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EXHIBIT 10.46
SECOND AMENDMENT TO LOAN INSTRUMENTS
This SECOND AMENDMENT TO LOAN INSTRUMENTS (this "SECOND AMENDMENT"),
dated as of March 10, 2000, is among SECURITY ASSOCIATES INTERNATIONAL, INC., a
Delaware corporation ("BORROWER"), CITIZENS BANK OF MASSACHUSETTS ("CITIZENS
BANK"), and FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in
its individual capacity and as agent for all the financial institutions from
time to time parties to the Loan Agreement defined below. Capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the Loan
Agreement.
R E C I T A L S
A. Borrower, State Street Bank and Trust Company ("STATE STREET"), and
FINOVA entered into a Second Amended and Restated Loan Agreement dated as of
September 30, 1999 (the "ORIGINAL LOAN AGREEMENT"), which was amended by a First
Amendment to Loan Instruments dated as of February 11, 2000 (the "FIRST
AMENDMENT") among Borrower, Citizens Bank, as successor in interest to State
Street, and FINOVA. The Original Loan Agreement, as amended by the First
Amendment and as the same may be further amended, restated, supplemented or
modified from time to time hereafter, is referred to herein as the "LOAN
AGREEMENT." Pursuant to the Loan Agreement, Citizens Bank and FINOVA have agreed
to make the Loan and other financial accommodations to Borrower.
B. Borrower has requested that the Loan Agreement be further amended in
certain respects.
C. Subject to the terms and conditions of this Second Amendment,
Lenders are willing to agree to the requests of Borrower.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, and subject to the terms and conditions hereof, Borrower and Lenders
agree as follows:
1. INCORPORATION OF RECITALS. The Recitals set forth above are
incorporated herein, are acknowledged by Borrower to be true and correct and are
made a part hereof.
2. DEFINITIONS. All capitalized terms used but not defined herein shall
have the respective meanings ascribed to such terms in the Loan Agreement, as
amended by this Second Amendment.
3. AMENDMENTS TO LOAN AGREEMENT. The Loan Instruments are amended as
set forth below:
(a) SECTION 1.1 - ADDITIONAL DEFINITIONS. Section 1.1 of the
Loan Agreement is amended by adding the following definitions in the
appropriate alphabetical order:
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Additional Portion Advance: a disbursement of any
portion of the Capital Expenditure Portion, SAFE Attrition
Guaranty Portion or SAFE Debt Portion.
Capital Expenditure Portion: a portion of the Loan in
the amount of $1,000,000.
Capital Expenditure Portion Advance: a disbursement
of any portion of the Capital Expenditure Portion.
SAFE Attrition Guaranty Portion: a portion of the
Loan in the amount of $2,000,000.
SAFE Attrition Guaranty Portion Advance: a
disbursement of any portion of the SAFE Attrition Guaranty
Portion Advance.
SAFE Debt Portion: a portion of the Loan in an amount
not to exceed the amount of the SAFE Debt as of the Funding
Date of the SAFE Debt Portion Portion.
SAFE Debt Portion Advance: a disbursement of the SAFE
Debt Portion.
(B) SECTION 1.1 - AMENDED DEFINITION. Section 1.1 of the Loan
Agreement is amended by deleting the current versions of the following
definitions contained therein and substituting therefor the following
versions of such definitions in the appropriate alphabetical order:
Acquisition Portion: a portion of the Loan equal to
$35,000,000 minus the SAFE Debt Portion.
Adjusted Total Debt: as of any Funding Date, the
Total Debt as of such date plus the requested Advance or
Additional Portion Advance, as applicable.
Funding Date: the date of the disbursement of an
Advance or Additional Portion Advance.
(C) SUBSECTION 2.1.4 - USE OF PROCEEDS. Subsection 2.1.4 of
the Loan Agreement is deleted in its entirety and the following is
substituted therefor:
"2.1.4 USE OF PROCEEDS. The proceeds of the Initial
Portion were used (i) to pay transaction costs and (ii) for
working capital. The proceeds of the Acquisition Portion shall
be used to (i) consummate Acquisitions and (ii) to pay
transaction costs in connection therewith. The proceeds of the
Capital Expenditure Portion shall be used to reimburse
Borrower for certain Capital Expenditures permitted hereunder.
The proceeds of the SAFE Attrition Guaranty Portion shall be
used to repay certain
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obligations to SAFE (i) in connection with the reprogramming
of account telephone lines and (ii) arising under the SAFE
Attrition Guaranty. The proceeds of the SAFE Debt Portion
shall be used to repay the SAFE Debt."
(D) SUBSECTION 2.1.7 - FUNDING PROCEDURES. Section 2.1.7 of
the Loan Agreement is deleted in its entirety and the following is
substituted therefor:
"2.1.7 FUNDING PROCEDURES. Agent shall give each
Lender prompt notice by telephone or facsimile transmission of
a Notice of Borrowing that is received by it. Each applicable
Lender shall make available to Agent, no later than 1:00 p.m.
Eastern Time on the applicable Funding Date set forth in the
Notice of Borrowing, for deposit into such account as Borrower
may direct, its Pro Rata Share of such Advance or Additional
Portion Advance in immediately available funds in Dollars,
provided that (i) all of the conditions set forth in Sections
4.1 and 4.3 have been satisfied with respect to an Advance
requested in such Notice of Borrowing and (ii) all of the
conditions set forth in Sections 4.1 and 4.4 have been
satisfied with respect to a Additional Portion Advance
requested in such Notice of Borrowing.
"Unless Agent receives contrary written notice prior
to any such Advance or Additional Portion Advance, it is
entitled to assume that each applicable Lender will make
available its Pro Rata Share of the Advance or Additional
Portion Advance and in reliance upon that assumption, but
without any obligation to do so, may advance such Pro Rata
Share on behalf of the applicable Lender, without the
necessity of giving daily notice to such Lender of the receipt
of a Notice of Borrowing. If the applicable amount is not in
fact made available to Agent by such Lender, Agent shall be
entitled to recover such amount on demand from such Lender
together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the Base
Rate. If such Lender pays such amount to Agent, then such
amount shall constitute such Lender's Pro Rata Share of the
applicable Advance or Additional Portion Advance. If such
Lender does not pay such corresponding amount forthwith upon
Agent's demand therefor, Agent shall promptly notify the
Borrower and the Borrower shall immediately pay such
corresponding amount to Agent together with interest thereon,
for each day from such Funding Date until the date such amount
is paid to Agent, at the rate payable under this Loan
Agreement for the Base Rate Portion.
"Nothing in this subsection 2.1.7 shall be deemed to
relieve any Lender from its obligation to fulfill its
Commitments hereunder or to prejudice any rights that Borrower
may have against any Lender as a result of any default by such
Lender hereunder. It is understood and agreed that no Lender
shall be responsible for any default by any other Lender in
that other Lender's obligation to make an Advance or
Additional Portion Advance requested hereunder
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nor shall the Commitment of any Lender to make the particular
type of Advance or Additional Portion Advance requested be
increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make an Advance or
Additional Portion Advance requested hereunder."
(E) SUBSECTION 2.1.8 - ADDITIONAL PORTION ADVANCES. Section
2.1 of the Loan Agreement is amended by adding the following subsection
2.1.8 immediately following subsection 2.1.7:
"2.1.8 ADDITIONAL PORTION ADVANCES. Each Lender
severally agrees to disburse its Pro Rata Share of Additional
Portion Advances to or as directed by Borrower from time to
time prior to December 31, 2000 provided all of the terms and
conditions set forth in Sections 4.1 and 4.4, to the extent
applicable, have been satisfied."
(F) SUBSECTION 2.2.5 - INTEREST HEDGE CONTRACTS. Section 2.2.5
of the Loan Agreement is deleted in its entirety and the following is
substituted therefor:
"2.2.5 INTEREST HEDGE CONTRACTS. Borrower shall enter
into an Interest Hedge Contract reasonably acceptable to the
Required Lenders, to provide protection to Borrower against
fluctuations in interest rates, and deliver to Agent the
Assignment of Interest Hedge Contract, (i) in a face amount
equal to 75% of the aggregate Principal Balance within 15 days
after any disbursement of the Loan which would result in an
aggregate outstanding Principal Balance equal to or greater
than $20,000,000 (the "Threshold Amount") and (ii) in a face
amount equal to 75% of any increase in the aggregate
outstanding Principal Balance over the Threshold Amount within
15 days after a disbursement of the Loan which would result in
an increase in the aggregate outstanding Principal Balance
equal to or greater than $5,000,000 since the delivery of the
most recent previous Assignment of Interest Hedge Contract."
(G) SUBSECTION 2.6.2 - NON-UTILIZATION FEE. Section 2.6.2 of
the Loan Agreement is deleted in its entirety and the following is
substituted therefor:
"2.6.2 NON-UTILIZATION FEE. Borrower shall pay to
Agent, for the benefit of Lenders, for each month through
March, 2001, a fee in the amount of one-half of one percent
(.50%) per annum (the "NON-UTILIZATION FEE") on the remainder
of (i) $38,000,000 minus (ii) the aggregate amount of all
prior Advances of the Acquisition Portion as of the last day
of such month minus (iii) the aggregate amount of all prior
Additional Portion Advances as of the last day of such month.
The Non-Utilization Fee shall be payable monthly in arrears on
the first Business Day of each month."
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(H) SECTION 4.4 - CONDITIONS FOR ADDITIONAL PORTION ADVANCES.
Article IV of the Loan Agreement is amended by adding the following
Section 4.4 immediately following Section 4.3:
"4.4 CONDITIONS FOR ADDITIONAL PORTION ADVANCES. The
obligation of Lenders to disburse Additional Portion Advances
shall be subject to the satisfaction or waiver of all of the
following conditions on or before the Funding Date with
respect to any requested Additional Portion Advance, in a
manner, form and substance satisfactory to the Required
Lenders:
"4.4.1 MAXIMUM FACILITY CASH FLOW LEVERAGE
RATIO. Borrower shall demonstrate to the satisfaction
of Agent that, assuming the requested Additional
Portion Advance had been disbursed on the last day of
the second month prior to the month in which the
applicable Funding Date is to occur, the Facility
Cash Flow Leverage Ratio as of such last day would
not exceed 3.5.
"4.4.2 AMOUNT AND FREQUENCY OF ADDITIONAL
PORTION ADVANCES. Any requested SAFE Attrition
Guaranty Portion Advance or Capital Expenditure
Portion Advance shall be in a minimum amount of
$75,000 or integral multiples of $25,000 in excess
thereof. Any requested SAFE Debt Portion Advance
shall be in a single disbursement in an amount not to
exceed the amount of the SAFE Debt outstanding as of
the Funding Date of the SAFE Debt Portion Advance.
The amount of the requested SAFE Attrition Guaranty
Portion Advance shall not exceed $2,000,000 when
added to the aggregate amount of all prior SAFE
Attrition Guaranty Portion Advances and the amount of
the requested Capital Expenditure Portion Advance
shall not exceed $1,000,000 when added to the
aggregate amount of all prior Capital Expenditure
Portion Advances. No more than two (2) Additional
Portion Advances shall be made in any month.
"4.4.3 NOTICE OF BORROWING. Agent shall have
received a Notice of Borrowing from Borrower respect
to each Additional Portion Advance no later than
12:00 p.m., Chicago time, at least three (3) Business
Days prior to the proposed Funding Date with respect
to such Additional Portion Advance, which shall be on
a Business Day.
"4.4.4 EVIDENCE OF PAYMENT OF SAFE DEBT.
With respect to a SAFE Debt Portion Advance, Agent
shall have received (i) a pay-off letter from SAFE in
form and substance satisfactory to Agent setting
forth a pay-off amount of the SAFE Debt as of the
proposed Funding Date with respect to such Additional
Portion Advance, (ii) such UCC-3 termination
statements and other Lien releases as Agent may
require, and (iii) evidence that the SAFE
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Debt shall be paid in full concurrently with the
disbursement of the SAFE Debt Portion.
"4.4.5 EVIDENCE OF PAYMENT OF INDEBTEDNESS
FOR BORROWED MONEY OWING UNDER THE SAFE ATTRITION
GUARANTY. With respect to a SAFE Attrition Guaranty
Portion Advance, Agent shall have received evidence
satisfactory to Agent that the disbursement made in
connection with such SAFE Attrition Guaranty Portion
Advance shall be used to satisfy Indebtedness for
Borrowed Money due and payable by Borrower to SAFE
pursuant to the SAFE Asset Purchase Agreement."
(I) SECTION 6.16 - TRIAL BALANCE REPORTS. Article VI of the
Loan Agreement is amended by adding the following Section 6.16
immediately following Section 6.15:
"6.16 TRIAL BALANCE REPORTS. Within 30 days of each
Funding Date with respect to a Capital Expenditure Portion
Advance, furnish each Lender with a trial balance report in
sufficient detail to demonstrate to the reasonable
satisfaction of Agent the amount of each payment and the
vendor paid with respect to each Capital Expenditure which is
the subject of each such Capital Expenditure Portion Advance."
(J) EXHIBITS TO LOAN AGREEMENT. Exhibits 1.1(G) and 7.6 to the
Loan Agreement are deleted in their entirety and Amended Exhibit 1.1(G)
and Amended Exhibit 7.6, each attached to this Second Amendment, are
substituted therefor.
4. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Second
Amendment shall be subject to the satisfaction of all of the following
conditions in a manner, form and substance satisfactory to FINOVA:
(A) DELIVERY OF DOCUMENTS. The following shall have been
delivered to FINOVA, each duly authorized and executed and each in form
and substance satisfactory to FINOVA:
(1) this Second Amendment;
(2) a copy, certified by the corporate secretary of
Borrower, of resolutions adopted by the Board of Directors of
Borrower authorizing the execution of this Second Amendment;
(3) such other instruments, documents, certificates,
consents, waivers and opinions as FINOVA reasonably may
request.
(B) PERFORMANCE; NO DEFAULT. Borrower shall have performed and
complied with all agreements and conditions contained in the Loan
Instruments to be performed by or complied with by it, and no Event of
Default or Incipient Default shall exist.
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(C) MATERIAL ADVERSE CHANGE. No event shall have occurred
since December 31, 1999 which has had or could have a Material Adverse
Effect.
The date on which all of the conditions set forth in this Paragraph 4
have been satisfied is referred to herein as the "Effective Date."
5. REFERENCES. From and after the Effective Date, all terms used in the
Loan Instruments which are defined in the Loan Agreement shall be deemed to
refer to such terms as amended by this Second Amendment.
6. REPRESENTATIONS AND WARRANTIES. Borrower hereby confirms to Agent
and Lenders that the representations and warranties set forth in the Loan
Instruments, as amended by this Second Amendment, are true and correct in all
material respects as of the date hereof, and shall be deemed to be remade as of
the date hereof. Borrower represents and warrants to Agent and Lenders that (i)
Borrower has full power and authority to execute and deliver this Second
Amendment and to perform its obligations hereunder, (ii) upon the execution and
delivery hereof, this Second Amendment will be valid, binding and enforceable
upon Borrower in accordance with its terms, (iii) the execution and delivery of
this Second Amendment does not and will not contravene, conflict with, violate
or constitute a default under (A) the articles of incorporation or by-laws of
Borrower or (B) any applicable law, rule, regulation, judgment, decree or order
or any agreement, indenture or instrument to which Borrower is a party or is
bound or which is binding upon or applicable to all or any portion of Borrower's
Property and (iv) as of the date hereof no Incipient Default or Event of Default
exists.
7. COSTS AND EXPENSES. Borrower agrees to reimburse Agent for all fees
and expenses incurred in the preparation, negotiation and execution of this
Second Amendment and the consummation of the transactions contemplated hereby,
including, without limitation, the fees and expenses of counsel for Agent.
8. NO FURTHER AMENDMENTS; RATIFICATION OF LIABILITY. Except as amended
hereby, the Loan Agreement and each of the other Loan Instruments shall remain
in full force and effect in accordance with its respective terms. Borrower
hereby ratifies and confirms its liabilities, obligations and agreements under
the Loan Agreement and the other Loan Instruments, all as amended by this Second
Amendment, and the Liens created thereby, and acknowledges that (i) it has no
defenses, claims or set-offs to the enforcement by Agent and Lenders of such
liabilities, obligations and agreements, (ii) Agent and Lenders have fully
performed all obligations to Borrower which any such Person may have had or has
on and as of the date hereof and (iii) other than as specifically set forth
herein, neither Agent nor any Lender waives, diminishes or limits any term or
condition contained in the Loan Agreement or the other Loan Instruments. Agent
and Lenders' agreement to the terms of this Second Amendment or any other
amendment of the Loan Agreement shall not be deemed to establish or create a
custom or course of dealing among Agent, Lenders and Borrower. The Loan
Instruments, as amended by this Second Amendment, contain the entire agreement
among Agent, Lenders and Borrower with respect to the transactions contemplated
hereby.
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9. COUNTERPARTS. This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall constitute one and the same instrument.
10. FURTHER ASSURANCES. Borrower covenants and agrees that it will at
any time and from time to time do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
documents and instruments as reasonably may be required by Agent and Lenders in
order to effectuate fully the intent of this Second Amendment.
11. SEVERABILITY. If any term or provision of this Second Amendment or
the application thereof to any party or circumstance shall be held to be
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, the validity, legality and enforceability of the remaining terms
and provisions of this Second Amendment shall not in any way be affected or
impaired thereby, and the affected term or provision shall be modified to the
minimum extent permitted by law so as most fully to achieve the intention of
this Second Amendment.
12. CAPTIONS. The captions in this Second Amendment are inserted for
convenience of reference only and in no way define, describe or limit the scope
or intent of this Second Amendment or any of the provisions hereof.
[remainder of this page intentionally left blank]
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IN WITNESS WHEREOF, this Second Amendment has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
SECURITY ASSOCIATES INTERNATIONAL,
INC., a Delaware corporation
By:
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Xxxxx X. Xxxxxxx
President
FINOVA CAPITAL CORPORATION, a
Delaware corporation, in its
individual capacity as a Lender
and as Agent for all Lenders
By:
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Xxxxxx X. Xxxxx
Vice President
CITIZENS BANK OF MASSACHUSETTS, as
Lender
By:
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Xxxxx X. Xxxxxx
Vice President
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AMENDED EXHIBIT 1.1(G)
to
LOAN AGREEMENT, as Amended by the Second Amendment
Form of Notice of Borrowing
See attached.
Second Amendment to Loan Instruments
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NOTICE OF BORROWING/DISBURSEMENT REQUEST
---------- --, -----
FINOVA Capital Corporation, as Agent
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Vice President
Operations Management
Ladies and Gentlemen:
Reference is made to that certain Second Amended and Restated Loan
Agreement, dated as of September 30, 1999 (the "Original Loan Agreement"), among
SECURITY ASSOCIATES INTERNATIONAL, INC., a Delaware corporation ("Borrower"),
FINOVA CAPITAL CORPORATION, a Delaware corporation ("FINOVA"), in its individual
capacity and as agent for the financial institutions from time to time parties
hereto, STATE STREET BANK AND TRUST COMPANY ("State Street"), and the other
financial institutions from time to time parties hereto, as amended by that
certain First Amendment to Loan Instruments, dated as of February 11, 2000 (the
"First Amendment") among Borrower, FINOVA and CITIZENS BANK OF MASSACHUSETTS
("Citizens Bank"), as successor in interest to State Street, and that certain
Second Amendment to Loan Instruments, dated as of March __, 2000 (the "Second
Amendment") among Borrower, FINOVA and Citizens Bank. The Original Loan
Agreement, as amended by the First Amendment and the Second Amendment, is
referred to herein as the "Loan Agreement"). All capitalized terms used but not
elsewhere defined herein shall have the respective meanings ascribed to such
terms in the Loan Agreement.
Borrower hereby notifies Agent that on the date hereof, Borrower
desires to borrow [$_________ of the Acquisition Portion] [$____________ of the
Capital Expenditure Portion] [$_________________ of the SAFE Attrition Guaranty
Portion] [$____________ of the SAFE Debt Portion] and Borrower hereby directs
Agent to disburse such principal amount in accordance with the payment
instructions attached hereto as EXHIBIT A. Borrower acknowledges and agrees that
even though a portion of the disbursements described on EXHIBIT A are directed
to entities other than Borrower, receipt of such disbursements by the applicable
payees shall constitute receipt of such disbursements by Borrower.
Borrower acknowledges that this Notice of Borrowing/Disbursement
Request and acceptance by Borrower of the proceeds of the disbursements
contemplated hereby constitute a representation and warranty that the conditions
contained in SECTIONS 4.1 AND [4.3] [4.4] of the Loan Agreement have been
satisfied in all material respects.
Second Amendment to Loan Instruments
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Very truly yours,
SECURITY ASSOCIATES INTERNATIONAL,
INC., a Delaware corporation
By:
------------------------------
Name:
-----------------------------
Title:
----------------------------
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Second Amendment to Loan Instruments
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EXHIBIT A
ENTITY, PAYMENT INSTRUCTIONS AMOUNT
1.
------------------------- $
-----------------
By Wire Transfer to:
Bank Name:
----------------------------------
Bank Address:
-------------------------------
ABA No.:
------------------------------------
Acct. No.:
----------------------------------
Acct. Name:
---------------------------------
Attention:
----------------------------------
Telephone:
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2.------------------------- $
-----------------
By Wire Transfer to:
Bank Name:
----------------------------------
Bank Address:
-------------------------------
ABA No.:
------------------------------------
Acct. No.:
----------------------------------
Acct. Name:
---------------------------------
Attention:
----------------------------------
Telephone:
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TOTAL DISBURSEMENTS $
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Second Amendment to Loan Instruments
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AMENDED EXHIBIT 7.6
to
LOAN AGREEMENT, as Amended by the Second Amendment
Capital Expenditures
Year Amount
---- ------
2000 $ 1,250,000
Each year thereafter $ 500,000
Second Amendment to Loan Instruments
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