aggregate commitment of all Lenders
to make Revolving Credit Advances, which aggregate commitment shall be Twenty
Million Dollars ($20,000,000) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement.
"Compliance Certificate" has the meaning ascribed to it in
Annex D.
"Concentration Account" has the meaning ascribed to it in
Annex B.
"Contracts" means all "contracts," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, in any event,
including all contracts, undertakings, or agreements (other than rights
evidenced by Chattel Paper, Documents or Instruments) in or under which any
Credit Party may now or hereafter have any right, title or interest, including
any agreement relating to the terms of payment or the terms of performance of
any Account.
"Control Letter" means a letter agreement between Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant or clearing house, as
applicable, with respect to commodity accounts and commodity contracts held by
any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of Agent, on behalf of
itself and Lenders, on such financial assets, and agrees to follow the
instructions or entitlement orders of Agent without further consent by the
affected Credit Party.
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"Copyright License" means any and all rights now owned or
hereafter acquired by any Credit Party under any written agreement granting any
right to use any Copyright or Copyright registration.
"Copyrights" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all copyrights and General
Intangibles of like nature (whether registered or unregistered), all
registrations and recordings thereof, and all applications in connection
therewith, including all registrations, recordings and applications in the
United States Copyright Office or in any similar office or agency of the United
States, any state or territory thereof, or any other country or any political
subdivision thereof, and (b) all reissues, extensions or renewals thereof.
"Credit Parties" means Borrower and each of its Subsidiaries.
"Dealer" means any Person from whom Borrower shall acquire any
Alarm Contract.
"Debt to RMR Ratio" means, with respect to Borrower on a
consolidated basis, as of any date, the ratio of (a) Borrower's Indebtedness as
of such date, to (b) RMR for all Alarm Contracts owned by or assigned to
Borrower as of such date.
"Default" means any event that, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section
1.4(d).
"Disbursement Accounts" has the meaning ascribed to it in
Annex B.
"Disclosure Schedules" means the Schedules prepared by
Borrower and denominated as Disclosure Schedules (1.4) through (6.7) in the
Index to the Agreement.
"Documents" means any "documents," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of
America.
"EBITDA" means, with respect to any Person for any fiscal
period, without duplication, an amount equal to (a) consolidated net income of
such Person for such period, determined in accordance with GAAP, minus (b) the
sum of (i) income tax credits, (ii) interest income, (iii) gain from
extraordinary items for such period, (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or other
disposition of capital assets by such Person (including any fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities), and (v) any other non-cash
gains that have been added in determining consolidated net income, in each case
to the extent included in the calculation of consolidated net income of such
Person for such period in accordance with GAAP, but without duplication, plus
(c) the sum of (i) any provision for income taxes, (ii) Interest Expense, (iii)
loss from extraordinary items for such period, (iv) the amount of non-cash
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charges (including depreciation and amortization) for such period, (v) amortized
debt discount for such period, and (vi) the amount of any deduction to
consolidated net income as the result of any grant to any members of the
management of such Person of any Stock, in each case to the extent included in
the calculation of consolidated net income of such Person for such period in
accordance with GAAP, but without duplication. For purposes of this definition,
the following items shall be excluded in determining consolidated net income of
a Person: (1) the income (or deficit) of any other Person accrued prior to the
date it became a Subsidiary of, or was merged or consolidated into, such Person
or any of such Person's Subsidiaries; (2) the income (or deficit) of any other
Person (other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such Person
in the form of cash dividends or distributions; (3) the undistributed earnings
of any Subsidiary of such Person to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any contractual obligation or requirement of law
applicable to such Subsidiary; (4) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period; (5) any write-up of any asset; (6) any net
gain from the collection of the proceeds of life insurance policies; (7) any net
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of such Person, (8) in the case of a successor
to such Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer of
assets, and (9) any deferred credit representing the excess of equity in any
Subsidiary of such Person at the date of acquisition of such Subsidiary over the
cost to such Person of the investment in such Subsidiary.
"Environmental Laws" means all applicable federal, state,
local and foreign laws, statutes, ordinances, codes, rules, standards and
regulations, now or hereafter in effect, and any applicable judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree, order or judgment, imposing liability or
standards of conduct for or relating to the regulation and protection of human
health, safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C.ss.ss.9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C.ss.ss.5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.ss.ss.136 et seq.); the
Solid Waste Disposal Act (42 ▇.▇.▇.▇▇.▇▇. 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C.ss.ss.2601 et seq.); the Clean Air Act (42
U.S.C.ss.ss.7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C.ss.ss.1251 et seq.); the Occupational Safety and Health Act (29
U.S.C.ss.ss.651 et seq.); and the Safe Drinking Water Act (42 ▇.▇.▇.▇▇.▇▇.
300(f) et seq.), and any and all regulations promulgated thereunder, and all
analogous state, local and foreign counterparts or equivalents and any transfer
of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person,
all liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
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(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
"Environmental Permits" means all permits, licenses,
authorizations, certificates, approvals or registrations required by any
Governmental Authority under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located
and, in any event, including all such Credit Party's machinery and equipment,
including processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering, processing and manufacturing equipment, office machinery,
furniture, materials handling equipment, tools, attachments, accessories,
automotive equipment, trailers, trucks, forklifts, molds, dies, stamps, motor
vehicles, rolling stock and other equipment of every kind and nature, trade
fixtures and fixtures not forming a part of real property, together with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals, drawings,
instructions, warranties and rights with respect thereto, and all products and
proceeds thereof and condemnation awards and insurance proceeds with respect
thereto.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any
trade or business (whether or not incorporated) that, together with such Credit
Party, are treated as a single employer within the meaning of Sections 414(b),
(c), (m) or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any
ERISA Affiliate, (a) any event described in Section 4043(c) of ERISA with
respect to a Title IV Plan; (b) the withdrawal of any Credit Party or ERISA
Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer, as defined in Section 4001(a)(2) of
ERISA; (c) the complete or partial withdrawal of any Credit Party or any ERISA
Affiliate from any Multiemployer Plan; (d) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination
under Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit
Party or ERISA Affiliate to make when due required contributions to a
Multiemployer Plan or Title IV Plan unless such failure is cured within 30 days;
(g) any other event or condition that might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
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reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the
requirements of Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section
8.1.
"Excess Cash Flow" means, without duplication, with respect to
any Fiscal Year of Borrower and its Subsidiaries, consolidated net income plus
(a) depreciation, amortization and Interest Expense to the extent deducted in
determining consolidated net income minus (c) Capital Expenditures (plus
additions to fixed assets associated with the installation of fixed assets at
customer locations in accordance with GAAP) during such Fiscal Year (excluding
the financed portion thereof and excluding any Capital Expenditures in such
Fiscal Year to the extent in excess of the amount permitted to be made in such
Fiscal Year pursuant to clause (g) of Annex F), minus (d) Interest Expense paid
or accrued (excluding any original issue discount, interest paid in kind or
amortized debt discount, to the extent included in determining Interest Expense)
and scheduled principal payments paid or payable in respect of Funded Debt, plus
or minus (as the case may be), (e) extraordinary gains or losses which are cash
items not included in the calculation of net income, minus (f) mandatory
prepayments paid in cash pursuant to Section 1.2 other than mandatory
prepayments made pursuant to Sections 1.2(b)(i), 1.2(b)(ii), 1.2(b)(iii) or
1.2(b)(iv), minus (h) Restricted Payments made in cash plus (g) taxes deducted
in determining consolidated net income to the extent not paid for in cash.
"Extension Fee" has the meaning ascribed to it in Section
1.6(c).
"Extension Request" has the meaning ascribed to it in Section
7.1(b).
"Fair Labor Standards Act" means the Fair Labor Standards Act,
29 U.S.C.ss.201 et seq.
"Federal Funds Rate" means, for any day, a floating rate equal
to the weighted average of the rates on overnight federal funds transactions
among members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"Fees" means any and all fees payable to Agent or any Lender
pursuant to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth
in Annex F.
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"Financial Statements" means the consolidated and
consolidating income statements, statements of cash flows and balance sheets of
Borrower delivered in accordance with Section 3.4 and Annex D.
"Fiscal Month" means any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" means any of the quarterly accounting periods
of Borrower, ending on March 31, June 30, September 30 and December 31 of each
year.
"Fiscal Year" means any of the annual accounting periods of
Borrower ending on December 31 of each year.
"Fixed Charges" means, with respect to any Person for any
fiscal period, (a) the aggregate of all Interest Expense paid or accrued during
such period, plus (b) scheduled payments of principal with respect to
Indebtedness during such period, plus (c) Capital Expenditures during such
period, plus (d) Restricted Payments made in cash with respect to the Preferred
Stock, as permitted pursuant to Section 6.14, plus (e) cash payments made with
respect to any Charges related to income of any Credit Party.
"Fixed Charge Coverage Ratio" means, with respect to any
Person for the period of 12 months ending on the date of determination, the
ratio of EBITDA to Fixed Charges. In computing Fixed Charges for any such
period, interest and principal payments that are due within one week after the
end of such period, without duplication, shall be deemed to have been paid on
the last day of such period.
"Fixtures" means all "fixtures" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party.
"Funded Debt" means, with respect to any Person, without
duplication, all Indebtedness for borrowed money evidenced by notes, bonds,
debentures, or similar evidences of Indebtedness and that by its terms matures
more than one year from, or is directly or indirectly renewable or extendible at
such Person's option under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year from
the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and also
including, in the case of Borrower, the Obligations and, without duplication,
Guaranteed Indebtedness consisting of guaranties of Funded Debt of other
Persons.
"GAAP" means generally accepted accounting principles in the
United States of America, consistently applied, as such term is further defined
in Annex F to the Agreement.
"GE Capital" means General Electric Capital Corporation, a
Delaware corporation.
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"GE Capital Fee Letter" means that certain letter, dated as of
the Closing Date, between GE Capital and Borrower with respect to certain Fees
to be paid from time to time by Borrower to GE Capital.
"General Intangibles" means all "general intangibles," as such
term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications therefor
and reissues, extensions or renewals thereof, rights in Intellectual Property,
interests in partnerships, joint ventures and other business associations,
licenses, permits, copyrights, trade secrets, proprietary or confidential
information, inventions (whether or not patented or patentable), technical
information, procedures, designs, knowledge, know-how, software, data bases,
data, skill, expertise, experience, processes, models, drawings, materials and
records, goodwill (including the goodwill associated with any Trademark or
Trademark License), all rights and claims in or under insurance policies
(including insurance for fire, damage, loss and casualty, whether covering
personal property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all unearned
premiums), uncertificated securities, choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive dividends, distributions, cash, Instruments and other property in
respect of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files, invoices
and other papers, including without limitation all tapes, cards, computer runs
and other papers and documents in the possession or under the control of such
Credit Party or any computer bureau or service company from time to time acting
for such Credit Party.
"Goods" means any "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Gross Attrition" means, for the period of 12 months ending on
the date of determination, the ratio of (a) (i) the RMR generated by Alarm
Contracts assigned to the Credit Parties that have been terminated or cancelled
during such period, plus the RMR generated by Alarm Contracts assigned to the
Credit Parties that as of the last day of such period are past due for at least
90 days, to (b) the average of (i) the RMR of the Credit Parties on the first
day of such period and (ii) the RMR of the Credit Parties on the last day of
such period.
"Guaranteed Indebtedness" means, as to any Person, any
obligation of such Person guaranteeing, providing comfort or otherwise
supporting any Indebtedness, lease, dividend, or other obligation ("primary
obligation") of any other Person (the "primary obligor") in any manner,
including any obligation or arrangement of such Person to (a) purchase or
repurchase any such primary obligation, (b) advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet condition of the primary obligor, (c)
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
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to make payment of such primary obligation, (d) protect the beneficiary of such
arrangement from loss (other than product warranties given in the ordinary
course of business) or (e) indemnify the owner of such primary obligation
against loss in respect thereof. The amount of any Guaranteed Indebtedness at
any time shall be deemed to be an amount equal to the lesser at such time of (x)
the stated or determinable amount of the primary obligation in respect of which
such Guaranteed Indebtedness is incurred and (y) the maximum amount for which
such Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, each Subsidiary Guaranty and
any other guaranty executed by any Guarantor in favor of Agent and Lenders in
respect of the Obligations.
"Guarantors" means each Subsidiary of Borrower and each other
Person, if any, that executes a guaranty or other similar agreement in favor of
Agent, for itself and the ratable benefit of Lenders, in connection with the
transactions contemplated by the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste
that is regulated by, or forms the basis of liability now or hereafter under,
any Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste," "toxic
substance" or other similar term or phrase under any Environmental Laws, or (b)
petroleum or any fraction or by-product thereof, asbestos, polychlorinated
biphenyls (PCB's), or any radioactive substance.
"Holdback Obligation" means any obligation of Borrower to pay
any "holdback" or like amount to the Dealer from whom Borrower has acquired an
Alarm Contract.
"Indebtedness" means, with respect to any Person, without
duplication (a) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property payment for which is deferred six months or
more, excluding obligations to trade creditors incurred in the ordinary course
of business that are unsecured and not overdue by more than six months unless
being contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), including without limitation all Holdback
Obligations, (e) all Capital Lease Obligations and the present value (discounted
at the Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under commodity
purchase or option agreements or other commodity price hedging arrangements, in
each case whether contingent or matured, (g) all obligations of such Person
under any foreign exchange contract, currency swap agreement, interest rate
swap, cap or collar agreement or other similar agreement or arrangement designed
to alter the risks of that Person arising from fluctuations in currency values
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or interest rates, in each case whether contingent or matured, (h) all
Indebtedness referred to above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property or other assets (including accounts and contract
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness, and (i) the Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in
Section 1.10.
"Indemnified Person" has the meaning ascribed to it in Section
1.10.
"Index Rate" means, for any day, a floating rate equal to the
higher of (i) the rate publicly quoted from time to time by The Wall Street
Journal as the "base rate on corporate loans posted by at least 75% of the
nation's 30 largest banks" (or, if The Wall Street Journal ceases quoting a base
rate of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate plus 50 basis points per annum.
Each change in any interest rate provided for in the Agreement based upon the
Index Rate shall take effect at the time of such change in the Index Rate.
"Index Rate Loan" means a Loan or portion thereof bearing
interest by reference to the Index Rate.
"Instruments" means all "instruments," as such term is defined
in the Code, now owned or hereafter acquired by any Credit Party, wherever
located, and, in any event, including all certificated securities, all
certificates of deposit, and all promissory notes and other evidences of
indebtedness, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Interest Coverage Ratio" means, with respect to any Person
for the period of 12 months ending on the date of determination, the ratio of
EBITDA to Interest Expense.
"Interest Expense" means, with respect to any Person for any
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including interest expense with respect to any Funded Debt of such Person and
interest expense for the relevant period that has been capitalized on the
balance sheet of such Person.
"Interest Payment Date" means (a) as to any Index Rate Loan,
the first Business Day of each month to occur while such Index Rate Loan is
outstanding, and (b) as to any LIBOR Loan, the last day of the applicable LIBOR
Period; provided, that in the case of any LIBOR Period greater than three months
in duration, interest shall be payable at three month intervals and on the last
day of such LIBOR Period; and provided further that, in addition to the
foregoing, each of (x) the date upon which all of the Commitments have been
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terminated and the Revolving Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with respect
to any interest that has then accrued under the Agreement.
"Inventory" means any "inventory," as such term is defined in
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or lease or
are furnished or are to be furnished under a contract of service, or that
constitute raw materials, work in process, finished goods, returned goods,
supplies or materials of any kind, nature or description used or consumed or to
be used or consumed in such Credit Party's business or in the processing,
production, packaging, promotion, delivery or shipping of the same, including
all supplies and embedded software.
"Investment Property" means all "investment property" as such
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of such Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities account
and any free credit balance or other money owing by any securities intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.
"IRC" means the Internal Revenue Code of 1986, as amended, and
all regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Lease Expenses" means, with respect to any Person for any
fiscal period, the aggregate rental obligations of such Person determined in
accordance with GAAP which are payable in respect of such period under leases of
real or personal property (net of income from subleases thereof, but including
taxes, insurance, maintenance and similar expenses that the lessee is obligated
to pay under the terms of such leases), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet of such
Person or in the notes thereto, excluding, however, any such obligations under
Capital Leases.
"Lenders" means GE Capital, the other Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to assign
all or any portion of the Obligations, such term shall include any assignee of
such Lender.
"Letter-of-Credit Rights" means "letter-of-credit rights" as
such term is defined in the Code, now owned or hereafter acquired by any Credit
Party, including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is entitled to
demand payment or performance.
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"Leverage Ratio" means, with respect to Borrower, on a
consolidated basis, the ratio of (a) Indebtedness as of any date of
determination, to (b) EBITDA for the twelve months ending on that date of
determination.
"LIBOR Business Day" means a Business Day on which banks in
the City of London are generally open for interbank or foreign exchange
transactions.
"LIBOR Loan" means a Revolving Loan or any portion thereof
bearing interest by reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each
period commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.4(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that is
not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the
Commitment Termination Date shall end two LIBOR Business Days prior to
such date;
(c) any LIBOR Period that begins on the last LIBOR Business
Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such LIBOR
Period) shall end on the last LIBOR Business Day of a calendar month;
(d) Borrower shall select LIBOR Periods so as not to require a
payment or prepayment of any LIBOR Loan during a LIBOR Period for such
LIBOR Loan; and
(e) Borrower shall select LIBOR Periods so that there shall be
no more than five separate LIBOR Loans in existence at any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest
determined by Agent equal to:
(a) the offered rate for deposits in United States Dollars for
the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m. (London time), on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); divided by
(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day that is two LIBOR Business Days prior
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to the beginning of such LIBOR Period (including basic, supplemental,
marginal and emergency reserves under any regulations of the Federal
Reserve Board or other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time in effect) for
Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of the Federal Reserve Board that are
required to be maintained by a member bank of the Federal Reserve
System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" means any Copyright License, Patent License,
Trademark License or other license of rights or interests now held or hereafter
acquired by any Credit Party.
"Lien" means any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Code or comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.13.
"Loan Account" has the meaning ascribed to it in Section 1.9.
"Loan Documents" means the Agreement, the Revolving Notes, the
Collateral Documents, and all other agreements, instruments, documents and
certificates identified in the Closing Checklist executed and delivered to, or
in favor of, Agent or any Lenders and including all other pledges, powers of
attorney, consents, assignments, contracts, notices, and all other written
matter whether heretofore, now or hereafter executed by or on behalf of any
Credit Party, or any employee of any Credit Party, and delivered to Agent or any
Lender in connection with the Agreement or the transactions contemplated
thereby. Any reference in the Agreement or any other Loan Document to a Loan
Document shall include all appendices, exhibits or schedules thereto, and all
amendments, restatements, supplements or other modifications thereto, and shall
refer to the Agreement or such Loan Document as the same may be in effect at any
and all times such reference becomes operative.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, or financial or other condition of the
Credit Parties considered as a whole, (b) Borrower's ability to pay any of the
Revolving Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or any
Lender's rights and remedies under the Agreement and the other Revolving Loan
Documents.
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"Maximum Amount" means, as of any date of determination, an
amount equal to the aggregate Commitments of all Lenders as of that date.
"Maximum Lawful Rate" has the meaning ascribed to it in
Section 1.4(f).
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate
is making, is obligated to make or has made or been obligated to make,
contributions on behalf of participants who are or were employed by any of them.
"Net Attrition" means, for the period of 12 months ending on
the date of determination, the ratio of (a) (i) the RMR generated by Alarm
Contracts assigned to the Credit Parties that have been terminated or cancelled
during such period, plus the RMR generated by Alarm Contracts assigned to the
Credit Parties that as of the last day of such period are past due for at least
90 days, less (ii) the RMR generated by Alarm Contracts referred to in clause
(i), that the seller of such Alarm Contracts has replaced in such period, less
(iii) the RMR generated by Alarm Contracts referred to in clause (i) the
original cost of which has been deducted from the contractual holdback, less
(iv) the RMR generated by Alarm Contracts referred to in clause (i) that has
been replaced by new Alarm Contracts at the same premises within three months of
such termination, to (b) the average of (i) the RMR of the Credit Parties on the
first day of such period and (ii) the RMR of the Credit Parties on the last day
of such period.
"Non-Funding Lender" has the meaning ascribed to it in Section
9.9(a)(ii).
"Notice of Conversion/Continuation" has the meaning ascribed
to it in Section 1.4(e).
"Notice of Revolving Credit Advance" has the meaning ascribed
to it in Section 1.1(a).
"Obligations" means all loans, advances, debts, liabilities
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under the Agreement or any of
the other Loan Documents. This term includes all principal, interest (including
all interest that accrues after the commencement of any case or proceeding by or
against any Credit Party in bankruptcy, whether or not allowed in such case or
proceeding), Fees, Charges, expenses, attorneys' fees and any other sum
chargeable to any Credit Party under the Agreement or any of the other Loan
Documents.
"Patent License" means rights under any written agreement now
owned or hereafter acquired by any Credit Party granting any right with respect
to any invention on which a Patent is in existence.
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"Patents" means all of the following in which any Credit Party
now holds or hereafter acquires any interest: (a) all letters patent of the
United States or any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any other
country, including registrations, recordings and applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State or any other country, and (b) all reissues,
continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of
ERISA.
"Permitted Acquisitions" has the meaning ascribed to it in
Section 6.1.
"Permitted Encumbrances" means the following encumbrances: (a)
Liens for taxes or assessments or other governmental Charges not yet due and
payable or which are being contested in accordance with Section 5.2(b); (b)
pledges or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability laws
or similar legislation (excluding Liens under ERISA); (c) pledges or deposits of
money securing bids, tenders, contracts (other than contracts for the payment of
money) or leases to which any Credit Party is a party as lessee made in the
ordinary course of business; (d) inchoate and unperfected workers', mechanics'
or similar liens arising in the ordinary course of business, so long as such
Liens attach only to Equipment, Fixtures and/or Real Estate; (e) deposits
securing, or in lieu of, surety, appeal or customs bonds in proceedings to which
any Credit Party is a party; (f) any attachment or judgment lien not
constituting an Event of Default under Section 8.1(j); (g) zoning restrictions,
easements, licenses, or other restrictions on the use of any Real Estate or
other minor irregularities in title (including leasehold title) thereto, so long
as the same do not materially impair the use, value, or marketability of such
Real Estate; (h) presently existing or hereafter created Liens in favor of
Agent, on behalf of Lenders; and (i) Liens expressly permitted under clauses (b)
and (c) of Section 6.7 of the Agreement.
"Permitted Portfolio Purchase" has the meaning ascribed to it
in Section 6.19.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, limited liability company, institution, public benefit corporation,
other entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division, agency,
body or department thereof).
"Plan" means, at any time, an "employee benefit plan," as
defined in Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any Credit Party.
"Pledge Agreements" means the Borrower Pledge Agreement and
any other pledge agreement entered into after the Closing Date by any Credit
Party (as required by the Agreement or any other Loan Document).
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"Preferred Stock" means, collectively, the Series C Preferred
Stock, the Series D Preferred Stock, the Series E Preferred Stock and any
preferred stock issued by Borrower after the date hereof.
"Prior Lender" means ▇▇▇▇▇▇ Financial, Inc.
"Prior Lender Obligations" means the obligations of the
Borrower under that certain Second Amended and Restated Loan and Security
Agreement, dated as of February 23, 1998 among the Borrower, the borrowing
subsidiaries from time to time party thereto and the Prior Lender, as amended
from time to time prior to the date hereof.
"Proceeds" means "proceeds," as such term is defined in the
Code, including (a) any and all proceeds of any insurance, indemnity, warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary by
Subsidiary or division-by-division basis, if applicable, and otherwise
consistent with the historical Financial Statements of Borrower, together with
appropriate supporting details and a statement of underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to
any Lender the percentage obtained by dividing (i) the Commitment of that Lender
by (ii) the aggregate Commitments of all Lenders.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of
any Lender and, with respect to any Lender that is an investment fund that
invests in commercial loans, any other investment fund that invests in
commercial loans and that is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor, and (b) any
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commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one of its businesses,
including insurance companies, mutual funds, lease financing companies and
commercial finance companies, in each case, which has a rating of BBB or higher
from S&P and a rating of Baa2 or higher from ▇▇▇▇▇'▇ at the date that it becomes
a Lender and which, through its applicable lending office, is capable of lending
to Borrower without the imposition of any withholding or similar taxes; provided
that no Person determined by Agent to be acting in the capacity of a vulture
fund or distressed debt purchaser shall be a Qualified Assignee and no Person or
Affiliate of such Person (other than a Person that is already a Lender) holding
Subordinated Debt or Stock issued by any Credit Party shall be a Qualified
Assignee.
"Real Estate" has the meaning ascribed to it in Section 3.6.
"Refinancing" means the repayment in full by Borrower of the
Prior Lender Obligations on the Closing Date.
"Release" means any release, threatened release, spill,
emission, leaking, pumping, pouring, emitting, emptying, escape, injection,
deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Material in the indoor or outdoor environment, including the movement
of Hazardous Material through or in the air, soil, surface water, ground water
or property.
"Requisite Lenders" means Lenders having (a) more than 66 2/3%
of the Commitments of all Lenders, or (b) if the Commitments have been
terminated, more than 66 2/3% of the aggregate outstanding amount of the
Revolving Loans.
"Restricted Payment" means, with respect to any Credit Party
(a) the declaration or payment of any dividend or the incurrence of any
liability to make any other payment or distribution of cash or other property or
assets in respect of Stock, other than dividends consisting solely of additional
Stock; (b) any payment on account of the purchase, redemption, defeasance,
sinking fund or other retirement of such Credit Party's Stock or any other
payment or distribution made in respect thereof, either directly or indirectly;
(c) any payment or prepayment of principal of, premium, if any, or interest,
fees or other charges on or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and any claim for
rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Credit
Party other than payment of compensation in the ordinary course of business to
Stockholders who are employees of such Credit Party; and (g) any payment of
management fees (or other fees of a similar nature) by such Credit Party to any
Stockholder of such Credit Party or its Affiliates.
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"Retiree Welfare Plan" means, at any time, a Welfare Plan that
provides for continuing coverage or benefits for any participant or any
beneficiary of a participant after such participant's termination of employment,
other than continuation coverage provided pursuant to Section 4980B of the IRC
and at the sole expense of the participant or the beneficiary of the
participant.
"Revolver Event" has the meaning ascribed to it in Section
1.1(a).
"Revolving Credit Advance" has the meaning ascribed to it in
Section 1.1(c).
"Revolving Loan" means, at any time, the aggregate amount of
Revolving Credit Advances outstanding to Borrower.
"Revolving Note" has the meaning ascribed to it in Section
1.1(b).
"RMR" means, as of the last day of any calendar month, for
Borrower and its Subsidiaries on a consolidated basis, (a) the aggregate
recurring regular monthly amount billable to customers or Dealers under Alarm
Contracts for a one-month period (regardless of whether billed monthly or less
frequently with ▇▇▇▇▇▇▇▇ made other than on a monthly basis being adjusted to
the equivalent monthly amount) for electrical protection, monitoring,
maintenance, closed circuit television and access control service charges, fire
and police panel charges and fire and sprinkler inspection, testing charges and
related revenue (but excluding revenues from any Alarm Contracts relating to any
non-recurring, special or other one-time charges) as such RMR is calculated by
Borrower in accordance with its past practices, less (b) such portion of the
amount specified in clause (a) arising in respect of Alarm Contracts which are
90 days or more past due.
"Security Agreements" means, collectively, the Security
Agreements of even date herewith entered into by and among Agent, on behalf of
itself and Lenders, and each Credit Party that is a signatory thereto.
"Series C Preferred Stock" means the Borrower's Series C 7.00%
Redeemable Cumulative Preferred Stock, par value $.001 per share.
"Series D Preferred Stock" means the Borrower's Series D 6.00%
Convertible Cumulative Preferred Stock, par value $.001 per share.
"Series E Preferred Stock" means the Borrower's Series E 7.00%
Preferred Stock, par value $.001 per share.
"Software" means all "software" as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular
date, that on such date (a) the fair value of the property of such Person is
greater than the total amount of liabilities, including contingent liabilities,
of such Person; (b) the present fair salable value of the assets of such Person
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is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in a business or transaction, and is
not about to engage in a business or transaction, for which such Person's
property would constitute an unreasonably small capital. The amount of
contingent liabilities (such as litigation, guaranties and pension plan
liabilities) at any time shall be computed as the amount that, in light of all
the facts and circumstances existing at the time, represents the amount that can
be reasonably be expected to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or
limited partnership interests, membership interests or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited
liability company or equivalent entity whether voting or nonvoting, including
common stock, preferred stock or any other "equity security" (as such term is
defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder
of Stock of such Person.
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subsidiary" means, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Subsidiary Guaranty" means the Subsidiary Guaranty of even
date herewith executed by each Subsidiary of Borrower in favor of Agent, on
behalf of itself and Lenders.
"Supporting Obligations" means all "supporting obligations" as
such term is defined in the Code, including letter of credit and guaranties
issued in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"Target" has the meaning ascribed to it in Section 6.1.
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"Taxes" means taxes, levies, imposts, deductions, Charges or
withholdings, and all liabilities with respect thereto, excluding taxes imposed
on or measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or any
political subdivision thereof.
"Telephone Number Assignment Agreement" means the Telephone
Number Assignment Agreement made in favor of Agent, on behalf of Lenders, by
each Applicable Credit Party.
"Termination Date" means the date on which (a) the Revolving
Loans have been indefeasibly repaid in full, (b) all other Obligations under the
Agreement and the other Loan Documents have been completely discharged, and (c)
Borrower shall not have any further right to borrow any monies under the
Agreement.
"Title IV Plan" means a Pension Plan (other than a
Multiemployer Plan), that is covered by Title IV of ERISA, and that any Credit
Party or ERISA Affiliate maintains, contributes to or has an obligation to
contribute to on behalf of participants who are or were employed by any of them.
"Trademark Security Agreements" means, collectively, the
Trademark Security Agreements made in favor of Agent, on behalf of Lenders, by
each Credit Party signatory thereto.
"Trademark License" means rights under any written agreement
now owned or hereafter acquired by any Credit Party granting any right to use
any Trademark.
"Trademarks" means all of the following now owned or hereafter
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
corporate names, business names, trade styles, service marks, logos, other
source or business identifiers, prints and labels on which any of the foregoing
have appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate
amount, if any, of the sum of (a) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions for funding purposes in effect
under such Title IV Plan, and (b) for a period of 5 years following a
transaction which might reasonably be expected to be covered by Section 4069 of
ERISA, the liabilities (whether or not accrued) that could be avoided by any
Credit Party or any ERISA Affiliate as a result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of
ERISA.
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Rules of construction with respect to accounting terms used in
the Agreement or the other Loan Documents shall be as set forth in Annex F. All
other undefined terms contained in any of the Loan Documents shall, unless the
context indicates otherwise, have the meanings provided for by the Code to the
extent the same are used or defined therein; in the event that any term is
defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, feminine and neuter genders. The words "including",
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; the word "or" is not exclusive; references to Persons include their
respective successors and assigns (to the extent and only to the extent
permitted by the Loan Documents) or, in the case of governmental Persons,
Persons succeeding to the relevant functions of such Persons; and all references
to statutes and related regulations shall include any amendments of the same and
any successor statutes and regulations. Whenever any provision in any Loan
Document refers to the knowledge (or an analogous phrase) of any Credit Party,
such words are intended to signify that such Credit Party has actual knowledge
or awareness of a particular fact or circumstance or that such Credit Party, if
it had exercised reasonable diligence, would have known or been aware of such
fact or circumstance.
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