NOTE PURCHASE AGREEMENT
dated as of
April 15,1997
by and between
SECURITY SYSTEMS HOLDINGS, INC.
as Issuer,
and
THE NOTEHOLDERS SIGNATORIES HERETO.
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS -2-
SECTION 1.1 Certain Defined Terms -2-
SECTION 1.2 Accounting Terms 12
ARTICLE 2.
SALE AND ISSUANCE OF NOTES;
INTEREST; PAYMENTS AND TERMS OF NOTES 13
SECTION 2.1 Sale and Issuance of the Notes 13
SECTION 2.2 Interest on the Notes 13
SECTION 2.3 Payments and Prepayments 14
ARTICLE 3. CONDITIONS TO NOTE ISSUANCE 15
SECTION 3.1 Conditions to Performance of Noteholders 15
SECTION 3.2 Conditions to Performance of the Parties 16
ARTICLE 4. REPRESENTATIONS AND WARRANTIES 17
SECTION 4.1 Organization and Good Standing 17
SECTION 4.2 Authorization and Power 17
SECTION 4.3 No Conflicts or Consents 17
SECTION 4.4 Enforceable Obligations 17
SECTION 4.5 No Default 18
SECTION 4.6 Capital Structure and Subsidiaries 18
SECTION 4.7 Investment Company Act 18
SECTION 4.8 Public Utility Holding Company Act 18
SECTION 4.9 Financial Statements 18
SECTION 4.10 Financial Information : 18
SECTION 4.11 Business Relationships 19
SECTION 4.12 Brokers 19
SECTION 4.13 Statutory Compliance 19
SECTION 4.14 Taxes 19
SECTION 4.15 Litigation 19
SECTION 4.16 Title to Properties 19
SECTION 4.17 Labor Relations 20
SECTION 4.18 Contingent Obligations 20
SECTION 4.19 Investments 20
SECTION 4.20 Representations and Warranties
of the Noteholders 20
ARTICLE 5. COVENANTS 21
SECTION 5.1 Indebtedness 21
SECTION 5.2 Payments 22
SECTION 5.3 Transactions with Affiliates 22
SECTION 5.4 Liens 22
SECTION 5.5 Mergers, Consolidations, etc 23
SECTION 5.6 Limitation on Asset Sales 23
SECTION 5.7 Existence 23
SECTION 5.8 Financial Statements and Other Reports 24
SECTION 5.9 Compliance with Laws 24
SECTION 5.10 Payment of Taxes and Other Claims 24
SECTION 5.11 Maintenance of Properties and Insurance 25
SECTION 5.12 Maintaining Records; Access to Properties
and Inspections 25
SECTION 5.13 Preservation of Business and Operations 26
SECTION 5.14 Lines of Business 26
SECTION 5.15 Governing Documents 26
SECTION 5.16 Maintenance of Ownership of Subsidiaries 26
SECTION 5.17 Investments 26
ARTICLE 6. EVENTS OF DEFAULT 26
SECTION 6.1 Failure to Make Payments When Due 26
SECTION 6.2 Default in Other Agreements 27
SECTION 6.3 Breach of Certain Covenants and Agreements 27
SECTION 6.4 Involuntary Bankruptcy; Appointment
of Receiver, etc 27
SECTION 6.5 Voluntary Bankruptcy; Appointment
of Receiver, etc 27
SECTION 6.6 Judgments and Attachments 28
SECTION 6.7 Change in Control 28
ARTICLE 7. SUBORDINATION 28
SECTION 7.1 Notes Subordinate to Senior Debt 28
SECTION 7.2 Standstills, Etc 28
SECTION 7.3 Authorization of Certain Actions 31
SECTION 7.4 Delivery in Trust 32
SECTION 7.5 Waiver of Subrogation. 32
SECTION 7.6 Waiver of Notices, Etc 32
SECTION 7.7 Assignments 33
SECTION 7.8 No Contest 33
SECTION 7.9 Collateral Waiver 33
SECTION 7.10 Additional Financing 33
SECTION 7.11 Benefit of Parties 33
ARTICLE 8. MISCELLANEOUS 34
SECTION 8.1 Transfers; Note Register; Replacement
of Notes 34
SECTION 8.2 Expenses 35
SECTION 8.3 Amendments and Waivers 35
SECTION 8.4 Independence of Covenants 35
SECTION 8.5 Notices 36
SECTION 8.6 Failure or Indulgence Not Waiver;
Remedies Cumulative 37
SECTION 8.7 Severability 37
SECTION 8.8 Heading 37
SECTION 8.9 Applicable Law 37
SECTION 8.10 Successors and Assigns; Subsequent
Holders of Notes 37
SECTION 8.11 Consent to Service of Process 37
SECTION 8.12 Waiver of Jury Trial 38
SECTION 8.13 Limited Recourse 38
SECTION 8.14 Counterparts; Effectiveness 38
SECTION 8.15 Entirety 38
EXHIBITS
Exhibit A Security Systems Holdings, Inc. Promissory
Note Due 1999
Exhibit B Existing SSH Subordinated Debt Allocation
Exhibit C New SSH Subordinated Debt Allocation
SCHEDULES
Schedule 1.1
Schedule 4.6
Schedule 4.9
Schedule 4.15
Schedule 4.16
Schedule 4.19
Schedule 5.1
Schedule 5.3
Schedule 5.4
Schedule 8.5
NOTE PURCHASE AGREEMENT (the "Agreement"), dated as of
April 15, 1997, by and between Security Systems Holdings, Inc., a
Delaware corporation (the "Company"), and each of the noteholders
identified on the signature pages hereof (individually, a
"Noteholder", and collectively, the "Noteholders").
WHEREAS, the Company is party to that certain Agreement
and Plan of Merger dated December 23, 1996, as amended (the
"Merger Agreement"), by and among the Company, Triton Group Ltd.,
a Delaware corporation ("Triton") and Triton Acquisition Corp., a
Delaware corporation and wholly-owned subsidiary of Triton
("Merger Sub"), pursuant to which Merger Sub will merge with and
into the Company, with the Company surviving as a wholly-owned
subsidiary of Triton (the "Triton Merger");
WHEREAS, in connection with the transactions
contemplated by the Merger Agreement, the Company has agreed to
repay certain existing indebtedness to the Persons and in the
amounts as set forth in Exhibit B hereto (the "Existing SSH
Debt") prior to the consummation of the transactions contemplated
hereby;
WHEREAS, in connection with the transactions
contemplated by the Merger Agreement, the Company desires to
borrow from the Noteholders and the Noteholders desire to lend to
the Company an aggregate amount of $4,600,000 on the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained, the
Company and the Noteholders agree as follows:
ARTICLE 1. DEFINITIONS
SECTION 1. 1 Certain Defined Terms. The following
capitalized terms, when used in this Agreement, shall have the
following meanings (such definitions to be equally applicable to
both singular and plural terms of the terms defined):
"Acquisition" means an acquisition of the assets or
Capital Stock of a Person by the Company or a Subsidiary of the
Company as permitted under Section 6.2 of the Credit Agreement.
"Administrative Agent" means Bank of Boston
Connecticut, or any successor appointed pursuant to Section l0.10
of the Credit Agreement.
"Affiliate" means any Person (i) which directly or
indirectly controls, or is controlled by, or is under common
control with, the Company or any Subsidiary of the Company; (ii)
which directly or indirectly beneficially owns or holds ten
percent (10%) or more of any class of voting stock of the Company
or any Subsidiary of the Company or ten percent (10%) or more of
the voting stock of which is directly or indirectly beneficially
owned or held by the Company or any Subsidiary of the Company; or
(iii) which is an officer, director, joint venturer or partner of
any Person referred to in clause (i) or (ii) above. The term
"control" (and its correlative meanings "controlled by" and under
common control with") as used in this defined term means the
possession, directly or indirectly, of the power to direct, or
cause the direction of, the management and policies of a Person,
whether through ownership of voting stock, by contract or
otherwise:
"Agent" means, individually, and "Agents" mean,
collectively, the Administrative Agent and Documentation Agent
(as such terms are defined in the Credit Agreement) under the
Credit Agreement, or any successor thereto, or any indenture
trustee with respect to any Senior Debt.
"Alarmguard" means Alarmguard, Inc., a Delaware
corporation and a Subsidiary of the Company.
"Alarmguard Holdings" means Triton immediately
following the Triton Merger (to be renamed Alarmguard Holdings,
Inc.), the Parent of the Company.
"Bankruptcy Code" means Title 11 of the United States
Code, as now and hereafter in effect, or any successor statute.
"Bankruptcy Events" has the meaning set forth in
Section 7.2.
Board of Directors" means the Board of Directors of the
Company or a Subsidiary of the Company, as applicable, or any
duly authorized committee of any such Board of Directors.
"Business Day" means any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of Connecticut or is a day on which banking institutions located
in such state are authorized or required by law or other
governmental action to close.
"Capital Expenditures" means, without duplication, for
any period, the aggregate of all expenditures made by the Company
and its Subsidiaries that, in conformity with GAAP, are required
to be included in the "additions to property, plant, equipment"
or similar fixed asset account reflected within the consolidated
Financial Statements of the Company and its Subsidiaries.
"Capital Lease Obligation" means, as to any Person, an
obligation of such Person that is required to be classified and
accounted for as a capital lease for financial reporting purposes
in accordance with GAAP and, for purposes of this Agreement, the
amount of such obligation shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated, including, without limitation, stock appreciation
rights) of or interests in its equity capital including any
Preferred Stock, any limited or general partnership interest and
any limited liability company membership interest and any rights
(other than debt securities convertible into capital stock),
warrants or options to acquire such equity capital.
"Cash Equivalents" means any of the following, to the
extent owned by any Person free and clear of all Liens (other
than Liens created pursuant to any Senior Credit Document) and
having a maturity of not greater than one hundred eighty (180)
days from the date of acquisition thereof. (a) readily marketable
direct obligations of the United States of America or any agency
or instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the United States of
America; (b) insured certificates of deposit of or time deposits
with any commercial bank that is (i) a lender under any Senior
Credit Document or (ii) a member of the Federal Reserve System,
that issues (or the parent of which issues) commercial paper
rated as described in clause (c) below, that is organized under
the laws of the United States of America or any state thereof and
has combined capital and surplus of at least $1,000,000,000; or
(c) commercial paper issued by any corporation organized under
the laws of any state of the United States of America and rated
at least Prime-1" (or the then equivalent grade) by ▇▇▇▇▇'▇
Investors Service, Inc. or "A-1" (or the then equivalent grade)
by Standard & Poor's Ratings Group.
"Change in Control" means (a) Alarmguard Holdings
ceases to own directly 100% on a fully diluted basis of the
Capital Stock of the Company (other than as a result of the
consolidation of Alarmguard Holdings with the Company); (b) the
Company or Alarmguard Holdings ceasing to own directly 100%, on a
fully diluted basis, of the Capital Stock of Alarmguard, (c) any
Person (other than a Continuing Shareholder) or group (within -
the meaning of the Exchange Act and the rules of the Securities
and Exchange Commission thereunder as in effect on the date
hereof) (other than a group of Continuing Shareholders) directly
or indirectly having acquired beneficial or record ownership of
more than 20% of the aggregate ordinary voting power represented
by the issued and outstanding shares of the Capital Stock of
Alarmguard Holdings (including, but not limited to, the
acquisition of such beneficial or record ownership by way of
proxy, voting trust, voting agreement or stock pledge); or (c)
the board of directors of Alarmguard Holdings ceasing to consist
of a majority of the Continuing Directors.
"Chief Financial Officer" means the highest ranking
officer of the Company then in charge of the financial matters of
the Company.
"Closing" has the meaning set forth in Section 2. 1
(b).
"Closing Date" has the meaning set forth in Section 2.
1 (b).
"Collateral' has the meaning set forth in Section
7.2(d).
"Collection Actions" has the meaning set forth in
Section 7.2(b).
"Common Stock" means the common stock of Alarmguard
Holdings, par value $.001 per share, any securities into which
the Common Stock shall have been changed, and all other
securities of any class or classes (however designated) of the
Company, the holders of which have the right, without limitation
as to amount, after payment on any securities entitled to a
preference on dividends or other distributions upon any
dissolution, liquidation or winding-up, either to all or to a
share of the balance of payments upon such dissolution,
liquidation or winding-up.
"Company" shall have the meaning set forth in the
preamble hereto.
"Company Guarantee" means the Guarantee of the Company
dated as of April 15, 1997, as amended, supplemented, made
subject to waiver, or otherwise modified from time to time, in
respect of the Obligations (as defined therein) in favor of the
Senior Creditors.
"Conflict" has the meaning set forth in Section 4.3.
"Consolidated Fixed Charge Ratio" means, as at any date
of determination, with respect to the Company and its
consolidated Subsidiaries, the ratio of earnings before interest,
taxes, depreciation and amortization to all payments of interest
and principal in respect of Indebtedness for the most recently
ended twelve-month period.
"Consolidated Net Worth" means, as at any date of
determination, the consolidated stockholders' equity of the
Company and its consolidated Subsidiaries, as determined on a
consolidated basis in accordance with GAAP.
"Continuing Directors" means the directors of
Alarmguard Holdings on the Closing Date as set forth on Schedule
1.1 attached hereto and each other director elected or appointed
after the Closing Date if such director's nomination or
appointment to the board of directors is recommended by a
majority of the then Continuing Directors.
"Continuing Shareholders" means the Persons possessing
shares of the Capital Stock of Alarmguard Holdings as of the
Closing Date and listed on Schedule 1.1 attached hereto.
"Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management
or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise, and the terms "Controlling"
and "Controlled" shall have meanings correlative thereto.
"Credit Agreement" means the Credit Agreement dated as
of the Closing Date among Alarmguard, the guarantors named
therein, the lenders named therein and Agents named therein, as
the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time in accordance with the terms
thereof.
"Customer Contracts" means contracts and agreements by
and between the Alarmguard and its customers, or any Subsidiary
of Alarmguard and its customers, for regular and ongoing
monitoring services, maintenance services and other related
services.
"DIP Financing" has the meaning set forth in Section
7.10.
"Direct Marketing Program" means an internal marketing
program conducted by Alarmguard (and formerly conducted by the
Company for the benefit of Alarmguard), the costs and expenses of
which are separately identified and segregated for accounting
purposes in a manner satisfactory to the Agent and the Lenders
for the purpose of generating new Customer Contracts through
telemarketing or other marketing techniques by making an
investment in the initial installation of a residential or small
commercial security alarm monitoring system.
"Dividend" or "Dividends" means the payment of any
dividend or other distribution in respect of the Capital Stock of
a Person in cash or other property (excepting distribution in the
form of such Capital Stock) or the redemption or acquisition of
any Capital Stock or security of a Person.
"Documentation Agent" means General Electric Capital
Corporation, or any successors appointed pursuant to the Credit
Agreement.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, or any successor
statute and the regulations promulgated thereunder.
"Event of Default" means each of the events set forth
in Article 6.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Extension of Credit" means any loan or extension of
credit to Alarmguard under the Credit Agreement by the Lenders.
"Financial Covenant Default" has the meaning set forth
in Section 7.2(a).
"Financial Statement" or "Financial Statements" means,
as of any date, or with respect to any period, as applicable, a
financial report or reports consisting of (i) a balance sheet;
(ii) an income statement; (iii) a statement of cash flow; and
(iv) a statement of changes in stockholders' equity.
"Fiscal Quarter" means each fiscal period of the
Company and its Subsidiaries ending on each March 31, June 30,
September 30 and December 31 in each Fiscal Year.
"Fiscal Year" means each fiscal period of the Company
and its Subsidiaries commencing on January 1 in each calendar
year and ending on December 31 in each such year.
"Forecasts" shall have the meaning set forth in Section
4.___ hereof.
"GAAP" means, with respect to any Person, generally
accepted accounting principles in the United States of America,
which are consistently applied for all periods.
"Governmental Authority" means any Federal, state,
local or foreign court, commission or tribunal, or governmental,
administrative or regulatory agency, department, authority,
instrumentality or other body exercising executive, legislative,
judicial, regulatory or administrative functions of, or
pertaining to, government.
"Government Obligations" means securities which are
general obligations of the United States of America or which are
unconditionally guaranteed by the United States of America as to
timely payment of principal and interest.
"Guarantee" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing or having
the economic effect of guaranteeing any Indebtedness of any other
Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of such Person, direct
or indirect, (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase
(or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness; (b) to purchase or lease
property, securities or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness;
or (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness;
provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of
business. The amount of any guarantee of any guaranteeing Person
shall be deemed to be the lower of (i) an amount equal to the
stated or determinable amount of the primary obligation in
respect of which such guarantee is made and (ii) the maximum
amount for which such guaranteeing Person may be liable pursuant
to the terms of the instrument embodying such guarantee, unless
such primary obligation and the maximum amount for which such
guaranteeing Person may be liable are not stated or determinable,
in which case the amount of such guarantee shall be such
guaranteeing Person's maximum reasonably anticipated liability in
respect thereof as determined by the guaranteeing Person in good
faith.
"Indebtedness" of any Person means, without
duplication: (a) all indebtedness for borrowed money, including
the indebtedness incurred in connection with the Note Issuance
(whether by loan or the issuance and sale of debt securities);
(b) all Capital Lease Obligations of such Person; (c) notes
payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money; (d)
any obligation owed for all or any part of the deferred purchase
price of property or services if the purchase price is due more
than six months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (e)
obligations of such Person under interest rate swaps, caps,
collars and similar arrangements and (f) all indebtedness secured
by any Lien on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of
that Person.
"Initial Interest Payment Date" means June 30, 1997.
"Interest Payment Date" means the last day of
September, December, March and June of each year.
"Investment" means, as applied to the Company and its
Subsidiaries, (i) the purchase or acquisition of (x) any share of
Capital Stock, indebtedness or other equity security of any other
Person, or (y) all or any material portion of the properties and
assets of any Person, (ii) any loan, advance or extension of
credit to, or contribution of, any other Person, (iii) any real
estate held for safe or investment, (iv) any commodities futures
contracts held other than in connection with bona fide hedging
transactions permitted under this Agreement, any (v) other
investment in any other Person, and the making of any commitment
or acquisition of any option to make an Investment.
"Lenders" has the meaning ascribed thereto under the
Credit Agreement.
"Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind, whether voluntary or
involuntary (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any
agreement to give any security interest).
"Loan Documents" means, collectively, this Agreement,
the Notes, the Warrant Documents and all other documents,
instruments and agreements executed and/or delivered in
connection herewith and therewith, each as amended, supplemented
or modified from time to time.
"Majority Holders of Notes" means, as of any date of
determination, the holders of in excess of 66-2/3% in aggregate
principal amount of the Notes then outstanding.
"Material Adverse Effect" means a material adverse
effect upon the (i) business, operations, assets or financial
condition or prospects of Alarmguard Holdings and its
Subsidiaries, taken as a whole, or (ii) the enforceability of
this Agreement, the Notes or the Warrant Documents or the rights
or remedies of the Noteholders hereunder or thereunder or (iii)
the ability of any Noteholder to enforce or collect any of the
obligations under such documents. In determining whether any
individual event would result in a Material Adverse Effect,
notwithstanding that such event does not of itself have such an
effect, a Material Adverse Effect shall be deemed to have
occurred if the cumulative effect of such event and all other
then existing events would result in a Material Adverse Effect.
"Maturity Date" means April 15, 1999.
"Merger Agreement" has the meaning set forth in the recitals
hereto.
"Merger Documents" means, collectively, the Merger
Agreement and each other material document and instrument
executed by the Company or any of its Subsidiaries in connection
therewith.
"Noteholders" has the meaning assigned to that term in
the introduction to this Agreement and shall include any assignee
of a Note pursuant to Section 8.1.
"Note Issuance" means the issuance and sale by the
Company, and the purchase by the Noteholders, of the Notes
pursuant to the terms and conditions of this Agreement.
"Notes" means the Promissory Notes due on the Maturity
Date of the Company issued pursuant to Section 2.1 and
substantially in the form of Exhibit A hereto.
"Notice Period" has the meaning set forth in Section
7.2(c)(2).
"Obligations" means all obligations for principal,
premium, interest, penalties, fees, indemnifications,
reimbursements, damages and other liabilities payable under the
documentation governing any Indebtedness.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such corporation
by its Chairman of the Board of Directors (if an officer), its
Chief Executive Officer, its President or one of its Vice
Presidents and its Chief Financial Officer or Secretary or
Treasurer.
"Other Default"' has the meaning set forth in Section
7.2(a).
"Overdue Rate" means, with respect to any date on which
interest shall be paid on the Notes in accordance with Section
2.2(c) hereof, the sum of (a) 2.00% per annum; plus (b) the rate
of interest otherwise payable on such date in accordance with
section 2.2(a) hereof.
"Permitted Indebtedness" means, without duplication,
each of the following:
(a) Indebtedness of Alarmguard or any of its
Subsidiaries incurred in respect of any Extension of Credit
under the Credit Agreement;
(b) Indebtedness existing as of the date of this
Agreement and disclosed on Schedule 5.1 attached hereto or
in the Financial Statements referred to in Section 4.9
hereof and any refinancings or refundings of such
Indebtedness which will not increase the principal amount
of such Indebtedness being refinanced or refunded or change
the amortization thereof (other than to extend the same)
and otherwise be on terms and conditions no less favorable
to any Noteholder, as determined by the Majority Holders of
Notes, than the Indebtedness being refinanced or refunded;
(c) Indebtedness under Capital Lease Obligations and
motor vehicle and office equipment and furnishings
installment sales contracts entered into in accordance with
the Credit Agreement;
(d) Subordinated Obligations due to the Company or any
Affiliate or Subsidiary of the Company or otherwise incurred
with the prior consent of the Majority Holders of Notes; and
(e) Subordinated Obligations due to any Person, other
than an Affiliate or Subsidiary of the Company and not
incurred in connection with an Acquisition existing on the
date hereof or otherwise incurred with the prior consent of
the Majority Holders of Notes;
"Permitted Liens" means:
(a) Liens in favor of the Agent for the benefit of the
Senior Creditors incurred pursuant to the Senior Credit
Documents;
(b) Liens existing as of the date of this Agreement
and disclosed in Schedule 5.4 attached hereto;
(c) Liens for taxes, fees, assessments and other
governmental charges to the extent that payment of the same
may be postponed, is being contested and is otherwise not
required to be paid in accordance with the provisions of
Section 5.10 hereof;
(d) landlords' and lessors' liens in respect of rent
not in default or liens in respect of pledges or deposits
under worker's compensation, unemployment insurance, social
security laws, or similar legislation (other than ERISA) or
in connection with appeal and similar bonds incidental to
litigation; mechanics', laborers' and materialmen's and
similar liens, if the obligations secured by such liens are
not then delinquent; liens securing the performance of bids,
tenders, contracts (other dm for the payment of money); and
statutory obligations incidental to the conduct of its
business and that do not in the aggregate materially detract
from the value of its property or materially impair the use
thereof in the operation of its business, which liens
incurred pursuant to this subparagraph (d) of the definition
of "Permitted Liens" do not, in the aggregate, have a
Material Adverse Effect on the Company;
(e) attachments, garnishments and judgment liens not
constituting an Event of Default;
(f) liens in favor of lessors in accordance with Capital
Lease Obligations and sellers under motor vehicles
installment sales contracts;
(g) easements, rights of way, restrictions and other
similar charges or Liens relating to real property and not
interfering in a material way with the ordinary conduct of
its business;
(h) Liens on property or assets created in connection
with the refinancing or refunding of Indebtedness referred
to in Section 5.1 hereof, provided, however, that the amount
of Indebtedness secured by any such Lien shall not be
increased as a result of such refinancing or refunding and
no such Lien shall extend to property and assets of the
Company or any of its Subsidiaries not encumbered prior to
any such refinancing or refunding;
(i) Liens securing Indebtedness for Capital
Expenditures to the extent such Indebtedness is permitted
under Section 5.1 hereof, provided, that (i) each such Lien
is given solely to secure the purchase price of such
property, does not extend to any other property and is given
at the time of acquisition of the property, and (ii) the
Indebtedness secured thereby does not exceed the lesser of
the cost of such property or its fair market value at the
time of acquisition; and
(j) without duplication, other Liens of the type
permitted pursuant to the Credit Agreement, as in effect on
the date hereof.
"Person" or "persons" means and includes natural
persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land
trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political
subdivisions thereof.
"Potential Event of Default" means a condition or event
which, after notice or lapse of time or both, would constitute an
Event of Default if that condition or event were not cured or
removed within any applicable grace or cure period.
"Qualification" means, with respect to any report of
independent public accountants covering any Financial Statements
of the Company and its Subsidiaries, a qualification to such
report (such as a "subject to" or "except for" statement therein)
(i) resulting from a limitation on the scope of examination of
the Financial Statements or the underlying data; (ii) as to the
capability of the Person whose Financial Statements are certified
to continue operations as a going concern; or (iii) which could
be eliminated by changes in the Financial Statements or notes
thereto covered by such report (such as, by the creation of or
increase in a reserve or a decrease in the carrying value of the
assets) and which if so eliminated by the making of any such
change and after giving effect thereto would constitute an Event
of Default; provided that the following shall not constitute a
Qualification: a consistency exception relating to a change in
accounting principles with which the independent public
accountants for the Person whose Financial Statements are being
examined have concurred.
"Qualified Investments" means, as applied to the
Company and its Subsidiaries, investments in (i) Governmental
Obligations; (ii) certificates of deposit or other deposit
instruments or accounts of Lenders or tug companies organized
under the laws of the United States of America or any state
thereof that have capital and surplus of at least FIVE HUNDRED
MILLION AND NO/100 DOLLARS ($500,000,000.00) having maturities of
not more than ninety (90) days from the date of acquisition;
(iii) commercial paper that is rated not less than prime-one or ▇-
▇ or their equivalents by ▇▇▇▇▇'▇ Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or their successors
having maturities of not more than ninety (90) days from the date
of acquisition; and (iv) any repurchase agreement secured by any
one (1) or more of the foregoing with a term of not more than
seven (7) days.
"Required Lenders" has the meaning ascribed thereto in
the Credit Agreement.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and the rules and regulations
promulgated thereunder.
"Senior Credit Default" has the meaning set forth in
Section 7.2(a).
"Senior Credit Documents" has the meaning set forth in
Section 7. 1.
"Senior Creditors" means (i) each Lender and the Agents
under the Credit Agreement and their respective successors and
permitted assigns under the Credit Agreement, and (ii) each other
obligee of the Company with respect to Senior Debt.
"Senior Debt" means (i) the Obligations (as defined in
the Company Guarantee) of the Company under the Company Guarantee
and (ii) any and all amounts payable under or in respect of the
Credit Agreement and any whole or partial increase, extension,
renewal, refinancing or replacement thereof or of any subsequent
Senior Debt, including principal, premium (if any), interest
(including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for post-filing interest is
allowed in such proceeding), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Standstill Period" has the meaning set forth in Section
7.2(c)(2).
"Subordinated Obligations" has the meaning set forth in
Section 7.1.
"Subsidiary" means, with respect to any Person (herein
referred to as the "parent"), any corporation, partnership,
association or other business entity (a) of which securities or
other ownership interests representing more than 50% of the
equity or more than 50% of the ordinary voting power or more than
50% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held, or (b)
that is, at the time, any determination is made, otherwise
Controlled, by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the
parent, provided that the term "subsidiary," when used in respect
of the Company or any of its Subsidiaries, shall not include any
foreign joint venture in which the Company or any such Subsidiary
owns less than or equal to 50% of the equity interest in such
joint venture.
"Successor Company" has the meaning set forth in
Section 5.5.
"Swap Rate Transaction" means any interest swap
agreement, interest cap agreement, interest rate collar
agreement, interest rate hedging agreement or other similar
interest rate protection agreement or arrangement.
"Taxes" means all taxes, assessments, fees, levies,
imposts, duties, penalties, deductions, withholdings or other
charges imposed by any law or any Governmental Authority.
"Transactions" has the meaning set forth in Section
4.3.
"Triton Merger" has the meaning ascribed to that term
in the introduction to this Agreement.
"Warrants" means each of the stock purchase warrants of
Alarmguard Holdings issued to the Registered Holder listed
therein pursuant to the Warrant Agreement, as the same may be
amended, supplemented or modified from time to time.
"Warrant Agreement" means the Warrant Agreement, dated
as of April 15, 1997, by and among the purchasers listed on the
signature pages thereto and Alarmguard Holdings as the same may
be amended, supplemented or modified from time to time.
"Warrant Documents" means the Warrants and the Warrant
Agreement.
"Wholly-Owned Subsidiary" means any corporation,
association or other business entity of which is 100% of the
total voting power of shares of stock entitled (without regard to
the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more
of the Subsidiaries of that Person or a combination thereof.
SECTION 1.2 Accounting Terms. For the purposes of
this Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to such terms in conformity with
GAAP as in effect from time to time.
ARTICLE 2.
SALE AND ISSUANCE OF NOTES;
INTEREST; PAYMENTS AND TERMS OF NOTES
SECTION 2.1 Sale and Issuance of the Notes.
(a) Sale and Issuance of Notes. Subject to the terms
and conditions of this
Agreement, at the Closing the Noteholders agree to purchase from
the Company, and the Company agrees to issue and sell to the
Noteholders, the Notes for a purchase price equal to the stated
principal amount of the Notes, as such amounts are set forth on
Exhibit C hereto.
(b) Closing. The pre-closing of the purchase and sale
of the Notes being issued hereunder shall take place at the
offices of ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ or at such other location mutually agreed to
by the Company and the Noteholders on the Business Day
immediately preceding the Closing Date (as defined below). The
closing of the purchase and sale of the Notes being issued
hereunder (the "Closing") shall take place on the date and at the
location that the closing under the Credit Agreement occurs. The
date that the Closing occurs is referred to as the "Closing
Date."
SECTION 2.2 Interest on the Notes.
(a) Rate of Interest. Subject to Section 2.2(c)
hereof, interest will accrue on the unpaid principal amount of
the Notes during the period from and including the Closing Date
through maturity (whether by acceleration or otherwise) at a rate
equal to 15% per annum.
(b) Interest Payments. Interest shall be payable with
respect to the Notes in the manner specified in Section 2.3(e) in
arrears on each Interest Payment Date commencing on the Initial
Interest Payment Date and upon any prepayment or repurchase of
the Notes and at maturity of the Notes.
(c) Overdue Rate. If the Company shall default in the
payment of any principal of or interest on the Notes when due
(whether upon the Maturity Date or any scheduled Interest Payment
Date, by acceleration or otherwise, but giving effect to
applicable grace periods), the Company agrees to pay, to the
extent permitted by law, interest on demand from time to time in
the manner specified in Section 2.3(e) on such defaulted amount
to, but excluding the date of actual payment, at the applicable
Overdue Rate.
(d) Computation of Interest. Interest on the Notes
shall be computed on the basis of a 365-day year for the actual
number of days elapsed.
SECTION 2.3 Payments and Prepayments.
(a) Payment. The Notes shall be payable in full,
together with all accrued and unpaid interest thereon, in
accordance with the terms thereof, on the Maturity Date.
(b) Voluntary Prepayments. At any time and from time
to time the Company, at its option, may prepay all or a portion
of the outstanding principal amount of the Notes, in each case
at a purchase price equal to 100% of the principal amount of the
Notes being prepaid, plus accrued but unpaid interest thereon to
(but excluding) the prepayment date. Notice of any prepayment
pursuant to this Section 2.3(b) will be delivered at least 30
days but not more than 75 days before the prepayment date to
each Noteholder and such--notice shall be irrevocable. Any
prepayment of less than all of the outstanding principal amount
of the Notes will be made pro rata among the registered holders
of the Notes on the basis of the outstanding principal amount of
the Notes then held by each such holder.
(c) Application of Prepayments. All prepayments shall
include payment of accrued interest on the principal amount so
prepaid and shall be applied to payment of interest before
application to principal.
(d) Miscellaneous. In the event that the Company
prepays less than all of the outstanding principal amount of any
Note held by any Noteholder, the Company shall deliver to such
Noteholder upon such prepayment or purchase a replacement Note
of like tenor representing the remaining outstanding principal
amount of such Note.
(e) Manner and Time of Payment. The Company will pay
interest due and payable on the Notes provided for in Section
2.2 above (x) in the case of interest which accrues pursuant to
Section 2.2(a) above, to Persons who are the registered holders
of the Notes at the close of business on the day next preceding
the applicable Interest Payment Date, notwithstanding any
cancellation of the Notes after the record date and on or before
such Interest Payment Date, and (y) in the case of interest
which accrues pursuant to Section 2.2(c) above, within five days
of the date on which the payment of such interest is demanded to
Persons who are registered holders of the Notes as of the close
of business on the third Business Day preceding the date on
which the payment of such interest is demanded. The Company
will pay the principal of and interest on the Notes and all
other amounts (if any) required to be paid by it under this
Agreement, in money of the United States that at the time of
payment is legal tender for payment of public and private debts.
The Company may pay principal, interest and any such other
amount by wire transfer of immediately available funds, or if
requested by any Noteholder, by check payable in such money and
may mail an interest check to the holder's registered address.
(f) Payments on Non-Business Days. Whenever any
payment to be made hereunder or under any Note shall be stated
to be due on a day which is not a Business Day, the payment
shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the
payment of interest hereunder or under the Note.
ARTICLE 3. CONDITIONS TO NOTE ISSUANCE
The obligations of the Company to issue and sell, and
each Noteholder to purchase, the Notes hereunder on the Closing
Date is subject to the satisfaction of the following conditions:
SECTION 3.1 Conditions to Performance of Noteholders.
(a) Organizational Documents. On or before the
Closing Date, each Noteholder shall have received the following
items, each of which shall be in form and substance reasonably
satisfactory to each Noteholder and its counsel and, unless
otherwise noted, dated the Closing Date:
(i) A certified copy of the charter of the
Company certified by the, Secretary of State of the State of
Delaware, together with a good standing certificate from the
Secretary of State of the State of Delaware, each to b e
dated a recent date prior to the Closing Date;
(ii) A copy of the by-laws of the Company
certified as of the Closing Date by the Secretary or an
Assistant Secretary of the Company;
(iii) Resolutions of the Company's Board of
Directors approving and authorizing the execution, delivery
and performance of the Loan Documents and any other
documents, instruments and certificates required to be
executed by the Company in connection therewith and
approving and authorizing the execution, delivery and
issuance of the Notes, certified as of the Closing Date by
the Secretary or an Assistant Secretary of the Company as
being in full force and effect without modification or
amendment;
(iv) Signatures and incumbency certificates of the
officers of the Company executing the Loan Documents;
(v) Executed copies of this Agreement, the Notes
and the other Loan Documents; and
(vi) Such other closing documents as each
Noteholder may reasonably request.
(b) Proceedings Satisfactory. On or before the
Closing Date, all corporate and other proceedings taken or to be
taken by the Company in connection with the Transactions and all
documents incidental thereto shall be reasonably satisfactory in
form and substance to each Noteholder, and each Noteholder shall
have received all such counterpart originals or certified copies
of such documents as each Noteholder may reasonably request.
(c) Opinions of Counsel to the Company. Each
Noteholder shall have received in form and substance reasonably
satisfactory to each Noteholder and its counsel opinions of
counsel to the Company dated as of the Closing Date.
(d) Representations and Warranties. The Company,
shall have delivered to each Noteholder an Officer's Certificate
in form and substance reasonably satisfactory to each Noteholder
to the effect that the representations and warranties of the
Company in Article 4 are true, correct and complete in all
material respects on and as of the Closing Date.
(e) Performance of Agreements. The Company shall have
performed in all material respects all agreements which this
Agreement provides shall be performed by the Company on or before
the Closing Date (except as otherwise consented to in writing by
each Noteholder), including the repayment of the Existing SSH
Debt immediately prior to the consummation of the transactions
contemplated hereby.
(f) Potential Event of Default; Event of Default. No
event shall have occurred and be continuing or would result from
the consummation of the Note Issuance which would constitute an
Event of Default or Potential Event of Default.
(g) Triton Merger. Each Noteholder shall have
received copies of each of the principal executed Merger
Documents, and all of such Merger Documents and instruments shall
be reasonably satisfactory, in form and substance, to each
Noteholder and its counsel; provided however, that to the extent
any Noteholder shall be a signatory to any of such Merger
Documents or such Merger Documents shall have separately been
delivered to any Noteholder as a condition to closing or
otherwise pursuant to any of the Loan Documents or other Merger
Documents, the Company shall be deemed to have delivered such
documents to such Noteholder in satisfaction of its obligation to
do so under this Section 3.1(g).
(h) Senior Credit Documents. Alarmguard and the
Senior Creditors shall have duly executed and delivered each of
the Senior Credit Documents. All of the conditions contained in
the Senior Credit Documents as in effect on the Closing Date will
have been satisfied or waived (and notice of such waiver shall
have been given to the Noteholders).
SECTION 3.2 Conditions to Performance of the
Parties.
(a) No Injunction, etc. No order, judgment or decree
of any Governmental Authority shall enjoin or restrain the
Company from executing this Agreement or from issuing and
selling, or any Noteholder from purchasing, the Notes or the
consummation of the transactions contemplated hereby.
(b) No Litigation, etc. There shall not be existing,
or to the knowledge of the Company threatened, any action, suit,
proceeding, governmental investigation or arbitration against or
affecting the Company and no injunction or other restraining
order shall have been issued and no hearing to cause an
injunction or other restraining order to be issued shall be
pending or noticed with respect to any action, suit or proceeding
seeking to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, this
Agreement or the Note Issuance.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Noteholders to enter into this
Agreement and to purchase the Notes, the Company represents and
warrants to each Noteholder as follows:
SECTION 4.1 Organization and Good Standing.
Each of the Company and its Subsidiaries is a corporation, duly
organized and existing in good standing under the laws of its
jurisdiction of incorporation. Each of the Company and its
Subsidiaries has the corporate power and authority to own its
properties and assets and to transact the business in which it is
engaged and is duly qualified as a foreign corporation and in
good standing in all states in which the nature of the operations
conducted by the Company and its Subsidiaries necessitates such
qualification, except where the failure to be so qualified would
not have a Material Adverse Effect.
SECTION 4.2 Authorization and Power. The execution,
delivery and performance of this Agreement, the Notes, the
Warrant Documents and the Merger Documents, the consummation of
the transactions herein and therein contemplated, the fulfillment
of and compliance with the terms and provisions hereof and
thereof have been duly authorized by all necessary corporate
action of the Company and are within its corporate power and will
not result in a violation of its governing documents.
SECTION 4.3 No Conflicts or Consents. The
execution, delivery and performance of the Loan Documents, the
consummation of the transactions contemplated hereby and thereby
(collectively, the "Transactions"), and compliance with the terms
and provisions hereof or thereof will not contravene or conflict
with (a "Conflict") any provision of law to which the Company is
subject or any judgment, license, order or permit applicable to
the Company or any agreement, mortgage, deed of trust or other
agreement or instrument to which the Company is a party or by
which the Company may be bound, or to which the Company may be
subject, or violate any provision of the Certificate of
Incorporation or By-laws of the Company. No consent, approval,
authorization or order of any Governmental Authority or other
Person is required in connection with the consummation of the
Transactions, except for such required consents, approvals and
authorizations which have been obtained by the Company or
permanently waived in writing by the requiring party.
SECTION 4.4 Enforceable Obligations. The Loan
Documents have been duly executed and delivered by the Company
and constitute the valid, legal and binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, subject to the applicable laws of bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization and
other similar laws affecting creditors' rights generally and by
general principles of equity.
SECTION 4.5 No Default. No event has occurred and
is continuing which constitutes a Potential Event of Default or
an Event of Default.
SECTION 4.6 Capital Structure and Subsidiaries.
(a) The authorized Capital Stock of the Company
consists of 100 shares of Common Stock. All outstanding shares
of such Capital Stock were duly authorized and validly issued,
and are fully paid and nonassessable.
(b) Set forth on Schedule 4.6 is a true and complete
list of each Subsidiary of the Company, setting forth each such
Subsidiary's jurisdiction of incorporation, each jurisdiction
where it is authorized to do business as a foreign corporation
and the ownership of its Capital Stock.
SECTION 4.7 Investment Company Act. The Company is
not an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 4.8 Public Utility Holding Company Act. The
Company is not a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
SECTION 4.9 Financial Statements. The Company has
provided to the Noteholders the consolidated Financial Statements
of the Company and its Subsidiaries dated as of December 31, 1996
and related footnotes, audited and certified by Ernst & Young,
LLP. The Company has also provided to the Noteholders the
internally prepared consolidated Financial Statements of the
Company and its Subsidiaries dated as of February 28, 1997,
certified by the Chief Financial Officer but subject, however, to
normal, recurring year-end adjustments that shall not in the
aggregate be material in amount. All consolidated Financial
Statements of the Company heretofore provided to the Company
present fairly the financial condition and results of business
operations of the Company and its Subsidiaries for the periods
indicated in accordance with GAAP. Neither the Company, nor any
of its Subsidiaries has any material direct or contingent
liabilities, liabilities for taxes, unusual commitments or
unrealized or unanticipated losses not disclosed in such
Financial Statements. Since the date of the latest dated
consolidated balance sheet included in the Financial Statements
specified in this Section 4.9, there has been no development or
event which would have a Material Adverse Effect and no Dividends
have been declared or made to stockholders, nor has any of its
Capital Stock been purchased or acquired by any Person in any
manner nor has the Company or any of its Subsidiaries made any
Investment except as set forth on Schedule 4.9 attached hereto.
SECTION 4.10 Financial Information. All written
data, reports and information which the Company has supplied to
the Noteholders or caused to be so supplied by a third party on
its behalf in connection with this Agreement, was at the time so
supplied, when taken as a whole, true and accurate in all
material respects and does not make any untrue statement of
material fact or omit to state a material fact necessary in order
to make, in light of the circumstances under which they were
made, not misleading.
SECTION 4.11 Business Relationships. There exists no
actual or, to the Company's knowledge, threatened termination,
cancellation or limitation of, or any modification or change in,
the business relationship of the Company or its Subsidiaries with
any customer or group of customers, or with any supplier (other
than in the ordinary course of business where one supplier is
replaced by another offering terms which are no less favorable to
the Company or its Subsidiaries) which could reasonably be
expected to have a Material Adverse Effect.
SECTION 4.12 Brokers. No broker or finder has
brought about the obtaining, making or closing of, and no
broker's or finder's fees or commissions will be payable by the
Company or its Affiliates to any Person in connection with, the
transactions contemplated by this Agreement.
SECTION 4.13 Statutory Compliance. Each of the
Company and its Subsidiaries is in compliance with all laws,
ordinances, rules, regulations and orders of any Governmental
Authority applicable to it, its properties or assets or the
business conducted by it except where non-compliance would have a
Material Adverse Effect.
SECTION 4.14 Taxes. Each of the Company and its
Subsidiaries has filed all tax returns and reports required to be
filed by it with any Governmental Authority and has paid in full,
or made adequate provisions or established adequate reserves in
accordance with GAAP, for, the payment of all taxes, interest,
penalties, assessments or deficiencies shown to be due or claimed
to be due on or in respect to such tax returns and reports.
SECTION 4.15 Litigation. Except as set forth in
Schedule 4.15 attached hereto, there are no actions, suits or
proceedings by or before any Governmental Authority or any
arbitration or alternate dispute resolution proceeding, pending
or, to the knowledge of the Company or any of its officers,
threatened, against any of the Company or its Subsidiaries or its
properties and assets, which if adversely determined, could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.16 Title to Properties. Each of the
Company and its Subsidiaries has good and marketable title to all
of the properties and assets as are reflected in the Financial
Statements referred to in Section 4.9. (except such properties,
assets or rights as have been disposed of in the ordinary course
of business since the date thereof), free from all Liens except
Permitted Liens or other Liens disclosed in Schedule 4.16
attached hereto, and, free from all defects of title that could
reasonably be expected to have a Material Adverse Effect. The
properties, assets and rights of the Company and its Subsidiaries
are sufficient to permit the Company and such Subsidiaries to
conduct the business in which its is presently engaged. The
Company and its Subsidiaries possess all trademarks, service
marks, trade names, trade service styles, copyrights and patents
that may be necessary to own their properties and assets and to
conduct their business as it is presently conducted or as
intended to be conducted hereafter, without any infringement or
conflict with the rights of any other Person or any violation of
law which could reasonably be expected to have a Material Adverse
Effect.
SECTION 4.17 Labor Relations. Neither the Company
nor any of its Subsidiaries is a party to any collective
bargaining or other agreement with any union and there are no
material grievances, disputes or controversies with any union or
other organization of such Person's employees, or threats of
strikes, work stoppages or demands by any union or such other
organization.
SECTION 4.18 Contingent Obligations. Neither the
Company nor any of its Subsidiaries is a party to any guarantee
or other similar type of agreement, and it has not offered its
endorsement to any Person which would in any way create a
contingent liability (except by endorsement of negotiable
instruments payable at sight for deposit or collection or similar
banking. transactions in the ordinary course of business).
SECTION 4.19 Investments. Except as set forth on
Schedule 4.19, attached hereto neither the Company nor any of its
Subsidiaries has an Investment in any Person other than existing
Investments in Subsidiaries and Qualified Investments.
SECTION 4.20 Representations and Warranties of the
Noteholders. In order to induce the Company to enter into this
Agreement and to issue and sell to the Noteholders the Notes,
each of the Noteholders, severally but not jointly, represents
and warrants to Company as follows:
(a) Organization and Standing. Each Noteholder which
is an organization, is an organization duly organized and is
validly existing under the laws of its state of organization.
(b) Authority.
(i) Each Noteholder has full legal right, power
and authority to enter into and perform its obligations
under this Agreement;
(ii) The execution and delivery of this
Agreement by each Noteholder and the consummation by it of
the transactions contemplated hereby have been duly
authorized by each Noteholder,
(iii) This Agreement has been duly
executed and delivered by each Noteholder;
(iv) This Agreement constitutes a valid and
binding obligation of each Noteholder enforceable against
each Noteholder in accordance with its terms, subject to the
applicable laws of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws
affecting creditor's rights generally and by general
principles of equity; and
(v) No consent, approval, order or
authorization of, or registration, declaration or filing
with (each a "Consent"), any governmental entity, is
required by or with respect to each Noteholder in connection
with the execution and delivery of this Agreement or
consummation of the transactions contemplated hereby, other
than such consents the failure to obtain which could not
reasonably be expected to have a Material Adverse Effect.
(c) Purchase for Investment. The Notes will be
acquired by each Noteholder for its own account for the purpose
of investment and not with a view to the resale or distribution
of all or any part of such securities in violation of the
Securities Act, it being understood that the right to dispose of
such securities shall be entirely within the discretion of each
Noteholder. Each Noteholder represents and warrants that it is
an "accredited investor" as such term is defined in Rule 501 of
Regulation D of the Act.
(d) Brokers. No broker or finder has brought about
the obtaining, making or closing of, and no broker's or finder's
fees or commissions will be payable by the Company or any of its
Affiliates in connection with, the transactions contemplated by
this Agreement.
ARTICLE 5. COVENANTS
The Company covenants and agrees with each
Noteholder that, until the outstanding principal of, and the
accrued but unpaid interest on, each Note shall have been paid in
full:
SECTION 5.1 Indebtedness. The Company will not, and
will not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume, acquire, become liable with
respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Event of Default
shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the
Company or any of its Subsidiaries may incur Indebtedness, in
each case, if on the date of the incurrence of such Indebtedness,
after giving effect to the incurrence thereof, the Consolidated
Fixed Charge Ratio of the Company is greater than [1.15].
Indebtedness of a Person existing at the time such
Person becomes a Subsidiary of the Company or which is secured by
a Lien on an asset acquired by the Company or a Subsidiary of the
Company (whether or not such Indebtedness is assumed by the
acquiring Person) shall be deemed incurred at the time the Person
becomes a Subsidiary of the Company or at the time of the asset
acquisition, as the case may be.
The Company shall not incur any Indebtedness that
purports to be by its terms (or by the terms of any agreement
governing such Indebtedness) subordinated to any other
Indebtedness of the Company unless such Indebtedness is also by
its terms (or by the terms of any agreement governing such
Indebtedness) made expressly subordinated to the Notes, to the
same extent and in the same manner as such Indebtedness is
subordinated to such other Indebtedness of the Company or such
Subsidiary, as the case may be.
SECTION 5.2 Restricted Payments. The Company shall
not pay any Dividends on any class of its Capital Stock or make
any other distribution or payment on account of or in redemption.
retirement or purchase of such Capital Stock. This Section 5.2
shall not apply to (i) the issuance, delivery or distribution by
the Company of shares of its Capital Stock pro rata to its
existing stockholders, (ii) the purchase or redemption by the
Company of its Capital Stock solely with the proceeds of the
issuance of additional shares of Capital Stock, (iii) dividends
or payments to Alarmguard Holdings to pay taxes and ordinary
course expenses not in excess of $500,000 in any fiscal year or
(iv) payments permitted under Section 5.3.
SECTION 5.3 Transactions with Affiliates.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into or
conduct any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with
any Affiliate of the Company on terms (i) that are less favorable
to the Company or such Subsidiary, as the case may be, than those
that could be obtained at the time of such transaction in arm's-
length dealings with a Person who is not such an Affiliate, (ii)
transactions listed and described on Schedule 5.3 attached hereto
and (iii) that, in the event such transaction involves an
aggregate amount in excess of $250,000, are not evidenced by a
written agreement, instrument or other document and have not been
approved by a majority of the members of the Company's Board of
Directors having no direct or indirect stake in such transaction.
(b) The provisions of the foregoing paragraph (a) will
not prohibit (i) any Restricted Payment, to the extent permitted
by Section 5.2 hereof, (ii) fees, compensation or employee
benefits paid to, and any indemnity provided for the benefit of,
current or former directors, officers or employees of the Company
or any Subsidiary of the Company in the ordinary course of
business, (iii) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to, or
the funding of, employment arrangements, stock options and stock
ownership plans approved by the Company's Board of Directors,
(iv) employee stock redemptions, including any payment of
principal of or interest on, or any purchase or redemption of,
any note issued in connection therewith, (v) loans or advances to
officers, directors or employees of the Company or any Subsidiary
thereof made in the ordinary course of business, but in any event
not to exceed $150,000 in the aggregate outstanding at any one
time, or (vi) any transaction between the Company and a
Subsidiary of the Company or between Subsidiaries of the Company.
SECTION 5.4 Liens. The Company will not, and
will not cause or permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit or suffer to exist
any Liens of any kind against or upon any property or assets of
the Company or any of its Subsidiaries, whether owned on the date
of this Agreement or acquired after the Date of this Agreement,
or any proceeds therefrom, or assign or otherwise convey any
right to receive income or profits therefrom unless (a) in the
case of Liens securing Indebtedness that is expressly subordinate
or junior in right of payment to the Notes, the Notes are secured
by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (b) in all other cases, the Notes are
equally and ratably secured, except for (i) Liens existing as of
the date of this Agreement; (ii) to the extent not included in
clause (i), Liens securing Senior Debt; (iii) Liens of the
Company or a Subsidiary of the Company on assets of any
Subsidiary of the Company; (iv) Liens securing Indebtedness
otherwise permitted under this Agreement; and (v) Permitted
Liens.
SECTION 5.5 Mergers, Consolidations, etc. The
Company will not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets to,
any Person, unless: (a) the resulting, surviving or transferee
Person (the "Successor Company") will be organized and existing
under the laws of the United States of America, any State thereof
or the District of Columbia and the Successor Company (if not the
Company) will expressly assume, by a written instrument in form
reasonably satisfactory to the Majority Holders of Notes, all the
obligations of the Company under the Notes; (b) immediately after
giving effect to such transaction (and treating any Indebtedness
which becomes an obligation of the Successor Company as a result
of such transaction as having been incurred by the Successor
Company at the time of such transaction), no Event of Default or
Potential Event of Default will have occurred and be continuing;
(c) immediately after giving effect to such transaction, the
Successor Company shall have Consolidated Net Worth in an amount
equal to or greater than the Consolidated Net Worth of the
Company immediately prior to such transaction; and (d) the
Company will have delivered to each Noteholder an officers'
certificate and an opinion of counsel reasonably satisfactory to
the Noteholders and their counsel, each stating that such
transaction complies with this Section 5.5.
The Successor Company shall succeed to, and be
substituted for, and may exercise every right and power of, the
Company under the Notes, but the predecessor Company in the case
of a conveyance, transfer or lease of all or substantially all
its assets shall not be released from the obligation to pay the
principal of and interest on the Notes.
SECTION 5.6 Limitation on Asset Sales. The Company
or its Subsidiaries may not sell, transfer, or encumber the
assets of the Company or its Subsidiaries except for (i) sales in
the ordinary course of business (which shall be deemed to include
the Swap Rate Transaction) and (ii) sales not in the ordinary
course of business which are approved by the Board of Directors
of the Company and do not involve a sale of all or substantially
all of the assets of the Company and do not result in a
Consolidated Fixed Charge Ratio of the Company less than or equal
to [1.15].
SECTION 5.7 Existence. Except as otherwise
permitted by Section 5.5, the Company will do or cause to be done
all things necessary to preserve and keep in full force and
effect its existence, rights (charter and statutory) and
franchises; provided, however, that the Company shall not be
required to preserve or keep in full force and effect any such
right or franchise if the Company's Board of Directors (or any
duly authorized committee thereof) shall determine that the
preservation thereof is no longer desirable in the conduct of the
business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.
SECTION 5.8 Financial Statements and Other Reports.
The Company will furnish to each Noteholder:
(a) as soon as available, but in no event later than
ninety (90) days after the end of each Fiscal Year of the
Company, consolidated Financial Statements for such Fiscal Year
of Alarmguard Holdings and its Subsidiaries, audited and
certified by Ernst & Young (or other independent certified public
accountants of nationally recognized standing) and consisting of
a consolidated balance sheet of Alarmguard Holdings and its
consolidated Subsidiaries as of the end of such Fiscal Year and
the related consolidated statements of income and consolidated
statements of cash flows for such Fiscal Year, setting forth in
each case in comparative form the figures for the previous Fiscal
year, and reported on without a Qualification;
(b) promptly after the same become publicly available,
copies of all periodic and other reports, proxy statements and
other materials filed by Alarmguard Holdings or any of its
Subsidiaries with the Securities and Exchange Commission, or with
any national securities exchange, or distributed to its
stockholders generally, as the case may be; and
(c) promptly after (and, in any event, no later than
10 days after) the chief executive officer, the president or the
principal financial officer of the Company obtains knowledge
thereof, written notice of any Event of Default or Potential
Event of Default, specifying the nature and extent thereof and
the corrective action (if any) taken or proposed to be taken with
respect thereto.
(d) as soon as practicable, notice of:
(i) of any action, suit, or proceeding by or before
any Governmental Authority or arbitration or alternate
dispute resolution proceeding, which would have a Material
Adverse Effect; and
(ii) any other matter which would have a Material
Adverse Effect.
SECTION 5.9 Compliance with Laws. The Company shall
comply, and shall cause each of its Subsidiaries to comply, with
all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department,
commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of
their respective businesses and the ownership of their respective
properties, except for such noncompliance as would not in the
aggregate have a Material Adverse Effect.
SECTION 5.10. Payment of Taxes and Other Claims. The
Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes,
assessments and governmental charges levied or imposed upon it or
any of its Subsidiaries or upon the income, profits or property
of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies which, in each case, if unpaid,
might by law become a material liability or Lien upon the
property of it or any of its Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings and for which
appropriate provision has been made.
SECTION 5.11 Maintenance of Properties and Insurance.
(a) The Company shall cause all material properties
owned by or leased by it or any of its Subsidiaries used or
useful to the conduct of its business or the business of any of
its Subsidiaries to be improved or maintained and kept in normal
condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements
thereof, all as in its judgment may be necessary, so that the
business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that
nothing in this Section 5.12 shall prevent the Company or any of
its Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is, in the judgment of
the Board of Directors of the Company or of the Board of
Directors of any Subsidiary of the Company, or of an officer (or
other agent employed by the Company or of any of its
Subsidiaries) of the Company or any of its Subsidiaries having
managerial responsibility for any such property, desirable in the
conduct of the business of the Company or any of its
Subsidiaries, and if such discontinuance or disposal is not
adverse in any material respect to the Noteholders.
(b) The Company shall maintain, and shall cause its
Subsidiaries to maintain, insurance with responsible carriers
against such risks and in such amounts, and with such
deductibles, retentions, self-insured amounts and co-insurance
provisions, as are customarily carried by similar businesses of
similar size, including property and casualty loss, workers'
compensation and interruption of business insurance.
SECTION 5.12 Maintaining Records; Access to Properties
and Inspections. The Company shall keep proper books of record
and account in which full, true and correct entries in conformity
with GAAP and all requirements of law are made in relation to its
business and activities. The Company shall (a) permit any
representatives designated by the Noteholders to visit and
inspect the financial records and the properties of the Company
or any of its Subsidiaries at reasonable times and as often as
reasonably requested and to make extracts from and copies of such
financial records, and (b) permit any representatives designated
by the Noteholders to discuss the affairs, finances and condition
of the Company or any of its Subsidiaries with the officers
thereof and independent accountants therefor; provided, however,
that the number of visits pursuant to clause (a) above in any
year shall not exceed two, unless (i) an Event of Default shall
have occurred and be continuing or (ii) the Noteholders determine
in good faith that any material event or material change has
occurred with respect to the Company and the its Subsidiaries and
that as a result of such event or change more frequent visits are
necessary or prudent.
SECTION 5.13 Preservation of Business and Operations.
The Company shall, and shall cause each of its Subsidiaries, to
do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights,
licenses, permits, franchises, authorizations, patents,
copyrights, trademarks and trade names material to the conduct of
its business.
SECTION 5.14 Lines of Business. Neither the Company
nor any of its Subsidiaries shall make a material change in or
discontinuance its existing lines of business (other than the
discontinuance of the Direct Marketing Program or its integrated
systems business) nor enter into any new line or lines of
business except as set forth in the Forecasts.
SECTION 5.15 Governing Documents. The Company shall
not amend its certificate of incorporation or bylaws in any
manner which could be reasonably expected to have a Material
Adverse Effect.
SECTION 5.16 Maintenance of Ownership of Subsidiaries.
The Company will not sell or otherwise dispose of any shares of
capital stock of any Subsidiary, except to another Subsidiary, or
permit any Subsidiary to issue, sell or otherwise dispose of any
shares or rights to acquire any of its capital stock or the
capital stock of any Subsidiary, except to the Company or another
Subsidiary; provided, however, that the Company may liquidate,
merge or consolidate any Subsidiary into or with itself; provided
that the Company is the surviving entity, or into or with another
Subsidiary. The Company and any of its Subsidiaries may pledge
shares of its Capital Stock as security for debt incurred by the
Company and any of its Subsidiaries.
SECTION 5.17 Investments. Neither the Company nor any
of its Subsidiaries shall make or maintain any Investments other
than (i) Investments in Subsidiaries, (ii) Acquisitions permitted
under the Credit Agreement, (iii) extensions of trade credit in
the ordinary course of business in accordance with the Company's
and Alarmguard's historic business practices; (iv) advances to
employees in accordance with the Company's historic practices
thereof in an amount not to exceed $100,000 in the aggregate at
any time or (iv) Qualified Investments.
ARTICLE 6. EVENTS OF DEFAULT
If any of the following conditions or events ("Events
of Default") shall occur and be continuing:
SECTION 6.1 Failure to Make Payments When Due. (i)
Failure to pay any principal of the Notes when due, whether at
stated maturity, by acceleration, or otherwise; or (ii) failure
to pay any installment of interest on the Notes or any other
amount due under this Agreement and such default continues for a
period of 10 days.
SECTION 6.2 Default in Other Agreements. Any breach or
default by the Company or any of its Subsidiaries under any
instrument or agreement evidencing Indebtedness of the Company or
any of its Subsidiaries the principal amount of which equals at
least $500,000 in the aggregate and the effect of such breach or
default is to cause, whether by declaration by the requisite
number of holders of such Indebtedness or automatically, the
acceleration of such Indebtedness, and such Indebtedness shall
not have been discharged or such acceleration shall not have been
rescinded or annulled within ten days thereof.
SECTION 6.3 Breach of Certain Covenants and Agreements.
Failure of the Company to perform or comply with any term or
condition contained in this Agreement or the Notes (other than
Article 2), which failure continues for a period of 30 days after
there shall have been given, to the Company by the Majority
Holders of Notes, a written notice specifying such default or
breach and requiring it to be remedied and stating that such
notice is a "Notice of Default".
SECTION 6.4 Involuntary Bankruptcy; Appointment of
Receiver, etc. (a) A Court of competent jurisdiction shall enter
a decree or order for relief in respect of the Company or
Alarmguard in an involuntary case under the Bankruptcy Code or
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, which decree or order is not stayed within
sixty (60) days thereof; or any other similar relief shall be
granted and remain unstayed under any applicable federal or state
law; or (b) an involuntary case is commenced against the Company
or Alarmguard under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect; or a decree or
order of a court of competent jurisdiction for the appointment of
a receiver, liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Company or Alarmguard or
over all or a substantial part of any of the Company's or
Alarmguard's properties, shall have been entered; or an interim
receiver, trustee or other custodian of the Company or Alarmguard
for all or a substantial part of the Company's or Alarmguard's
properties is involuntarily appointed; or a warrant of
attachment, execution or similar process is issued against any
substantial part of the property of the Company or Alarmguard,
and the continuance of any such events in this clause (b) for
sixty (60) days unless dismissed, vacated or discharged.
SECTION 6.5 Voluntary Bankruptcy; Appointment of
Receiver, etc. The Company or Alarmguard shall have an order for
relief entered with respect to it or commence a voluntary case
under the Bankruptcy Code or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to
a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property;
the making by the Company or Alarmguard of any assignment for the
benefit of creditors, the admission by the Company or Alarmguard
in writing of its inability to pay its debts as such debts become
due; or the Board of Directors of the Company or Alarmguard (or
any committee thereof) adopts any resolution or otherwise
authorizes action to approve any of the foregoing.
SECTION 6.6 Judgments and Attachments. Any money
judgment, writ or warrant of attachment, or similar process
involving in any individual case or in the aggregate at any time
an amount in excess of $250,000 (not covered by insurance) shall
be entered or filed against the Company or any of its assets and
shall remain undischarged or unvacated for a period of sixty (60)
days.
SECTION 6.7 Change in Control. A Change in Control
shall have occurred.
THEN, subject to the terms of Article 7, (i) upon the
occurrence of any Event of Default described in the foregoing
Section 6.4 or 6.5, the unpaid principal amount of and accrued
interest on the Notes shall automatically become immediately due
and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly
waived by the Company, and the obligations of each Noteholder
hereunder shall thereupon terminate and (ii) upon the occurrence
of any other Event of Default, the Majority Holders of Notes may,
by written notice to the Company, declare the Notes to be, and
the same shall forthwith become, due and payable, together with
accrued interest thereon.
ARTICLE 7. SUBORDINATION
SECTION 7.1 Notes Subordinate to Senior Debt. Each
Noteholder agrees that the Notes and all interest accrued thereon
and any other amounts owing thereunder, under this Agreement, or
in respect hereof ("Subordinated Obligations") shall be
Subordinate and Junior in Right of Payment to all
Senior Debt (including any interest accruing on the Senior Debt,
whether prior or subsequent to the commencement of bankruptcy,
insolvency or similar proceedings with respect to the Company),
together with any and all reasonable fees and expenses incurred
by the Senior Creditors in collecting all or any of the Senior
Debt, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, the Company
Guarantee, the Credit Agreement, the promissory notes from time
to time issued pursuant to the Credit Agreement, and any other
documents made, delivered or given in connection with any of the
foregoing (together with all amendments, restatements,
supplements, replacements or other modifications thereof, "Senior
Credit Documents"), whether on account of guaranteed obligations,
principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all
fees and disbursements of counsel to the Senior Creditors) or
otherwise, the principal amount of which obligations under the
Credit Agreement shall in no case exceed EIGHTY MILLION DOLLARS
($80,000,000).
SECTION 7.2 Standstills, Etc. As used in this
Agreement, the term "Subordinate and Junior in Right of Payment"
shall mean that:
(a) Unless and until the Credit Agreement shall have
been terminated and the Senior Debt shall have been indefeasibly
paid in full, no Noteholder will take, demand or receive, by set-
off, or in any other manner, any payment or security for the
whole or any part of the Subordinated Obligations, provided,
however, that the Company may Pay interest and principal on the
Subordinated Obligations when and as, and only when and as, the
same becomes due and payable unless (i) a default under Section
11.1(c) of the Credit Agreement ("Payment Default") has occurred
and such Payment Default is continuing, (ii) the Company either
has actual knowledge that, or has received written notice from
the Administrative Agent that, a default under Section 11.1(k) of
the Credit Agreement ("Financial Covenant Default") has occurred
(or would occur as a result of any such payment on the
Subordinated Obligations) and such Financial Covenant Default is
continuing or (iii) the Company either has actual knowledge that,
or has received written notice from the Administrative Agent that
an other Event of Default (as defined in the Credit Agreement)
other than Events of Default under Section 11.1(c) or Section
11.1(k) of the Credit Agreement ("Other Default" and together
with Financial Covenant Defaults and Payment Defaults, "Senior
Credit Defaults") has occurred (or would occur as a result of any
such payment on the Subordinated Obligations) and such Other
Default is continuing. Upon a Payment Default, or upon a
Financial Covenant Default or Other Default of which the Company
is aware, the Company shall give prompt written notice of such
event to the Noteholders. In addition, for purposes of this
Article 7, the Administrative Agent may give notice to the
Noteholders of the existence of any Senior Credit Default.
(b) Unless and until the Credit Agreement shall have
been terminated and the Senior Debt shall have been indefeasibly
paid in full, no Noteholder will (i) enforce or exercise any
right of acceleration, demand or set off against the Company,
Alarmguard or any of the Collateral (as hereinafter defined);
(ii) make any claim or commence or initiate any action, lawsuit,
case or proceeding against the Company or Alarmguard, excluding
proceedings under the Bankruptcy Code against the Company only
(after proceedings, under the Bankruptcy Code have been commenced
by or against Alarmguard) or join together or with any creditor
in any action, lawsuit, case or proceeding, excluding proceedings
under the Bankruptcy Code (other than initiating a bankruptcy in
conjunction with any creditor other than the Administrative
Agent), against the Company only; (iii) contact any account
debtor of the Company or Alarmguard or take possession of any
Collateral or exercise any right of foreclosure, sale or any
right or remedy with respect to the Company, Alarmguard or the
Collateral; or (iv) take any other action prejudicial to or
inconsistent with the subordination of the Subordinated
Obligations to the Senior Debt as provided for herein including,
without limitation, that no Noteholder shall take any action that
will impede, interfere with, restrict, or restrain the exercise
by the Administrative Agent or the Lenders of its rights and
remedies under the Credit Agreement (hereinafter, (i) through
(iv) are collectively referred to as "Collection Actions"). If
any Noteholder shall attempt any Collection Action, the Company,
the Administrative Agent or the Lenders may interpose as a
defense or plea the making of this Agreement.
(c) Prohibitions on payments on the Subordinated
Obligations under paragraph (a) above and Collection Actions in
connection with the Subordinated Obligations under paragraph
(b) above are:
1. applicable only as long as a Senior Credit Default
is continuing and
such payments shall be made immediately following the cure of any
such Senior Credit Default; and
2. subject to the limitation that if, within one
hundred eighty (180) days of the date that the Noteholders have
received notice of a Financial Covenant Default or an Other
Default (such 180 day period being hereinafter referred to as the
"Standstill Period" and the date of notice of a Financial
Covenant Default or an Other Default being hereinafter referred
to as a "Notice Date") and the loans outstanding in connection
with the Credit Agreement have not been declared by the
Administrative Agent or the Lenders to be immediately due and
payable, then upon the expiration of the Standstill Period the
prohibitions relating to the existing Financial Covenant Default
and/or Other Default shall lapse for the following purposes: (i)
the Company shall pay all interest that is then due and owing on
the Subordinated Obligations (including all interest that would
have been paid but for the Senior Credit Default) and (ii) the
Noteholders shall be entitled to exercise their remedies
hereunder, under the Notes, or otherwise, subject to the
condition that any funds collected in excess of the interest
payments due and owing shall be first used to pay off the
outstanding Senior Debt in their express order of priority. No
facts or circumstances constituting a Senior Credit Default under
the Credit Agreement existing on a Notice Date shall be used as a
basis for any subsequent Senior Credit Default under the Credit
Agreement for a period of time beginning on such Notice Date and
ending following the 179th consecutive day after the expiration
of the Standstill Period unless such prior Senior Credit Default
under the Credit Agreement is cured prior to such subsequent
Senior Credit Default.
(d) Unless and until the Credit Agreement has been
terminated and the Senior Debt has been indefeasibly paid in
full, each Noteholder acknowledges and agrees that, regardless of
the time of loans, advances or extensions of credit made by the
Administrative Agent or the Lenders under the Credit Agreement or
the relative times or order of attachment, perfection or creation
of any security interests, liens, mortgages, encumbrances,
pledges, assignments or hypothecations granted to, obtained by or
to be granted or obtained by the Administrative Agent for the
account of the Lenders in any now existing or hereinafter
acquired properties and assets of any kind or description of the
Company or Alarmguard (collectively, the "Collateral") for the
purpose of securing the Senior Debt, or the actual possession of
any Collateral, or the order of filing or recording of financing
statements, mortgages or other documents, if any, or any defect,
deficiency, error or omission contained in any of the foregoing,
or anything in the Credit Agreement or this Agreement to the
contrary, as between the Administrative Agent and any Noteholder
any security interests, liens, mortgages, encumbrances, pledges,
assignments or hypothecations granted to, obtained by or to be
granted or obtained by any Noteholder to secure the Subordinated
Obligations or otherwise, shall in all respects be subordinate
and junior in priority and right of enforcement to the security
interest, mortgages, liens, encumbrances, pledges, assignments or
hypothecations granted to, obtained by or to be granted or
obtained by the Administrative Agent in the Collateral.
(e) In the event of any distribution, division or
application, partial or complete, voluntary or involuntary, by
operation of law or otherwise, of all or any part of any
properties or assets of the Company to any creditor or creditors
of the Company by reason of any liquidation, dissolution or other
winding-up of the Company, or by reason of any sale,
receivership, insolvency or bankruptcy proceeding or assignment
for the benefit of creditors or any proceeding by or against the
Company for any relief under any bankruptcy, reorganization or
insolvency law or laws, or any law relating to the relief of
debtors, readjustment of indebtedness, reorganization,
composition or extension, then and in any such event, any payment
or distribution of any kind or character whether in cash,
property or securities which, but for the subordination
provisions of this Agreement would otherwise be payable or
deliverable upon or in respect of the Subordinated Obligations,
shall instead be paid over or delivered to the Administrative
Agent for the account of the Lenders for application on account
of the Senior Debt in their express order of priority, and no
Noteholder shall receive any such payment or distribution or any
benefit therefrom. The Administrative Agent shall be entitled to
hold any amounts so paid over or delivered to the Administrative
Agent, whether or not any Senior Debt owed to the Administrative
Agent or the Lenders are then due and payable, until the Senior
Debt have been paid in full. The Company shall give the
Noteholders prompt notice of all such actions taken by the
Administrative Agent pursuant to this paragraph.
SECTION 7.3 Authorization of Certain Actions. Each
Noteholder hereby irrevocably authorizes and empowers (without
imposing any obligation on) the Administrative Agent until such
time as the Senior Debt shall have been paid in full, under the
circumstances set forth in paragraph (e) of Section 7.2 of this
Article 7, to demand, ▇▇▇ for, collect and receive every such
payment or distribution described therein and give acquittance
therefor, to file claims and proofs of claims in any statutory or
non-statutory proceeding, to vote the full amount of the
Subordinated Obligations in its sole discretion in connection
with any resolution, arrangement, plan of reorganization,
compromise, settlement or extension and to take all such other
action (including, without limitation, the right to participate
in any composition of creditors and the right to vote the
Subordinated Obligations at creditor's meetings for the election
of trustees, acceptances of plans and otherwise), in the name of
the Administrative Agent for the account of the Lenders, or in
the name of any Noteholder or otherwise as the Administrative
Agent for the account of the Lenders may deem necessary or
advisable for the enforcement of the subordination provisions of
this Agreement. Each Noteholder hereby agrees, under the
circumstances set forth in paragraph (e) of Section 7.2 of this
Article 7, duly and promptly to take such action as may be
reasonably requested at any time and from time to time by the
Administrative Agent in accordance herewith to collect the
Subordinated Obligations for the account of the Senior Creditors
and to file appropriate proofs of claim in respect thereof, to
refrain from taking any action inconsistent with any action taken
or proposed to be taken by the Administrative Agent in accordance
herewith pursuant to the preceding sentence, and to execute and
deliver such powers of attorney, assignments or other instruments
as may be reasonably requested by the Administrative Agent in
accordance herewith in order to enable it to enforce any and all
claims upon or in respect of the Subordinated Obligations and to
collect and receive any and all payments or distributions which
may be payable or deliverable at any time upon or in respect of
the Subordinated Obligations. Notwithstanding the foregoing, in
the event of any bankruptcy proceeding under Chapter 11 of the
United States Bankruptcy Code in which the Company is the debtor,
the rights of the Administrative Agent set forth herein to take
action on the Noteholders' behalf or to prevent any Noteholder
from taking action on its own behalf in such proceedings shall
lapse if (i) a plan of reorganization has not been filed within
12 months of the commencement of such Chapter 11 case or (ii) a
plan of reorganization has not been confirmed within 18 months of
the commencement of such Chapter 11 case. In addition, the
rights of the Administrative Agent set forth herein to take
action on the Noteholders' behalf or to prevent any Noteholder
from taking action on its own behalf shall only be applicable if
at such time such Noteholder is prevented from receiving a
payment in connection with a Subordinated Obligation as a result
of a Senior Credit Default.
SECTION 7.4 Delivery in Trust. Should any payment or
distribution or security, or the proceeds of any thereof, be
collected or received by any Noteholder in respect of
Subordinated Obligations, and such collection or receipt is not
expressly permitted hereunder prior to the payment in full of the
Senior Debt (including, without limitation, circumstances where,
following payment to any Noteholder of a payment hereunder, it is
thereafter determined that the Company had knowledge or received
notice of a Senior Credit De ' fault prior to the time when such
payment was made), such Noteholder will, forthwith (or as soon
thereafter as such Noteholder shall have notice that such payment
should not have been collected or received by such Noteholder)
deliver the same to the Administrative Agent, to the extent
practicable in precisely the form received (except for the
endorsement or the assignment of the holder thereof where
necessary) and, until so delivered, the same shall be held in
trust by such Noteholder as the property of the Senior Creditors.
The Administrative Agent shall be entitled to hold any such
payment or distribution or security, or the proceeds of any
thereof, so delivered to the Administrative Agent, whether or not
any Senior Debt owed to the Administrative Agent or the Lenders
are then due and payable, until the Senior Debt owed to the
Administrative Agent or the Lenders have been paid in full.
SECTION 7.5 Waiver of Subrogation. Each Noteholder
waives any right that it may have to be subrogated to the rights
of the Senior Creditors to receive payments or distributions of
assets of the Company made on the Senior Debt or to otherwise
seek reimbursement, indemnity or contribution or payment of any
kind from the Company in respect of amounts paid to the Senior
Creditors in lieu of the Noteholders under this Agreement, until
the Senior Debt have been paid in full.
SECTION 7.6 Waiver of Notices, Etc., Each Noteholder
hereby waives any and all notices of renewal, extension or
accrual of an of the Senior Debt, and agrees and consents,
subject to the limitation in Section 7.1 of this Article 7, that
without notice to or assent by any Noteholder:
(a) the obligations and liabilities of Alarmguard
under the Credit Agreement or the Company or any other party or
parties for or upon the Senior Debt (and/or any promissory
note(s), security document or guaranty evidencing or securing the
same) may, from time to time, in whole or in part, be renewed,
extended, modified, amended, restated, accelerated, compromised,
supplemented, terminated, sold, exchanged, waived or released;
(b) the Senior Creditors may exercise or refrain from
exercising any right, remedy or power granted by the Company
Guarantee or the Credit Agreement or any other document creating,
evidencing or otherwise related to the Obligations or the Senior
Debt or at law, in equity, or otherwise, with respect to the
Obligations or the Senior Debt or any collateral security or lien
(legal or equitable) held, given or intended to be given therefor
(including, without limitation, the right to perfect any lien or
security interest created in connection therewith);
(c) any and all collateral security and/or liens
(legal or equitable) at any time, present or future, held, given
or intended to be given for the Senior Debt, and any rights or
remedies of the Senior Creditors in respect thereof may, from
time to time, in whole or in part, be exchanged, sold,
surrendered, released, modified, waived or extended by the Senior
Creditors; and
(d) any balance or balances of funds with the Senior
Creditors at any time standing to the credit of the Company or
the Noteholder of any of the Senior Debt may, from time to time,
in whole or in part, be surrendered or released; all as the
Senior Creditors may deem advisable and all without impairing,
abridging, diminishing, releasing or affecting the subordination
to the Senior Debt provided for herein.
SECTION 7.7 Assignments.. Each Noteholder agrees that
it will not assign, transfer, sell or otherwise dispose of its
right, title or interest in any Note issued to such Noteholder to
any other person or entity, other than to affiliates of such
Noteholder, without the prior written consent of the Required
Lenders, which consent shall not be unreasonably withheld.
SECTION 7.8 No Contest. Each Noteholder agrees that it
will not contest or challenge the validity, perfection,
enforceability or priority of any security interests, liens,
mortgages, encumbrances, pledges, assignments or hypothecations
granted to, obtained by or to be granted or obtained by the
Administrative Agent for the account of the Lenders in the
Collateral.
SECTION 7.9 Collateral Waiver. Each Noteholder hereby
waives any and all rights to have the Collateral, or any part
thereof, granted to or obtained by the Administrative Agent for
the account of the Lenders marshalled upon any foreclosure or
other disposition thereof.
SECTION 7.10 Additional Financing. Each Noteholder
agrees that in the event that the Company or Alarmguard shall
become subject to a bankruptcy proceeding under the Bankruptcy
Code and the Lenders or the Agents voluntarily or involuntarily
provide funds to the Company or Alarmguard secured by the
Collateral or any other property of the Company or Alarmguard,
either as cash collateral pursuant to Section 363 of the
Bankruptcy Code or as debtor-in-possession financing pursuant to
Section 364 of the Bankruptcy Code ("DIP Financing"), any and all
loans, advances and other extensions of credit, and all other
obligations, liabilities or indebtedness of every kind owed by
the Company or Alarmguard arising out of or in connection with
DIP Financing shall be deemed to be a part of the Senior Debt.
Each Noteholder agrees not to oppose the provisions of any DIP
Financing in any such proceeding.
SECTION 7.11 Benefit of Parties. The subordination
provisions contained herein are for the benefit of the Senior
Creditors and their respective successors and assigns as holders
from time to time of Senior Debt, and may not be rescinded or
canceled or modified in any way, nor may any provision of this
Article 7 be changed, without the prior written consent thereto
of the Required Lenders.
ARTICLE 8. MISCELLANEOUS
SECTION 8.1 Transfers; Note Register; Replacement of
Notes.
(a) The Notes shall not be sold, assigned, pledged,
hypothecated or otherwise transferred, in whole or in part,
except as provided in paragraphs (b) and (c) below and except for
transfers by will or applicable laws of descent.
(b) Subject to paragraph (c) below, the holder of a
Note may sell, assign, pledge, hypothecate or otherwise transfer
such Note, in whole or in part, to any Person.
(c) Prior to any sale, assignment, pledge,
hypothecation or other transfer of any Note pursuant to paragraph
(b) above, the holder thereof shall give at least 15 days' prior
written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer and shall indicate the
exemption under the Securities Act pursuant to which the proposed
transfer of the Note may be effected without registration under
the Securities Act. Every Note surrendered for registration of
transfer shall be duly endorsed, or shall be accompanied by a
written instrument of transfer duly executed, by the registered
holder of such Note. The Note issued upon such transfer shall
bear the restrictive legend set forth in paragraph (d) below.
(d) Each Note will be stamped or otherwise imprinted
with a legend in capital letters and otherwise in substantially
the following form:
"THE SECURITY REPRESENTED BY THIS NOTE
HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE SECURITIES LAWS, AND MAY
NOT BE RESOLD OR TRANSFERRED, IN WHOLE
OR IN PART, UNLESS REGISTERED OR EXEMPT
FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND ALL
APPLICABLE STATE SECURITIES LAWS."
(e) The Company shall keep a register in which
provisions shall be made for the registration of transfers and
exchanges of Notes. The register shall be kept at the chief
executive office of the Company. Upon surrender for registration
of transfer of any Note at the chief executive office of the
Company (and provided that such transfer is effected in
compliance with this Section 8.1), the Company shall execute and
deliver, in the name of the designated transferee or transferees,
one or more new Notes of like tenor for a like aggregate
principal amount of Notes. At the option of any registered
holder of Notes, its Notes may be exchanged for other Notes of
like tenor of any authorized denominations and of a like
aggregate principal amount, upon surrender of the Notes to be
exchanged at the chief executive office of the Company. Each new
Note issued upon transfer or exchange shall be in a principal
amount of at least $100,000 and dated the date to which interest
on the Notes surrendered shall have been paid. All Notes issued
upon any registration of transfer or exchange of Notes shall be
the valid obligations of the Company evidencing the same
respective obligations, and entitled to the same benefits, as the
Notes surrendered upon such registration of transfer or exchange.
The Company shall make a notation on each new Note of the amount
of all payments of principal previously made on the old Notes
with respect to which such new Note is issued and the date to
which interest accrued on such old Note has been paid, and shall
stamp or otherwise imprint on each new Note the restrictive
legend set forth above.
(f) Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Note
and, in the case of any such loss, theft or destruction, upon
delivery of an indemnity agreement satisfactory to the Company,
or in the case of any such mutilation, upon surrender of such
Note (which surrendered Note shall be canceled by the Company),
the Company will, without charge, issue a new Note of like tenor
in lieu of such lost, stolen, destroyed or mutilated Note as if
the lost, stolen, destroyed or mutilated Note were then
surrendered for exchange.
SECTION 8.2 Expenses. The Company agrees to promptly
pay after the occurrence of an Event of Default, all costs and
expenses (including reasonable attorneys' fees) incurred by the
Noteholders in enforcing any obligations of or in collecting any
payments due from the Company hereunder or under the Notes by
reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided
under this Agreement (including any amendment or waiver of the
provisions of this Agreement), or of any insolvency or bankruptcy
proceedings.
SECTION 8.3 Amendments and Waivers. Subject to
Section 7.11 hereof, no amendment, modification, termination or
waiver of any provision of this Agreement or of the Notes, or
consent to any departure by the Company therefrom, shall in any
event be effective without the written concurrence of the
Majority Holders of Notes and the Company; provided, that no
amendment, modification, waiver or consent shall, unless in
writing and signed by each Noteholder, do any of the following:
(a) reduce the principal of, or interest on the Notes or any
fees, premiums, or other amounts payable hereunder; (b) postpone
any date fixed for any payment of principal of, or premium or
interest on, the Notes or any fees or other amounts payable
hereunder; or (c) amend this Section 8.3. Any waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand
on the Company in any case shall entitle the Company to any
further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected
in accordance with this Section 8.3 shall be binding upon each
holder of the Notes at the time outstanding and each future
holder of the Notes.
SECTION 8.4 Independence of Covenants. All covenants
hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitation of, another covenant
shall not avoid the occurrence of an Event of Default or
Potential Event of Default if such action is taken or condition
exists.
SECTION 8.5 Notices. All notices, demands or other
communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and delivered
personally, mailed by certified or registered mail, return
receipt requested and postage prepaid, sent via a nationally
recognized overnight courier, or via facsimile. Such notices,
demands and other communications will be sent to the address
indicated below:
To the Company:
Security Systems Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Noteholders at the address set forth on Schedule 8.5
With a copy to:
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or to the attention of such other Person as
the recipient party shall have specified by prior written notice
to the sending party; provided, that the failure to deliver
copies of notices as indicated above shall not affect the
validity of any notice. Any such communication shall be deemed
to have been received (i) when delivered, if personally
delivered, or sent by nationally recognized overnight courier or
sent via facsimile or (ii) on the third Business Day following
the date on which the piece of mail containing such communication
is posted if sent by certified or registered mail.
SECTION 8.6 Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any Noteholder in
the exercise of any power, right or privilege hereunder or under
the Notes shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right
or privilege preclude other or further exercise thereof or of any
other right, power or privilege. All rights and remedies
existing under this Agreement or the Notes are cumulative to and
not exclusive of, any rights or remedies otherwise available.
SECTION 8.7 Severability. In case any provision in or
obligation under this Agreement or the Notes shall be invalid,
illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired
thereby.
SECTION 8.8 Heading. Section and subsection headings
in this Agreement are included herein for convenience of
reference only and shall not constitute a part of this Agreement
for any other purpose or be given any substantive effect.
SECTION 8.9 Applicable Law. THIS AGREEMENT AND THE
NOTES SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CONNECTICUT WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS.
SECTION 8.10 Successors and Assigns; Subsequent Holders
of Notes. This Agreement shall be binding upon the parties
hereto and their respective permitted successors and assigns and
shall inure to the benefit of the parties hereto and the
permitted successors and assigns of the Noteholders. The terms
and provisions of this Agreement and all other certificates
delivered pursuant to Article 3 shall inure to the benefit of any
permitted assignee or transferee of the Notes pursuant to Section
8.1(a), and in the event of such transfer or assignment, the
rights and privileges herein conferred upon the Noteholders shall
automatically extend to and be vested in such transferee to
assignee, all subject to the terms and conditions hereof. The
Company's rights or any interest therein hereunder may not be
assigned without the written consent of the Majority Holders of
Notes.
SECTION 8.11 Consent to Service of Process. EACH OF
THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
IN ANY ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT
THE ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME
EFFECTIVE FIFTEEN (15) DAYS AFTER SUCH MAILING. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY PARTY
HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES AND
DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR
PROCEEDINGS AGAINST ANY OF THE OTHER PARTIES HERETO IN SUCH OTHER
JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE PERMITTED BY ANY
APPLICABLE LAW.
SECTION 8.12 Waiver of Jury Trial. EACH OF THE COMPANY
AND THE NOTEHOLDER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, TRIAL BY JURY IN ANY LITIGATION IN ANY COURT
WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE VALIDITY,
PRESERVATION OF RIGHTS, INTERPRETATION, COLLECTION OR ENFORCEMENT
THEREOF.
SECTION 8.13 Limited Recourse. Notwithstanding
anything in this Agreement or any other document, agreement or
instrument contemplated hereby or entered into in connection with
the transactions contemplated hereby, the obligations of the
Company under this Agreement shall be without recourse to any
director, officer or stockholder of the Company.
SECTION 8.14 Counterparts; Effectiveness. This
Agreement and any amendments, waivers, consents or supplements
may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto.
SECTION 8.15 Entirety. This Agreement and the other
Loan Documents embody the entire agreement among the parties and
supersede all prior agreements and understandings, if any,
relating to the subject matter hereof and thereof.
IN WITNESS WHEREOF the due execution hereof by the
respective duly authorized officers of the undersigned as of the
date first written above.
SECURITY SYSTEMS HOLDINGS, INC.
By:___________________________
Name:
Title:
ALIS & CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
Title: General Partner
BF PARTNERS
By:__________________________________
Name:
Title:
COAST MEZZANINE INVESTEMENTS, LTD.
By: /s/ Hamad AbdulAziz Al Sagar
Name: Hamad AbdulAziz Al Sagar
Title: Chairman
NORTHERN TRUST COMPANY AS TRUSTEE OF
THE ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ TRUST
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT B
Existing SSH Subordinated Debt
Allocation of Principal Amount
Triumph-Connecticut Limited Partnership $2,014,800
Coast Mezzanine Investments, Ltd. $2,014,800
Alis & Co. $653,520
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust $168,360
BF Partners $99,000
$4,950,480
EXHIBIT C
New SSH Subordinated New SSH Subordinated
Debt Allocation of Debt Percent of
Principal Amount Principal Amount
Coast Mezzanine Investments, Ltd $2,500,000 54.35%
Alis & Co. $1,231,640 6.77%
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Trust' $168,360 3.66%
BF Partners $400,000 8.70%
▇▇▇▇▇▇▇ ▇▇▇▇▇ $100,000 2.17%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ $125,000 2.72%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $75,000 1.63%
$4,600,000 100.00%