1
Exhibit 10.2
2
SECOND AMENDED AND RESTATED LOAN AGREEMENT
among
FINOVA CAPITAL CORPORATION,
as Agent,
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTIES HERETO,
as Lenders
and
SECURITY ASSOCIATES INTERNATIONAL, INC.,
as Borrower
Dated as of September 30, 1999
3
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS AND DETERMINATIONS......................................................................2
1.1 Definitions.....................................................................................2
1.2 Time Periods...................................................................................22
1.3 Accounting Terms and Determinations............................................................22
1.4 References.....................................................................................22
1.5 Lender's or Agent's Discretion.................................................................22
1.6 Borrower's Knowledge...........................................................................22
ARTICLE II LOAN AND TERMS OF PAYMENT..........................................................................23
2.1 Loan...........................................................................................23
2.1.1 Aggregate Loan Amount.................................................................23
2.1.2 Initial Portion.......................................................................23
2.1.3 Acquisition Portion...................................................................23
2.1.4 Use of Proceeds.......................................................................23
2.1.5 Notes.................................................................................23
2.1.6 Reborrowing...........................................................................23
2.1.7 Funding Procedures....................................................................23
2.2 Interest.......................................................................................24
2.2.1 Interest Rate...........................................................................24
2.2.2 Interest Computation..................................................................25
2.2.3 Maximum Interest......................................................................25
2.2.4 Increased Costs.......................................................................26
2.2.5 Interest Hedge Contract...............................................................26
2.3 Principal and Interest Payments................................................................27
2.3.1 Interest..............................................................................27
2.3.2 Principal.............................................................................27
2.4 Late Charges...................................................................................27
2.5 LIBOR Loans....................................................................................27
2.5.1 Election by Borrower..................................................................27
2.5.2 LIBOR Limitations.....................................................................28
2.5.3 Eurodollar Deposits Unavailable or Interest Rate Unascertainable......................28
2.5.4 Tax and Other Laws....................................................................28
2.5.5 Changes in Law Rendering LIBOR Loans Unlawful.........................................29
2.5.6 Indemnity.............................................................................29
2.6 Loan Fees......................................................................................29
2.6.1 Closing Fee...........................................................................29
2.6.2 Non-Utilization Fee...................................................................29
2.7 Prepayments....................................................................................30
2.7.1 Voluntary Prepayment of Loan..........................................................30
2.7.2 Mandatory Prepayments of the Loan.....................................................30
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2.7.3 No Prepayment Premium.................................................................31
2.7.4 Involuntary Prepayment................................................................31
2.8 Default Rate Period............................................................................31
2.9 Method of Payment..............................................................................31
2.9.1 Lockboxes and Lockbox Accounts; Payments; Application of Funds........................31
2.9.2 Other Payments........................................................................32
ARTICLE III SECURITY............................................................................................33
ARTICLE IV CONDITIONS OF CLOSING AND ACQUISITIONS..............................................................33
4.1 Closing Conditions for each Disbursement.......................................................33
4.1.1 Representations and Warranties........................................................33
4.1.2 Performance; No Default...............................................................33
4.1.3 UL Certifications.....................................................................33
4.1.4 Alarm Licenses........................................................................33
4.1.5 Insurance.............................................................................34
4.1.6 Environmental Audit...................................................................34
4.1.7 Approval of Instruments and Security Interests........................................34
4.1.8 Security Interests....................................................................34
4.1.9 Use of Assets.........................................................................34
4.1.10 Material Adverse Change...............................................................34
4.1.11 Proceedings and Documents.............................................................34
4.1.12 Broker Fees...........................................................................35
4.1.13 Payment of Fees and Expenses..........................................................35
4.1.14 Maximum Times RMR.....................................................................35
4.2 Closing Conditions for Initial Portion.........................................................35
4.2.1 Delivery of Documents.................................................................35
4.2.2 RMR...................................................................................36
4.2.3 Evidence of Junior Capital............................................................36
4.2.4 Conversion of Subordinated Debt to Equity Interests...................................36
4.3 Conditions for Acquisition Portion.............................................................36
4.3.1 Initial Portion.......................................................................36
4.3.2 Maximum Facility Cash Flow Leverage Ratio.............................................36
4.3.3 Amount and Frequency of Advances......................................................36
4.3.4 Information Regarding Acquisitions....................................................37
4.3.5 Consent to Acquisition................................................................37
4.3.6 Consummation of Acquisition...........................................................37
4.3.7 Delivery of Documents.................................................................37
ARTICLE V REPRESENTATIONS AND WARRANTIES......................................................................38
5.1 Existence and Power............................................................................38
5.2 Authority......................................................................................38
5.3 Capital Stock and Related Matters..............................................................38
5.3.1 Capitalization........................................................................39
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5.3.2 Restrictions..........................................................................39
5.4 Binding Agreements.............................................................................39
5.5 Business and Property of Borrower and its Subsidiaries.........................................39
5.5.1 Business and Property.................................................................39
5.5.2 Facility Sites........................................................................40
5.5.3 Leases................................................................................40
5.5.4 Real Estate...........................................................................40
5.5.5 Operation and Maintenance of Equipment................................................40
5.6 Title to Property; Liens.......................................................................40
5.7 Projections and Financial Statements...........................................................41
5.7.1 Financial Statements..................................................................41
5.7.2 Projections...........................................................................41
5.8 Litigation.....................................................................................41
5.9 Defaults in Other Agreements; Consents; Conflicting Agreements.................................41
5.10 Taxes..........................................................................................42
5.11 Compliance with Applicable Laws................................................................42
5.12 Patents, Trademarks, Franchises, Agreements....................................................42
5.13 Environmental Matters..........................................................................42
5.14 Application of Certain Laws and Regulations....................................................43
5.14.1 Investment Company Act................................................................43
5.14.2 Holding Company Act...................................................................43
5.14.3 Foreign or Enemy Status...............................................................43
5.14.4 Regulations as to Borrowing...........................................................43
5.15 Margin Regulations.............................................................................43
5.16 Other Indebtedness.............................................................................43
5.17 No Misrepresentation...........................................................................43
5.18 Employee Benefit Plans.........................................................................44
5.18.1 No Other Plans........................................................................44
5.18.2 ERISA and Code Compliance and Liability...............................................44
5.18.3 Funding...............................................................................44
5.18.4 Prohibited Transactions and Payments..................................................45
5.18.5 No Termination Event..................................................................45
5.18.6 ERISA Litigation......................................................................45
5.19 Employee Matters...............................................................................45
5.19.1 Collective Bargaining Agreements; Grievances..........................................45
5.19.2 Claims Relating to Employment.........................................................45
5.20 Burdensome Obligations.........................................................................45
5.21 Year 2000......................................................................................46
ARTICLE VI AFFIRMATIVE COVENANTS................................................................................46
6.1 Legal Existence; Good Standing.................................................................46
6.2 Inspection.....................................................................................46
6.3 Financial Statements and Other Information.....................................................46
6.3.1 Monthly Statements....................................................................47
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6.3.2 Quarterly Agings......................................................................47
6.3.3 Annual Statements.....................................................................47
6.3.4 Compliance Certificates...............................................................48
6.3.5 Accountants'Certificate...............................................................48
6.3.6 Audit Reports.........................................................................48
6.3.7 Business Plans........................................................................48
6.3.8 Notice of Defaults; Loss..............................................................48
6.3.9 Notice of Suits, Adverse Events.......................................................49
6.3.10 Reports to Shareholders, Members, Creditors and
Governmental Bodies...................................................................49
6.3.11 ERISA Notices and Requests............................................................50
6.3.12 Other Information.....................................................................50
6.4 Reports to Governmental Bodies and Other Persons...............................................51
6.5 Maintenance of UL Certifications, Alarm Licenses, Licenses, Franchises and Other Agreements....51
6.5.1 Maintenance of UL Certifications and Alarm Licenses...................................51
6.5.2 Maintenance of Licenses, Franchises and Agreements....................................51
6.6 Insurance......................................................................................52
6.6.1 Business Insurance....................................................................52
6.6.2 Claims and Proceeds...................................................................52
6.7 Future Leases..................................................................................53
6.8 Future Acquisitions of Real Property...........................................................53
6.9 Environmental Matters..........................................................................53
6.9.1 Compliance............................................................................53
6.9.2 Certification.........................................................................54
6.10 Compliance with Laws...........................................................................54
6.11 Taxes and Claims...............................................................................54
6.12 Maintenance of Properties......................................................................54
6.13 Governmental Approvals.........................................................................54
6.14 Year 2000......................................................................................54
6.15 Dissolution or Merger of Certain Subsidiaries..................................................55
ARTICLE VII NEGATIVE COVENANTS..................................................................................55
7.1 Borrowing......................................................................................55
7.2 Liens..........................................................................................55
7.3 Merger and Acquisition.........................................................................55
7.4 Contingent Liabilities.........................................................................55
7.5 Distributions..................................................................................55
7.6 Capital Expenditures...........................................................................55
7.7 Payments of Indebtedness for Borrowed Money....................................................56
7.8 Obligations as Lessee Under Operating Leases...................................................56
7.9 Investments, Loans.............................................................................56
7.10 Fundamental Business Changes...................................................................56
7.11 Facility Sites.................................................................................56
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7.12 Sale or Transfer of Assets.....................................................................56
7.13 Amendment of Certain Documents.................................................................57
7.14 Acquisition of Additional Properties...........................................................57
7.15 Issuance of Equity Interests...................................................................57
7.16 Transactions with Affiliates...................................................................57
7.17 Compliance with ERISA..........................................................................57
7.18 Facility Cash Flow Leverage Ratio..............................................................58
7.19 Operating Cash Flow Leverage Ratio.............................................................58
7.20 Ratio of Total Debt to RMR.....................................................................58
7.21 Fixed Charge Coverage Ratio....................................................................59
7.22 Senior Interest Coverage Ratio.................................................................59
ARTICLE VIII DEFAULT AND REMEDIES...............................................................................59
8.1 Events of Default..............................................................................59
8.1.1 Default in Payment....................................................................59
8.1.2 Breach of Covenants...................................................................59
8.1.3 Breach of Warranty....................................................................60
8.1.4 Default Under Other Indebtedness for Borrowed Money...................................60
8.1.5 Bankruptcy............................................................................60
8.1.6 Judgments.............................................................................61
8.1.7 Impairment of Licenses; Other Agreements..............................................61
8.1.8 Collateral............................................................................61
8.1.9 Interruption of Operations............................................................61
8.1.10 Plans.................................................................................61
8.1.11 Change in Control.....................................................................62
8.1.12 Change in Management..................................................................62
8.2 Acceleration of Borrower's Obligations.........................................................62
8.3 Remedies on Default............................................................................62
8.3.1 Enforcement of Security Interests.....................................................62
8.3.2 Other Remedies........................................................................62
8.4 Application of Funds...........................................................................63
8.4.1 Expenses..............................................................................63
8.4.2 Borrower's Obligations................................................................64
8.4.3 Surplus...............................................................................64
8.5 Performance of Borrower's Obligations..........................................................64
ARTICLE IX ADDITIONAL LENDERS AND PARTICIPANTS; THE AGENT.......................................................64
9.1 Assignment to Other Lenders....................................................................64
9.1.1 Assignment............................................................................64
9.1.2 Effect of Loan Assignment.............................................................65
9.1.3 Register..............................................................................65
9.1.4 Substitution of Notes.................................................................65
9.1.5 Inspections...........................................................................65
9.2 Participations.................................................................................65
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9.3 Set Off and Sharing of Payments................................................................66
9.4 Appointment of Agent...........................................................................66
9.5 Delegation of Duties...........................................................................66
9.6 Nature of Duties; Independent Credit Investigation.............................................67
9.7 Instructions from Lenders......................................................................67
9.8 Exculpatory Provisions.........................................................................67
9.9 Reimbursement and Indemnification by Lenders of Agent..........................................67
9.10 Reliance by Agent..............................................................................68
9.11 Notice of Default..............................................................................68
9.12 Release of Collateral..........................................................................68
9.13 Lenders in Their Individual Capacities.........................................................68
9.14 Holders of Notes...............................................................................68
9.15 Successor Agent................................................................................69
9.16 Delivery of Information........................................................................69
9.17 Beneficiaries..................................................................................69
ARTICLE X CLOSING...............................................................................................69
ARTICLE XI EXPENSES AND INDEMNITY...............................................................................70
11.1 Attorneys'Fees and Other Fees and Expenses.....................................................70
11.1.1 Fees and Expenses for Preparation of Loan Instruments.................................70
11.1.2 Fees and Expenses in Enforcement of Rights or Defense of Loan Instruments.............70
11.2 Indemnity......................................................................................70
11.2.1 Brokerage Fees........................................................................70
11.2.2 General...............................................................................70
11.2.3 Operation of Collateral; Joint Venturers..............................................71
11.2.4 Environmental Indemnity...............................................................71
ARTICLE XII MISCELLANEOUS.......................................................................................71
12.1 Notices........................................................................................71
12.2 Survival of Loan Agreement; Indemnities........................................................73
12.3 Further Assurance..............................................................................73
12.4 Taxes and Fees.................................................................................73
12.5 Severability...................................................................................73
12.6 Waiver.........................................................................................73
12.7 Modification of Loan Instruments; Amendments...................................................74
12.8 Captions.......................................................................................74
12.9 Successors and Assigns.........................................................................74
12.10 Remedies Cumulative............................................................................74
12.11 Entire Agreement; Conflict.....................................................................74
12.12 Applicable Law.................................................................................74
12.13 Jurisdiction and Venue.........................................................................74
12.14 Waiver of Right to Jury Trial..................................................................75
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12.15 Time of Essence................................................................................75
12.16 Estoppel Certificate...........................................................................75
12.17 Consequential Damages..........................................................................76
12.18 Counterparts...................................................................................76
12.19 No Fiduciary Relationship.....................................................................76
12.20 No Strict Construction.........................................................................76
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SECOND AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDED AND RESTATED LOAN AGREEMENT, dated as of September
30, 1999, is among SECURITY ASSOCIATES INTERNATIONAL, INC., a Delaware
corporation ("BORROWER"), FINOVA CAPITAL CORPORATION, a Delaware corporation
("FINOVA"), in its individual capacity and as agent for the financial
institutions from time to time parties hereto, STATE STREET BANK AND TRUST
COMPANY ("STATE STREET"), and the other financial institutions from time to time
parties hereto.
RECITALS:
A. Borrower, Telecommunications Associates Group, Inc., an Ohio
corporation ("ERC"), All-Security Monitoring Services, L.L.C., an Illinois
limited liability company ("ASMS"), AMJ Central Station Corporation, Inc., a
Delaware corporation ("AMJ") (Borrower, ASMS, AMJ and ERC sometimes hereinafter
are referred to collectively as the "ORIGINAL BORROWERS"), Security Associates
Command Center II, L.L.C., a Michigan limited liability company ("SACC"),
Monitor Service Group, L.L.C., a Delaware limited liability company ("MSG"), and
FINOVA entered into an Amended and Restated Loan Agreement dated as of December
2, 1997 (the "ORIGINAL LOAN AGREEMENT"), as amended by a First Amendment to Loan
Instruments dated as of June 17, 1998 (the "FIRST AMENDMENT") among the Original
Borrowers, SACC, MSG, Texas Security Central, Inc., a Texas corporation ("TSC"),
and FINOVA, as further amended by a Second Amendment to Loan Instruments dated
as of July 17, 1998 (the "SECOND AMENDMENT") among the Original Borrowers, TSC,
Reliance Protection Services, Ltd., an Illinois corporation ("RELIANCE"), and
FINOVA, as further amended by a Third Amendment to Loan Instruments dated as of
March 23, 1999 (the "THIRD AMENDMENT") among the Original Borrowers, TSC,
Reliance and FINOVA, and as further amended by a Fourth Amendment to Loan
Instruments dated as of June 30, 1999 (the "FOURTH AMENDMENT") among Borrower,
ERC, TSC and FINOVA (such Original Loan Agreement, as amended by the First
Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment
hereinafter is referred to as the "EXISTING LOAN AGREEMENT").
B. Pursuant to the Existing Loan Agreement, FINOVA extended to
Borrower, ERC and TSC a $30,000,000 credit facility. The outstanding principal
balance of all loans made pursuant to the Existing Loan Agreement (the "EXISTING
PRINCIPAL BALANCE") is $6,609,730.35 as of the date hereof.
C. Borrower has requested an increase in the maximum credit facility
provided under the Existing Loan Agreement from $30,000,000 to $45,000,000 and
certain other amendments to the Existing Loan Agreement. The proceeds of such
increased credit facility will be used by Borrower (i) to pay transaction costs,
(ii) to provide funds for Acquisitions and (iii) for working capital.
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NOW, THEREFORE, it is agreed that the Existing Loan Agreement is
amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
I.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
Instruments, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
Account Debtor: any Person who is obligated on or under an Account
Receivable.
Accountants: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, L.L.P. or any other independent
certified public accounting firm selected by Borrower and reasonably
satisfactory to the Required Lenders.
Accounting Changes: has the meaning assigned to that term in
Section 1.3.
Accounts Receivable: all presently existing and hereafter arising
accounts receivable and other rights to payment owing to Borrower or
any of its Subsidiaries.
Accounts Receivable Decrease: for any period, the excess of the
Eligible Accounts at the beginning of such period over the Eligible
Accounts at the end of such period.
Accounts Receivable Increase: for any period, the excess of
Eligible Accounts at the end of such period over the Eligible Accounts
at the beginning of such period.
ACM: Alarm Central Monitoring, Inc., a Texas corporation.
Acquisition: an Asset Acquisition or an Equity Acquisition.
Acquisition Closing: the consummation of an Acquisition.
Acquisition Closing Date: the date of an Acquisition Closing.
Acquisition Instruments: the purchase agreement and all other
documents executed in connection with an Acquisition.
Acquisition Operating Cash Flow Adjustment: for any three-month
period (the "SUBJECT PERIOD") shall mean:
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(a) for purposes of calculating the Facility Cash Flow
Leverage Ratio under Section 7.18, the sum of:
(i) with respect to each Central Station Business acquired
by Borrower during the Subject Period, the Adjusted Acquired
Operating Cash Flow of all such Central Station Business(es)
for the three-month period ended on the last day of the second
month prior to the month in which the applicable Acquisition
Closing Date with respect to such Central Station Business
occurred, plus
(ii) with respect to each Central Station Business
acquired by Borrower during the three-month period immediately
preceding the Subject Period, the Operating Cash Flow of
Borrower and its Subsidiaries derived from the operation of
all such Central Station Business(es) during the Subject
Period; and
(b) for purposes of calculating the Facility Cash Flow
Leverage Ratio when determining the maximum amount of an Advance
requested in connection with a proposed Acquisition under
subsection 4.3.2, the sum of:
(i) with respect to each Central Station Business acquired
by Borrower during the Subject Period:
(A) if the applicable Acquisition Closing Date
occurred during a quarter ending on or after the end of
the Subject Period, the Adjusted Acquired Operating Cash
Flow of all such Central Station Business(es) for the
three-month period ended on the last day of the second
month prior to the month in which such Acquisition Closing
Date occurred, plus
(B) if the applicable Acquisition Closing Date
occurred during a quarter ending prior to the end of the
Subject Period, the sum of:
(1) the product of (x) the number of months of
such quarter falling in such Subject Period multiplied
by (y) one-third of the Adjusted Acquired Operating
Cash Flow of all such Central Station Business(es) for
the three-month period ended on the last day of the
second month prior to the month in which such
Acquisition Closing Date occurred, plus
(2) the Operating Cash Flow of Borrower and its
Subsidiaries derived from the operation of all such
Central
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Station Business(es) during the number of months
of such Subject Period after the end of such
quarter; plus
(ii) the Adjusted Acquired Operating Cash Flow of the
Central Station Business which is the subject of the proposed
Acquisition for such Subject Period.
Acquisition Portion: a portion of the Loan equal to $38,000,000.
ADA: the Americans with Disabilities Act of 1990, as amended, any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Additional Loan Instruments: collectively, the following documents,
as applicable, to be executed and delivered in connection with each
Acquisition, in each case in form and substance reasonably satisfactory
to Agent:
(i) the applicable Assignment of Acquisition Instruments, a
Notice of Borrowing with respect to the applicable Advance,
any amendments to the Loan Instruments and any mortgages,
security agreements, pledge agreements, UCC Financing
Statements and other agreements reasonably required by Agent
to (A) reflect the effect of such Acquisition, (B) grant to
Agent a perfected first Lien, subject only to Permitted Prior
Liens, upon all existing and after-acquired Property (x)
acquired by Borrower upon the consummation of such
Acquisition and (y) of the Person acquired by Borrower, if
such Acquisition is an Equity Acquisition;
(ii) an Environmental Certificate covering any Real Estate
acquired by Borrower in connection with such Acquisition;
(iii) a Landlord Consent and Waiver executed by each Landlord under
each Lease assumed or executed by Borrower in connection with
such Acquisition; and
(iv) any other instruments and documents as Agent may reasonably
require in connection with such Acquisition.
Adjusted Acquired Operating Cash Flow: for any period with respect
to a Central Station Business acquired or proposed to be acquired by
Borrower, the sum of the following, as determined by the Required
Lenders based on financial and other information submitted to Agent by
Borrower: (i) the Operating Cash Flow of such Central Station Business
for such period plus (ii) such adjustments to the Operating Cash Flow
of such Central Station Business for such period as the Required
Lenders deem appropriate to take into account reductions or increases
in expenses for such period which would have been effected assuming
Borrower had acquired such Central Station Business at the beginning of
such period.
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Adjusted Total Debt: as of any Funding Date, the Total Debt as of
such date plus the requested Advance.
Advance: a disbursement of any portion of the Acquisition Portion.
Affiliate: any Person that directly or indirectly, through one or
more intermediaries, controls or is controlled by or is under common
control with another Person. The term "control" means possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through the ownership
of voting securities or equity interests, by contract or otherwise. For
the purposes hereof, any Person which owns or controls, directly or
indirectly, 10% or more of the securities or equity interests, as
applicable, whether voting or non-voting, of any other Person shall be
deemed to "control" such Person.
Agent: FINOVA, as agent for all Lenders.
Alarm Licenses: a license or licenses issued by a state licensing
authority that authorize a Person to provide remote security monitoring
services to consumers and/or businesses within such state.
AMJ: has the meaning assigned to that term in the Recitals to this
Loan Agreement.
Applicable Margin: has the meaning assigned to that term in
subsection 2.2.1.
ASMS: has the meaning assigned to that term in the Recitals to this
Loan Agreement.
Asset Acquisition: an acquisition by Borrower of Property used in a
Central Station Business.
Assignee: any Person to which a Loan Assignment is made in
compliance with the provisions of subsection 9.1.1.
Assignment and Acceptance: an assignment and acceptance agreement
to be executed in connection with each Loan Assignment substantially in
the form of EXHIBIT 1.1(A).
Assignment of Interest Hedge Contract: an assignment of the
Interest Hedge Contract executed by Borrower in favor of Agent.
Assignments of Leases: collateral assignments of leases executed by
Borrower and its Subsidiaries in favor of Agent.
Assignments of Acquisition Instruments: assignments of Acquisition
Instruments executed by Borrower in connection with each Acquisition
made by Borrower on or after the
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Closing Date, each such assignment to be consented to by the applicable
seller if such consent is required by the terms of such Acquisition
Instruments.
Bankruptcy Code: the United States Bankruptcy Code and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Base Rate: the per annum rate of interest announced or published
publicly from time to time by Citibank, N.A. in New York, New York as
its corporate base (or equivalent) rate of interest, which rate shall
change automatically without notice and simultaneously with each change
in such corporate base rate. The Base Rate is a reference rate and does
not necessarily represent the lowest or best rate actually charged to
any customer by Citibank, N.A. in New York, New York.
Base Rate Portion: the Principal Balance other than the portion
thereof consisting of LIBOR Loans.
Basic Financial Statements: has the meaning assigned to that term
in subsection 6.3.3.
Borrower: has the meaning assigned to that term in the Preamble to
this Loan Agreement.
Borrower's Obligations: (i) any and all Indebtedness due or to
become due, now existing or hereafter arising, of Borrower to Lenders
and/or Agent pursuant to the terms of this Loan Agreement or any other
Loan Instrument and (ii) the performance of the covenants of Borrower
contained in the Loan Instruments.
Business Day: (i) except as provided in clause (ii), any day other
than a Saturday, Sunday or other day on which banks in Phoenix, Arizona
or New York, New York are required or authorized to close, and (ii)
with respect to all notices, determinations, fundings and payments in
connection with a LIBOR Loan, any day which is a Business Day described
in clause (i) and which is also a day for trading by and between banks
in Dollar deposits in the London interbank market.
Business Insurance: such property, casualty, business interruption
and other insurance as Agent from time to time reasonably requires
Borrower to maintain.
Capital Expenditures: payments that are made or liabilities that
are incurred by Borrower or any of its Subsidiaries for the lease,
purchase, improvement, construction or use of any Property, the value
or cost of which under GAAP is required to be capitalized and appears
on such Person's balance sheet in the category of property, plant or
equipment, without regard to the manner in which such payments or the
instruments pursuant to which they are made are characterized by
Borrower or any of its Subsidiaries or any other Person, but excluding
payments made or liabilities incurred in connection with an
Acquisition.
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Except for the purpose of determining Excess Cash Flow, a Capital
Expenditure shall be deemed to be made as of the time the Property
which is the subject thereof is put into service by Borrower or any of
its Subsidiaries, as the case may be.
Capitalized Lease: any lease of Property, the obligations for the
rental of which are required to be capitalized in accordance with GAAP.
Cash Equivalents: the aggregate of Borrower's and each of its
Subsidiaries' (i) cash on hand or in any bank or trust company, and
checks on hand and in transit, (ii) monies on deposit in any money
market account, and (iii) treasury bills, certificates of deposit,
commercial paper and readily marketable securities at current market
value having, in each instance, a maturity of not more than 180 days.
Cash Instruments: all cash, checks, drafts and other similar
writings for the payment of money.
Central Station Business: the business of owning and operating one
or more central monitoring stations and related businesses and
providing service pursuant to Central Station Contracts.
Central Station Contracts: contracts with Dealers to provide
security monitoring services to the customers of the Dealers.
Chief Financial Officer: the duly elected and acting chief
financial officer of Borrower.
Closing: the disbursement of the remaining $390,269.65 of the
Initial Portion.
Closing Certificate: a closing certificate executed by Borrower.
Closing Date: the date of the Closing.
Code: the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Collateral: (i) all existing and after-acquired Property of
Borrower and each of its Subsidiaries, including without limitation all
existing and after-acquired Accounts Receivable, equipment, inventory
and general intangibles, (ii) the Pledged Capital Stock and (iii) all
proceeds of the foregoing.
Collected Funds: defined in subsection 2.9.1(b).
Commitment: shall mean, as to any Lender at any time, the amount
initially set forth opposite its name in the column labeled
"Commitment" on SCHEDULE I, as adjusted from time to time to reflect
any Assignment and Acceptances.
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Compliance Certificate: a Compliance Certificate executed by
Borrower in the form of EXHIBIT 1.1(B) attached hereto.
Dealer: any Person whose primary business is the installation or
servicing of alarm equipment and the sale of security monitoring
services.
Default Rate: with respect to (i) the Base Rate Portion and all of
the other of Borrower's Obligations other than LIBOR Loans, a per annum
rate equal to the Base Rate in effect from time to time plus the
Applicable Margin plus 2.0% per annum and (ii) each LIBOR Loan, a per
annum rate equal to the LIBOR Rate applicable thereto plus the
Applicable Margin plus 2.0% per annum.
Default Rate Period: a period of time commencing on the date that
an Event of Default has occurred and ending on the date that such Event
of Default is cured or waived.
Determination Date: has the meaning assigned to that term in
subsection 2.2.1.
Dollar: lawful currency of the United States.
Eligible Accounts: at any given time, the aggregate of the face
amount of the accounts receivable of Borrower and its Subsidiaries not
over 75 days past due.
Employee Benefit Plan: any employee benefit plan within the meaning
of Section 3(3) of ERISA which (i) is maintained for employees of
Borrower, any of its Subsidiaries or any ERISA Affiliate or (ii) has at
any time within the preceding six years been maintained for the
employees of Borrower, any of its Subsidiaries or any current or former
ERISA Affiliate.
Environmental Audit: (i) a Phase I audit report with respect to a
parcel of real estate and such other studies and reports as Agent deems
necessary after review of the results of such Phase I audit report,
including, if reasonably required by Agent, soil and ground water
tests, each such report and study to be in form and content and issued
by Persons reasonably acceptable to Agent and (ii) a letter from each
Person issuing each such report or study entitling Lenders to rely
thereon.
Environmental Certificate: an environmental certificate executed by
Borrower.
Environmental Compliance Certificate: an Environmental Compliance
Certificate in the form of EXHIBIT 1.1(C).
Environmental Laws: any and all federal, state and local laws that
relate to or impose liability or standards of conduct concerning public
or occupational health and safety or protection of the environment, as
now or hereafter in effect and as have been or hereafter may be amended
or reauthorized, including, without limitation, the Comprehensive
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Environmental Response, Compensation and Liability Act (42 U.S.C.
ss.9601 et seq.), the Hazardous Materials Transportation Act (42 U.S.C.
ss.1802 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
ss.6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.
ss.1251 et seq.), the Toxic Substances Control Act (15 U.S.C. ss.2601
et seq.), the Clean Air Act (42 U.S.C. ss.7901 et seq.), the National
Environmental Policy Act (42 U.S.C. ss.4231, et seq.), the Refuse Act
(33 U.S.C. ss.407, et seq.), the Safe Drinking Water Act (42 U.S.C.
ss.300(f) et seq.), the Occupational Safety and Health Act (29 U.S.C.
ss.651 et seq.), and all rules, regulations, codes, ordinances and
guidance documents promulgated or published thereunder, and the
provisions of any licenses, permits, orders and decrees issued pursuant
to any of the foregoing.
Equity Acquisition: an acquisition by Borrower of all of the
capital stock or other equity interests of a Person or Persons which
owns a Central Station Business.
Equity Interests: all of the issued and outstanding capital stock,
membership interests, partnership interests and other equity interests,
and all warrant, options and other rights to acquire the same, of a
Person.
ERC: has the meaning assigned to that term in the Preamble to this
Loan Agreement.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended, any successor statute thereto, and the rules and regulations
issued thereunder, as in effect from time to time.
ERISA Affiliate: any Person who is a member of a group which is
under common control with Borrower or any of its Subsidiaries, who
together with Borrower or any of its Subsidiaries is treated as a
single employer within the meaning of Section 414(b), (c) and (m) of
the Code.
Eurocurrency Reserve Requirements means, for any day as applied to
a LIBOR Loan, the aggregate (without duplication) of the rates
(expressed as a decimal rounded upward to the nearest 1/100th of 1%) of
reserve requirements in effect on such day (including, without,
limitation, basic, supplemental, marginal and emergency reserves under
any regulations of the Board of Governors of the Federal Reserve System
of the United States or other Governmental Body, or any successor
thereto, having jurisdiction with respect thereto) prescribed for
Eurocurrency funding (currently referred to as "Eurocurrency
Liabilities" in Regulation D of such Board) maintained by a member bank
of the Federal Reserve System.
Event of Default: any of the Events of Default set forth in Section
8.1.
Excess Cash Flow: for any period, (i) the Operating Cash Flow of
Borrower and its Subsidiaries for such period, (ii) plus, the Accounts
Receivable Decrease, if any, for such period and (iii) minus, the sum
of the following for such period: (A) Total Debt Service actually paid
during such period, (B) Capital Expenditures for such period which are
permitted pursuant to Section 7.6, other than any such Capital
Expenditures made with the
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proceeds of Permitted Senior Indebtedness and (C) the Accounts
Receivable Increase, if any, for such period.
Excess Interest: has the meaning assigned to that term in
subsection 2.2.3.
Existing Loan Agreement: has the meaning assigned to that term in
the Recitals to this Loan Agreement.
Existing Principal Balance: has the meaning assigned to that term
in the Recitals to this Loan Agreement.
Facility Cash Flow: for any three-month period, the remainder of
(i) the sum of (A) the Operating Cash Flow of Borrower and its
Subsidiaries for such period plus (B) the Acquisition Operating Cash
Flow Adjustment for such period plus (C) the Facility Cash Flow
Adjustment for such period, minus (ii) the Operating Cash Flow of
Borrower and its Subsidiaries derived from the operation of any Central
Station Business(es) acquired by Borrower during such period or during
the immediately preceding three-month period
Facility Cash Flow Adjustment: for any three month period, the sum
of the amounts set forth on EXHIBIT 1.1(D) for each month in such three
month period.
Facility Cash Flow Leverage Ratio: has the meaning assigned to that
term in Section 7.18.
FINOVA: has the meaning assigned to that term in the Preamble to
this Loan Agreement.
Fixed Charge Coverage Ratio: has the meaning assigned to that term
in Section 7.21.
Funding Date: the date an Advance is disbursed.
GAAP: generally accepted accounting principles as in effect from
time to time, which shall include but shall not be limited to the
official interpretations thereof by the Financial Accounting Standards
Board or any successor thereto.
Good Funds: United States Dollars available in Federal funds to
FINOVA at or before 2:00 p.m., Phoenix time, on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
government or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Guarantor: any of the Guarantors.
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Guarantors: ERC, TSC, ACM, Guardian and each other Subsidiary of
Borrower.
Guarantor Security Agreement: a security agreement executed by ERC,
TSC, ACM and Guardian in favor of Agent to secure Guarantors'
Obligations.
Guarantors' Obligations: (i) any and all Indebtedness due or to
become due, now existing or hereafter arising, of each Guarantor to
Lenders and/or Agent pursuant to the terms of any Guaranty or any other
Loan Instrument and (ii) the performance of the covenants of Guarantors
contained in the Loan Instruments.
Guaranty: a guaranty of Borrower's Obligations executed by each
Guarantor.
Guardian: Guardian Security Systems, Inc., an Ohio corporation.
Hazardous Materials: any hazardous, toxic, dangerous or other
waste, substance or material defined as such in, regulated by or for
purposes of any Environmental Law.
Hurdle Amount: the monthly estimate of the accrued and unpaid
interest on the Principal Balance, as determined by Agent.
Incipient Default: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves, contingent
or otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet or would be required to be disclosed in a
financial statement, including, without duplication: (i) Indebtedness
for Borrowed Money, (ii) obligations secured by any Lien upon Property,
(iii) guaranties, letters of credit and other contingent obligations
and (iv) liabilities in respect of unfunded vested benefits under any
Pension Plan or in respect of withdrawal liabilities incurred under
ERISA by Borrower or any of its Subsidiaries or any ERISA Affiliate to
any Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money
(including, without limitation, all of Borrower's Obligations and
Permitted Senior Indebtedness), (iii) in respect of rent or hire of
Property under Capitalized Leases or for the deferred purchase price of
Property, (iv) in respect of obligations under conditional sales or
other title retention agreements and (v) all guaranties of any or all
of the foregoing.
Initial Loan Instruments:
(i) Loan Agreement:
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(ii) Notes;
(ii) Guaranty;
(iii) Security Instruments;
(iv) SAFE Subordination Agreement;
(v) Closing Certificate;
(vi) Solvency Certificate;
(vii) Environmental Certificate;
(viii) Uniform Commercial Code financing statements delivered
to Agent prior to the Closing and any such statements
required by Agent on or after the Closing Date; and
(ix) such other instruments and documents as Agent
reasonably may require in connection with the
transactions contemplated by this Loan Agreement.
Initial Portion: a portion of the Loan equal to $7,000,000.
Inspection: has the meaning assigned to that term in Section 6.2.
Instruments: collectively, the (i) Loan Instruments, (ii) SAFE Debt
Instruments, (iii) the SAFE Attrition Guaranty and (iii) SAFE Asset
Purchase Agreement.
Interest Hedge Contract: the interest rate cap, hedge or similar
agreement required to be maintained by Borrower pursuant to subsection
2.2.5, which shall be issued by a financial institution and be in form
and substance acceptable to the Required Lenders.
Interest Period: a period (i) commencing (A) on the applicable
Funding Date, if Borrower prior thereto has elected pursuant to
subsection 2.5.1 to have all or a portion the Principal Balance
disbursed on such date to bear interest from such date at a LIBOR Rate,
(B) with respect to the conversion of all or a portion of the Base Rate
Portion to a LIBOR Loan, on the Business Day specified by Borrower in
the applicable LIBOR Election Notice and (c) with respect to the
continuation as a LIBOR Loan after the expiration of the Interest
Period applicable to such existing LIBOR Loan, on the day after the
last day of the Interest Period applicable to such existing LIBOR Loan,
and (ii) ending 30, 60 or 90 days thereafter, as selected by Borrower
in the corresponding LIBOR Election Notice; provided, however:
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(1) if any Interest Period otherwise would end on a day that
is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, unless the result of such extension would
be to carry such Interest Period into another calendar month, in
which event such Interest Period shall end on the immediately
preceding Business Day; and
(2) any Interest Period that otherwise would extend beyond the
Maturity Date shall end on such date.
Interest Rate Determination Date: the date for determining a LIBOR
Rate, which date shall be two Business Days prior to the date of
commencement of the applicable Interest Period.
Landlord: a lessor under a Lease.
Landlord Consent and Waiver: a landlord consent and waiver in the
form of EXHIBIT 1.1(E).
Leases: any lease of real estate under which Borrower or any of its
Subsidiaries is the lessee.
Leasehold Property: any real estate which is the subject of a
Lease.
Lenders: FINOVA, State Street and each Assignee.
LIBOR Election Notice: a notice by Borrower to the Agent to have
all or any portion of the Principal Balance bear or continue to bear
interest determined by reference to a LIBOR Rate, in the form of
EXHIBIT 1.1(F) attached hereto.
LIBOR Loan: each portion of the Principal Balance which bears
interest determined by reference to a LIBOR Rate.
LIBOR Rate: for each Interest Period a rate of interest equal to
(i) the rate per annum determined by Agent (rounded up to the nearest
1/100th of 1%) identified as the lowest London Interbank Offered Rate
(LIBOR) for the relevant Interest Period appearing on Page 3750 of the
Telerate Service (or on any successor or substitute page of such
service, or any successor to or substitute for such service, providing
rate quotations comparable to those currently provided on such page of
such service, as determined by Agent from time to time for purposes of
providing quotations of interest rates applicable to Dollar deposits in
the London interbank market) at 11:00 a.m. London time on the
applicable Interest Rate Determination Date divided by (ii) 1.00 minus
the Eurocurrency Reserve Requirements in effect on the applicable
Interest Rate Determination Date. The LIBOR Rate shall be adjusted with
respect to any LIBOR Loan outstanding on the effective date of any
change in the Eurocurrency Reserve Requirements as of such effective
date. Agent shall give prompt
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notice to Borrower of the LIBOR Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent
manifest error.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance
or security interest of any kind, or the interest of a vendor or lessor
under any conditional sale agreement, Capitalized Lease or other title
retention agreement.
Loan: the term loan made by Lenders to Borrower in the maximum
aggregate amount of $45,000,000 pursuant to Section 2.1.
Loan Agreement: this Second Amended and Restated Loan Agreement.
Loan Assignment: the assignment by a Lender of (i) any portion of
such Lender's interest in Borrower's Obligations and (ii) any of such
Lender's other rights under any of the Loan Instruments.
Loan Fees: the fees to be paid by Borrower to Agent in accordance
with Section 2.6.
Loan Instruments: collectively, the Initial Loan Instruments and
the Additional Loan Instruments.
Loan Year: a period of time from the Closing Date or any
anniversary of the Closing Date to the immediately succeeding
anniversary of the Closing Date.
Lockbox Accounts: the accounts identified in the Lockbox Account
Agreement which shall be credited for all Cash Instruments deposited in
the Lockboxes.
Lockbox Account Agreement: the Restricted Lockbox and Cash
Collateral Accounts Agreement among Agent, Borrower, Borrower's
Subsidiaries and Lockbox Bank dated as of December 2, 1997, as amended
from time to time.
Lockbox Bank: shall mean American National Bank and Trust Company
of Chicago or any other financial institution acceptable to Agent and
Borrower.
Lockboxes: the lockboxes identified in the Lockbox Account
Agreement into which all Cash Instruments received by Borrower or any
of its Subsidiaries from an Account Debtor shall be deposited.
Material Adverse Effect: (i) a material adverse effect upon the
business, operations, Property or financial condition of Borrower or
any of its Subsidiaries or (ii) a material impairment of the ability of
Borrower or any of its Subsidiaries to perform its obligations under
any Loan Instrument to which it is a party.
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Maturity Date: the earlier to occur of (i) December 31, 2004 and
(ii) the date Borrower's Obligations are accelerated.
Maximum Rate: has the meaning assigned to that term in subsection
2.2.3.
MSG: has the meaning assigned to that term in the Recitals to this
Loan Agreement.
Multiemployer Plan: any multiemployer plan as defined pursuant to
Section 3(37) of ERISA to which Borrower, any of its Subsidiaries or
any ERISA Affiliate makes, or accrues an obligation to make,
contributions, or has made, or been obligated to make, contributions
within the preceding six years.
Non-Utilization Fee: has the meaning assigned to that term in
subsection 2.6.2.
Notes: the promissory notes executed by Borrower payable to the
order of each Lender in the amount of such Lender's Commitment, each
dated as of the Closing Date, and any notes issued in substitution
therefor pursuant to subsection 9.1.4.
Notice of Borrowing: a notice of borrowing/disbursement request
from Borrower to Lenders in the form of EXHIBIT 1.1(G).
Operating Cash Flow: for any period, the consolidated net income of
Borrower and its Subsidiaries or a Central Station Business, as
applicable, for such period:
(i) plus the sum of the following (without duplication), to
the extent deducted in determining such net income for such period:
(A) losses from sales, exchanges and other dispositions
of Property or other extraordinary losses not in the ordinary
course of business;
(B) interest paid or accrued on Indebtedness, including,
without limitation, interest on Capitalized Leases that is
imputed in accordance with GAAP and any other Debt;
(C) depreciation and amortization of assets;
(D) income taxes which are accrued but not paid during
such period;
(E) casualty losses; and
(F) any other non-cash item deducted in determining such
net income; and
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(ii) minus the sum of the following (without duplication), to
the extent included in determining net income for such period:
(A) gains from sales, transactions, exchanges and other
dispositions of Property or other extraordinary gains not in
the ordinary course of business;
(B) proceeds of any insurance other than business
interruption insurance; and
(C) any other non-cash item included in determining such
net income.
Operating Cash Flow Leverage Ratio: has the meaning assigned to
that term in Section 7.19.
Operating Lease: any lease which, under GAAP, is not required to be
capitalized.
Original Borrowers: has the meaning assigned to that term in the
Recitals to this Loan Agreement.
Participant: any Person to which a Lender sells or assigns a
Participation.
Participation: a sale or an assignment by a Lender of a
participating interest in (i) any portion of such Lender's interest in
Borrower's Obligations and (ii) any of such Lender's rights under any
of the Loan Instruments.
PBGC: the Pension Benefit Guaranty Corporation or any Governmental
Body succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a Multiemployer
Plan, which is subject to the provisions of Part 3 of Title I of ERISA,
Title IV of ERISA, or Section 412 of the Code and which (i) is
maintained for employees of Borrower, any of its Subsidiaries or any
ERISA Affiliate, or (ii) has at any time within the preceding six years
been maintained for the employees of Borrower or any of its
Subsidiaries or any of their current or former ERISA Affiliates.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
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(iii) Liens for taxes or assessments and similar charges,
which either are (A) not delinquent or (B) being
contested diligently and in good faith by appropriate
proceedings, and as to which Borrower or any of its
Subsidiaries has set aside reserves on its books which
are satisfactory to the Required Lenders;
(iv) statutory Liens, such as mechanic's, materialman's,
warehouseman's, carrier's or other like Liens,
incurred in good faith in the ordinary course of
business, provided that the underlying obligations
relating to such Liens are paid in the ordinary course
of business, or are being contested diligently and in
good faith by appropriate proceedings and as to which
Borrower or any of its Subsidiaries has set aside
reserves on its books satisfactory to the Required
Lenders, or the payment of which obligations are
otherwise secured in a manner reasonably satisfactory
to the Required Lenders;
(v) zoning ordinances, easements, licenses, reservations,
provisions, covenants, conditions, waivers or
restrictions on the use of Property and other title
exceptions, in each case, that are reasonably
acceptable to the Required Lenders;
(vi) Liens in respect of judgments or awards with respect
to which no Event of Default would exist pursuant to
subsection 8.1.6;
(vii) Liens to secure payment of insurance premiums (A) to
be paid in accordance with applicable laws in the
ordinary course of business relating to payment of
worker's compensation, or (B) that are required for
the participation in any fund in connection with
worker's compensation, unemployment insurance, old-age
pensions or other social security programs; and
(viii) the SAFE Liens.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses (iii) and
(iv) of the definition of Permitted Liens that are
accorded priority to the Security Interests by law;
and
(iii) the Permitted Liens described in clauses (v) and (vii)
of the definition of Permitted Liens, subject to the
limitations set forth therein.
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Permitted Senior Indebtedness: Indebtedness, other than Borrower's
Obligations, incurred by Borrower or any of its Subsidiaries to
purchase tangible personal property or Indebtedness incurred to lease
tangible personal property pursuant to Capitalized Leases, provided
that (i) the aggregate amount of such Indebtedness of all Borrower and
its Subsidiaries at any one time outstanding shall not exceed $200,000,
and (ii) no Event of Default exists at the time or will be caused as a
result of the incurrence of any Indebtedness described in clause (i).
Permitted Senior Indebtedness Liens: Liens that secure Permitted
Senior Indebtedness, provided that (i) each such Lien attaches only to
the Property purchased or leased with the proceeds of the Permitted
Senior Indebtedness incurred with respect to such Property and (ii)
Agent is granted a Lien upon such Property, subject only to the Lien
granted to the holder of the applicable Permitted Senior Indebtedness.
Person: any individual, firm, corporation, limited liability
company, business enterprise, trust, association, joint venture,
partnership, Governmental Body or other entity, whether acting in an
individual, fiduciary or other capacity.
Pledge Agreements: pledge agreements executed by the holders of the
Pledged Capital Stock pursuant to which Agent is granted a Lien upon
the Pledged Capital Stock.
Pledged Capital Stock: all of the Equity Interests of Borrower's
Subsidiaries.
Prepayment Premium: has the meaning assigned to that term in
subsection 2.7.1(a).
Principal Balance: the unpaid principal balance of the Loan or any
specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all
types of tangible or intangible property.
Pro Rata Share: the proportion that a Lender's Commitment bears to
the total Commitments of all Lenders.
Qualified Depository: a member bank of the Federal Reserve System
having a combined capital and surplus of at least $100,000,000.
Reliance: has the meaning assigned to that term in the Recitals to
this Loan Agreement.
Remainder Funds: has the meaning assigned to that term in
subsection 2.9.1(b).
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Required Lenders: at any time, Lenders who in the aggregate hold
not less than 66_% of the total Commitments of all Lenders, provided,
however, so long as FINOVA and State Street are the only Lenders,
Required Lenders shall mean FINOVA and State Street.
RMR: as of any date of determination, the total recurring regular
monthly amounts billable to all customers of Borrower and its
Subsidiaries who are not more than 90 days delinquent in payment of any
amounts payable to Borrower or any of its Subsidiaries and who have not
made the equivalent of two months' payments within 90 days of such date
(regardless of whether such customers are billed monthly or less
frequently), measured by the amount most recently billed to such
customers attributable to a one month period.
SACC: has the meaning assigned to that term in the Recitals to this
Loan Agreement.
SAFE: Security Alarm Financing Enterprises, Inc., a California
corporation.
SAFE Asset Purchase Agreement: the Asset Purchase Agreement dated
as of June 30, 1999 between SAFE and Borrower.
SAFE Attrition Guaranty: the guaranty made by Borrower in favor of
SAFE, as more particularly described in Section 3.1 of the SAFE Asset
Purchase Agreement.
SAFE Debt: the Indebtedness for Borrowed Money owed by Borrower to
SAFE pursuant to the SAFE Note.
SAFE Debt Instruments: the SAFE Note, the SAFE Pledge Agreement and
all documents, instruments and agreements executed and delivered in
connection therewith.
SAFE Liens: the Liens granted by Borrower in favor of SAFE in (i)
the "Commissions" (as defined in the SAFE Asset Purchase Agreement) and
(ii) the capital stock, warrants, options and other equity interests of
TSC and ERC pursuant to the SAFE Debt Instruments.
SAFE Note: that certain Secured Promissory Note of even date
herewith executed by Borrower in favor of SAFE in the aggregate
principal amount of $1,800,000.
SAFE Pledge Agreement: that certain Pledge Agreement of even date
herewith executed by Borrower in favor of SAFE to secure the SAFE Debt.
SAFE Subordination Agreement: the Subordination Agreement dated as
of June 30, 1999 among SAFE, Borrower, ERC, TSC and Agent.
Securities Act: the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, as in effect
from time to time.
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Security Agreement: a security agreement executed by Borrower and
its Subsidiaries in favor of Agent to secure Borrower's Obligations.
Security Interests: the Liens in the Collateral granted to Agent
pursuant to the Security Instruments.
Security Instruments: collectively, the Assignments of Leases, the
Assignments of Acquisition Instruments, the Security Agreement, the
Guarantor Security Agreement, the Pledge Agreement, the Lockbox Account
Agreement, the Assignment of Interest Hedge Contract and each other
agreement, document or instrument pursuant to which a Lien is granted
to Agent on any Property of Borrower or any of its Subsidiaries,
including, without limitation, applicable Additional Loan Instruments,
to secure Borrower's Obligations or Guarantors' Obligations.
Senior Debt Service: during any period, all payments of principal,
interest, premium, fees and other charges with respect to Borrower's
Obligations, Guarantors' Obligations and Permitted Senior Indebtedness
which are due and payable during such period, but excluding the Loan
Fees and any Prepayment Premium.
Senior Interest Coverage Ratio: has the meaning assigned to that
term in Section 7.22.
Small Acquisition: an Acquisition with respect to which (i) the
gross purchase price payable is less than $2,000,000 and (ii) Agent has
reviewed and approved any liabilities, whether liquidated or
contingent, to be assumed or incurred by Borrower or any of its
Subsidiaries in connection with such Acquisition.
Solvency Certificate: a solvency certificate executed by Borrower
and its Subsidiaries.
Stated Rate: has the meaning assigned to that term in subsection
2.2.3.
State Street: has the meaning assigned to that term in the Preamble
to this Loan Agreement.
Subsidiary: any corporation, general partnership, limited
partnership, limited liability company, limited liability partnership
or other entity with respect to which another Person owns or controls,
directly or indirectly, such amount of outstanding shares or other
equity interests of such corporation, general partnership, limited
partnership, limited liability company, limited liability partnership
or other entity as have at the time of any determination hereunder 50%
or more of the ordinary voting power for the election of directors (or
their equivalent under the laws of the jurisdiction of organization of
such corporation, general
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partnership, limited partnership, limited liability company, limited
liability partnership or other entity).
Termination Event: (i) a "Reportable Event" described in Section
4043 of ERISA and the regulations issued thereunder; or (ii) the
withdrawal of Borrower, any of its Subsidiaries or any ERISA Affiliate
from a Pension Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2); or (iii) the termination of
a Pension Plan, the filing of a notice of intent to terminate a Pension
Plan or the treatment of a Pension Plan amendment as a termination
under Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any Pension
Plan by the PBGC; or (v) any other event or condition which would
constitute grounds under Section 4042(a) of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan; or
(vi) the partial or complete withdrawal of Borrower, any of its
Subsidiaries or any ERISA Affiliate from a Multiemployer Plan; or (vii)
the imposition of a lien pursuant to Section 412 of the Code or Section
302 of ERISA; or (viii) any event or condition which results in the
reorganization or insolvency of a Multiemployer Plan under Sections
4241 or 4245 of ERISA; or (ix) any event or condition which results in
the termination of a Multiemployer Plan under Section 4041A of ERISA or
the institution by the PBGC of proceedings to terminate a Multiemployer
Plan under Section 4042 of ERISA.
TJS Partners: TJS Partners, L.P., a New York limited partnership.
Total Debt: as of any date, the aggregate principal amount of all
Indebtedness for Borrowed Money of Borrower and its Subsidiaries as of
such date, including, without limitation, (i) Borrower's Obligations,
(ii) Guarantors' Obligations, (iii) Permitted Senior Indebtedness, (iv)
the SAFE Debt, (v) all amounts then due and payable under the SAFE
Attrition Guaranty and (vi) the dealer holdback debt described on
EXHIBIT 7.11.
Total Debt Service: during any period, all payments of principal,
interest, premium, fees and other charges with respect to all
Indebtedness for Borrowed Money of Borrower and its Subsidiaries
permitted hereunder (including, without limitation, all of Borrower's
Obligations, Guarantors' Obligations, Permitted Senior Indebtedness,
the SAFE Debt and amounts payable under the SAFE Attrition Guaranty),
which are due and payable during such period, but excluding the Loan
Fees and any Prepayment Premium.
TSC: has the meaning assigned to that term in the Recitals to this
Loan Agreement.
UL Certification: Underwriters Laboratories approval of a Central
Station Business.
I.2 TIME PERIODS. In this Loan Agreement and the other Loan
Instruments, in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" means "from and including," (ii) the
words "to" and "until" each mean "to, but excluding" and (iii) the words
"through," "end of" and "expiration" each mean "through and including." Unless
otherwise specified, all references in this Loan Agreement and the other Loan
Instruments to (i) a
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"month" shall be deemed to refer to a calendar month, (ii) a "quarter" shall be
deemed to refer to a calendar quarter and (iii) a "year" shall be deemed to
refer to a calendar year.
I.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In the
event that any "Accounting Changes" (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrower and Lenders
agree to enter into negotiations to amend such provisions of this Loan Agreement
so as to reflect such Accounting Changes with the desired result that the
criteria for evaluating the financial condition of Borrower shall be the same
after such Accounting Changes as if such Accounting Changes had not been made.
For purposes hereof, "Accounting Changes" shall mean (i) changes in generally
accepted accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or any successor
thereto) or other appropriate authoritative body and (ii) changes in accounting
principles as approved by the Accountants.
I.4 REFERENCES. All references contained in (i) this Loan Agreement to
"Article," "Section," "subsection," "subparagraph," "clause" or "Exhibit,"
unless otherwise indicated, shall be deemed to refer to an Article, Section,
subsection, subparagraph, clause or Exhibit, as applicable, of this Loan
Agreement, and (ii) any Loan Instrument to any Loan Instrument at any given time
shall be to such Loan Instrument as the same shall have been amended,
supplemented, restated or otherwise modified as of such time.
I.5 LENDER'S OR AGENT'S DISCRETION. Whenever the terms "satisfactory to
Lenders, the Required Lenders or Agent," "determined by Lenders, the Required
Lenders or Agent," "acceptable to Lenders, the Required Lenders or Agent,"
"Lenders, the Required Lenders or Agent shall elect," "Lenders, the Required
Lenders or Agent shall request," "at the option or election of Lenders, the
Required Lenders or Agent," or similar terms are used in the Loan Instruments,
except as otherwise specifically provided therein, such terms shall mean
satisfactory to, at the election or option of, determined by, acceptable to or
requested by Lenders, the Required Lenders or Agent, as applicable, in their or
its sole and unlimited discretion.
I.6 BORROWER'S KNOWLEDGE. Any statements, representations or warranties
that are based upon the best knowledge of Borrower or an officer thereof shall
be deemed to have been made after due inquiry by Borrower or an officer thereof
with respect to the matter in question.
ARTICLE II
LOAN AND TERMS OF PAYMENT
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II.1 LOAN.
II.1.1 AGGREGATE LOAN AMOUNT. The Loan shall consist of a term
credit facility made available by Lenders to Borrower in the maximum
aggregate amount of $45,000,000, comprised of the Initial Portion and
the Acquisition Portion.
II.1.2 INITIAL PORTION. Provided all of the terms and
conditions set forth in Sections 4.1 and 4.2 have been satisfied (i)
the Existing Principal Balance shall be deemed to have been converted
to the Principal Balance of the Initial Portion, and (ii) each Lender
severally agrees to disburse its Pro Rata Share of the remaining
$390,269.65 of the Initial Portion to or as directed by Borrower.
II.1.3 ACQUISITION PORTION. Each Lender severally agrees to
disburse its Pro Rata Share of Advances of the Acquisition Portion to
or as directed by Borrower from time to time prior to April 1, 2001
provided all of the terms and conditions set forth in Sections 4.1 and
4.3 have been satisfied.
II.1.4 USE OF PROCEEDS. The proceeds of the Initial Portion
shall be used (i) to pay transaction costs and (ii) for working
capital. The proceeds of the Acquisition Portion shall be used (i)
consummate Acquisitions and (ii) to pay transaction costs incurred in
connection therewith.
II.1.5 NOTES. The Loan shall be evidenced by the Notes.
II.1.6 REBORROWING. Borrower shall not be entitled to reborrow
any portion of the Loan which is repaid or prepaid.
II.1.7 FUNDING PROCEDURES. Agent shall give each Lender prompt
notice by telephone or facsimile transmission of a Notice of Borrowing
that is received by it. Provided that all of the conditions set forth
in Sections 4.1 and 4.3 have been satisfied with respect to the Advance
requested in such Notice of Borrowing, each applicable Lender shall
make available to Agent, no later than 1:00 p.m. Eastern Time on the
applicable Funding Date set forth in the Notice of Borrowing, for
deposit into such account as Borrower may direct, its Pro Rata Share of
such Advance in immediately available funds in Dollars.
Unless Agent receives contrary written notice prior to any
such Advance, it is entitled to assume that each applicable Lender will
make available its Pro Rata Share of the Advance and in reliance upon
that assumption, but without any obligation to do so, may advance such
Pro Rata Share on behalf of the applicable Lender, without the
necessity of giving daily notice to such Lender of the receipt of a
Notice of Borrowing. If the applicable amount is not in fact made
available to Agent by such Lender, Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon,
for each day from such Funding Date until the date such amount is paid
to Agent, at the Base Rate. If such Lender pays such
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amount to Agent, then such amount shall constitute such Lender's Pro
Rata Share of the applicable Advance. If such Lender does not pay such
corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify the Borrower and the Borrower shall immediately
pay such corresponding amount to Agent together with interest thereon,
for each day from such Funding Date until the date such amount is paid
to Agent, at the rate payable under this Loan Agreement for the Base
Rate Portion.
Nothing in this subsection 2.1.7 shall be deemed 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. It is understood and
agreed that no Lender shall be responsible for any default by any other
Lender in that other Lender's obligation to make an Advance requested
hereunder nor shall the Commitment of any Lender to make the particular
type of Advance requested be increased or decreased as a result of a
default by any other Lender in that other Lender's obligation to make
an Advance requested hereunder.
II.2 INTEREST.
II.2.1 INTEREST RATE. Except as provided in Section 2.8, the
Base Rate Portion of the Loan shall bear interest at the Base Rate in
effect from time to time plus the Applicable Margin and each LIBOR Loan
shall bear interest at the applicable LIBOR Rate plus the Applicable
Margin. The Applicable Margin for any quarter shall be determined on
the last day of the preceding quarter (the "DETERMINATION DATE") based
upon the most recent financial statements delivered to Agent pursuant
to Section 6.3 which Agent has had at least ten days to review. As used
herein, the term "APPLICABLE MARGIN," as of any Determination Date
shall mean with respect to the Base Rate Portion and each LIBOR Loan
the per annum rate set forth below opposite the ratio of the Principal
Balance as of such Determination Date to the RMR as of such
Determination Date:
Principal Balance Base Rate LIBOR Loan
to RMR Portion Portion
------ ------- -------
greater than 1.50% 4.25%
or equal to 12.0
greater than 1.25% 4.00%
or equal to 9.0
but less than 12.0
less than 9.0 0.75% 3.50%
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The Applicable Margin shall be 0.75% per annum for the Base Rate
Portion and 3.50% per annum for the LIBOR Loans from the Closing Date
until the first Determination Date following the Closing Date upon
which an adjustment to the Applicable Margin is warranted.
II.2.2 INTEREST COMPUTATION. Interest shall be computed on the
basis of a year consisting of 360 days and charged for the actual
number of days during the period for which interest is being charged.
In computing interest, the date of funding of an advance of the Loan
shall be included and the date of payment shall be excluded.
II.2.3 MAXIMUM INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, Lenders
shall not collect a rate of interest on any obligation or liability due
and owing by Borrower to Lenders in excess of the maximum contract rate
of interest permitted by applicable law ("EXCESS INTEREST"). Lenders
and Borrower agrees that the interest laws of the State of Arizona
govern the relationship among them, but in the event of a final
adjudication to the contrary, Borrower shall be obligated to pay, nunc
pro tunc, to Lenders only such interest as then shall be permitted by
the laws of the state found to govern the contract relationship among
Lenders and Borrower. If any Excess Interest is provided for or
determined by a court of competent jurisdiction to have been provided
for in this Loan Agreement or any other Loan Instrument, then in such
event (i) neither Borrower nor any of its Subsidiaries shall be
obligated to pay such Excess Interest, (ii) any Excess Interest
collected by Lenders shall be, at Lenders' option, (A) applied to the
Principal Balance or to accrued and unpaid interest not in excess of
the maximum rate permitted by applicable law or (B) refunded to the
payor thereof, (iii) the interest rates provided for herein
(collectively, the "STATED RATE") shall be automatically reduced to the
maximum rate allowed from time to time under applicable law (the
"MAXIMUM RATE") and this Loan Agreement and the other Loan Instruments,
as applicable, shall be deemed to have been, and shall be, modified to
reflect such reduction, and (iv) neither Borrower nor any of its
Subsidiaries shall have any action against Lenders for any damages
arising out of the payment or collection of such Excess Interest;
provided, however, that if at any time thereafter the Stated Rate is
less than the Maximum Rate, Borrower shall, to the extent permitted by
law, continue to pay interest at the Maximum Rate until such time as
the total interest received by Lenders is equal to the total interest
which Lenders would have received had the Stated Rate been (but for the
operation of this provision) the interest rate payable. Thereafter, the
interest rate payable shall be the Stated Rate unless and until the
Stated Rate again exceeds the Maximum Rate, in which event the
provisions contained in this subsection 2.2.3 shall again apply.
II.2.4 INCREASED COSTS. If, after the Closing Date, either (i)
any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve
requirements applicable to any Lender (other than reserves included in
the Eurocurrency Reserve Requirements), (ii) any Lender complies with
any future guideline or request from any central bank or other
Governmental Body proposed or promulgated after the Closing Date or
(iii) any Lender determines that the adoption of any applicable law,
rule
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or regulation regarding capital adequacy or any change therein, or any
change in the interpretation or administration thereof by any
Governmental Body, central bank or comparable agency charged with the
interpretation or administration thereof announced after the Closing
Date has or would have the effect described below, or any Lender
complies with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such Governmental Body,
central bank or comparable agency announced after the Closing Date and
in case of any event set forth in this clause (iii), such adoption,
change or compliance has or would have the direct or indirect effect of
reducing the rate of return on any of any Lender's capital as a
consequence of its obligations hereunder to a level below that which
such Lender could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, and any of the foregoing events described in clauses (i),
(ii) or (iii) increases the cost to any Lender of funding or
maintaining the Commitment or reduces the amount receivable in respect
thereof by such Lender, then Borrower shall upon demand by such Lender
at any time within 180 days after the date on which an officer of such
Lender responsible for overseeing this Loan Agreement knows or has
reason to know of its right to additional compensation under this
subsection 2.2.4, pay to such Lender additional amounts sufficient to
reimburse such Lender against such increase in cost or reduction in
amount receivable; provided, however, if such Lender fails to deliver
such demand within such 180 day period, such entity shall only be
entitled to additional compensation for any such costs incurred from
and after the date that is 180 days prior to the date Borrower receives
such demand. A certificate as to the amount of such increased cost, and
setting forth in reasonable detail the calculation thereof, shall be
submitted to Borrower by such Lender, and shall be conclusive absent
manifest error. Each Lender will promptly notify Borrower of any event
of which it has knowledge that would entitle such Lender to additional
compensation under this subsection 2.2.4. No Lender shall request any
additional compensation under this subsection 2.2.4 unless it is
generally making similar requests of other borrowers similarly
situated, and such Lender agrees to use a reasonable basis for
calculating amounts allocable hereunder.
II.2.5 INTEREST HEDGE CONTRACT. Borrower shall enter into an Interest
Hedge Contract reasonably acceptable to the Required Lenders, to provide
protection to Borrower against fluctuations in interest rates, and deliver to
Agent the Assignment of Interest Hedge Contract, within 30 days after the
earlier to occur of (i) March 31, 2000 and (ii) the delivery to Lenders of the
Basic Financial Statements for 1999.
II.3 PRINCIPAL AND INTEREST PAYMENTS.
II.3.1 INTEREST. Except as otherwise provided in subsections
2.7.1(c) and 2.7.2(b), interest on (i) the Base Rate Portion shall be
payable monthly in arrears on the first Business Day of each month
beginning with the month following the month in which the Closing Date
occurs and (ii) each LIBOR Loan shall be payable on the last day of the
Interest Period applicable thereto.
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II.3.2 PRINCIPAL. The Principal Balance shall be payable in
consecutive quarterly installments on the first Business Day of each
quarter set forth below in an amount equal to the product of (i) the
percentage set forth below opposite such quarter, multiplied by (ii)
the outstanding Principal Balance as of April 1, 2001 as follows:
Quarter Beginning Percentage
July, 2001 2.75%
October, 2001 2.75%
January, 2002 2.75%
April, 2002 3.00%
July, 2002 3.00%
October, 2002 3.00%
January, 2003 3.00%
April, 2003 4.25%
July, 2003 4.25%
October, 2003 4.25%
January, 2004 4.25%
April, 2004 5.75%
July, 2004 5.75%
October, 2004 5.75%
The remaining Principal Balance, together with any other sums which
then are due and payable pursuant to the terms of the Loan Instruments,
shall be due and payable in full on the Maturity Date.
II.4 LATE CHARGES. If a payment of principal or interest to be made
pursuant to this Loan Agreement becomes past due for a period in excess of five
days, Borrower shall pay on demand to Lenders a late charge of 2% of the amount
of such overdue payment.
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II.5 LIBOR LOANS.
II.5.1 ELECTION BY BORROWER. Subject to the provisions of
subsection 2.5.2 and provided no Event of Default then exists, Borrower
from time to time may elect to have all or a portion of the Principal
Balance bear or continue to bear interest at a LIBOR Rate, such
election to be exercised by delivery of a LIBOR Election Notice to
Agent c/o ▇▇▇▇ ▇▇▇▇▇▇▇▇, FINOVA Capital Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇, by
facsimile transmission not less than three Business Days prior to the
commencement of the applicable Interest Period. Agent promptly
thereafter shall send a copy of such notice to each Lender. Agent shall
determine (which determination shall, absent manifest error, be
presumptively correct) the LIBOR Rate applicable to the relevant LIBOR
Loan on the applicable Interest Rate Determination Date and promptly
shall give notice thereof to Borrower. Agent and Lenders shall have the
right without further confirmation to assume that any LIBOR Election
Notice executed by ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or any senior officer of Borrower
received by Agent has been given by a person duly authorized to act on
behalf of Borrower. Upon the expiration of an Interest Period the
applicable LIBOR Loan shall be converted to and become part of the Base
Rate Portion unless such LIBOR Loan has been continued as a LIBOR Loan
in accordance with this subsection 2.5.1. If Borrower delivers a LIBOR
Election Notice to Agent and thereafter withdraws such election before
it becomes effective, Borrower shall reimburse Lenders on demand for
the amount of any loss, cost and/or expense incurred by Lenders as a
result of Lenders' reliance on such notice, including, without
limitation, any loss, cost or expense resulting from Lenders'
contractual obligations in connection with the applicable Dollar
deposits.
II.5.2 LIBOR LIMITATIONS. Each LIBOR Loan shall be in the
amount of not less than $1,000,000 or in integral multiples of $500,000
in excess thereof. At no time shall more than three LIBOR Loans be in
effect.
II.5.3 EURODOLLAR DEPOSITS UNAVAILABLE OR INTEREST RATE
UNASCERTAINABLE. If, prior to the commencement of any Interest Period,
Lenders determine that Dollar deposits of the relevant amount for the
relevant Interest Period are not available in the London Interbank
Market or the rate at which such Dollar deposits are being offered will
not adequately and fairly reflect the cost to the Lenders of
maintaining a LIBOR Rate for such Interest Period, or that by reason of
circumstances affecting such market, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate applicable to such Interest
Period, Agent promptly shall give notice of such determination to
Borrower and Lenders and any LIBOR Election Notice previously given by
Borrower which has not yet become effective shall be deemed to be
canceled.
II.5.4 TAX AND OTHER LAWS. In the event that by reason of any
law, regulation or requirement or interpretation thereof by any
Governmental Body, or the imposition of any requirement of any such
Governmental Body, whether or not having the force of law, including
the imposition of any reserve and/or special deposit requirement (other
than reserves included in the Eurocurrency Reserve Requirements), any
Lender shall be subjected
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to any tax, levy, impost, charge, fee, duty, deduction or withholding
of any kind whatsoever (other than any tax imposed upon the total net
income of such Lender) and if any such measures or any other similar
measure shall result in an increase in the cost to any Lender of
maintaining its share of any LIBOR Loan or in a reduction in the
amount of principal or interest receivable by any Lender in respect
thereof, then Borrower shall pay to the affected Lender within ten days
after receipt of a notice from such Lender (which notice shall be
accompanied by a statement in reasonable detail setting forth the basis
for the calculation thereof, which calculation, in the absence of
demonstrable error, shall be conclusive and binding and a copy of such
notice concurrently therewith shall be delivered to Agent), an amount
equal to such increased cost or reduced amount. At any time after
receipt of such notice, Borrower may convert all LIBOR Loans to the
Base Rate Portion, and such conversion shall be effective three
Business Days after the Agent has received notice from Borrower of such
conversion.
II.5.5 CHANGES IN LAW RENDERING LIBOR LOANS UNLAWFUL. If at
any time any law, treaty or regulation, or any interpretation thereof
by any Governmental Body shall make it unlawful for any Lender to fund
or maintain its share of any LIBOR Loan with monies obtained in the
London Interbank Market, such Lender, upon the occurrence of such
event, shall notify Borrower thereof (and a copy of such notice
concurrently shall be delivered to Agent) and thereupon (i) the right
of Borrower to make any LIBOR Election shall be suspended for the
duration of such illegality and (ii) if required by such law,
regulation or interpretation, on such date as shall be specified in
such notice all Interest Periods then in effect with respect to the
affected Lender shall be terminated, and thereafter all LIBOR Loans
with respect to the affected Lender shall be deemed converted to the
Base Rate Portion.
II.5.6 INDEMNITY. In addition to any other payments payable by
Borrower to Lenders pursuant to the Loan Instruments, Borrower shall
indemnify and reimburse each Lender on demand for any loss or expense
which such Lender may sustain as a consequence of any prepayment of any
LIBOR Loan prior to the expiration of the Interest Period applicable
thereto and/or any failure by Borrower to (i) make any payment when due
of any amount payable with respect to any LIBOR Loan or (ii) borrow the
amount set forth in any LIBOR Election Notice on the date specified
therefor.
II.6 LOAN FEES.
II.6.1 CLOSING FEE. Borrower shall pay a loan fee to Agent,
for the pro rata benefit of Lenders, in the amount of $337,500, which
shall be deemed to be fully earned and payable on the Closing Date.
II.6.2 NON-UTILIZATION FEE. Borrower shall pay to Agent, for
the benefit of Lenders, for each month through March, 2001, a fee in
the amount of one-half of one percent (.50%) per annum (the
"NON-UTILIZATION FEE") on the remainder of (i) $38,000,000 minus (ii)
the aggregate amount of all prior Advances of the Acquisition Portion
as of the last day
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of such month. The Non-Utilization Fee shall be payable monthly in
arrears on the first Business Day of each month.
II.7 PREPAYMENTS.
II.7.1 VOLUNTARY PREPAYMENT OF LOAN. Borrower may at any time
voluntarily prepay the Principal Balance in whole or in part, subject
to the following conditions:
(A PREPAYMENT PREMIUM. Except as provided in
subsection 2.7.3, concurrently with any voluntary prepayment
of all or any part of the Principal Balance, Borrower shall
pay to Lenders a prepayment premium (the "PREPAYMENT PREMIUM")
equal to a percentage of the amount of the Principal Balance
prepaid, determined in accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
First Loan Year 2.0%
Thereafter 0.0%
(B NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF
PREPAYMENTS. Not less than 20 days prior to the date upon
which Borrower desires to make any voluntary prepayment of the
Principal Balance, Borrower shall deliver to Lenders notice of
its intention to prepay, which notice shall state the
prepayment date and the amount of the Principal Balance to be
prepaid. The amount of any partial prepayment of the Principal
Balance shall be not less than $100,000 or integral multiples
thereof. A prepayment of the Principal Balance shall not be
made more frequently than once a month. If Borrower delivers
to Lenders a notice of prepayment and fails to make such
prepayment, Borrower shall reimburse Lenders on demand in the
amount of any loss, cost and/or expense reasonably incurred by
Lenders as a result of Lenders' reliance on such notice,
including without limitation, any loss, cost or expense
resulting from Lenders' contractual obligations in connection
with the reinvestment of the amount indicated in such notice
of prepayment.
(C ADDITIONAL PAYMENTS. Concurrently with any
prepayment of the Principal Balance pursuant to this
subsection 2.7.1, Borrower shall pay to Lenders accrued and
unpaid interest on the portion of the Principal Balance which
is being prepaid to the date on which Lenders are in receipt
of Good Funds, and any other sums which are due and payable
pursuant to the terms of any of the Loan Instruments.
(D APPLICATION OF PARTIAL PREPAYMENTS. Any partial
prepayment of the Principal Balance pursuant to this
subsection 2.7.1 shall be applied to the installments of the
Principal Balance in the inverse order of maturity.
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II.7.2 MANDATORY PREPAYMENTS OF THE LOAN.
(A EXCESS CASH FLOW PAYMENTS. Until the Loan is paid
in full, for each year commencing with the year 2000 Borrower
shall pay to Lenders not later than the earlier of (x) 30 days
after receipt by Lenders of the Basic Financial Statements for
such year and (y) 120 days after the end of such year, an
amount equal to the lesser of (i) 50% of the Excess Cash Flow
for such year and (ii) the amount by which the Cash
Equivalents as of the last day of such year exceeds $750,000.
(B APPLICATION OF MANDATORY PREPAYMENTS. Prepayments
received by Lenders pursuant to this subsection 2.7.2 shall be
applied in the following order of priority to the payment of:
(i) any and all sums which are due and payable pursuant to the
terms of the Loan Instruments, except the Principal Balance
and accrued interest thereon, (ii) accrued and unpaid interest
on the portion of the Principal Balance being prepaid and
(iii) the installments of the Principal Balance in the inverse
order of maturity.
II.7.3 NO PREPAYMENT PREMIUM. No Prepayment Premium shall be
payable with respect to prepayments pursuant to subsection 2.7.2.
II.7.4 INVOLUNTARY PREPAYMENT. Concurrently with any payment
of the Principal Balance received by Lenders resulting from the
exercise by Agent and/or Lenders of any remedy available to Agent
and/or Lenders subsequent to the occurrence of an Event of Default and
the acceleration of Borrower's Obligations, Borrower shall pay to
Lenders a Prepayment Premium in an amount equal to the Prepayment
Premium which would be payable if such payment was made pursuant to
subsection 2.7.1.
II.8 DEFAULT RATE PERIOD. During a Default Rate Period, (i) Borrower's
Obligations shall bear interest at the Default Rate and (ii) all payments
received by Lenders shall be applied in accordance with Section 8.4.
II.9 METHOD OF PAYMENT.
II.9.1 LOCKBOXES AND LOCKBOX ACCOUNTS; PAYMENTS; APPLICATION
OF FUNDS.
(A MAINTENANCE OF LOCKBOXES AND LOCKBOX ACCOUNTS.
Borrower and its Subsidiaries shall maintain at Lockbox Bank
the Lockboxes and Lockbox Accounts. The Lockboxes and Lockbox
Accounts shall be under the sole dominion and control of Agent
and neither Borrower nor any of its Subsidiaries shall have
any right of withdrawal therefrom. Promptly after the Closing
Date, Borrower and each of its Subsidiaries which has not
previously done so shall notify such Person's Account Debtors
that all payments shall be made directly to the applicable
Lockbox or, if by
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wire transfer, to the applicable Lockbox Account. All items
deposited in the applicable Lockbox shall be credited to the
Lockbox Account.
(B HURDLE AMOUNT. On the first Business Day of each
month, Agent shall notify Lockbox Bank of the Hurdle Amount
for such month. Upon the opening of business on each Business
Day of each month, Lockbox Bank shall calculate the amount of
collected funds on deposit in the Lockbox Accounts for such
month (the "COLLECTED FUNDS"). For each month, beginning with
the second Business Day following the Business Day on which
the Lockbox Bank has determined that the Collected Funds
exceed the Hurdle Amount for such month (the amount of such
excess hereinafter is referred to as the "REMAINDER FUNDS"),
Lockbox Bank shall remit the Remainder Funds to Borrower and
its Subsidiaries until the end of such month.
(C MONTHLY PAYMENTS FROM THE LOCKBOX. Beginning with
the first Business Day of the month following the month in
which the Closing occurs, Lockbox Bank shall remit the Hurdle
Amount to Agent in Good Funds prior to 1:00 P.M. Chicago time
for application to Borrower's Obligations in the following
order of priority: (i) first, to the payment of all Borrower's
Obligations then due and payable other than the Principal
Balance and accrued and unpaid interest thereon, and (ii)
second, to the payment of accrued and unpaid interest then due
and payable on the Principal Balance. If no Event of Default
or Incipient Default then exists, the remainder, if any, shall
be remitted to Borrower and its Subsidiaries. If an Event of
Default exists such remainder may, at the option of Agent, be
applied in accordance with Section 8.4.
(D CASH INSTRUMENTS RECEIVED BY BORROWER AND ITS
SUBSIDIARIES. At the close of each Business Day following the
Closing Date, Borrower and each of its Subsidiaries shall
transmit, in the form received, all Cash Instruments received
by such Person since the close of business on the preceding
Business Day to the applicable Lockbox or directly to the
Lockbox Bank for deposit in the applicable Lockbox Account.
All Cash Instruments received by Borrower and each of its
Subsidiaries shall be held in express trust for Lenders until
delivery thereof is made to the applicable Lockbox or the
Lockbox Bank for deposit in the applicable Lockbox Account and
shall not be commingled with any other Property of such
Person.
II.9.2 OTHER PAYMENTS. All payments other than those specified
in subsection 2.9.1 to be made pursuant to the Loan Instruments by
Borrower shall be made by wire transfer of Good Funds to the account of
Agent at Citibank, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, Credit: FINOVA Capital Corporation, Credit Account No.
▇▇▇▇▇▇▇▇, or to such other account with respect to which FINOVA shall
have given five Business Days prior written notice to Borrower. Agent
shall distribute to each Lender which is in compliance with subsection
2.1.7 its Pro Rata Share of all payments received by Agent from
Borrower which are payable to such Lender (i) on the Business Day
received by Agent
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if received by Agent on or before 1:00 p.m. Eastern time in immediately
available Federal funds or (ii) on the Business Day immediately
succeeding the Business Day received by Agent if received by Agent
after 1:00 p.m. Eastern time in immediately available Federal funds.
ARTICLE III
SECURITY
Borrower's Obligations and Guarantors' Obligations shall be secured by
a Lien upon all of the Collateral, which at all times shall be superior and
prior to all other Liens, except Permitted Prior Liens.
ARTICLE IV
CONDITIONS OF CLOSING AND ACQUISITIONS
IV.1 CLOSING CONDITIONS FOR EACH DISBURSEMENT. The obligation of
Lenders to disburse any portion of the Loan shall be subject to the satisfaction
or waiver of all of the following conditions on or before the applicable Funding
Date in a manner, form and substance satisfactory to the Required Lenders:
IV.1.1 REPRESENTATIONS AND WARRANTIES. On such Funding Date,
the representations and warranties of Borrower and each of its
Subsidiaries set forth in the Instruments to which such Person is a
party shall be true and correct in all material respects.
IV.1.2 PERFORMANCE; NO DEFAULT. Borrower and each of its
Subsidiaries shall have, in all material respects, performed and
complied with all agreements and conditions contained in the
Instruments to be performed by or complied with by such Person prior to
or on such Funding Date, and no Event of Default or Incipient Default
then shall exist.
IV.1.3 UL CERTIFICATIONS. Agent shall have received (i)
certified copies of all UL Certifications which are required under
subsection 6.5.1 and (ii) evidence that such UL Certifications are in
full force and effect as of the applicable Funding Date and no event
has occurred which could result in the termination, revocation or
non-renewal of any such UL Certification.
IV.1.4 ALARM LICENSES. Agent shall have received (i) copies of
the Alarm Licenses which are necessary for the operation of Borrower's
and each of its Subsidiaries' Central Station Business, certified by
Borrower as correct and complete and (ii) evidence that (A) such Alarm
Licenses are in full force and effect as of the applicable Funding Date
and (B) no event has occurred which could result in the termination,
revocation or non-renewal of any such Alarm License.
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IV.1.5 INSURANCE. At least three Business Days prior to the
applicable Funding Date, Borrower shall have delivered to Agent
evidence satisfactory to Agent that all insurance coverage required
pursuant to Section 6.6 is in full force and effect and all premiums
then due thereon have been paid in full.
IV.1.6 ENVIRONMENTAL AUDIT. At the request of Agent, Agent
shall have received an Environmental Audit with respect to any real
estate which is the subject of a Lease.
IV.1.7 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS. Agent
shall have received evidence that the approval or consent shall have
been obtained from all Governmental Bodies and all other Persons whose
approval or consent is required to enable (i) Borrower and each of its
Subsidiaries to enter into and perform their respective obligations
under the Instruments to which each such Person is a party and (ii)
Borrower and each of its Subsidiaries to grant to Agent the Security
Interests contemplated in the Instruments to which such Person is a
party.
IV.1.8 SECURITY INTERESTS. All filings of Uniform Commercial
Code financing statements and all other filings and actions necessary
to perfect and maintain the Security Interests as first, valid and
perfected Liens in the Property covered thereby, subject only to
Permitted Prior Liens, shall have been filed or taken and Agent shall
have received such UCC, state and federal tax Lien, pending suit,
judgment and other Lien searches as it deems necessary to confirm the
foregoing.
IV.1.9 USE OF ASSETS. Agent shall be satisfied that Borrower
and its Subsidiaries at all times shall be entitled to the use and
quiet enjoyment of all Property necessary for the continued ownership
and operation of the Central Station Business conducted by Borrower and
its Subsidiaries, including, without limitation, the use of equipment,
fixtures, licenses, offices and means of ingress and egress thereto,
and any easements or rights-of-way necessary to reach any equipment or
other items necessary for the operation of such Central Station
Business.
IV.1.10 MATERIAL ADVERSE CHANGE. No event shall have occurred
which has had or reasonably could be expected to have a Material
Adverse Effect since the end of the most recent period for which
Borrower has delivered to Agent financial statements pursuant to
Section 6.3.1.
IV.1.11 PROCEEDINGS AND DOCUMENTS. All corporate, limited
liability company and other proceedings in connection with the
transactions contemplated by the Instruments and all documents and
instruments incident to such transactions shall be reasonably
satisfactory to the Required Lenders, and Agent shall have received all
such counterpart originals or certified or other copies as Agent may
reasonably request.
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IV.1.12 BROKER FEES. If the services of a broker or other
agent have been used in connection with the Loan, all fees owed to such
broker or agent shall have been paid by Borrower and Agent shall have
received evidence of such payment.
IV.1.13 PAYMENT OF FEES AND EXPENSES. Borrower shall have
paid the Loan Fees and all fees and expenses described in subsection
11.1.1 incurred in connection with the Loan.
IV.1.14 MAXIMUM TIMES RMR. The Adjusted Total Debt as of the
requested Funding Date shall not exceed 15 times the RMR as of such
date, including the RMR which is the subject of the proposed
Acquisition, if any.
IV.2 CLOSING CONDITIONS FOR INITIAL PORTION. The obligation of Lenders
to disburse the Initial Portion shall be subject to the satisfaction or waiver
of all of the following conditions on or before the Closing Date in a manner,
form and substance satisfactory to the Required Lenders:
IV.2.1 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, except to the extent previously delivered to Agent,
each duly authorized and executed, where applicable:
(A) the Loan Instruments, other than the Assignment
of Interest Hedge Contract;
(B) a good standing or similar certificate, dated a
recent date prior to the Closing Date, for Borrower and each
of its Subsidiaries from the Secretary of State in each state
in which such Person organized or is qualified to transact
business;
(C) copies of (i) the articles of incorporation and
all amendments thereto of Borrower and each of its
Subsidiaries, together with the Certificate of Designations,
Rights, Preferences and Limitations of Series A Convertible
Preferred Stock, of Borrower, certified by the Secretary of
State of their respective states of incorporation as of a
recent date prior to the Closing Date, and (ii) the following,
each certified by the President of Borrower or its
Subsidiaries: (A) the by-laws of such Person and (C) all
agreements among the shareholders of such Person known to
Borrower;
(D) certified copies of resolutions adopted by the
board of directors of Borrower and each of its Subsidiaries
authorizing the execution and delivery of the Instruments to
which each such Person is a party;
(E) signature and incumbency certificates of each
officer of Borrower and each of its Subsidiaries executing any
of the Loan Instruments on behalf of such Person;
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(F) such other instruments, documents, certificates,
consents, waivers and opinions as Agent may reasonably
request; and
(G) an opinion dated the Closing Date from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, general counsel to Borrower and its Subsidiaries,
addressed to Agent, as a Lender and as Agent, in such form and
covering such matters as Agent may require.
IV.2.2 RMR. Agent shall have received evidence that the
Adjusted Total Debt as of the Closing Date does not exceed the sum of
15 times the RMR as of the Closing Date.
IV.2.3 EVIDENCE OF JUNIOR CAPITAL. Agent shall have received
evidence that Borrower has received not less than $27,000,000 in
proceeds of capital contributions or subordinated debt since January 1,
1996.
IV.2.4 CONVERSION OF SUBORDINATED DEBT TO EQUITY INTERESTS.
Agent shall have received evidence that (i) all conditions to the
conversion of all Indebtedness for Borrowed Money owed by Borrower to
TJS Partners and all preferred stock in Borrower owned by TJS Partners
prior to the Closing Date into Series A Convertible Preferred Stock of
Borrower have been satisfied, (ii) Stroock and Stroock and ▇▇▇▇▇ has
been directed to release from escrow to Borrower the original
subordinated notes previously issued by Borrower to TJS Partners and
the original stock certificates for all preferred stock owned by TJS
Partners in Borrower prior to the Closing Date and (iii) LaSalle
National Bank, N.A., Borrower's transfer agent, has been directed to
issue to TJS Partners certificates representing the Series A
Convertible Preferred Stock of Borrower to be issued to TJS Partners as
a result of the conversion described in clause (i) above.
IV.3 CONDITIONS FOR ACQUISITION PORTION. The obligation of Lenders to
disburse Advances of the Acquisition Portion, and the right of Borrower to
consummate Acquisitions, shall be subject to the satisfaction or waiver of all
of the following conditions on or before the Acquisition Closing Date in a
manner, form and substance satisfactory to the Required Lenders:
IV.3.1 INITIAL PORTION. The Initial Portion shall have been
disbursed.
IV.3.2 MAXIMUM FACILITY CASH FLOW LEVERAGE RATIO. Borrower
shall demonstrate to the satisfaction of Agent that, assuming the
requested Advance, if any, had been disbursed and the applicable
Acquisition, if any, had been consummated on the last day of the second
month prior to the month in which the applicable Acquisition Closing
Date is to occur, the Facility Cash Flow Leverage Ratio as of such last
day would not exceed 3.5.
IV.3.3 AMOUNT AND FREQUENCY OF ADVANCES. The requested Advance
shall be in a minimum amount of $500,000 or integral multiples of
$100,000 in excess thereof and no more than two Advances shall be made
in any month. The amount of the requested Advance, when added to the
aggregate amount of all prior Advances, shall not exceed the amount of
the Acquisition Portion then in effect.
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IV.3.4 INFORMATION REGARDING ACQUISITIONS. Not less than 45
days prior to the proposed Acquisition Closing Date of the requested
Advance, Agent shall have received notice from Borrower describing the
proposed Acquisition and affording Lenders an opportunity to inspect
the Central Station Business proposed to be acquired. Not later than 15
days prior to the proposed Acquisition Closing Date of the requested
Advance, Agent shall have received from Borrower a description of the
proposed Acquisition accompanied by a description of the operations
history and relevant market information with respect to the Central
Station Business proposed to be acquired, a discussion of competition
and information regarding key personnel with respect to such Central
Station Business, and such other financial statements, reports,
projections and information with respect to the operation of such
Central Station Business as Agent reasonably may require. Not later
than 5 days prior to the proposed Acquisition Closing Date of the
requested Advance, Borrower shall provide to Agent drafts of the
applicable Acquisition Instruments.
IV.3.5 CONSENT TO ACQUISITION. If the proceeds of the
requested Advance are to be used to consummate an Acquisition other
than a Small Acquisition, or if the aggregate gross purchase prices
payable in connection with all prior Small Acquisitions is $7,500,000
or greater, Agent shall have consented to such Acquisition, which
consent may be given or withheld in Agent's sole discretion.
IV.3.6 CONSUMMATION OF ACQUISITION. Prior to or concurrently
with each Acquisition Closing, Agent shall have received evidence that
(i) such Acquisition is in accordance with the terms of the applicable
Acquisition Instruments with such modifications as are reasonably
satisfactory to the Required Lenders and (ii) (A) Borrower will acquire
concurrently with the Acquisition Closing, good and marketable title to
the Property which is the subject to such Acquisition and (B) if the
subject of such Acquisition is a Subsidiary of Borrower, such
Subsidiary will on the Acquisition Closing Date own good and marketable
title to all of its Property, in each case free and clear of all Liens
and Indebtedness.
IV.3.7 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, each duly authorized and executed where applicable:
(A) the Additional Loan Instruments;
(B) if such Subsidiary is a corporation, the
certificates representing all of the capital stock of such
Subsidiary and stock powers for each certificate in form
acceptable to Agent;
(C) such certificates of incumbency, good-standing
and corporate and limited liability company resolutions as
Agent may reasonably require in connection with such
Acquisition;
(D) Agent shall have received a Notice of Borrowing
from Borrower respect to each such Advance no later than 12:00
p.m., Chicago time, at least five (5)
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Business Days prior to the proposed Acquisition Closing Date
with respect to such Advance, which such Acquisition Closing
Date shall be on a Business Day;
(D) certified or executed original copies of each of
the following, the terms and conditions of all of which shall
be reasonably satisfactory to the Required Lenders:
(i) the applicable Acquisition
Instruments; and
(ii) the Leases assumed or entered into
by Borrower in connection with such
Acquisition; and
(E) such other instruments, documents, certificates,
consents, waivers and opinions as Agent may reasonably
require.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Agent and Lenders as follows:
V.1 EXISTENCE AND POWER. Borrower and each of its Subsidiaries is a
corporation or limited liability company duly formed and validly existing under
the laws of the state of its organization or incorporation. Borrower and each of
its Subsidiaries is in good standing and qualified to transact business in each
jurisdiction in which the failure so to qualify could have a Material Adverse
Effect. Borrower and each of its Subsidiaries have all requisite power and
authority to own its Property and to carry on its business as now conducted and
as proposed to be conducted following the Closing Date.
V.2 AUTHORITY. Borrower and each of its Subsidiaries has full power and
authority to enter into, execute, deliver and carry out the terms of the
Instruments to which it is a party and to incur the obligations provided for
therein, all of which have been duly authorized by all proper and necessary
action and are not prohibited by the organizational instruments of such Person.
V.3 CAPITAL STOCK AND RELATED MATTERS.
V.3.1 CAPITALIZATION. There is set forth in EXHIBIT 5.3.1 a
complete description of the Equity Interests of Borrower and each of
its Subsidiaries. All of such Equity Interests are validly issued,
fully paid and non-assessable, and have been issued and sold in
compliance with all applicable federal and state laws, rules and
regulations, including, without limitation, all so-called "Blue-Sky"
laws, excepting only possible instances of noncompliance which in the
aggregate are not material. All of the Equity Interests of each
Subsidiary of Borrower are
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owned beneficially and of record by Borrower and are free and clear of
all Liens except the Security Interests and the SAFE Liens.
V.3.2 RESTRICTIONS. Except as set forth on EXHIBIT 5.3.2,
neither Borrower nor any of its Subsidiaries (i) is a party to, or has
knowledge of any agreements restricting the transfer of the Equity
Interests of such Person, except the Loan Instruments and the SAFE Debt
Instruments, (ii) has issued any rights which can be convertible into
or exchangeable or exercisable for any of such Person's Equity
Interests, or any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls, commitments or
claims of any character relating to, any of such Person's Equity
Interests or any securities convertible into or exchangeable or
exercisable for any of such Person's Equity Interests and (iii) is
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of such Person's Equity Interests or
any convertible rights or options. No Subsidiary of Borrower is
required to file or has filed, pursuant to the Securities Act of 1933
or Section 12 of the Securities Exchange Act of 1934, as amended, a
registration statement relating to any class of debt or equity
securities.
V.4 BINDING AGREEMENTS. This Loan Agreement and the other
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of Borrower and its Subsidiaries to the extent such Person
is a party thereto, enforceable against such Person in accordance with their
respective terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally,
and (ii) equitable principles (whether or not any action to enforce such
document is brought at law or in equity).
V.5 BUSINESS AND PROPERTY OF BORROWER AND ITS SUBSIDIARIES.
V.5.1 BUSINESS AND PROPERTY. Borrower and each of its
Subsidiaries is the owner of all Property and the holder of all UL
Certifications, Alarm Licenses and Central Station Contracts necessary
to conduct such Person's Central Station Business in the places where a
material portion of such Central Station business is now conducted. All
of such UL Certifications, Alarm Licenses and Central Station Contracts
are in full force and effect and no invalidity, default or breach
exists thereunder which could reasonably be expected to have a Material
Adverse Effect or result in the revocation, termination or non-renewal
of such UL Certifications or Alarm Licenses where such revocation,
termination or non-renewal could reasonably be expected to have a
Material Adverse Effect. There is set forth in EXHIBIT 5.5.1 a
description of all UL Certifications and Alarm Licenses which have been
issued to Borrower and each of its Subsidiaries. Neither Borrower nor
any of its Subsidiaries engage or propose to engage in any business or
activity other than the Central Station Business.
V.5.2 FACILITY SITES. There is set forth in EXHIBIT 5.5.2 the
location of the chief executive office of Borrower and each of its
Subsidiaries and the locations all central station
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monitoring operations, offices and other Property used in the
operation of Borrower's and each of its Subsidiaries' Central Station
Business.
V.5.3 LEASES. There is set forth in EXHIBIT 5.5.3 a list of
all leases of real property under which Borrower or any of its
Subsidiaries is the lessee, together with a complete and accurate
address and legal description of each such parcel of Leasehold Property
and the current Landlord under each Lease. Each Lease is in full force
and effect, there has been no material default in the performance of
any of its terms or conditions by any party thereto, and no claims of
default have been asserted with respect thereto. To the best knowledge
of Borrower, the present and contemplated use of the Leasehold Property
is in material compliance with all applicable zoning ordinances and
regulations and other laws and regulations.
V.5.4 REAL ESTATE. Neither Borrower nor any of its
Subsidiaries owns any real property.
V.5.5 OPERATION AND MAINTENANCE OF EQUIPMENT. To the best
knowledge of Borrower, no Person owning or operating any equipment
necessary for the operation of Borrower's or any of its Subsidiaries'
Central Station Business has used, operated or maintained the same in a
manner which now or hereafter could result in the cancellation or
termination of the right of such Person to use or make use of the same
or which could result in any material liability of such Person for
damages in connection therewith. All of the equipment and other
tangible personal property owned by Borrower and its Subsidiaries on
the Closing Date is, in all material respects, in good operating
condition and repair (subject to normal wear and tear) and has to the
best knowledge of Borrower, been used, operated and maintained in
substantial compliance with all applicable laws, rules and regulations.
V.6 TITLE TO PROPERTY; LIENS. Upon the Closing Borrower and each
of its Subsidiaries shall have (i) good and marketable title to all of its
Property, except (A) any UL Certification which cannot be transferred and (B)
the portion thereof consisting of a leasehold estate and (ii) a valid leasehold
estate in each portion of its Property which consists of a leasehold estate.
Upon the Closing, all of such Property shall be free and clear of all Liens,
except Permitted Liens. Upon the proper filing with the appropriate Governmental
Bodies of appropriate Uniform Commercial Code financing statements, the
applicable Loan Instruments will create valid and perfected Liens in the
Property described therein, subject only to Permitted Prior Liens.
V.7 PROJECTIONS AND FINANCIAL STATEMENTS.
V.7.1 FINANCIAL STATEMENTS. Borrower has delivered to Agent
the consolidated financial statements described in EXHIBIT 5.7.1
pertaining to Borrower's and each of its Subsidiaries' Central Station
Business. Such financial statements present fairly in all material
respects the results of operations of Borrower's and each of its
Subsidiaries' Central Station Business for the periods covered thereby
and the financial condition of Borrower's and each of its Subsidiaries'
Central Station Business as of the dates indicated therein. All of such
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financial statements have been prepared in conformity with GAAP. Since
June 30, 1999 there has been no change which has had a Material Adverse
Effect. Borrower also has delivered to Agent pro-forma consolidated and
consolidating balance sheets as of the Closing Date. Such pro-forma
balance sheets, which assume the consummation of the transactions
contemplated by the Loan Instruments, presents fairly in all material
respects the anticipated financial condition of Borrower and each of
its Subsidiaries as of the Closing Date.
V.7.2 PROJECTIONS. Borrower has delivered to Agent the
projections described in EXHIBIT 5.7.2 of the future operations of
Borrower and each of its Subsidiaries. Such projections represent the
best estimates of Borrower as of the Closing Date of Borrower's and
each of its Subsidiaries' future financial performance.
V.8 LITIGATION. There is set forth in EXHIBIT 5.8 a description of all
actions and suits, arbitration proceedings and claims pending or, to the best
knowledge of Borrower, threatened against Borrower or any of its Subsidiaries or
maintained by Borrower or any of its Subsidiaries at law or in equity or before
any Governmental Body where the amount claimed exceeds $10,000 or is not covered
by insurance. None of the matters set forth in such EXHIBIT 5.8, if adversely
determined, could have a Material Adverse Effect.
V.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING AGREEMENTS.
Neither Borrower nor any of its Subsidiaries is in default under any agreement
to which such Person is a party or by which such Person or any of the Property
of such Person is bound, the effect of which default could have a Material
Adverse Effect. No authorization, consent, approval or other action by, and no
notice to or filing with, any Governmental Body or any other Person which has
not already been obtained, taken or filed, as applicable, is required (i) for
the due execution, delivery or performance by Borrower or any of its
Subsidiaries of any of the Loan Instruments to which such Person is a party or
(ii) as a condition to the validity or enforceability of any of the Loan
Instruments to which Borrower or any of its Subsidiaries is a party or any of
the transactions contemplated thereby or the priority of the Security Interests,
except for certain filings to establish and perfect the Security Interests. No
provision of any material mortgage, indenture, contract, agreement, statute,
rule, regulation, judgment, decree or order binding on Borrower or any of its
Subsidiaries or affecting the Property of Borrower or any of its Subsidiaries
conflicts with, or requires any consent which has not already been obtained
under, or would in any way prevent the execution, delivery or performance of the
terms of any of the Loan Instruments or affect the validity or priority of the
Security Interests. The execution, delivery or performance of the terms of the
Loan Instruments will not constitute a default under, or result in the creation
or imposition of, or obligation to create, any Lien upon the Property of
Borrower or any of its Subsidiaries pursuant to the terms of any such material
mortgage, indenture, contract or agreement, other than the Loan Instruments.
V.10 TAXES. Borrower and each of its Subsidiaries has filed all tax
returns required to be filed, and has paid, or made adequate provision for the
payment of, all taxes shown to be due and payable on such returns or in any
assessments made against any such Person, and no tax Liens have been filed and
no claims are being asserted in respect of such taxes which are required by GAAP
to
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be reflected in the financial statements of Borrower and each of its
Subsidiaries and are not so reflected therein. The charges, accruals and
reserves on the books of Borrower and each of its Subsidiaries with respect to
all federal, state, local and other taxes are considered by the management of
such Person to be adequate, and there is no unpaid assessment which is or might
be due and payable by Borrower or any of its Subsidiaries or create a Lien
against Borrower's or any of its Subsidiaries' Property, except such assessments
as are being contested in good faith and by appropriate proceedings diligently
conducted, and for which adequate reserves have been set aside in accordance
with GAAP. None of the tax returns of Borrower or any of its Subsidiaries are
under audit.
V.11 COMPLIANCE WITH APPLICABLE LAWS. Neither Borrower nor any of its
Subsidiaries is in default in respect of any judgment, order, writ, injunction,
decree or decision of any Governmental Body, which default would have a Material
Adverse Effect. Except as otherwise provided herein, Borrower and each of its
Subsidiaries are in compliance in all material respects with all applicable
statutes and regulations, including, without limitation, all laws, statutes and
regulations relating to UL Certification, all Environmental Laws, ERISA, ADA and
all laws and regulations relating to unfair labor practices, equal employment
opportunity and employee safety, of all Governmental Bodies, a violation of
which could have a Material Adverse Effect. No material condemnation, eminent
domain or expropriation has been commenced or, to the best knowledge of
Borrower, threatened against the Property which Borrower or any of its
Subsidiaries will own upon the Closing.
V.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. Upon the Closing,
Borrower and each of its Subsidiaries will own, possess or have the right to use
all patents, trademarks, service marks, tradenames, copyrights, franchises and
rights with respect thereto, necessary for the conduct of such Person's Central
Station Business as proposed to be conducted by such Person after the Closing
Date, without any known conflict with the rights of others and, in each case,
free of any Liens.
V.13 ENVIRONMENTAL MATTERS. Borrower and each of its Subsidiaries is in
compliance with all applicable Environmental Laws and, to the best of Borrower's
knowledge, no portion of the Leasehold Property has been used as a land fill.
There currently are not any known Hazardous Materials generated, manufactured,
released, stored, buried or deposited over, beneath, in or on (or used in the
construction and/or renovation of) the Leasehold Property in violation of
applicable Environmental Laws which could have a Material Adverse Effect.
V.14 APPLICATION OF CERTAIN LAWS AND REGULATIONS. Neither Borrower, any
of Borrower's Subsidiaries, nor any Affiliate of any such Persons is:
V.14.1 INVESTMENT COMPANY ACT. An "investment company," or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
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V.14.2 HOLDING COMPANY ACT. A "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
V.14.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally of
an enemy" within the meaning of Section 2 of the Trading with the Enemy
Act, (ii) a "national" of a foreign country designated in Executive
Order No. 8389, as amended, or of any "designated enemy country" as
defined in Executive Order No. 9095, as amended, of the President of
the United States of America, in each case within the meaning of such
Executive Orders, as amended, or of any regulation issued thereunder,
(iii) a "national of any designated foreign country" within the meaning
of the Foreign Assets Control Regulations or of the Cuban Assets
Control Regulations of the United States of America (Code of Federal
Regulations, Title 31, Chapter V, Part 515, Subpart B, as amended), or
(iv) an alien or a representative of any alien or foreign government
within the meaning of Section 310 of Title 47 of the United States
Code.
V.14.4 REGULATIONS AS TO BORROWING. Subject to any statute or
regulation which regulates the incurrence of any Indebtedness for
Borrowed Money, including, without limitation, statutes or regulations
relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public
utility services.
V.15 MARGIN REGULATIONS. None of the transactions contemplated by
this Loan Agreement or any of the other Loan Instruments, including the use of
the proceeds of the Loan, will violate or result in a violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T, U and X, and
neither Borrower nor any of its Subsidiaries owns or intends to carry or
purchase any "margin security" within the meaning of such Regulation U or G.
V.16 OTHER INDEBTEDNESS. Upon the Closing, neither Borrower nor any
of its Subsidiaries will have any Indebtedness for Borrowed Money, except (i)
Borrower's Obligations, (ii) Guarantors' Obligations, (iii) Permitted Senior
Indebtedness permitted to exist as of the Closing Date pursuant to this Loan
Agreement, (iv) the SAFE Debt and (v) the dealer holdback debt described on
EXHIBIT 7.1.
V.17 NO MISREPRESENTATION. Neither this Loan Agreement nor any
other Loan Instrument, certificate, information or report furnished or to be
furnished by or on behalf of Borrower or any of its Subsidiaries to Agent or any
Lender in connection with any of the transactions contemplated hereby or
thereby, contains or will contain a misstatement of material fact, or omits or
will omit to state a material fact required to be stated in order to make the
statements contained herein or therein, taken as a whole, not misleading in the
light of the circumstances under which such statements were made. There is no
fact, other than information known to the public generally, known to or
reasonably foreseen by Borrower after diligent inquiry, that would be expected
to have a Material Adverse Effect that has not expressly been disclosed to Agent
in writing.
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V.18 EMPLOYEE BENEFIT PLANS.
V.18.1 NO OTHER PLANS. Neither Borrower, any of its
Subsidiaries nor any ERISA Affiliate maintains or contributes to, or
has any obligation under, any Employee Benefit Plan other than those
identified on EXHIBIT 5.18.1. Borrower has provided Agent accurate and
complete copies of all Contracts, agreements and documents described on
EXHIBIT 5.18.1.
V.18.2 ERISA AND CODE COMPLIANCE AND LIABILITY. Borrower, each
of its Subsidiaries and each ERISA Affiliate is in compliance with all
applicable provisions of ERISA with respect to all Employee Benefit
Plans except where failure to comply would not result in a material
liability to any such Person and except for any required amendments for
which the remedial amendment period as defined in Section 401(b) of the
Code has not yet expired. Each Employee Benefit Plan that is intended
to be qualified under Section 401(a) of the Code has been determined by
the Internal Revenue Service to be so qualified (except that Agent and
Lenders acknowledge that as of the Closing Date, Borrower is awaiting a
letter of determination from the Internal Revenue Service as to the
qualification of its 401(k) plan), and each trust related to such plan
has been determined to be exempt under Section 501(a) of the Code
(except that Agent and Lenders acknowledge that as of the Closing Date,
Borrower is awaiting a letter of determination from the Internal
Revenue Service as to the exemption of such trust with respect to
Borrower's 401(k) plan), except for any amendments for which the
remedial amendment period as defined in Section 401(b) of the Code has
not yet expired. No material liability has been incurred by Borrower,
any of its Subsidiaries or ERISA Affiliate which remains unsatisfied
for any taxes or penalties with respect to any Employee Benefit Plan or
any Multiemployer Plan.
V.18.3 FUNDING. No Pension Plan has been terminated, nor has
any accumulated funding deficiency (as defined in Section 412 of the
Code) been insured (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has Borrower, any of its Subsidiaries or any ERISA Affiliate failed
to make any contributions or to pay any amounts due and owing as
required by Section 412 of the Code, Section 302 of ERISA or the terms
of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any
event requiring any disclosure under Section 4041(c)(3)(C), 4063(a) or
4068 of ERISA with respect to any Pension Plan.
V.18.4 PROHIBITED TRANSACTIONS AND PAYMENTS. Neither Borrower,
any of its Subsidiaries nor any ERISA Affiliate has: (i) engaged in a
nonexempt "prohibited transaction" as such term is defined in Section
406 of ERISA or Section 4975 of the Code; (ii) incurred any liability
to the PBGC which remains outstanding other than the payment of
premiums and there are no premium payments which are due and unpaid;
(iii) failed to make a required contribution or payment to a
Multiemployer Plan; or (iv) failed to make a required installment or
other required payment under Section 412 of the Code.
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V.18.5 NO TERMINATION EVENT. No Termination Event has occurred
or is reasonably expected to occur.
V.18.6 ERISA LITIGATION. No material proceeding, claim,
lawsuit and/or investigation is existing or, to the best knowledge of
Borrower, threatened concerning or involving any (i) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) currently maintained
or contributed to by Borrower, any of its Subsidiaries or any ERISA
Affiliate, (ii) Pension Plan or (iii) Multiemployer Plan.
V.19 EMPLOYEE MATTERS.
V.19.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i) None
of the employees of Borrower or any of its Subsidiaries is subject to
any collective bargaining agreement, (ii) no petition for certification
or union election is pending with respect to the employees of Borrower
or any of its Subsidiaries and no union or collective bargaining unit
has sought such certification or recognition with respect to the
employees of Borrower or any of its Subsidiaries and (iii) there are no
strikes, slowdowns, work stoppages, unfair labor practice complaints,
grievances, arbitration proceedings or controversies pending or, to the
best knowledge of Borrower, threatened against Borrower or any of its
Subsidiaries by Borrower's or any of its Subsidiaries' employees, other
than employee grievances or controversies arising in the ordinary
course of business that could not in the aggregate be expected to have
a Material Adverse Effect.
V.19.2 CLAIMS RELATING TO EMPLOYMENT. Neither Borrower or any
of its Subsidiaries, nor, to Borrower's best knowledge, any partner,
shareholder or employee of any such Person, is subject to any
employment agreement or non-competition agreement with any former
employer or any other Person which agreement would have a Material
Adverse Effect due to (i) any information which such Person would be
prohibited from using under the terms of such agreement or (ii) any
legal considerations relating to unfair competition, trade secrets or
proprietary information.
V.20 BURDENSOME OBLIGATIONS. After giving effect to the transactions
contemplated by the Loan Instruments, (i) neither Borrower nor any of its
Subsidiaries (A) will be a party to or be bound by any franchise, agreement,
deed, lease or other instrument, or be subject to any restriction, which is so
unusual or burdensome so as to cause, in the foreseeable future, a Material
Adverse Effect and (B) intends to incur, or believes that it will incur, debts
beyond its ability to pay such debts as they become due, and (ii) Borrower and
each of its Subsidiaries (A) owns and will own Property, the fair saleable value
of which is (I) greater than the total amount of its liabilities (including
contingent liabilities) and (II) greater than the amount that will be required
to pay the probable liabilities of its then existing debts as they become
absolute and matured, and (B) has and will have capital that is not unreasonably
small in relation to its business as presently conducted and as proposed to be
conducted. Neither Borrower nor any of its Subsidiaries presently anticipates
that
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future expenditures needed to meet the provisions of federal or state statutes,
orders, rules or regulations will be so burdensome so as to have a Material
Adverse Effect.
V.21 YEAR 2000. Borrower and each of its Subsidiaries have taken all
action necessary to assure that no Material Adverse Effect shall occur by reason
of the advent of the year 2000, including, without limitation, that all
computer-based systems, embedded microchips and other processing capabilities
effectively recognize and process dates after December 31, 1999.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full
Borrower agrees that it will, and cause each of its Subsidiaries to:
VI.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and its
good standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify would have a Material Adverse
Effect, and in any event in each jurisdiction in which any central monitoring
station owned or operated by such Person is located.
VI.2 INSPECTION. Permit representatives of Agent and Lenders, upon two
Business Days prior notice if no Event of Default exists, or at any time if any
Event of Default exists, to (i) visit its offices, (ii) examine its books and
records and Accountants' reports relating thereto, (iii) make copies or extracts
therefrom, (iv) discuss its affairs with its employees, (v) examine and inspect
its Property and (vi) meet and discuss its affairs with the Accountants, and
such Accountants, as a condition to their retention by such Person, are hereby
irrevocably authorized by such Person to fully discuss and disclose all such
affairs with Agent and Lenders (the foregoing items (i) through (vi) hereinafter
are referred to collectively as an "INSPECTION"). Notwithstanding the foregoing,
if no Event of Default exists, Agent shall not (A) conduct an Inspection more
than once a quarter and (B) charge Borrower more than $2,000 on account of such
Inspection. For purposes of this Section 6.2, Agent agrees to comply with the
rules and regulations with respect to UL Certifications.
VI.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a
standard system of accounting in accordance with GAAP and furnish to each
Lender:
VI.3.1 MONTHLY STATEMENTS. As soon as available and in any
event within 30 days after the close of each month:
(A) the consolidated and consolidating balance sheets
of Borrower and each of its Subsidiaries as of the end of such
month,
(B) the consolidated statements of operations and
Operating Cash Flow of Borrower, the consolidating statements
of each central monitoring station of
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Borrower and its Subsidiaries and the consolidating statements
of Operating Cash Flow of Borrower and each of its
Subsidiaries for such month and for the period from the
beginning of the then current year to the end of such month,
setting forth in each case in comparative form the
corresponding figures for the corresponding period in the
preceding year, and
(C) a report providing the following information as
of the end of such month: (i) the number of Central Station
Contracts monitored by Borrower and each of its Subsidiaries;
and (ii) the RMR as of the end of such month,
all in reasonable detail, containing such information as Lenders
reasonably may require, and certified by the Chief Financial Officer of
Borrower as complete and correct, subject to normal year-end
adjustments.
VI.3.2 QUARTERLY AGINGS. As soon as available and in any event
within 45 days after the close of each quarter of each year, an aging
of Borrower's and each of its Subsidiaries' outstanding accounts
payable and accounts receivable as of the end of such quarter, all in
reasonable detail, containing such information as Lenders reasonably
may require, and certified by the Chief Financial Officer of Borrower
as complete and correct, subject to normal year-end adjustments.
VI.3.3 ANNUAL STATEMENTS. As soon as available and in any
event within 120 days after the close of each year:
(A) the consolidated balance sheet of Borrower as of
the end of such year and the consolidated statements of
operations, cash flows, shareholders' equity or members'
equity of Borrower for such year (collectively, the "Basic
Financial Statements"), the consolidating balance sheet of
Borrower and each of its Subsidiaries as of the end of such
year, the consolidated statements of operations, cash flows
and shareholders' equity or members' equity, as applicable, of
Borrower for such year and the consolidated and consolidating
statements of Operating Cash Flow and Excess Cash Flow of
Borrower and each of its Subsidiaries for such year, setting
forth in each case in comparative form the corresponding
figures for the preceding year,
(B) an opinion of the Accountants which shall
accompany the Basic Financial Statements, which opinion shall
be unqualified as to going concern and scope of audit, stating
that (i) the examination by the Accountants in connection with
such Basic Financial Statements has been made in accordance
with generally accepted auditing standards, (ii) such Basic
Financial Statements have been prepared in conformity with
GAAP and in a manner consistent with prior periods, and (iii)
such Basic Financial Statements fairy present in all material
respects the financial position and results of operations of
Borrower and its Subsidiaries, and
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(C) a letter from the Accountants stating that the
statements of Operating Cash Flow and Excess Cash Flow were
computed in accordance with the requirements of this Loan
Agreement.
VI.3.4 COMPLIANCE CERTIFICATES. The financial statements
described in subsections 6.3.1, 6.3.2 and 6.3.3 shall be accompanied by
a Compliance Certificate.
VI.3.5 ACCOUNTANTS' CERTIFICATE. Simultaneously with the
delivery of the certified Basic Financial Statements required by
subsection 6.3.3, copies of a certificate of the Accountants stating
that (i) they have checked the computations delivered by Borrower and
its Subsidiaries in compliance with subsection 6.3.3, and (ii) in
making the examination necessary for their audit of the Basic Financial
Statements of Borrower and its Subsidiaries for such year, nothing came
to their attention of a financial or accounting nature that caused them
to believe that (A) Borrower and its Subsidiaries were not in
compliance with the terms, covenants, provisions or conditions of any
of the Loan Instruments, or (B) there shall have occurred any condition
or event which would constitute an Event of Default, or, if so,
specifying in such certificate all such instances of non-compliance and
the nature and status thereof.
VI.3.6 AUDIT REPORTS. Promptly upon receipt thereof, a copy of
each report, other than the reports referred to in subsection 6.3.3,
including any so-called "Management Letter" or similar report,
submitted to Borrower and its Subsidiaries by the Accountants in
connection with any annual, interim or special audit made by the
Accountants of the books of Borrower and its Subsidiaries.
VI.3.7 BUSINESS PLANS. Before the end of each year, a business
plan for the following year setting forth in reasonable detail the
projected operations budget of Borrower's and each of its Subsidiaries'
business for such year and such other information as Lenders reasonably
may request, for such following year.
VI.3.8 NOTICE OF DEFAULTS; LOSS. Prompt notice if: (i) any
Indebtedness of Borrower or any of its Subsidiaries is declared or
shall become due and payable prior to its declared or stated maturity,
or called and not paid when due, (ii) an event has occurred that
enables the holder of any note, or other evidence of such Indebtedness,
certificate or security evidencing any such Indebtedness of Borrower or
any of its Subsidiaries to declare such Indebtedness due and payable
prior to its stated maturity, (iii) there shall occur and be continuing
an Incipient Default or Event of Default, accompanied by a statement
setting forth what action Borrower propose to take in respect thereof,
or (iv) any event shall occur which has a Material Adverse Effect,
including the amount or the estimated amount of any loss or
depreciation or adverse effect.
VI.3.9 NOTICE OF SUITS, ADVERSE EVENTS. Prompt notice of: (i)
any citation, summons, subpoena, order to show cause or other order
naming Borrower or any of its Subsidiaries a party to any proceeding
before any Governmental Body which might
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reasonably be expected to have a Material Adverse Effect and include
with such notice a copy of such citation, summons, subpoena, order to
show cause or other order, (ii) any lapse or other termination of any
UL Certification, Alarm License, license, permit, franchise, agreement
or other authorization issued to Borrower or any of its Subsidiaries
by any Governmental Body or any other Person that is material to the
operation of Borrower's or any of its Subsidiaries' Central Station
Business, (iii) any refusal by any Governmental Body or any other
Person that is material to Borrower or any central monitoring station
of Borrower or any of its Subsidiaries to renew or extend any such UL
Certification, Alarm License, license, permit, franchise, agreement or
other authorization and (iv) any dispute between Borrower or any of its
Subsidiaries and any Governmental Body or any other Person, which
lapse, termination, refusal or dispute referred to in clauses (ii) and
(iii) above or in this clause (iv) could reasonably be expected to have
a Material Adverse Effect.
VI.3.10 REPORTS TO SHAREHOLDERS, MEMBERS, CREDITORS AND
GOVERNMENTAL BODIES.
(A) Promptly upon becoming available, copies of all
financial statements, reports, notices and other statements
sent or made available generally by Borrower or any of its
Subsidiaries to such Person's shareholders or members to the
extent the same contain any information not included in any
financial statements previously furnished to Lenders pursuant
to subsections 6.3.1, 6.3.2 or 6.3.3, of all regular and
periodic reports and all registration statements and
prospectuses filed by Borrower or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange
Commission or any Governmental Body succeeding to any of its
functions, and of all statements generally made available by
Borrower and each of its Subsidiaries or others concerning
material developments in the business of Borrower or any of
its Subsidiaries.
(B) Promptly upon becoming available, copies of any
periodic or special reports filed by Borrower or any of its
Subsidiaries with any Governmental Body or Person, if such
reports indicate any material change in the business,
operations, affairs or condition of such Person, or if copies
thereof are requested by Lender, and copies of any material
notices and other communications from any Governmental Body or
Person which specifically relate to Borrower or any of its
Subsidiaries.
VI.3.11 ERISA NOTICES AND REQUESTS.
(A) With reasonable promptness, and in any event
within 25 Business Days after occurrence of any of the
following, Borrower will give notice of and/or deliver to
Agent copies of: (i) the establishment of any new Pension Plan
or Multiemployer Plan; (ii) the commencement of contributions
to any Pension Plan or Multiemployer Plan to which Borrower or
any of its Subsidiaries or any of its ERISA Affiliates was not
previously contributing or any increase in the benefits of any
existing Pension Plan or Multiemployer Plan; (iii) each
funding waiver request filed with respect to any Pension Plan
and all communications received or sent by Borrower or any of
its
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Subsidiaries or any ERISA Affiliate with respect to such
request; and (iv) the failure of Borrower or any of its
Subsidiaries or ERISA Affiliate to make a required installment
or payment to a Pension Plan under Section 302 of ERISA or
Section 412 of the Code by the due date.
(B) Promptly and in any event within 10 Business Days
of becoming aware of the occurrence of or forthcoming
occurrence of any (i) Termination Event or (ii) non-exempt
"prohibited transaction", as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, Borrower
will deliver to Agent a notice specifying the nature thereof,
what action Borrower has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto.
(C) With reasonable promptness but in any event
within 10 Business Days after the occurrence of, or receipt
of, any of the following, Borrower will deliver to Agent
copies of: (i) any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a)
of the Code; (ii) all notices received by Borrower or any of
its Subsidiaries or any ERISA Affiliate of the PBGC's intent
to terminate any Pension Plan or to have a trustee appointed
to administer any Pension Plan; (iii) each Schedule B
(Actuarial Information) to the annual report (Form 5500
Series) filed by Borrower or any of its Subsidiaries or any
ERISA Affiliate with the Internal Revenue Service with respect
to each Pension Plan; and (iv) all notices received by
Borrower or any of its Subsidiaries or any ERISA Affiliate
from a Multiemployer Plan sponsor concerning the imposition or
amount of withdrawal liability pursuant to Section 4202 of
ERISA. Borrower will notify Agent in writing within two
Business Days of Borrower, any of its Subsidiaries or any
ERISA Affiliate that has filed a notice of intent to terminate
any Pension Plan under a distress termination within the
meaning of Section 4041(c) of ERISA.
VI.3.12 OTHER INFORMATION.
(A) Immediate notice of any change in the location of
any Property of Borrower or any of its Subsidiaries, which is
material to or necessary for the continued operation of such
Person's Central Station Business, any change in the name of
Borrower or any of its Subsidiaries, any sale or purchase of
Property outside the regular course of business of Borrower or
any of its Subsidiaries, and any change in the business or
financial affairs of Borrower or any of its Subsidiaries,
which change would have a Material Adverse Effect.
(B) Promptly upon request therefor, such other
information and reports relating to the past, present or
future financial condition, operations, plans and
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projections of Borrower and each of its Subsidiaries as
Lenders reasonably may request from time to time.
VI.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file
all material reports, applications, documents, instruments and information
required to be filed pursuant to all rules, regulations or requests of any
Governmental Body or other Person having jurisdiction over the operation of
Borrower's and each of its Subsidiaries' Central Station Business, including,
but not limited to, such of the Loan Instruments as are required to be filed
with any such Governmental Body or other Person pursuant to applicable rules and
regulations promulgated by such Governmental Body or other Person.
VI.5 MAINTENANCE OF UL CERTIFICATIONS, ALARM LICENSES, LICENSES,
FRANCHISES AND OTHER AGREEMENTS.
VI.5.1 MAINTENANCE OF UL CERTIFICATIONS AND ALARM LICENSES.
Maintain in full force and effect at all times, and apply in a timely
manner for renewal of, all Alarm Licenses required by applicable law
for the operation of Borrower's and each of its Subsidiaries' Central
Station Business, and UL Certifications for each of its central
monitoring stations (provided, however that any central monitoring
station which is the subject of an Acquisition need not have a UL
Certification as of the applicable Acquisition Closing Date if such UL
Certification is obtained for such central monitoring station within
180 days after the applicable Acquisition Closing Date), and deliver to
Agent (i) at least 30 days prior notice of the proposed amendment of
any of such UL Certifications and Alarm Licenses and (ii) (A) evidence
of the filing of any application for renewal of such UL Certifications
and Alarm Licenses not less than the earlier of (x) 60 days prior to
the expiration of such UL Certifications and Alarm Licenses or (y) the
last day such application may be filed in accordance with applicable
law and (B) copies of any petition or other document filed to deny or
object to any such renewal application promptly after receipt thereof
by Borrower or any of its Subsidiaries.
VI.5.2 MAINTENANCE OF LICENSES, FRANCHISES AND AGREEMENTS.
Maintain in full force and effect at all times, and apply in a timely
manner for renewal of all other licenses, franchises, trademarks,
tradenames and agreements necessary for the operation of Borrower's and
each of its Subsidiaries' Central Station Business, the loss of any of
which would have a Material Adverse Effect, and deliver to Agent (i) at
least 30 days prior notice of the proposed amendment of any of such
other licenses, franchises, trademarks, tradenames and agreements and
(ii) (A) evidence of the filing of any application for renewal of such
other licenses, franchises, trademarks, tradenames and agreements not
less than the earlier of (x) 60 days prior to the expiration of such
licenses, license or franchise or (y) the last day such application may
be filed in accordance with applicable law and (B) copies of any
petition or other document filed to deny or object to any such renewal
application promptly after receipt thereof by Borrower or any of its
Subsidiaries.
VI.6 INSURANCE.
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VI.6.1 BUSINESS INSURANCE. Maintain in full force and effect
at all times Business Insurance as required by the insurance letter
agreement among Borrower, its Subsidiaries and Agent, a copy of which
is attached hereto as EXHIBIT 6.6.1, all of which shall be written by
insurers and in amounts and forms reasonably satisfactory to the
Required Lenders and otherwise comply with the terms of such insurance
letter agreement, and deliver to Agent, from time to time as Agent
reasonably may request, evidence of compliance with this subsection
6.6.1.
VI.6.2 CLAIMS AND PROCEEDS. Borrower hereby directs all
insurers, and will cause each of its Subsidiaries to direct all
insurers, under all policies of Business Insurance to pay all proceeds
payable thereunder directly to Agent and Borrower hereby authorizes,
and will cause each of its Subsidiaries to authorize, Agent to collect
all such proceeds. Borrower irrevocably appoints, and will cause each
of its Subsidiaries to appoint, Agent (and all officers, employees or
agents designated by Agent) as Borrower's and each of its Subsidiaries'
true and lawful attorney and agent in fact for the purpose of and with
power to make, settle and adjust claims under such policies of
insurance, endorse the name of Borrower or any of its Subsidiaries on
any check, draft, instrument or other item of payment for the proceeds
of such policies of insurance, and to make all determinations and
decisions with respect to such policies of insurance. Borrower
acknowledges that such appointment of Agent as its attorney and agent
in fact is a power coupled with an interest and therefore is
irrevocable. Borrower shall promptly notify Agent of any loss, damage,
destruction or other casualty to the Collateral. The insurance proceeds
received on account of any loss, damage, destruction or other casualty
shall, at the option of Lenders, be (i) applied in reduction of
Borrower's Obligations in the following order of priority: (A) first,
to the payment of any and all sums which are then due and payable
pursuant to the terms of the Loan Instruments, other than the Principal
Balance and accrued and unpaid interest thereon, (B) next, to accrued
and unpaid interest on the Principal Balance and (C) then to the
Principal Balance in the inverse order of the maturity of the
installments thereof, or (ii) held by Agent and applied to pay for the
cost of repair or replacement of the Collateral subject to such loss,
damage, destruction or other casualty, in which event such proceeds
shall be made available in the manner and under such conditions as
Agent reasonably may require. Notwithstanding anything to the contrary
contained in this subsection 6.6.2, if the amount of the proceeds from
any loss, damage, destruction or other casualty to the Collateral
reasonably is expected to be less than $100,000 and neither an Event of
Default nor an Incipient Default then shall exist, Borrower shall have
the right to make, settle and adjust any claim regarding such proceeds
and Agent shall collect such proceeds and make such proceeds available
to Borrower to pay for the repair or replacement of the Collateral
which was the subject of such loss, damage, destruction or other
casualty in the manner and under such terms and conditions as Agent
reasonably may require. In the event the proceeds are to be applied to
the repair or replacement of Collateral, the Collateral shall be
repaired or replaced so as to be of at least equal value and
substantially the same character as prior to such loss, damage,
destruction or other casualty.
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VI.7 FUTURE LEASES. Deliver to Agent, concurrently with the execution
by Borrower or any of its Subsidiaries, as lessee, of any lease pertaining to
real property, (i) an executed copy thereof, (ii) at the option of Agent, either
a leasehold mortgage upon or a collateral assignment of such lease in favor of
Agent, in either case in a form reasonably acceptable to Agent, and (iii) a
Landlord Consent and Waiver from the lessor under such lease.
VI.8 FUTURE ACQUISITIONS OF REAL PROPERTY. Deliver to Agent
concurrently with the (i) execution by Borrower or any of its Subsidiaries of
any contract relating to the purchase by such Person of real property, an
executed copy of such contract and (ii) closing of the purchase of such real
property, (A) a first mortgage or deed of trust in favor of Agent on such real
property, in form and content satisfactory to the Required Lenders, (B) a
lender's policy of title insurance, in such form and amount and containing such
endorsements as shall be reasonably satisfactory to the Required Lenders, (C) an
ALTA/ACSM survey of such real property and (D) such other documents and
assurances with respect to such real property as Agent may require.
VI.9 ENVIRONMENTAL MATTERS.
VI.9.1 COMPLIANCE. At all times comply with, and be responsible
for, its obligations under all Environmental Laws applicable to the
Leasehold Property, any parcel of real estate acquired in connection
with an Acquisition and any other Property owned by Borrower or any of
its Subsidiaries or used by such Person in the operation of its
business. At its sole cost and expense, Borrower and each of its
Subsidiaries shall (i) comply in all respects with (A) any notice of
any violation or administrative or judicial complaint or order having
been filed against such Person, any portion of the Leasehold Property,
any parcel of real estate acquired in connection with an Acquisition or
any other Property owned by such Person or used by such Person in the
operation of its business alleging violations of any law, ordinance
and/or regulation requiring such Person to take any action in
connection with the release, transportation and/or clean-up of any
Hazardous Materials, and (B) any notice from any Governmental Body or
any other Person alleging that such Person is or may be liable for
costs associated with a response or clean-up of any Hazardous Materials
or any damages resulting from such release or transportation, or (ii)
diligently contest in good faith by appropriate proceedings any demands
set forth in such notices, provided (A) reserves in an amount
satisfactory to the Required Lenders to pay the costs associated with
complying with any such notice are established by such Person and (B)
no Lien would or will attach to the Property which is the subject of
any such notice as a result of any compliance by such Person which is
delayed during any such contest. Promptly upon receipt of any notice
described in the foregoing clause (i), Borrower shall deliver to Agent
a copy thereof.
VI.9.2 CERTIFICATION. Deliver to Agent, not later than January 1
of each year, an Environmental Compliance Certificate.
VI.10 COMPLIANCE WITH LAWS. Comply with all laws, statutes and
regulations relating to UL Certification and all other federal, state and local
laws, ordinances, requirements and regulations and all judgments, orders,
injunctions and decrees applicable to Borrower and each of its
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Subsidiaries and its operations, the failure to comply with which would have a
Material Adverse Effect.
VI.11 TAXES AND CLAIMS. Pay and discharge all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any Property belonging to it, prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a Lien (other than
a Permitted Lien) upon the Property of Borrower or any of its Subsidiaries,
provided that so long as no Lien has attached to the Property of Borrower or any
of its Subsidiaries as a result of any of the foregoing, neither Borrower nor
any of its Subsidiaries shall be required by this Section 6.11 to pay any such
amount if the same is being contested diligently and in good faith by
appropriate proceedings and as to which such Person has set aside reserves on
its books satisfactory to the Required Lenders.
VI.12 MAINTENANCE OF PROPERTIES. Maintain all of its Property necessary
in the operation of Borrower's and each of its Subsidiaries' Central Station
Business in good working order and condition.
VI.13 GOVERNMENTAL APPROVALS. Upon the exercise by Agent and/or Lenders
of any power, right or privilege pursuant to the provisions of any of the Loan
Instruments requiring any consent, approval or authorization of any Governmental
Body (including, without limitation, transfers of UL Certifications), promptly
execute and cause the execution of all applications, certificates, instruments
and other documents that Agent and/or Lenders may reasonably be required to
obtain for such consent, approval or authorization.
VI.14 YEAR 2000. Take all action necessary to assure that no Material
Adverse Effect shall occur by reason of the advent of the year 2000, including,
without limitation, that all computer-based systems, embedded microchips and
other processing capabilities effectively recognize and process dates after
December 31, 1999, and provide, at Agent's request, assurance reasonable
acceptable to Lenders that Borrower's and each of its Subsidiaries'
computer-based systems, embedded microchips and other processing capabilities
are year 2000 compatible.
VI.15 DISSOLUTION OR MERGER OF CERTAIN SUBSIDIARIES. Dissolve and
wind-up the affairs of, or cause to be merged with and into Borrower, Guardian,
ACM, TSC and ERC on or before the earlier to occur of (i) September 30, 2000 or
(ii) 60 days after the SAFE Debt is paid in full.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
without the prior written consent of the Required Lenders Borrower shall not,
and shall not permit any of its Subsidiaries to:
VII.1 BORROWING. Create, incur, assume or suffer to exist any liability
for Indebtedness for Borrowed Money except (i) Borrower's Obligations, (ii)
Guarantors' Obligations, (iii) Permitted
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Senior Indebtedness, (iv) the SAFE Debt, (v) amounts payable under the SAFE
Attrition Guaranty and (vi) the dealer holdback debt described on EXHIBIT 7.1.
VII.2 LIENS. Create, incur, assume or suffer to exist any Lien upon any
of its Property, whether now owned or hereafter acquired, except Permitted
Liens.
VII.3 MERGER AND ACQUISITION. Consolidate with or merge with or into
any Person, or acquire directly or indirectly all or substantially all of the
capital stock, equity interests, membership interests or Property of any Person,
or otherwise enter into any agreement for, or consummate any Acquisition, except
that (i) Borrower may enter into agreements for, and may consummate,
Acquisitions financed with the proceeds of an Advance and (ii) any Subsidiary of
Borrower may merge with and into Borrower.
VII.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse, contingently
agree to purchase, become liable in respect of any letter of credit, or
otherwise become liable upon the obligation of any Person, except (i)
liabilities arising from the endorsement of negotiable instruments for deposit
or collection, (ii) the posting of bonds to secure performance to the extent
necessary in connection with Borrower's or any of its Subsidiaries' Central
Station Business and similar transactions in the ordinary course of business,
(iii) guaranties by Borrower of the obligations of any of its Subsidiaries under
any Lease, (iv) Guarantors' Obligations and (v) the SAFE Attrition Guaranty.
VII.5 DISTRIBUTIONS. Pay any dividends or make any distributions with
respect to, or purchase or redeem all or any portion of its Equity Interests,
except that any of Borrower's Subsidiaries may pay dividends or make
distributions to Borrower.
VII.6 CAPITAL EXPENDITURES. Make or incur any Capital Expenditures in
any year set forth in EXHIBIT 7.6 if the aggregate amount of all Capital
Expenditures made by Borrower and each of its Subsidiaries with respect to such
year would exceed the amount set forth opposite such year.
VII.7 PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY. Make any (i)
voluntary or optional prepayment of any Indebtedness for Borrowed Money other
than Borrower's Obligations, or (ii) any payments with respect to the SAFE Debt,
except as permitted pursuant to the SAFE Subordination Agreement.
VII.8 OBLIGATIONS AS LESSEE UNDER OPERATING LEASES. Enter into any
arrangement as lessee of Property under any Operating Lease if the aggregate
rentals for by Borrower and each of its Subsidiaries for all such Operating
Leases during any year would exceed $750,000.
VII.9 INVESTMENTS, LOANS. At any time purchase or otherwise acquire,
hold or invest in the capital stock of, or any other interest in, any Person, or
make any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by
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a Qualified Depository, (ii) investments in commercial or finance paper which,
at the time of investment, is rated either "A" or better by ▇▇▇▇▇'▇ Investors
Service, Inc., or Standard & Poor's Corporation, respectively, or at the
equivalent rate by any of their respective successors, (iii) any interests in
any money market account maintained, at the time of investment, with a Qualified
Depository, the investments of which, at the time of investment, are restricted
to the types specified in clause (i) above, (iv) the formation and
capitalization by Borrower of any of its Subsidiaries in connection with any
Acquisition permitted hereunder and (v) investments by Borrower in ERC, TSC, ACM
and Guardian. All investments permitted pursuant to clauses (i), (ii) and (iii)
of this Section 7.9 shall have a maturity not exceeding one year.
VII.10 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of
its business or engage in any business other than the Central Station Business
or permit ACM or Guardian to incur any Indebtedness or own any material
Property.
VII.11 FACILITY SITES. Change the locations of its chief executive
office, Central Station Businesses, offices or other Property used in the
operation of Borrower's or any of its Subsidiaries's Central Station Business
unless (i) Agent shall have received at least 30 days' prior notice thereof,
(ii) such Person shall have complied with all applicable laws, rules and
regulations and shall have received all required consents and approvals from any
Governmental Body, (iii) Agent shall have received satisfactory evidence that
such change could not reasonably be expected to affect adversely the operations
or business prospects of such Person and (iv) such Person shall have executed
and delivered to Agent any documents Agent may reasonably require in order to
maintain the validity and priority of the Security Interests.
VII.12 SALE OR TRANSFER OF ASSETS. Sell, lease, assign or transfer or
otherwise dispose of any Property (other than in the ordinary course of
business) except for the sale or disposition of (i) Property which is not
material to or necessary for the continued operation of its business and (ii)
obsolete or unusable items of equipment which promptly are replaced with new
items of equipment of like function and comparable value to the unusable items
of equipment when the same were new or not obsolete or unusable, provided such
replacement items of equipment shall become subject to the Security Interests.
VII.13 AMENDMENT OF CERTAIN DOCUMENTS. Amend, modify or waive any term
or provision of the (i) the articles of incorporation, by-laws or other
constitutive documents of Borrower or any of its Subsidiaries, (ii) the SAFE
Debt Instruments, (iii) the SAFE Attrition Guaranty or (iv) the SAFE Asset
Purchase Agreement.
VII.14 ACQUISITION OF ADDITIONAL PROPERTIES. Acquire any additional
Property except (i) such Property as is necessary to or useful in the operation
of Borrower's or any of its Subsidiaries' Central Station Business, provided
such acquisitions shall be subject to the conditions and limitations set forth
in this Loan Agreement and (ii) Acquisitions permitted under Section 7.3.
VII.15 ISSUANCE OF EQUITY INTERESTS. Issue or sell, permit to be issued
or sold, any additional Equity
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Interests or any interests convertible into or exercisable for any such
additional Equity Interests, other than (i) Equity Interests issued by any of
Borrower's Subsidiaries to Borrower, (ii) common stock of Borrower issued upon
conversion of Series A Convertible Preferred Stock of Borrower and (iii) other
Equity Interests issued or sold by Borrower, provided the terms under which such
Equity Interests are issued or sold do not and could not provide for any
mandatory payments or dividends on such Equity Interests, mandatory
distributions with respect to such Equity Interests or mandatory redemptions of
such Equity Interests prior to the Maturity Date.
VII.16 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer or
otherwise dispose of any Property to any Affiliate of Borrower or any of its
Subsidiaries (other than Borrower or any of its Subsidiaries), lease Property,
render or receive services or purchase assets from any such Affiliate, or
otherwise enter into any contractual relationship with any such Affiliate.
VII.17 COMPLIANCE WITH ERISA.
(a) Permit the occurrence of any Termination Event which would
result in a liability to Borrower, any of its Subsidiaries or ERISA
Affiliate in excess of $50,000;
(b) Permit the present value of all benefit liabilities under
all Pension Plans to exceed the current value of the assets of such
Pension Plans allocable to such benefit liabilities by more than
$50,000;
(c) Permit any accumulated funding deficiency in excess of
$50,000 (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived;
(d) Fail to make any contribution or payment to any
Multiemployer Plan which Borrower, any of its Subsidiaries or ERISA
Affiliate may be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto which results in or
is likely to result in a liability in excess of $50,000;
(e) Engage, or permit Borrower, any of its Subsidiaries or
ERISA Affiliate to engage, in any "prohibited transaction" as such term
is defined in Section 406 of ERISA or Section 4975 of the Code for
which a civil penalty pursuant to Section 502(i) of ERISA or a tax
pursuant to Section 4975 Of the Code in excess of $50,000 is imposed;
(f) Permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to Borrower, any of its Subsidiaries or ERISA Affiliate or
increase the obligation of such Person to a Multiemployer Plan which
liability or increase, individually or together with all similar
liabilities and increases, is material to such Person; or
(g) Fail, or permit Borrower, any of its Subsidiaries or ERISA
Affiliate to fail, to establish, maintain and operate each Employee
Benefit Plan in compliance in all material
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respects with ERISA, the Code and all other applicable laws and
regulations and interpretations thereof.
VII.18 FACILITY CASH FLOW LEVERAGE RATIO. Permit the Facility Cash Flow
Leverage Ratio as of any date set forth on EXHIBIT 7.18 to be greater than the
amount set forth opposite such date in EXHIBIT 7.18. As used herein, the term
"FACILITY CASH FLOW LEVERAGE RATIO" as of any date shall mean the ratio of (i)
Total Debt as of such date to (ii) the product of (A) the Facility Cash Flow for
the three month period then ending multiplied by (B) 4.
VII.19 OPERATING CASH FLOW LEVERAGE RATIO. Permit the Operating Cash
Flow Leverage Ratio as of the last day of any quarter set forth in EXHIBIT 7.19
to be greater than the amount set forth opposite such last day in EXHIBIT 7.19.
As used herein, the term "OPERATING CASH FLOW LEVERAGE RATIO" as of the last day
of any quarter shall mean the ratio of (i) Total Debt as of such last day to
(ii) for the quarter ending (A) December 31, 2001, the product of the Operating
Cash Flow of Borrower and its Subsidiaries for such quarter multiplied by 4, (B)
March 31, 2002, the product of the Operating Cash Flow of Borrower and its
Subsidiaries for the six months then ended multiplied by 2, (C) June 30, 2002,
the product of the Operating Cash Flow of Borrower and its Subsidiaries for the
nine months then ended multiplied by 1.33 and (D) September 30, 2002 and the
last day of each quarter thereafter, the Operating Cash Flow of Borrower and its
Subsidiaries for the twelve months then ended.
VII.20 RATIO OF TOTAL DEBT TO RMR. Permit the ratio of Total Debt as of
the last day of any quarter set forth in EXHIBIT 7.20 to RMR as of such last day
to be greater than the amount set forth opposite such quarter in EXHIBIT 7.20.
VII.21 FIXED CHARGE COVERAGE RATIO. Permit the Fixed Charge Coverage
Ratio as of the last day of any quarter to be less than 1.05. As used herein,
the term:
"FIXED CHARGE COVERAGE RATIO" as of the last day of any
quarter shall mean a fraction (i) the numerator of which is the sum of
(A) the Operating Cash Flow of Borrower and its Subsidiaries for the
Test Period then ended plus (B) income taxes of Borrower and its
Subsidiaries which are paid during such Test Period and (ii) the
denominator of which is the sum of (A) Senior Debt Service for such
Test Period plus (B) Capital Expenditures for such Test Period (other
than any such Capital Expenditures made with the proceeds of Permitted
Senior Indebtedness) plus (C) income taxes of Borrower and its
Subsidiaries which are paid during such Test Period.
"TEST PERIOD" shall mean (i) the quarter ending December 31,
1999, (ii) the six month period ending ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) the nine
month period ending June 30, 2000 and (iv) the twelve month period
ending September 30, 2000 and the last day of each quarter thereafter.
VII.22 SENIOR INTEREST COVERAGE RATIO. Permit the Senior Interest
Coverage Ratio as of the last day of any quarter set forth in EXHIBIT 7.22 to be
less than the amount set forth opposite such
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quarter in EXHIBIT 7.22. As used herein, the term "SENIOR INTEREST COVERAGE
RATIO" as of the last day of any quarter shall mean a fraction (i) the numerator
of which is the Operating Cash Flow of Borrower and its Subsidiaries for such
quarter and (ii) the denominator of which is the aggregate amount of all
interest paid or accrued on the Principal Balance for such quarter.
ARTICLE VIII
DEFAULT AND REMEDIES
VIII.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Instruments:
VIII.1.1 DEFAULT IN PAYMENT. If Borrower or any of its
Subsidiaries shall fail to pay all or any portion of Borrower's
Obligations when the same become due and payable.
VIII.1.2 BREACH OF COVENANTS.
(a) If Borrower or any of its Subsidiaries shall fail to
observe or perform any covenant or agreement made by it
contained in Section 6.1, 6.2, 6.6, 6.9, or in Article VII;
(b) If Borrower or any of its Subsidiaries shall fail to
observe or perform any covenant or agreement (other than those
referred to in subparagraph (a) above or specifically addressed
elsewhere in this Section 8.1) made by such Person in any of the
Loan Instruments to which such Person is a party, and such
failure shall continue for a period of 30 days after notice of
such failure is given by Agent, provided that, if such failure
is in connection with subsection 6.5, such Person shall have an
additional 30 days to cure such failure, if such Person (i) is
diligently pursuing a cure for such failure and (ii) provides
Agent with evidence to that effect in form and substance
reasonably satisfactory to Agent.
VIII.1.3 BREACH OF WARRANTY. If any representation or warranty
made by or on behalf of Borrower or any of its Subsidiaries in or
pursuant to any of the Loan Instruments or in any instrument or
document furnished in compliance with the Loan Instruments shall prove
to be false or misleading in any material respect on the date as of
which made.
VIII.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY. If
(i) Borrower or any of its Subsidiaries at any time shall be in default
(as principal or guarantor or other surety) in the payment of any
principal of or premium or interest on any Indebtedness for Borrowed
Money (other than Borrower's Obligations) beyond the grace period, if
any, applicable thereto and the aggregate amount of such payments then
in default beyond such grace period shall exceed $25,000 or (ii) any
default shall occur in respect of any issue of Indebtedness for
Borrowed Money of Borrower or any of its Subsidiaries (other than
Borrower's Obligations) outstanding in a principal amount of at least
$50,000, or in
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respect of any agreement or instrument relating to any such issue of
Indebtedness for Borrowed Money, and such default shall continue beyond
the grace period, if any, applicable thereto.
VIII.1.5 BANKRUPTCY.
(a) If Borrower or any of its Subsidiaries shall (i)
generally not be paying its debts as they become due, (ii) file,
or consent, by answer or otherwise, to the filing against it of
a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or insolvency under the laws of any
jurisdiction, (iii) make an assignment for the benefit of
creditors, (iv) consent to the appointment of a custodian,
receiver, trustee or other officer with similar powers for such
Person, or for any substantial part of the Property of such
Person or (v) be adjudicated insolvent.
(b) If any Governmental Body of competent jurisdiction
shall enter an order appointing, without consent of such Person,
a custodian, receiver, trustee or other officer with similar
powers with respect to such Person, or with respect to any
substantial part of the Property belonging to any such Person,
or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to
take advantage of any bankruptcy or insolvency law of any
jurisdiction, or ordering the dissolution, winding-up or
liquidation of Borrower or any of its Subsidiaries or if any
petition for any such relief shall be filed against Borrower or
any of its Subsidiaries and such petition shall not be dismissed
or stayed within 60 days.
VIII.1.6 JUDGMENTS. If there shall exist a final judgment or
award against Borrower or any of its Subsidiaries which shall have been
outstanding for a period of 30 days or more from the date of the entry
thereof and shall not have been discharged or paid in full or stayed
pending appeal, if the aggregate amount of all such judgments and
awards exceeds $50,000.
VIII.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify
any UL Certification or Alarm License of Borrower or any of its
Subsidiaries, the non-continuation of which could reasonably be
expected to have a Material Adverse Effect, or (ii) there shall exist
any violation or default in the performance of, or a material failure
to comply with any agreement, or condition or term of any UL
Certification or Alarm License, which violation, default or failure
could reasonably be expected to have a Material Adverse Effect, or any
such UL Certification or Alarm Licenses shall cease to be in full force
and effect and such cessation could reasonably be expected to have a
Material Adverse Effect, (iii) any agreement which is necessary to the
operation of Borrower or any of its Subsidiaries's Central Station
Business shall be revoked or terminated and not replaced by a
substitute acceptable to Lenders within 30 days after the date of such
revocation or termination, and
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such revocation or termination and non-replacement could reasonably be
expected to have a Material Adverse Effect.
VIII.1.8 COLLATERAL. If any material portion of the Collateral
shall be seized or taken by a Governmental Body or Person, or Borrower
and its Subsidiaries shall fail to maintain or cause to be maintained
the Security Interests and priority of the Loan Instruments as against
any Person, or the title and rights of Borrower or any of its
Subsidiaries to any material portion of the Collateral shall have
become the subject matter of litigation which could reasonably be
expected to result in impairment or loss of the security provided by
the Loan Instruments.
VIII.1.9 INTERRUPTION OF OPERATIONS. If the operations of any
portion of Borrower's or any of its Subsidiaries' Central Station
Business is interrupted at any time for more than 48 hours during any
period of 10 consecutive days and such interruption could reasonably be
expected to have a Material Adverse Effect, unless such Person shall be
entitled to receive during such period of interruption proceeds of
business interruption insurance sufficient to assure that the per diem
Operating Cash Flow of Borrower and its Subsidiaries derived from the
operation of such portion of such Person's Central Station Business
during such period is at least equal to such per diem Operating Cash
Flow for the month preceding the initial date of interruption.
VIII.1.10 PLANS. If an event or condition specified in
subsection 6.3.11 hereof shall occur or exist with respect to any
Pension Plan or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions, Borrower
and its Subsidiaries or any member of a Controlled Group shall incur,
or in the opinion of Lender be reasonably likely to incur, a liability
to a Pension Plan or Multiemployer Plan or the PBGC (or any of them)
which, in the reasonable judgment of Lender, would have a Material
Adverse Effect.
VIII.1.11 CHANGE IN CONTROL. If at any time (i) TJS Partners
ceases to own at least 25% of the Equity Interests of Borrower, (ii)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ or an entity controlled by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
ceases to be a general partner of and hold, directly or indirectly, a
controlling general partnership interest in TJS Partners or (iii)
Borrower ceases to own and control all of the Equity Interests of each
of its Subsidiaries.
VIII.1.12 CHANGE IN MANAGEMENT. If at any time (i) ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, or any successor to him reasonably acceptable to the Required
Lenders, ceases to be the President and Chief Executive Officer of
Borrower, (ii) ▇▇▇▇▇▇ ▇▇▇▇, or any successor to him reasonably
acceptable to the Required Lenders, ceases to manage the day-to-day
operation of Borrower's and each of its Subsidiaries' Central Station
Business or (iii) ▇▇▇▇▇▇ ▇▇▇▇▇, or any successor to him reasonably
acceptable to the Required Lenders, ceases to be the Chairman of
Borrower.
VIII.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
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(A) any Event of Default described in clauses (ii), (iii), (iv)
and (v) of subsection 8.1.5(a) or in 8.1.5(b), all of Borrower's
Obligations at that time outstanding automatically shall mature and
become due, and
(B) any other Event of Default, Lenders, at any time (unless
such Event of Default shall have been waived in writing or remedied),
at their option, without further notice or demand, may declare all of
Borrower's Obligations due and payable, whereupon Borrower's
Obligations immediately shall mature and become due and payable,
all without presentment, demand, protest or notice (other than the declaration
referred to in clause (b) above), all of which hereby are waived.
VIII.3 REMEDIES ON DEFAULT. If Borrower's Obligations have been
accelerated pursuant to Section 8.2, Lenders, at their option, may:
VIII.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce their rights
and remedies under the Loan Instruments in accordance with their
respective terms.
VIII.3.2 OTHER REMEDIES. Enforce any of the rights or remedies
accorded to Lenders and/or Agent at equity or law, by virtue of statute
or otherwise, including, without limitation, the right and power to (i)
take possession of all or any part of the Collateral, exclude Borrower
and its Subsidiaries wholly or partly therefrom and thereafter hold,
store and/or use, operate, manage and control the Collateral, (ii) upon
such taking of possession, from time to time, at the expense of
Borrower, make all such repairs, replacements, alterations, additions
and improvements to and of the Collateral as Lenders may deem proper,
(iii) carry on the Central Station Businesses of Borrower and its
Subsidiaries and exercise all rights and powers of Borrower and its
Subsidiaries with respect thereto as Lenders shall deem best, including
the right to enter into agreements with respect to the operation of the
Collateral or any part thereof as Lenders may see fit, (iv) collect and
receive all rents, issues, profits, fees, revenues and other income of
the Collateral and every part thereof (and the reasonable costs and
expenses of such collection, including, without limitation, reasonable
attorneys' fees, shall be paid by Borrower to Agent upon demand and
shall be deemed to be a part of Borrower's Obligations) and (v) apply
for and have a receiver appointed by a court of competent jurisdiction
as provided in the following sentence. WITHOUT LIMITING THE GENERALITY
OF THE FOREGOING AND WITHOUT DEROGATING FROM ANY RIGHT, REMEDY OR OTHER
PROVISION CONTAINED IN THIS LOAN AGREEMENT OR ANY OF THE OTHER LOAN
INSTRUMENTS, AT ANY TIME FROM AND AFTER 30 DAYS AFTER THE OCCURRENCE OF
AN EVENT OF DEFAULT UNDER SUBSECTION 8.1.1 AND THE ACCELERATION OF
BORROWER'S OBLIGATIONS PURSUANT TO SECTION 8.2, LENDERS AND/OR AGENT
SHALL HAVE THE RIGHT TO APPLY FOR AND HAVE A RECEIVER APPOINTED BY A
COURT OF COMPETENT JURISDICTION IN ANY ACTION TAKEN BY AGENT AND/OR
LENDERS TO ENFORCE THE RIGHTS ACCORDED TO THEM HEREUNDER AND THEREUNDER
IN ORDER TO MANAGE, PROTECT AND PRESERVE THE COLLATERAL AND CONTINUE
THE OPERATION OF THE CENTRAL STATION BUSINESS OF BORROWER AND ITS
SUBSIDIARIES, OR TO SELL OR DISPOSE OF THE COLLATERAL, AND TO COLLECT
ALL REVENUES AND PROFITS THEREOF AND APPLY THE SAME AS SET
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FORTH IN SECTION 8.4. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW,
BORROWER HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY RIGHT TO OBJECT
TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AS PROVIDED
ABOVE. BORROWER (I) GRANTS SUCH WAIVER AND CONSENT KNOWINGLY AFTER
HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, (II)
ACKNOWLEDGES THAT (A) THE UNCONTESTED RIGHT TO HAVE A RECEIVER
APPOINTED FOR THE FOREGOING PURPOSES IS CONSIDERED ESSENTIAL BY LENDERS
IN CONNECTION WITH THE ENFORCEMENT OF THEIR RIGHTS AND REMEDIES
HEREUNDER AND UNDER THE OTHER LOAN INSTRUMENTS AND (B) THE AVAILABILITY
OF SUCH APPOINTMENT AS A REMEDY UNDER THE FOREGOING CIRCUMSTANCES WAS A
MATERIAL FACTOR IN INDUCING LENDERS TO MAKE THE LOAN TO BORROWER AND
(III) TO THE EXTENT NO PROHIBITED BY APPLICABLE LAW, AGREES TO ENTER
INTO ANY AND ALL STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR
OTHER INSTRUMENTS IN CONNECTION WITH THE FOREGOING, AND TO COOPERATE
FULLY WITH AGENT AND LENDERS IN CONNECTION WITH THE ASSUMPTION AND
EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF THE
COLLATERAL.
VIII.4 APPLICATION OF FUNDS. Any funds received by Lenders or Agent
pursuant to the exercise of any rights accorded to Lenders and/or Agent pursuant
to, or by the operation of any of the terms of, any of the Loan Instruments,
including, without limitation, insurance proceeds, condemnation proceeds or
proceeds from the sale of Collateral, shall be applied to Borrower's Obligations
in the following order of priority:
VIII.4.1 EXPENSES. First, to the payment of (i) all reasonable
fees and expenses actually incurred, including, without limitation,
court costs, fees of appraisers, title charges, costs of maintaining
and preserving the Collateral, costs of sale, and all other costs
incurred by Lenders and Agent in exercising any rights accorded to such
Persons pursuant to the Loan Instruments or by applicable law,
including, without limitation, reasonable attorneys' fees, and (ii) all
Liens (excluding Permitted Liens other than the Security Interests)
superior to the Liens of Agent except such superior Liens subject to
which any sale of the Collateral may have been made.
VIII.4.2 BORROWER'S OBLIGATIONS. Next, to the payment of the
remaining portion of Borrower's Obligations in such order as Lenders
may determine.
VIII.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
thereto.
VIII.5 PERFORMANCE OF BORROWER'S OBLIGATIONS. If Borrower or any of its
Subsidiaries fails to (i) maintain in force and pay for any insurance policy or
bond which such Person is required to provide pursuant to any of the Loan
Instruments, (ii) keep the Collateral free from all Liens except for Permitted
Liens, (iii) pay when due all taxes, levies and assessments on or in respect of
the Collateral, except as otherwise permitted pursuant to the terms hereof, (iv)
make all payments and perform all acts on the part of such Person to be paid or
performed in the manner required by the terms hereof and by the terms of the
other Loan Instruments with respect to any of the Collateral, including, without
limitation, all expenses of protecting, storing, warehousing, insuring, handling
and maintaining the Collateral, (v) keep fully and perform promptly any other of
the obligations of
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such Person hereunder or under any of the other Loan Instruments, and (vi) keep
fully and perform promptly the obligations of such Person with respect to any
issue of Indebtedness for Borrowed Money secured by a Permitted Prior Lien, then
Agent or Lenders may (but shall not be required to) procure and pay for such
insurance policy or bond, place such Collateral in good repair and operating
condition, pay, contest or settle such Liens or taxes or any judgments based
thereon or otherwise make good any other aforesaid failure of such Person.
Borrower shall reimburse Agent and Lenders immediately upon demand for all
reasonable sums paid or advanced on behalf of Borrower for any such purpose,
together with reasonable and/or necessary costs and expenses (including
reasonable attorneys' fees) paid or incurred by Agent and Lenders in connection
therewith and interest on all sums advanced from the date of advancement until
repaid to Agent and Lenders at the Default Rate. All such sums advanced by Agent
and Lenders, with interest thereon, immediately upon advancement thereof, shall
be deemed to be part of Borrower's Obligations.
ARTICLE IX
ADDITIONAL LENDERS AND PARTICIPANTS; THE AGENT
IX.1 ASSIGNMENT TO OTHER LENDERS.
IX.1.1 ASSIGNMENT. FINOVA and State Street may make one or more
Loan Assignments and each Assignee, with the prior written consent of
Agent (which may be given or denied in the sole discretion of Agent),
may make a Loan Assignment of the rights and obligations which were
assigned to such Assignee, provided, however, that (i) each Loan
Assignment shall not be less than $5,000,000 and shall be in integral
multiples of $1,000,000 in excess thereof, (ii) the parties to each
such Loan Assignment shall execute and deliver to the Agent an
Assignment and Acceptance, together with any Note or Notes subject to
such assignment and (iii) the Assignee shall pay to Agent an assignment
fee of $3,500. Notwithstanding anything to the contrary contained
herein, any Lender may at any time pledge all or any portion of its
interests and rights under the Loan Instruments (including all or any
portion of any Notes payable to the order of such Lender) to any of the
twelve Federal Reserve Banks organized under ss.4 of the Federal
Reserve Act, 12 U.S.C. ss.341. No such pledge or the enforcement
thereof shall release any Lender from its obligations hereunder or
under any other Loan Instrument.
IX.1.2 EFFECT OF LOAN ASSIGNMENT. Upon the execution, delivery,
acceptance and recording of an Assignment and Acceptance (i) the
Assignee thereunder shall be a party to this Loan Agreement and, to the
extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (ii) the Lender thereunder shall,
to the extent that rights and obligations hereunder have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Loan Agreement.
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IX.1.3 REGISTER. Agent shall maintain a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the
recordation of the names, addresses, and interests of the Lenders in
Borrower's Obligations (the "REGISTER"). The entries in the Register
shall be conclusive and binding for all purposes, absent manifest
error, and Borrower, Agent and Lenders may treat each Person whose name
is recorded in the Register as a Lender hereunder for all purposes of
this Agreement. The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
IX.1.4 SUBSTITUTION OF NOTES. Simultaneously with the delivery
by Agent to Borrower of any Note which is the subject of a Loan
Assignment which is marked "canceled," Borrower shall execute and
deliver to Agent for delivery to (i) the applicable Assignee, a Note
payable to the order of such Assignee in an amount equal to the amount
assigned to such Assignee, and (ii) the assigning Lender, a Note
payable to the order of such Lender in an amount equal to the amount
retained by such Lender, each such Note to be substantially in the form
of the canceled Note.
IX.1.5 INSPECTIONS. Any Inspection which any Lender shall desire
to undertake, and all communications between any Lender and Borrower or
any of its Subsidiaries, shall be coordinated by such Lender through
Agent, and Agent shall accompany each Lender on any Inspection which
such Lender desires to undertake.
IX.2 PARTICIPATIONS. Subject to the restrictions set forth in
subsection 9.1.1, each Lender shall have the right to sell Participations. In
the event of the sale of a Participation, the obligations of the Lender selling
such a Participation shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any Note which previously has been delivered to Lender pursuant to the terms of
this Loan Agreement, and Borrower shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Loan Agreement. Notwithstanding the sale of any Participation, all amounts
payable by Borrower pursuant to the terms of the Loan Instruments shall be
determined as if no such Participation had been sold. No Participant shall be
entitled to require a Lender to take or omit to take any action pursuant to the
Loan Instruments except as provided in the Participation Agreement executed by
and between the Participant and such Lender.
IX.3 SET OFF AND SHARING OF PAYMENTS. Upon the occurrence of any
Event of Default, regardless of the value of the Collateral or any other
security for the repayment of Borrower's Obligations, and in addition to and not
in limitation of the rights of offset that any Lender may have under applicable
law, and whether or not any Lender has made any demand or Borrower's Obligations
have matured, each Lender shall have the right, at any time or from time to time
after the occurrence of such Event of Default, without notice to Borrower or to
any other Person, to set off and to appropriate and apply to the payment of
Borrower's Obligations any and all deposits, balances and other obligations held
by such Lender for the account of Borrower or any of its Subsidiaries, and any
other Property at any time held or owing by such Lender to or for the credit or
for the account of Borrower or any of its Subsidiaries. Each Lender exercising
such rights shall
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notify the Agent thereof and any amount received as a result of the exercise of
such rights shall be shared by Lenders in accordance with their Pro Rata Shares.
Borrower agrees that (i) each Lender may exercise its right to set off with
respect to amounts in excess of such Lender's share of Borrower's Obligations
and may sell Participations in such excess to other Lenders and (ii) any Lender
so purchasing a Participation in the Loan made or other of Borrower's
Obligations held by other Lenders may exercise all rights of set-off, bankers'
lien, counterclaim or similar rights with respect to such Participation as fully
as if such Lender were a direct holder of the Loan and other of Borrower's
Obligations in the amount of such Participation.
IX.4 APPOINTMENT OF AGENT. Each Lender hereby irrevocably appoints
and authorizes FINOVA to act as Agent for such Lender under this Loan Agreement
and to execute and deliver or accept the other Loan Instruments on behalf of
such Lender. Each Lender hereby irrevocably authorizes, and each holder of any
Note by the acceptance of a Note shall be deemed irrevocably to authorize, the
Agent to take such action on its behalf under the provisions of this Loan
Agreement and the other Loan Instruments and any other instruments and
agreements referred to herein and therein, and to exercise such powers and to
perform such duties hereunder as are specifically delegated to or required of
the Agent by the terms of this Loan Agreement, together with such powers as are
reasonably incidental thereto. FINOVA agrees to act as the Agent on behalf of
the Lenders to the extent provided in this Loan Agreement.
IX.5 DELEGATION OF DUTIES. The Agent may perform any of its duties
hereunder by or through agents or employees and shall be entitled to engage and
pay a reasonable fee for the advice or services of any attorneys, accountants or
other experts concerning all matters pertaining to its duties hereunder and to
rely upon any advice so obtained.
IX.6 NATURE OF DUTIES; INDEPENDENT CREDIT INVESTIGATION. Agent shall
have no duties or responsibilities except those expressly set forth in this Loan
Agreement and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Loan Agreement or otherwise
exist. The duties of Agent shall be mechanical and administrative in nature.
Agent shall not have by reason of this Loan Agreement a fiduciary or trust
relationship in respect of any Lender, and nothing in this Loan Agreement
express or implied, is intended to or shall be so construed as to impose upon
Agent any obligations in respect of this Loan Agreement except as expressly set
forth herein. Each Lender expressly acknowledges that (i) Agent has not made any
representations or warranties to it and that no act by Agent hereafter taken,
including any review of the affairs of any of the Persons party to any Loan
Instrument shall be deemed to constitute any representation or warranty by Agent
to any Lender and (ii) it has made and will continue to make, without reliance
upon Agent, its own independent investigation of the financial condition and
affairs and its own appraisal of the creditworthiness of each of the Persons
party to any Loan Instrument and the condition and value of the Collateral in
connection with this Loan Agreement and the making of the Loan.
IX.7 INSTRUCTIONS FROM LENDERS. Agent shall have the right to request
instructions from the Lenders by notice to each of the Lenders. If Agent shall
request instructions from the Lenders with respect to any act or action
(including the failure to act) in connection with this Loan
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Agreement, Agent shall be entitled to refrain from such act or taking such
action unless and until Agent shall have received instructions from the Lenders
or the Required Lenders, as applicable, and Agent shall not incur liability to
any Person by reason of so refraining. No Lender shall have any right of action
against Agent as a result of Agent acting or refraining from acting in
accordance with the instructions of the Lenders or the Required Lenders, as
applicable.
IX.8 EXCULPATORY PROVISIONS. Neither Agent nor any of its respective
directors, officers, employees, agents, attorneys or Affiliates shall (i) be
liable to any Lender for any action taken or omitted to be taken by it or them
pursuant to any Loan Instruments unless caused by it or its respective
directors, officers, employees, agents, attorneys or Affiliates own gross
negligence or willful misconduct, (ii) be responsible in any manner to any
Lender for the effectiveness, enforceability, genuineness, validity or due
execution of this Loan Agreement or any other Loan Instruments or for any
recital, representation, warranty, document, certificate, report or statement
herein or made or furnished under or in connection with this Loan Agreement or
any other Loan Instruments, or (iii) be under any obligation to any Lender to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions hereof or thereof on the part of the Persons party to
any Loan Instrument, the financial condition of such Persons, or the existence
or possible existence of any Event of Default or Incipient Default.
IX.9 REIMBURSEMENT AND INDEMNIFICATION BY LENDERS OF AGENT. Each
Lender agrees to reimburse and indemnify Agent (to the extent not reimbursed by
Borrower and without limiting the obligation of Borrower to do so) in proportion
to its Pro Rata Share from and against all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in its respective capacities as such, in any way relating
to or arising out of this Loan Agreement or any other Loan Instruments or any
action taken or omitted by Agent hereunder or thereunder, 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 own gross negligence or willful misconduct.
IX.10 RELIANCE BY AGENT. Agent shall be entitled to rely upon any
writing, telegram, telex or teletype message, resolution, notice, consent,
certificate, letter, statement, order or other document or conversation by
telephone or otherwise reasonably believed by it to be genuine and correct and
to have been signed, sent or made by the proper Person or Persons, and upon the
advice and opinions of counsel and other professional advisers selected by
Agent, as the case may be. Agent shall be fully justified in failing or refusing
to take any action hereunder unless it shall first be indemnified to its
satisfaction by Lenders against any and all liability and expense (other than a
liability or expense relating to gross negligence or willful misconduct) which
may be incurred by it by reason of taking or continuing to take any such action.
IX.11 NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge
or notice of the occurrence of any Incipient Default or Event of Default unless
Agent has received written notice from a Lender or Borrower referring to this
Loan Agreement, describing such Incipient Default or Event of Default and
stating that such notice is a "notice of default."
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IX.12 RELEASE OF COLLATERAL. Lenders hereby authorize Agent to release
any Lien granted to Agent upon any Collateral upon (i) the payment and
satisfaction of all of Borrower's Obligations or (ii) the request of Borrower if
such release is required pursuant to the terms of any of the Loan Instruments.
IX.13 LENDERS IN THEIR INDIVIDUAL CAPACITIES. With respect to the
portions of the Loan made by it, Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not Agent, and the
term "Lenders" shall, unless the context otherwise indicates, include Agent in
its individual capacity. Agent and its Affiliates and each of the Lenders and
their respective Affiliates may, without liability to account, except as
prohibited herein, make loans to, accept deposits from, discount drafts for, act
as trustee under indentures of, and generally engage in any kind of banking or
trust business with, Borrower, any of Borrower's Subsidiaries and their
Affiliates as though such Lender were not a Lender hereunder.
IX.14 HOLDERS OF NOTES. Agent may deem and treat any payee of any Note
as the owner hereof for all purposes unless and until Agent receives an
Assignment and Acceptance with respect thereto. Any request, authority or
consent of any Person who at the time of making such request or giving such
authority or consent is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of such Note or of any Note or
Notes issued in exchange therefor.
IX.15 SUCCESSOR AGENT. Agent may resign at any time by giving not less
than 30 days' prior written notice to Borrower and the other Lenders. The
Lenders shall have the right to appoint a successor Agent. If a successor Agent
is not appointed within 30 days following Agent's notice of its resignation or
its removal, Agent shall appoint a successor agent who shall serve as Agent
until such time as the Lenders appoint a successor Agent. Upon its appointment,
such successor Agent shall succeed to the rights, powers and duties of Agent and
the term "Agent" shall mean such successor effective upon its appointment, and
the former Agent's rights, powers and duties as Agent shall be terminated
without any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement. After the resignation of any Agent, the
provisions of this Article IX shall inure to the benefit of such former Agent
and such former Agent shall not by reason of such resignation be deemed to be
released from liability for any actions taken or not taken by it while it was
Agent.
IX.16 DELIVERY OF INFORMATION. Agent shall not be required to deliver
to any Lender originals or copies of any documents, instruments, reports,
notices, communications or other information received by Agent from Borrower or
any other Person under or in connection with any Loan Instruments except (i) as
specifically provided in the Loan Instruments or (ii) as specifically requested
from time to time in writing by any Lender with respect to a specific document,
instrument, notice or other written communication received by and in the
possession of Agent at the time of receipt of such request and then only in
accordance with such specific request.
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IX.17 BENEFICIARIES. Except as expressly provided in this Loan
Agreement, the provisions of this Article IX are solely for the benefit of Agent
and Lenders, and Borrower shall not have any rights to rely on or enforce any of
the provisions hereof. In performing its functions and duties under this Loan
Agreement, Agent shall act solely as 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 Borrower.
ARTICLE X
CLOSING
The Closing Date shall be such date as the parties shall determine, and
the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by Lenders. The Closing shall take place at the office of Altheimer &
▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or such other place as the
parties hereto shall agree. Unless the Closing occurs on or before September 30,
1999, this Loan Agreement shall terminate and be of no further force or effect
and, except for any obligation of Borrower to Lenders pursuant to Article XI,
none of the parties hereto shall have any further obligation to any other party.
ARTICLE XI
EXPENSES AND INDEMNITY
XI.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any
of the transactions contemplated by this Loan Agreement shall be consummated,
Borrower agrees to pay to Lenders on demand all reasonable expenses incurred by
Lenders in connection with the transactions contemplated hereby (including,
without limitation, any appraisal fees, environmental audit fees and title and
recording charges) and in connection with any amendments, modifications or
waivers (whether or not the same become effective) under or in respect of any of
the Loan Instruments, including, without limitation:
XI.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN INSTRUMENTS.
All reasonable expenses, disbursements and reasonable attorneys' fees,
actually incurred (including, without limitation, charges for required
mortgagee's title insurance, lien searches, reproduction of documents,
long distance telephone calls and overnight express carriers) of
special counsel and other counsel retained by Lenders in connection
with the preparation and negotiation of the Loan Instruments or any
amendments, modifications or waivers hereto or thereto.
XI.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF
LOAN INSTRUMENTS. Any reasonable expenses or other costs, including
reasonable attorneys' fees and expert witness fees, actually incurred
by Agent or Lenders in connection with the
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administration and monitoring of the Commitments or the enforcement or
collection (except to the extent Borrower is the prevailing party in
any such enforcement or collection proceeding) against Borrower or any
of its Subsidiaries of any provision of any of the Loan Instruments,
and in connection with or arising out of any litigation, investigation
or proceeding instituted by any Governmental Body or any other Person
with respect to any of the Loan Instruments, whether or not suit is
instituted, including, but not limited to, such costs or expenses
arising from the enforcement or collection against Borrower or any of
its Subsidiaries of any provision of any of the Loan Instruments in any
state or federal bankruptcy or reorganization proceeding.
XI.2 INDEMNITY. Borrower agrees to indemnify and save Agent and
Lenders harmless of and from the following:
XI.2.1 BROKERAGE FEES. The fees, if any, of brokers and finders
engaged by Borrower.
XI.2.2 GENERAL. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by Agent
or Lenders in investigating, preparing for, defending against,
providing evidence, producing documents or taking other action in
respect of any commenced or threatened litigation, administrative
proceeding, suit instituted by any Person or investigation under any
law, including any federal securities law, the Bankruptcy Code, any
relevant state corporate statute or any other securities law,
bankruptcy law or law affecting creditors generally of any
jurisdiction, or any regulation pertaining to any of the foregoing, or
at common law or otherwise, relating to the transactions contemplated
by or referred to in, or any other matter related to, the Loan
Instruments, whether or not Agent or any Lender is a party to such
litigation, proceeding or suit, or is subject to such investigation.
XI.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of Agent or any Lender
and Borrower as having the relationship of joint venturers or partners
or the determination that Agent or any Lender has acted as agent for
Borrower.
XI.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses,
damages, out of pocket response costs, clean-up costs and expenses
suffered and/or incurred at any time by Agent or any Lender arising out
of or in any way relating to the existence at any time of any Hazardous
Materials in, on, under, at, transported to or from, or used in the
construction and/or renovation of, any of the Leasehold Property, any
parcel of real estate acquired in connection with an Acquisition, or
otherwise with respect to any Environmental Law, and/or the failure of
Borrower to perform its obligations and covenants hereunder with
respect to environmental matters, including, but not limited to: (i)
claims of any Persons for damages, penalties, response costs, clean-up
costs, injunctive or other relief, (ii) costs of removal and
restoration, including fees of attorneys and experts, and costs of
reporting the existence of Hazardous Materials to any Governmental
Body, and (iii) any expenses or obligations,
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including reasonable attorneys' fees and expert witness fees, incurred
at, before and after any trial or other proceeding before any
Governmental Body or appeal therefrom whether or not taxable as costs,
including, without limitation, witness fees, deposition costs, copying
and telephone charges and other expenses, all of which shall be paid by
Borrower to Agent or such Lender when incurred by Agent or such Lender,
except where such costs were directly caused by the gross negligence or
willful misconduct of FINOVA, any Lender, or by any agent, or third
party acting on behalf of and at the direction of FINOVA or any Lender.
ARTICLE XII
MISCELLANEOUS
XII.1 NOTICES. All notices and communications under this Loan Agreement
shall be in writing and shall be (i) delivered in person, (ii) sent by
facsimile, or (iii) mailed, postage prepaid, either by registered or certified
mail, return receipt requested, or by overnight express carrier, addressed in
each case as follows:
To Borrower: Security Associates International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq., General Counsel
Facsimile No.: 847/956-9360
To Agent or
FINOVA: FINOVA Capital Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Facsimile No.: 312/322-3530
Copy to: FINOVA Capital Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Law
Facsimile No.: 602/207-5036
Copy to: Altheimer & ▇▇▇▇
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile No.: 312/715-4000
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▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust Company
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, III
Facsimile No.: 617/664-3708
Copy to: ▇▇▇▇▇▇, Hall & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Pallantino, P.C.
Facsimile No.: 617/248-4000
or to any other address or facsimile number, as to any of the parties hereto, as
such party shall designate in a notice to the other parties hereto. All notices
sent pursuant to the terms of this Section 12.1 shall be deemed received (i) if
personally delivered, then on the Business Day of delivery, (ii) if sent by
facsimile before 2:00 p.m. Phoenix time, on the day sent if a Business Day or if
such day is not a Business Day or if sent after 2:00 p.m. Phoenix time, then on
the next Business Day, (iii) if sent by overnight, express carrier, on the next
Business Day immediately following the day sent, or (iv) if sent by registered
or certified mail, on the earlier of the fifth Business Day following the day
sent or when actually received. Any notice by facsimile shall be followed by
delivery on the next Business Day by overnight, express carrier or by hand.
XII.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants,
agreements, representations and warranties made in this Loan Agreement and in
the certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution and delivery to Lenders of the Notes and of all other
Loan Instruments, and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
Notwithstanding the repayment of all amounts due under the Loan Instruments, the
cancellation of the Notes and the release and/or cancellation of any and all of
the Loan Instruments or the foreclosure of any Liens on the Collateral, the
obligations of Borrower to indemnify Agent and Lenders with respect to the
expenses, damages, losses, costs and liabilities described in Section 11.2 shall
survive until all applicable statute of limitations periods with respect to
actions which may be brought against Agent or any Lender have run.
XII.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
deliver to Agent and Lenders such additional documents as Lenders reasonably may
require to carry out the purposes of the Loan Instruments and to protect
Lenders' rights thereunder, including, without limitation, using its best
efforts in the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments.
XII.4 TAXES AND FEES. Should any tax (other than taxes based upon the
net income of any Lender), recording or filing fees become payable in respect of
any of the Loan Instruments, or any amendment, modification or supplement
thereof, Borrower agrees to pay the same on demand,
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together with any interest or penalties thereon attributable to any delay by
Borrower in meeting any Lender's demand, and agree to hold Lenders harmless with
respect thereto.
XII.5 SEVERABILITY. In the event that any provision of this Loan
Agreement is deemed to be invalid by reason of the operation of any law, this
Loan Agreement shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
XII.6 WAIVER. No delay on the part of Agent or any Lender in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, and no single or partial exercise of any right, power or privilege
hereunder shall preclude other or further exercise thereof, or be deemed to
establish a custom or course of dealing or performance between the parties
hereto, or preclude the exercise of any other right, power or privilege.
XII.7 MODIFICATION OF LOAN INSTRUMENTS; AMENDMENTS. No modification or
waiver of any provision of any of the Loan Instruments shall be effective unless
in writing and signed by the Required Lenders or the Agent on their behalf, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given, except that (i) the written consent of all
Lenders is required to (A) increase the Commitment, (B) reduce the principal of
or interest on any Note, (C) postpone any date fixed for payment of any
principal of or interest on any Note or any fee due hereunder, (D) amend or
waive Section 12.6, Section 12.7, Section 12.9 or the definition of "Required
Lenders," (E) release any Guarantor from its obligations under the Guaranty or
(F) release any Liens upon the Collateral except as expressly provided in this
Loan Agreement and (ii) the written consent of Agent is required for any
amendments of Article IX. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in the same, similar
or other circumstances.
XII.8 CAPTIONS. The headings in this Loan Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
XII.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto.
XII.10 REMEDIES CUMULATIVE. All rights and remedies of Agent and
Lenders pursuant to this Loan Agreement, any other Loan Instruments or
otherwise, shall be cumulative and non-exclusive, and may be exercised
singularly or concurrently. Neither Agent nor any Lender shall be required to
prosecute collection, enforcement or other remedies against Borrower before
proceeding against any of its Subsidiaries or to enforce or resort to any
security, liens, collateral or other rights of Agent or Lenders. One or more
successive actions may be brought against Borrower and/or any of its
Subsidiaries, either in the same action or in separate actions, as often as
Lenders deem advisable, until all of Borrower's Obligations are paid and
performed in full.
XII.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other
Loan Instruments executed pursuant hereto constitute the entire agreement among
the parties hereto with
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respect to the transactions contemplated hereby or thereby and supersede any
prior agreements, whether written or oral, relating to the subject matter
hereof. In the event of a conflict between the terms and conditions set forth
herein and the terms and conditions set forth in any other Loan Instrument, the
terms and conditions set forth herein shall govern.
XII.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA.
FOR PURPOSES OF THIS SECTION 12.12, THE LOAN INSTRUMENTS SHALL BE DEEMED TO BE
PERFORMED AND MADE IN THE STATE OF ARIZONA.
XII.13 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS
OR PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF
THE LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT OF MARICOPA
COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA OR, IF
AGENT OR ANY LENDER INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS,
ANY COURT IN WHICH AGENT OR SUCH LENDER SHALL INITIATE OR TO WHICH AGENT OR SUCH
LENDER SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION.
BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR PROCEEDING COMMENCED BY AGENT OR ANY LENDER IN OR REMOVED BY
AGENT OR ANY LENDER TO ANY OF SUCH COURTS, AND HEREBY AGREES THAT PERSONAL
SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS ISSUED THEREIN
MAY BE SERVED IN THE MANNER PROVIDED FOR NOTICES HEREIN, AND AGREES THAT SERVICE
OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR PAPERS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWER AT THE ADDRESS TO WHICH
NOTICES ARE TO BE SENT PURSUANT TO SECTION 12.1. BORROWER WAIVES ANY CLAIM THAT
MARICOPA COUNTY, ARIZONA OR THE DISTRICT OF ARIZONA IS AN INCONVENIENT FORUM OR
AN IMPROPER FORUM BASED ON LACK OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD
BORROWER, AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS,
COMPLAINT, PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY
LAW AFTER THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER
AND/OR JUDGMENT MAY BE ENTERED BY THE COURT AGAINST BORROWER AS DEMANDED OR
PRAYED FOR IN SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE
OF FORUM FOR BORROWER SET FORTH IN THIS SECTION 12.13 SHALL NOT BE DEEMED TO
PRECLUDE THE ENFORCEMENT BY AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN ANY
OTHER FORUM OR THE TAKING BY AGENT OR ANY LENDER OF ANY ACTION TO ENFORCE THE
SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT
TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
XII.14 WAIVER OF RIGHT TO JURY TRIAL. AGENT, LENDERS AND BORROWER
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN
INSTRUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE
BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT
ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
XII.15 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY
BORROWER OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER LOAN
INSTRUMENTS.
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XII.16 ESTOPPEL CERTIFICATE. Within 15 days after Agent or any Lender
reasonably requests Borrower to do so, Borrower will execute and deliver to
Agent or such Lender a statement certifying (i) that this Loan Agreement is in
full force and effect and has not been modified except as described in such
statement, (ii) the date to which interest on the Notes has been paid, (iii) the
Principal Balance, (iv) whether or not to its knowledge an Incipient Default or
Event of Default has occurred and is continuing, and, if so, specifying in
reasonable detail each such Incipient Default or Event of Default of which it
has knowledge, (v) whether to its knowledge it has any defense, setoff or
counterclaim to the payment of the Notes in accordance with its terms, and, if
so, specifying each defense, setoff or counterclaim of which it has knowledge in
reasonable detail (including where applicable the amount thereof), and (vi) as
to any other matter reasonably requested by Agent or such Lender.
XII.17 CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender nor any
agent or attorney of Agent or such Lender shall be liable to Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of Borrower's
Obligations, except in the case of such Person's gross negligence or willful
misconduct.
XII.18 COUNTERPARTS. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
XII.19 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement
or in any other Loan Instrument, and no course of dealing among the parties
hereto, shall be deemed to create any fiduciary duty by Agent or any Lender to
Borrower.
XII.20 NO STRICT CONSTRUCTION. The language used in this Loan Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party hereto.
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IN WITNESS WHEREOF, this Second Amended and Restated Loan Agreement has
been executed and delivered by each of the parties hereto by a duly authorized
officer of each such party on the date first set forth above.
SECURITY ASSOCIATES INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
FINOVA CAPITAL CORPORATION, a Delaware
corporation, in its individual capacity as a
Lender and as Agent for all Lenders
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Assistant Vice President
STATE STREET BANK AND TRUST COMPANY,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President