REVOLVING CREDIT FACILITY CREDIT AGREEMENT by and among INTEGRATED ALARM SERVICES GROUP, INC., CRITICOM INTERNATIONAL CORPORATION, MONITAL SIGNAL CORPORATION, INTEGRATED ALARM SERVICES, INC., PAYNE SECURITY GROUP, L.L.C., AMERICAN HOME SECURITY, INC....
REVOLVING
CREDIT FACILITY
by
and among
INTEGRATED
ALARM SERVICES GROUP, INC.,
CRITICOM
INTERNATIONAL CORPORATION, MONITAL SIGNAL CORPORATION, INTEGRATED ALARM
SERVICES, INC., XXXXX SECURITY GROUP, L.L.C., AMERICAN HOME SECURITY,
INC.
and
THE
GUARANTORS PARTY HERETO
and
THE
BANKS PARTY HERETO
and
LASALLE
BANK NATIONAL ASSOCIATION, as Agent
Dated:
November 16, 2004
TABLE
OF CONTENTS
Section
|
Heading
|
Page
|
||
1
|
CERTAIN
DEFINITIONS
|
1
|
||
1.1
|
Certain
Definitions.
|
1
|
||
1.2
|
17
|
|||
1.2.1
|
Number;
Inclusion.
|
17
|
||
1.2.2
|
18
|
|||
1.2.3
|
Agent's
Discretion and Consent.
|
18
|
||
1.2.4
|
Documents
Taken as a Whole.
|
18
|
||
1.2.5
|
18
|
|||
1.2.6
|
Implied
References to this Agreement.
|
18
|
||
1.2.7
|
18
|
|||
1.2.8
|
18
|
|||
1.2.9
|
From,
To and Through.
|
18
|
||
1.2.10
|
Shall;
Will.
|
19
|
||
1.3
|
19
|
|||
1.4
|
Concerning
Corporate Terms.
|
19
|
||
2
|
REVOLVING
CREDIT FACILITY
|
19
|
||
2.1
|
Revolving
Credit Commitments.
|
19
|
||
2.1.1
|
Generally
|
19
|
||
2.2
|
Nature
of Banks' Obligations with Respect to Revolving Credit
Loans.
|
20
|
||
2.3
|
Commitment
Fee.
|
20
|
||
2.4
|
Revolving
Credit Loan Requests.
|
20
|
||
2.5
|
Making
Revolving Credit Loans.
|
21
|
||
2.6
|
Revolving
Credit Notes.
|
21
|
||
2.7
|
Use
of Proceeds.
|
21
|
||
2.8
|
Unused
Commitment Fee.
|
21
|
||
3
|
INTEREST
RATES
|
22
|
||
3.1
|
Interest
Rate Options.
|
22
|
||
3.1.1
|
Revolving
Credit Interest Rate Options.
|
22
|
||
3.1.2
|
22
|
|||
3.1.3
|
Rate
Quotations.
|
22
|
||
3.2
|
Interest
Periods.
|
22
|
||
3.3
|
Interest
After Default.
|
23
|
||
3.3.1
|
23
|
|||
3.4
|
23
|
|||
3.4.1
|
LIBOR
Rate Unascertainable.
|
23
|
||
3.4.2
|
23
|
|||
3.4.3
|
Agent's
and Bank's Rights.
|
24
|
||
3.5
|
Selection
of Interest Rate Options.
|
24
|
||
4
|
PAYMENTS
|
25
|
||
4.1
|
Payments.
|
25
|
||
4.2
|
Pro
Rata Treatment of Banks.
|
25
|
||
4.3
|
Interest
Payment Dates.
|
25
|
||
4.4
|
Voluntary
Prepayments.
|
26
|
||
4.4.1
|
Right
to Prepay.
|
26
|
||
4.4.2
|
Replacement
of a Bank.
|
26
|
||
4.4.3
|
Change
of Lending Office.
|
27
|
i2
Section
|
Heading
|
Page
|
||
4.5
|
27
|
|||
4.5.1
|
Sale
of Assets.
|
27
|
||
4.5.2
|
Application
Among Interest Rate Options.
|
27
|
||
4.6
|
Additional
Compensation in Certain Circumstances.
|
28
|
||
4.6.1
|
Increased
Costs or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.
|
28
|
||
4.6.2
|
Indemnity.
|
28
|
||
5
|
REPRESENTATIONS
AND WARRANTIES
|
29
|
||
5.1
|
Representations
and Warranties.
|
29
|
||
5.1.1
|
Organization
and Qualification.
|
29
|
||
|
|
5.1.2
|
Capitalization
and Ownership.
|
29
|
|
|
5.1.3
|
Subsidiaries.
|
30
|
|
|
5.1.4
|
Power
and Authority.
|
30
|
|
|
5.1.5
|
Validity,
Delivery, and Binding Effect.
|
30
|
|
|
5.1.6
|
No
Conflict.
|
30
|
|
|
5.1.7
|
Litigation.
|
31
|
|
|
5.1.8
|
Financial
Statements.
|
31
|
|
|
5.1.9
|
Use
of Proceeds; Margin Stock; Section 20 Subsidiaries.
|
32
|
|
|
5.1.10
|
Full
Disclosure.
|
32
|
|
|
5.1.11
|
Taxes.
|
33
|
|
|
5.1.12
|
Consents
and Approvals.
|
33
|
|
|
5.1.13
|
No
Event of Default; Compliance with Instruments.
|
33
|
|
|
5.1.14
|
Patents,
Trademarks, Copyrights, Licenses, Etc.
|
33
|
|
|
5.1.15
|
Security
Interests.
|
34
|
|
|
5.1.16
|
Real
Property.
|
34
|
|
|
5.1.17
|
Status
of the Pledged Collateral.
|
34
|
|
|
5.1.18
|
Insurance.
|
35
|
|
|
5.1.19
|
Compliance
with Laws.
|
35
|
|
|
5.1.20
|
Material
Contracts; Burdensome Restrictions.
|
35
|
|
|
5.1.21
|
Investment
Companies; Regulated Entities.
|
36
|
|
|
5.1.22
|
Plans
and Benefit Arrangements.
|
36
|
|
|
5.1.23
|
Employment
Matters.
|
37
|
|
|
5.1.24
|
Environmental
Matters.
|
37
|
|
|
5.1.25
|
Alarm
Contracts.
|
37
|
|
|
5.1.26
|
Alarm
Systems.
|
38
|
|
|
5.1.27
|
Telephone
Numbers.
|
38
|
|
|
5.1.28
|
Regarding
Borrowers.
|
38
|
|
|
5.1.29
|
Convertible
Debt
|
38
|
|
5.2
|
|
Updates
to Schedules.
|
39
|
|
|
|
||
6
|
CONDITIONS
OF LENDING
|
39
|
||
6.1
|
On
the Closing Date:
|
39
|
||
6.1.1
|
Officer's
Certificate.
|
39
|
||
6.1.2
|
Secretary's
Certificate.
|
39
|
||
6.1.3
|
Delivery
of Loan Documents.
|
40
|
||
6.1.4
|
Opinion
of Counsel.
|
40
|
||
6.1.5
|
Legal
Details.
|
40
|
||
6.1.6
|
Payment
of Fees.
|
40
|
i3
Section
|
Heading
|
Page
|
||
6.1.7
|
Officer's
Certificate Regarding MACs.
|
40
|
||
6.1.8
|
Due
Diligence.
|
41
|
||
6.1.9
|
Consents.
|
41
|
||
6.1.10
|
No
Violation of Laws.
|
41
|
||
6.1.11
|
41
|
|||
6.1.12
|
Insurance
Policies; Certificates of Insurance; Endorsements.
|
41
|
||
6.1.13
|
Intentionally
omitted.
|
41
|
||
6.1.14
|
41
|
|||
6.2
|
On
the Funding Date.
|
42
|
||
6.3
|
Each
Additional Loan.
|
42
|
||
7
|
COVENANTS
|
42
|
||
7.1
|
Affirmative
Covenants.
|
42
|
||
7.1.1
|
Preservation
of Existence, Etc.
|
42
|
||
7.1.2
|
Payment
of Liabilities, Including Taxes, Etc.
|
43
|
||
7.1.3
|
Maintenance
of Insurance.
|
43
|
||
7.1.4
|
Maintenance
of Properties and Leases.
|
44
|
||
7.1.5
|
Maintenance
of Patents, Trademarks, Etc.
|
45
|
||
7.1.6
|
Visitation
Rights.
|
45
|
||
7.1.7
|
Keeping
of Records and Books of Account.
|
45
|
||
7.1.8
|
Plans
and Benefit Arrangements.
|
45
|
||
7.1.9
|
Compliance
with Laws.
|
45
|
||
7.1.10
|
Use
of Proceeds.
|
46
|
||
7.1.11
|
Further
Assurances.
|
46
|
||
7.1.12
|
Intentionally
Omitted.
|
46
|
||
7.1.13
|
Interest
Rate Hedging.
|
46
|
||
7.1.14
|
Operating
and Lockbox Accounts.
|
46
|
||
7.1.15
|
Field
Audits.
|
46
|
||
7.1.16
|
Compliance
with Federal Law ' Patriot Act..
|
47
|
||
7.2
|
Negative
Covenants.
|
47
|
||
7.2.1
|
Indebtedness.
|
47
|
||
7.2.2
|
Liens.
|
48
|
||
7.2.3
|
48
|
|||
7.2.4
|
Loans
and Investments.
|
48
|
||
7.2.5
|
Dividends
and Related Distributions.
|
48
|
||
7.2.6
|
Liquidations,
Mergers, Consolidations, Acquisitions.
|
49
|
||
7.2.7
|
Dispositions
of Assets or Subsidiaries.
|
50
|
||
7.2.8
|
Affiliate
Transactions.
|
51
|
||
7.2.9
|
Subsidiaries,
Partnerships and Joint Ventures.
|
51
|
||
7.2.10
|
Continuation
of or Change in Business.
|
52
|
||
7.2.11
|
Plans
and Benefit Arrangements.
|
52
|
||
7.2.12
|
Fiscal
Year.
|
53
|
||
7.2.13
|
Issuance
of Stock.
|
53
|
||
7.2.14
|
Changes
in Documents.
|
53
|
||
7.2.15
|
Minimum
Fixed Charge Coverage Ratio.
|
53
|
||
7.2.16
|
Intentionally
Omitted.
|
53
|
||
7.2.17
|
Senior
Revolving Debt to Eligible RMR.
|
53
|
||
7.2.18
|
Availability
Requirement.
|
53
|
||
i4
Section
|
Heading
|
Page
|
||
7.3
|
Reporting
Requirements.
|
53
|
||
7.3.1
|
Monthly
Financial Statements.
|
54
|
||
7.3.2
|
Annual
Financial Statements.
|
54
|
||
7.3.3
|
Certificate
of the Borrower.
|
54
|
||
7.3.4
|
Borrowing
Base Certificate.
|
55
|
||
7.3.5
|
Notice
of Default.
|
56
|
||
7.3.6
|
Notice
of Litigation.
|
56
|
||
7.3.7
|
56
|
|||
7.3.8
|
Budgets,
Forecasts, Other Reports and Information.
|
56
|
||
7.3.9
|
Notices
Regarding Plans and Benefit Arrangements.
|
57
|
||
8
|
DEFAULT
|
58
|
||
8.1
|
Events
of Default.
|
58
|
||
8.1.1
|
Payments
Under Loan Documents.
|
58
|
||
8.1.2
|
Breach
of Warranty.
|
59
|
||
8.1.3
|
Breach
of Certain Covenants or Visitation Rights.
|
59
|
||
8.1.4
|
Breach
of Other Covenants.
|
59
|
||
8.1.5
|
Defaults
in Other Agreements or Indebtedness.
|
59
|
||
8.1.6
|
Final
Judgments or Orders.
|
59
|
||
8.1.7
|
59
|
|||
8.1.8
|
Uninsured
Losses; Proceedings Against Assets.
|
60
|
||
8.1.9
|
Notice
of Lien or Assessment.
|
60
|
||
8.1.10
|
60
|
|||
8.1.11
|
Events
Relating to Plans and Benefit Arrangements.
|
60
|
||
8.1.12
|
Cessation
of Business.
|
61
|
||
8.1.13
|
Change
of Control.
|
61
|
||
8.1.14
|
Involuntary
Proceedings.
|
61
|
||
8.1.15
|
Voluntary
Proceedings.
|
61
|
||
8.2
|
Consequences
of Event of Default.
|
62
|
||
8.2.1
|
Events
of Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.
|
62
|
||
8.2.2
|
Bankruptcy,
Insolvency or Reorganization Proceedings.
|
62
|
||
8.2.3
|
Set-off.
|
62
|
||
8.2.4
|
Suits,
Actions, Proceedings.
|
63
|
||
8.2.5
|
Application
of Proceeds.
|
63
|
||
8.2.6
|
Rights
with Respect to Collateral Assignment of Telephone
Numbers.
|
63
|
||
8.2.7
|
Other
Rights and Remedies.
|
63
|
||
8.3
|
Notice
of Sale.
|
64
|
||
8.4
|
Notice
of Default.
|
64
|
||
9
|
THE
AGENT
|
64
|
||
9.1
|
Appointment.
|
64
|
||
9.2
|
Delegation
of Duties.
|
64
|
||
9.3
|
Nature
of Duties; Independent Credit Investigation.
|
64
|
||
9.4
|
Actions
in Discretion of Agent; Instructions From the Banks.
|
65
|
||
9.5
|
Reimbursement
and Indemnification of Agent by the Borrower.
|
65
|
||
9.6
|
66
|
|||
9.7
|
Reimbursement
and Indemnification of Agent by Banks.
|
66
|
||
9.8
|
Reliance
by Agent.
|
67
|
i5
Section
|
Heading
|
Page
|
||
9.9
|
Notice
of Default.
|
67
|
||
9.10
|
67
|
|||
9.11
|
Banks
in Their Individual Capacities; Agent in its Individual
Capacity.
|
67
|
||
9.12
|
Holders
of Notes.
|
68
|
||
9.13
|
Equalization
of Banks.
|
68
|
||
9.14
|
Successor
Agent.
|
68
|
||
9.15
|
Agent's
Fees.
|
69
|
||
9.16
|
Availability
of Funds.
|
69
|
||
9.17
|
Calculations.
|
69
|
||
9.18
|
Beneficiaries.
|
70
|
||
9.19
|
Addition
of Additional Banks.
|
70
|
||
9.2
|
Borrower
Cooperation.
|
70
|
||
10
|
MISCELLANEOUS
|
71
|
||
10.1
|
Modifications,
Amendments or Waivers.
|
71
|
||
10.1.1
|
Increase
of Commitment; Extension of Expiration Date.
|
71
|
||
10.1.2
|
Extension
of Payment; Reduction of Principal, Interest or Fees; Modification
of
Terms of Payment.
|
71
|
||
10.1.3
|
Release
of Collateral.
|
71
|
||
10.1.4
|
71
|
|||
10.2
|
No
Implied Waivers; Cumulative Remedies; Writing Required.
|
72
|
||
10.3
|
Reimbursement
and Indemnification of Banks by the Borrower; Taxes.
|
72
|
||
10.4
|
Holidays.
|
72
|
||
10.5
|
Funding
by Branch, Subsidiary or Affiliate.
|
73
|
||
10.5.1
|
Notional
Funding.
|
73
|
||
10.5.2
|
Actual
Funding.
|
73
|
||
10.6
|
Notices.
|
73
|
||
10.7
|
Severability.
|
74
|
||
10.8
|
Governing
Law.
|
74
|
||
10.9
|
Prior
Understanding.
|
74
|
||
10.1
|
Duration;
Survival.
|
74
|
||
10.1
|
Successors
and Assigns.
|
75
|
||
10.1
|
Confidentiality.
|
76
|
||
10.12.1
|
76
|
|||
10.12.2
|
Sharing
Information With Affiliates of the Banks.
|
76
|
||
10.1
|
Counterparts.
|
76
|
||
10.1
|
Agent's
or Bank's Consent.
|
77
|
||
10.2
|
Exceptions.
|
77
|
||
10.2
|
CONSENT
TO FORUM; WAIVER OF JURY TRIAL.
|
77
|
||
10.2
|
Tax
Withholding Clause.
|
77
|
||
10.2
|
Joinder
of Borrowers and Guarantors.
|
78
|
||
10.2
|
Loan
Party Agency.
|
79
|
||
10.2
|
Entire
Agreement.
|
79
|
||
11
|
Nonsolicitation
and Nondisclosure
|
80
|
||
11.1
|
Nonsolicitation
and Nonacceptance.
|
80
|
||
11.2
|
Nondisclosure.
|
80
|
||
11.3
|
Employees.
|
81
|
||
11.4
|
Acknowledgment.
|
81
|
||
11.5
|
Representations.
|
81
|
||
11.6
|
Remedies.
|
82
|
||
11.7
|
Severability.
|
82
|
||
11.8
|
Consent
to Jurisdiction, Service and Venue.
|
82
|
i6
SCHEDULES
|
|
|
|
|
SCHEDULE
1.1(B)
|
|
COMMITMENTS
OF BANKS & ADDRESSES FOR NOTICES
|
|
|
|
|
|
SCHEDULE
1.1(P)
|
|
PERMITTED
LIENS
|
|
SCHEDULE
5.1.1
|
|
QUALIFICATIONS
TO DO BUSINESS
|
|
SCHEDULE
5.1.2
|
|
CAPITALIZATION
|
|
SCHEDULE
5.1.3
|
|
SUBSIDIARIES
|
|
SCHEDULE
5.1.7
|
|
LITIGATION
|
|
SCHEDULE
5.1.8
|
|
PROJECTIONS
|
|
SCHEDULE
5.1.12
|
|
CONSENTS
AND APPROVALS
|
|
SCHEDULE
5.1.14
|
|
PATENTS,
TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
|
|
SCHEDULE
5.1.16
|
|
REAL
PROPERTY
|
|
SCHEDULE
5.1.17
|
|
PARTNERSHIP
AGREEMENTS; LLC AGREEMENTS
|
|
SCHEDULE
5.1.18
|
|
INSURANCE
POLICIES
|
|
SCHEDULE
5.1.20
|
|
MATERIAL
CONTRACTS
|
|
SCHEDULE
5.1.22
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EMPLOYEE
BENEFIT PLAN DISCLOSURES
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SCHEDULE
5.1.24
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ENVIRONMENTAL
DISCLOSURES
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EXHIBITS
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EXHIBIT
1.1(A)
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ASSIGNMENT
AND ASSUMPTION AGREEMENT
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EXHIBIT
1.1(G)
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GUARANTY
JOINDER
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EXHIBIT
1.1 (J)
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BORROWER
JOINDER AGREEMENT
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EXHIBIT
1.1(R)
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REVOLVING
CREDIT NOTE
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EXHIBIT
2.4
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LOAN
REQUEST
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EXHIBIT
7.2.6
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ACQUISITION
COMPLIANCE CERTIFICATE
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EXHIBIT
7.3.3
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COMPLIANCE
CERTIFICATE
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EXHIBIT
7.3.4
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BORROWING
BASE CERTIFICATE
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EXHIBIT
9.19
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BANK
ADDITION AGREEMENT
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i7
THIS
CREDIT AGREEMENT is dated November 16, 2004 and is made by and among
INTEGRATED
ALARM SERVICES GROUP, INC.,
a
Delaware corporation ("IASG"), CRITICOM INTERNATIONAL CORPORATION, a New Jersey
Corporation ("Criticom"), MONITAL SIGNAL CORPORATION, a New Jersey corporation
("Monital'), INTEGRATED ALARM SERVICES, INC., a Delaware corporation ("IAS"),
XXXXX SECURITY GROUP, L.L.C., a New Jersey limited liability company ("Xxxxx"),
and AMERICAN HOME SECURITY, INC., a Nevada corporation ("AHS"; hereinafter
IASG,
Criticom, Monital, IAS, Xxxxx and AHS are collectively referred to as
"Borrower"), and LASALLE
BANK N. A.,
as
"Bank" and in its capacity as agent for any additional lenders that may become
a
party as a Bank as defined below (hereinafter referred to in such capacity
as
the "Agent").
1. |
CERTAIN
DEFINITIONS
|
1.1 |
Certain
Definitions.
|
In
addition to words and terms defined elsewhere in this Agreement, the following
words and terms shall have the following meanings, respectively, unless the
context hereof clearly requires otherwise:
Additional
Banks
shall
mean any Bank that joins and becomes subject to this Agreement by executing
a
Bank Addition Agreement. In order for a Bank to be considered as an Additional
Bank, such financial institution or the holding company of which it is a part
must have a minimum of $1.0 billion in assets.
Affiliate
as to
any Person shall mean any other Person (i) which directly or indirectly
controls, is controlled by, or is under common control with such Person, (ii)
which beneficially owns or holds 10% or more of any class of the voting or
other
equity interests of such Person, or
1
(iii)
10%
or more of any class of voting interests or other equity interests of which
is
beneficially owned or held, directly or indirectly, by such Person. Control,
as
used in this definition, shall mean 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, including the power to elect a majority of the directors or trustees
of a corporation or trust, as the case may be.
Agent
shall
mean LaSalle Bank National Association, acting in its capacity as agent
hereunder, and its successors and assigns.
Agent's
Letter
shall
have the meaning assigned to that term in Section 9.15.
Agreement
shall
mean this Credit Agreement, as the same may be supplemented or amended from
time
to time, including all schedules and exhibits.
Alarm
Contract
shall
mean all Monitoring Contracts and all other contracts, agreements and other
similar obligations related to the alarm security business conducted by
Borrower, as the same may from time to time be amended, supplemented or
modified, including all rights to: (a) receive money due and to become due
thereunder or in connection therewith; (b) damages arising out of any breach
or
default in respect thereof; and (c) perform and to exercise remedies
thereunder.
Applicable
Margin
shall
mean, for any Type of Loans, 2.00% for Base Rate Loans and 3.50% for LIBOR
Rate
Loans.
Anything
herein to the contrary notwithstanding, the Applicable Margin shall be
calculated by adding an additional 3% per annum to the Applicable Margin
pursuant to the terms and provisions of this section for both Base Rate Loans
and LIBOR Loans (i) during any period when an Event of Default shall have
occurred and be continuing or (ii) if any Compliance Certificate shall not
be
delivered when required by Section 7.3.3
(but
only, in the case of this clause (ii) with respect to the portion of such
Payment Period prior to the delivery of such certificate).
Assignment
and Assumption Agreement
shall
mean an Assignment and Assumption Agreement by and among a Purchasing Bank,
a
Transferor Bank and the Agent, in its own capacity and on behalf of the
remaining Banks, substantially in the form of Exhibit 1.1(A).
Assignment
of Lease
shall
mean the several assignments of lease regarding each Loan Parties' leasehold
interests in any Property.
Authorized
Officer
shall
mean as to IASG, its President, Chief Executive Officer, Chief Financial
Officer, Treasurer, Secretary and those individuals, designated by written
notice to the Agent from the Borrower, authorized to execute notices, reports
and other documents on behalf of Borrower required hereunder. The Borrower
may
amend such list of individuals from time to time by giving written notice of
such amendment to the Agent.
2
Bank
or Banks
shall
mean, collectively, the financial institutions named on Schedule 1.1(B)
and
their respective successors and assigns as permitted hereunder, each of which
is
referred to herein as a Bank.
Bank
Addition Agreement shall
mean the Bank Addition Agreement, in the form attached hereto as Exhibit 9.19
pursuant to which Additional Banks are added as a Bank hereunder.
Base
Rate
shall
mean the greater of: (i) the interest rate per annum announced from time to
time
by the Agent at its Principal Office as its then prime rate, which rate may
not
be the lowest rate then being charged commercial borrowers by the Agent; or
(ii)
the Federal Funds Effective Rate plus one-half percent (0.5%) per
annum.
Base
Rate Option
or
Revolving
Credit Base Rate Option
shall
mean the option of the Borrower to have Revolving Credit Loans bear interest
at
the rate and under the terms and conditions set forth in Section
3.1.1((i)).
Beacon
Score
shall
mean the Consumer Credit Scoring System promulgated by Equifax,
Trans Union or Experian.
Benefit
Arrangement
shall
mean at any time an "employee benefit plan," within the meaning of Section
3(3)
of ERISA, which is neither a Plan nor a Multiemployer Plan and which is
maintained, sponsored or otherwise contributed to by any member of the ERISA
Group.
Borrower
shall
mean, individually and collectively, IASG, Criticom, Monital, IAS, Xxxxx, AHS
and any Person, including all of the Borrower's Subsidiaries which shall execute
hereafter a Borrower Joinder; "Borrower" or "Borrowers" shall mean all such
Persons collectively.
Borrower
Joinder
shall
mean a joinder by a Person as a Borrower under this Agreement, the Note and
the
other Loan Documents in the form of Exhibit 1.1 (J).
Borrowing
Base Certificate
shall
mean the consolidated and consolidating Borrowing Base Certificate prepared
and
delivered by the IASG, on behalf of all Borrowers, as and when required by
Section 7.3.4; the form of the Borrowing Base Certificate is attached hereto
as
Exhibit 7.3.4.
Borrowing
Date
shall
mean, with respect to any Loan, the date for the making thereof or the renewal
or conversion thereof at or to the same or a different Interest Rate Option,
which shall be a Business Day.
Borrowing
Tranche
shall
mean specified portions of Loans outstanding as follows: (i) any Loans to which
a LIBOR Rate Option applies which become subject to the same Interest Rate
Option under the same Loan Request by the Borrower and which have the same
Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans
to
which a Base Rate Option applies shall constitute one Borrowing
Tranche.
3
Business
Day shall
mean
any day other than a Saturday or Sunday or a legal holiday on which commercial
banks are authorized or required to be closed for business in Chicago, Illinois,
and if the applicable Business Day relates to any Loan to which the LIBOR Rate
Option applies, such day must also be a day on which dealings are carried on
in
the London interbank market.
Capital
Expenditures
shall
mean all expenditures (by the expenditure of cash or the incurrence of
Indebtedness) during any measuring period for any fixed assets or improvements
or for replacements, substitutions, or additions thereto, that have a useful
life of more than one year and that are required to be capitalized under GAAP,
excluding those expenditures in connection with (i) the installation of Alarm
Contracts and (ii) Permitted Acquisitions.
Closing
Date
shall
mean the date hereof. The closing shall take place at 11:00 a.m. in the offices
of McGuireWoods, LLP in Chicago, Illinois, or at such other time and place
as
the parties agree.
Collateral
shall
mean the Pledged Collateral, the Real Estate Collateral and the UCC
Collateral.
Collateral
Assignment of Contracts
shall
mean the Collateral Assignment of Contracts dated the Closing Date executed
and
delivered by the Loan Parties in respect of (i) all of the Alarm Contracts
and
other service contracts to which they are party, other than those wholesale
alarm contracts which serve as collateral for the Convertible Debt as of the
date hereof; (ii) all third party monitoring contracts; (iii) all non-compete
agreements executed and delivered to, or assigned to, a Loan Party, (iv)
non-solicitation agreements, if any, and (v) any such other agreements
as
may be described in the Collateral Assignment of Contracts.
Collateral
Assignment of Life Insurance
shall
mean, collectively, those forms of collateral assignment of life insurance
policies provided by the applicable insurance companies in respect of the key
man life insurance policies issued on the lives of Xxxxxxx X. XxXxxx ("XxXxxx")
and Xxxxxx X. Few ('Few").
Collateral
Assignment of Telephone Numbers
shall
mean the Collateral Assignment of Telephone Numbers dated as of the Closing
Date
executed and delivered by the Loan Parties relating to all of the Loan Parties'
Alarm Contracts and service relationships.
Commitment
or
Revolving
Credit Commitment
shall
mean, as to any Bank at any time, the amount initially set forth opposite its
name on Schedule
1.1(B)
in the
column labeled "Amount of Commitment for Revolving Credit Loans," and thereafter
on Schedule I to the most recent Assignment and Assumption Agreement, and
Commitments or Revolving Credit Commitments shall mean the aggregate Revolving
Credit Commitments of all of the Banks, all as may be reduced from time to
time
hereunder.
Compliance
Certificate
shall
have the meaning set forth in Section 7.3.3.
Consideration
shall
mean with respect to any Permitted Acquisition, the aggregate, without
duplication, of (i) the cash paid by any of the Loan Parties, directly or
indirectly, to the seller in connection therewith, (ii) the Indebtedness
incurred or assumed by any of the Loan Parties, whether in favor of the seller
or otherwise and whether fixed or contingent, (iii) any
4
Guaranty
given or incurred by any Loan Party in connection therewith, and
(iv) any
other
consideration given or obligation incurred by any of the Loan Parties in
connection therewith.
Consolidated
EBITDA
shall
mean, for any Person and for any period, for such Person and its Subsidiaries
on
a consolidated basis, an amount equal to Consolidated Net Income for such
period, plus
(a) the following to the extent deducted in calculating such Consolidated
Net Income: (i) Consolidated Interest Charges for such period,
(ii) the provision for federal, state, local and foreign income taxes
payable by such Person and its Subsidiaries for such period, and (iii) the
amount of depreciation and amortization expense deducted in determining such
Consolidated Net Income, and minus
(b) all
non-cash items increasing Consolidated Net Income for such period.
Consolidated
Fixed Charges
shall
mean for any period of determination on the date of determination the sum
(without duplication) of cash Consolidated Interest Charges on all Indebtedness
other than with respect to the Second Lien Notes, scheduled principal payments
on all Indebtedness excluding principal payments with respect to Convertible
Debt, but only if such principal is repaid with available Revolving Credit
Loans, cash income taxes, management fees paid, cash distributions and all
Capital Expenditure payments under capitalized leases in each case of a Borrower
and its Subsidiaries for such period determined and consolidated in accordance
with GAAP.
Consolidated
Interest Charges
shall
mean, for any Person and for any period, for such Person and its Subsidiaries
on
a consolidated basis, the sum of (a) all interest, premium payments,
debt
discount, fees, charges and related expenses of such Person and its restricted
Subsidiaries in connection with borrowed money (including capitalized interest)
or in connection with the deferred purchase price of assets, in each case to
the
extent treated as interest in accordance with GAAP, and (b) the portion
of
rent expense of such Person and its Subsidiaries with respect to such period
under capital leases that is treated as interest in accordance with
GAAP.
Consolidated
Net Income
shall
mean, for any period, on a consolidated basis, the net income of the Borrower
and its Subsidiaries (excluding extraordinary gains and extraordinary losses)
for that period.
Consolidated
Net Worth
shall
mean, at any time, shareholders' equity of the Borrower and its Subsidiaries
on
a consolidated basis.
Convertible
Debt
shall
mean that certain Indebtedness described in those certain $5,500,000.00 secured
convertible promissory notes due September 1, 2005 issued by IASG.
Depreciation
shall
mean the total amounts added to depreciation, amortization, obsolescence,
valuation and other proper reserves, as reflected on the Borrower's financial
statement and determined in accordance with GAAP.
Dollar,
Dollars, U.S. Dollars
and the
symbol $ shall mean lawful money of the United States of America.
5
Eligible
RMR
means as
of any time, the aggregate amount of RMR associated with enforceable written
Alarm Contracts in effect between customers and Borrower or any of its
Subsidiaries in which no person other than Borrower or any of it Subsidiaries
and the Agent has any interest, net of any amounts per month payable to any
person as a percentage of RMR or in the nature of discounting, factoring or
other accounts receivable financing; provided, however, that Eligible RMR will
not include any revenue (a) from customers whose balances are more than ninety
(90) days past the invoice date; (b) that is not periodic in nature, but rather
relates to installation purchase payments or one-time assessments or charges;
(c) from Alarm Contracts as to which Borrower or any of its Subsidiaries has
received notice of a pending termination; (d) from wholesale monitoring
accounts; (e) from customers whose Beacon Score is below 625; (f) for
customers from whom twelve (12) consecutive months of prompt payment have not
been received; (g) that pertains to lease agreements which expire within twelve
(12) months after the date of making or which provide the customer with the
option of buying the system for a nominal amount; (h) from stand alone service
agreements; (i) from Alarm Contracts which are not freely assignable and which
are not in writing; or (j) from customers who have received two (2) or more
full
credits with respect to such customer's monthly payment in a twelve (12) month
period.
Environmental
Law
shall
mean any and all laws relating to protection of the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
petrochemicals or petroleum, chemicals or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface water,
ground water or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial, toxic or hazardous substances
or wastes.
ERISA
shall
mean the Employee Retirement Income Security Act of 1974, as the same may be
amended or supplemented from time to time, and any successor statute of similar
import, and the rules and regulations thereunder, as from time to time in
effect.
ERISA
Group
shall
mean, at any time, the Borrower and all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control and all other entities which, together with the Borrower, are
treated as a single employer under Section 414 of the Internal Revenue
Code.
Event
of Default
shall
mean any of the events described in Section 8.1 and referred to therein as
an
"Event of Default."
Expiration
Date
shall
mean, with respect to the Revolving Credit Commitments, November 16,
2007.
Federal
Funds Effective Rate
for any
day shall mean the rate per annum (based on a year of 360 days and actual days
elapsed and rounded upward to the nearest 1/100 of 1%) announced by the Federal
Reserve Bank of New York (or any successor) on such day as being the weighted
average of the rates on overnight federal funds transactions arranged by federal
funds brokers on the previous trading day, as computed and announced by such
Federal Reserve Bank (or any successor) in substantially the same manner as
such
Federal
6
Reserve
Bank computes and announces the weighted average it refers to as the "Federal
Funds Effective Rate" as of the date of this Agreement; provided, if such
Federal Reserve Bank (or its successor) does not announce such rate on any
day,
the "Federal Funds Effective Rate" for such day shall be the Federal Funds
Effective Rate for the last day on which such rate was announced.
Financial
Projections
shall
have the meaning assigned to that term in Section 5.1.8((ii)).
Fixed
Charge Coverage Ratio
shall
mean, the ratio of (x) Consolidated EBITDA, less
Capital
Expenditures, less
Taxes,
to (y) Consolidated Fixed Charges, for such period, calculated on a rolling
twelve
(12)
month
basis beginning on January
31,
2005
and continuing each month thereafter.
Funding
Date
shall
mean the date on which the first advance of the Loans is made pursuant to the
terms and conditions hereof.
GAAP
shall
mean generally accepted accounting principles as are in effect from time to
time
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, subject to the
provisions of Section 1.3, and applied on a consistent basis both as to
classification of items and amounts.
Guarantor
Joinder
shall
mean a joinder by a Person as a Guarantor under this Agreement, the Guaranty
Agreement, the Security Agreement and the other Loan Documents in the form
of
Exhibit 1.1(G).
Guarantors
shall
mean the guarantors under the Guaranty Agreement and any Person, including
all
of the Borrower's Subsidiaries, who execute hereafter a Guarantor Joinder.
As of
the Closing Date, the Guarantors are Integrated Alarm and Security, LLC, a
New
Jersey limited liability company ("IASLLC"), Morlyn Financial Group, L.L.C.,
a
New Jersey limited liability company ("Morlyn") and Guardian Group, LLC, a
New
Jersey limited liability company ("Guardian").
Guaranty
of any
Person shall mean any obligation of such Person guaranteeing or in effect
guaranteeing any liability or obligation of any other Person in any manner,
whether directly or indirectly, including any agreement to indemnify or hold
harmless any other Person, any performance bond or other suretyship arrangement
and any other form of assurance against loss, except endorsement of negotiable
or other instruments for deposit or collection in the ordinary course of
business.
Guaranty
Agreement
shall
mean the Guaranty Agreement dated the Closing Date executed and delivered by
the
Guarantors to the Agent for the benefit of the Banks.
Historical
Statements
shall
have the meaning assigned to that term in Section 5.1.8.
Indebtedness
shall
mean, as to any Person at any time, any and all indebtedness, obligations or
liabilities (whether matured or unmatured, liquidated or unliquidated, direct
or
indirect, absolute or contingent, or joint or several) of such Person for or
in
respect of: (i) borrowed money, (ii) amounts raised under or liabilities in
respect of any note purchase or
7
acceptance
credit facility, (iii) reimbursement obligations (contingent or otherwise)
under
any letter of credit, currency swap agreement, interest rate swap, cap, collar
or floor agreement or other interest rate management device, (iv) any other
transaction (including forward sale or purchase agreements, capitalized leases
and conditional sales agreements but excluding operating leases, trade payables
and accrued expenses incurred in the ordinary course of business which are
not
represented by a promissory note or other evidence of indebtedness and which
are
not the subject of a genuine dispute or are not more than ninety (90) days
past
due, or if more than ninety (90) days past due, for which adequate reserves
in
conformity with GAAP have been established on the books of said Person) having
the commercial effect of a borrowing of money entered into by such Person to
finance its operations or capital requirements, or (v) any Guaranty of
Indebtedness for borrowed money.
Indenture
shall
mean that certain Indenture of even date herewith entered into among IASG,
its
Subsidiaries and the Trustee, as amended, supplemented, amended and restated
or
otherwise modified from time to time, governing the rights and duties of IASG
under the Second Lien Notes.
Ineligible
Security
shall
mean any security which may not be underwritten or dealt in by member banks
of
the Federal Reserve System under Section 16 of the Banking Act of 1933 (12
U.S.C. Section 24, Seventh), as amended.
Insolvency
Proceeding
shall
mean, with respect to any Person, (a) a case, action or proceeding with respect
to such Person (i) before any court or any other Official Body under any
bankruptcy, insolvency, reorganization or other similar Law now or hereafter
in
effect, or (ii) for the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator, conservator (or similar official) of any
Loan
Party or otherwise relating to the liquidation, dissolution, winding-up or
relief of such Person, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of such Person's creditors generally or any substantial
portion of its creditors; undertaken under any Law.
Intercreditor
Agreement
means
that certain Intercreditor Agreement, dated of even date herewith, entered
into
by and among the Agent, the Borrower and the Trustee.
Interest
Period
shall
mean the period of time selected by the Borrower in connection with (and to
apply to) any election permitted hereunder by the Borrower to have Revolving
Credit Loans bear interest under the LIBOR Rate Option. Subject to the last
sentence of this definition, such period shall be one, two or three Months
if
the Borrower selects the LIBOR Rate Option. Such Interest Period shall commence
on the effective date of such Interest Rate Option, which shall be (i) the
Borrowing Date if the Borrower is requesting new Loans, or (ii) the date of
renewal of or conversion to the LIBOR Rate Option if the Borrower is renewing
or
converting to the LIBOR Rate Option applicable to outstanding Loans.
Notwithstanding the second sentence hereof: (A) any Interest Period which would
otherwise end on a date which is not a Business Day shall be extended to the
next succeeding Business Day unless such Business Day falls in the next calendar
month, in which case such Interest Period shall end on the next preceding
Business Day, and (B) the Borrower shall not select, convert to or renew an
Interest Period for any portion of the Loans that would end after the Expiration
Date.
8
Interest
Rate Agreement
shall
mean any one or more interest rate hedging or management agreements or
arrangements of the type described in and required by Section 7.1.13 [Interest
Rate Hedging], including any swap agreement (on a standard ISDA form) provided
by LaSalle Bank.
Interest
Rate Option
shall
mean any LIBOR Rate Option or Base Rate Option.
Interim
Statements
shall
have the meaning assigned to that term in Section 5.1.8.
Internal
Revenue Code
shall
mean the Internal Revenue Code of 1986, as the same may be amended or
supplemented from time to time, and any successor statute of similar import,
and
the rules and regulations thereunder, as from time to time in
effect.
Inventory
shall
have the meaning ascribed that term under GAAP.
Labor
Contracts
shall
mean all employment agreements, employment contracts, collective bargaining
agreements and other agreements among Borrower or a Subsidiary of Borrower
and
its employees.
Landlord
Waivers
shall
mean any one or more landlord waivers which relate to any Property, executed
from time to time in form and substance satisfactory to the Agent.
LaSalle
Bank
shall
mean LaSalle Bank National Association, its successors and assigns.
Law
shall
mean any law (including common law), constitution, statute, treaty, regulation,
rule, ordinance, opinion, release, ruling, order, injunction, writ, decree,
bond, judgment, authorization or approval, lien or award of or settlement
agreement with or issued by any Official Body.
Liabilities
shall
mean at all times all liabilities of the Borrower that would be shown as such
on
a balance sheet of the Borrower prepared in accordance with GAAP.
LIBOR
Rate
shall
mean, with respect to the Loans comprising any Borrowing Tranche to which the
LIBOR Rate Option applies for any Interest Period, a
rate of
interest equal to the per annum rate of interest at which United States dollar
deposits for a period equal to the relevant Interest Period are offered in
the
London Interbank Eurodollar market at 11:00 a.m. (London time) two Business
Days
prior to the commencement of each Interest Period, as displayed in the Bloomberg
Financial Markets system, or other authoritative source selected by the Bank
in
its sole discretion, divided by a number determined by subtracting from 1.00
the
maximum reserve percentage for determining reserves to be maintained by member
banks of the Federal Reserve System for Eurocurrency liabilities, such rate
to
remain fixed for such Interest Period. The Bank's determination of LIBOR shall
be conclusive, absent manifest error.
LIBOR
Rate Option
or
Revolving
Credit LIBOR Rate Option
shall
mean the option of the Borrower to have Revolving Credit Loans bear interest
at
the rate and under the terms and conditions set forth in Section
3.1.1((ii)).
9
LIBOR
Rate Reserve Percentage
shall
mean as of any day the maximum percentage in effect on such day, as prescribed
by the Board of Governors of the Federal Reserve System (or any successor)
for
determining the reserve requirements (including supplemental, marginal and
emergency reserve requirements) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency Liabilities").
Lien
shall
mean any mortgage, deed of trust, pledge, lien, security interest, charge or
security arrangement of any nature whatsoever or other encumbrance of like
kind,
whether voluntarily or involuntarily given, including any conditional sale
or
title retention arrangement, and any assignment, deposit arrangement or lease
intended as, or having the effect of, security and any filed financing statement
(other than precautionary financing statement filed in respect of operating
leases) or other notice of any of the foregoing (whether or not a lien or other
encumbrance is created or exists at the time of the filing).
LLC
Interests
shall
mean in respect of any limited liability company, its outstanding limited
liability company interests or units and the voting rights associated
therewith.
Loan
Documents
shall
mean this Agreement, all of the Guaranty Agreements, the Note, the Pledge
Agreement, the Security Agreement, financing statements, the Assignment of
Lease, the Landlord Waivers, any Interest Rate Agreement entered into with
LaSalle Bank, the Collateral Assignment of Contracts, the Collateral Assignment
of Telephone Numbers, the Nonsolicitation Agreement, the Collateral Assignment
of Life Insurance, the Lockbox Agreement, the Patent, Trademark and Copyright
Security Agreement, the Assignment and Assumption Agreement, the Borrower
Joinder, the Intercreditor Agreement and any other instruments, certificates
or
documents executed and delivered or contemplated to be executed and delivered
hereunder or thereunder or in connection herewith or therewith, as the same
may
be supplemented or amended from time to time in accordance herewith or
therewith, and Loan Document shall mean any of the Loan Documents.
Loan
Party or Loan Parties
shall
mean the Borrowers and the Guarantors.
Loan
Request
shall
have the meaning given to such term in Section 2.4.
Loans
or
Revolving
Credit Loans
shall
mean collectively, and Loan or Revolving Credit Loan shall mean separately,
all
Revolving Credit Loans or any Revolving Credit Loan made by the Banks or one
of
the Banks to the Borrower pursuant to Section 2.1.
Lockbox
Agreement
shall
mean any lockbox agreement between any Borrower and the Agent in respect of
the
restricted access account or accounts maintained in Borrower's name at LaSalle
Bank.
Material
Adverse Change
shall
mean any set of circumstances or events which (a) has or could reasonably be
expected to have any material adverse effect whatsoever upon the validity or
enforceability of this Agreement or any other Loan Document, (b) is or could
reasonably be expected to be material and adverse to the business, properties,
assets, financial condition or results of operations of the Loan Parties taken
as a whole, (c) impairs or could reasonably be expected to impair the ability
of
the Loan Parties to duly and punctually pay or perform their Indebtedness,
or
(d) impairs or could reasonably be expected to impair the ability of the Agent
or any of the Banks, to the extent permitted thereunder, to enforce their legal
remedies pursuant to this Agreement or any other Loan Document.
10
Maximum
Availability
shall
have the meaning ascribed to that term in Section 2.1.
Monitoring
Contract
shall
mean a contract for providing central station monitoring and/or similar services
for security alarm and/or similar equipment or devices to residential or
commercial customers and including all recurring monthly revenue from
maintenance and service contracts with customers who are parties to monitoring
contracts, but excluding contracts to provide "wholesale" services for other
alarm dealers, retailers or companies and excluding all contracts providing
for
guard, patrol or response services.
Month,
with
respect to an Interest Period under the LIBOR Rate Option, shall mean the
interval between the days in consecutive calendar months numerically
corresponding to the first day of such Interest Period. If any LIBOR Rate
Interest Period begins on a day of a calendar month for which there is no
numerically corresponding day in the month in which such Interest Period is
to
end, the final month of such Interest Period shall be deemed to end on the
last
Business Day of such final month.
Multiemployer
Plan
shall
mean any employee benefit plan which is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA and to which the Borrower or any member
of the ERISA Group is then making or accruing an obligation to make
contributions or, within the preceding five Plan years, has made or had an
obligation to make such contributions.
Multiple
Employer Plan
shall
mean a Plan which has two or more contributing sponsors (including the Borrower
or any member of the ERISA Group) at least two of whom are not under common
control, as such a plan is described in Sections 4063 and 4064 of
ERISA.
Non-compete
Agreement
shall
mean any agreement entered into by and between any Loan Party and any employee,
officer, director, agent, officer, director, shareholder or other third-party
which contains any restrictions or limitations upon competition with a Loan
Party or its business or the solicitation of any Loan Party's customers,
prospective customers or employees.
Nonsolicitation
Agreement
shall
mean the Nonsolicitation and Nondisclosure Agreements in favor of the Agent
and
the Banks executed and delivered on the Closing Date by XxXxxx and
Few.
Notes
or
Revolving
Credit Notes
shall
mean collectively and Note
or
Revolving
Credit Note
shall
mean separately all of the Revolving Credit Note of the Borrower in the form
of
Exhibit 1.1(R) evidencing the Revolving Credit Loans together with all
amendments, extensions, renewals, replacements, refinancings or refundings
thereof in whole or in part.
Notices
shall
have the meaning assigned to that term in Section 10.6.
Obligation
shall
mean any obligation or liability of any Loan Party to the Agent or any of the
Banks, howsoever created, arising or evidenced, whether direct or indirect,
absolute or contingent,
now or hereafter existing, or due or to become due, under or in connection
with
this Agreement, the Notes, any Interest Rate Agreement with any Bank or any
other Loan Document.
11
Official
Body
shall
mean any national, federal, state, local or other government or political
subdivision or any agency, authority, board, bureau, central bank, commission,
department or instrumentality thereof or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
Partnership
Interests
shall
mean in respect of any limited or general partnership, its outstanding
partnership interests (general and limited) and the voting rights associated
therewith.
Patent,
Trademark and Copyright Security Agreement
shall
mean the Patent, Trademark and Copyright Security Agreement dated the Closing
Date and executed and delivered by the Borrower to the Bank and the Agent for
the benefit of the Banks.
PBGC
shall
mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle
A
of Title IV of ERISA or any successor.
Permitted
Acquisitions
shall
mean acquisitions described in and permitted by Section 7.2.6
(2).
Permitted
Investments
shall
mean:
(i) direct
obligations of the United States of America or any agency or instrumentality
thereof or obligations backed by the full faith and credit of the United States
of America maturing in twelve (12) months or less from the date of
acquisition;
(ii) commercial
paper maturing in 180 days or less rated not lower than A-1, by Standard &
Poor's or P-1 by Xxxxx'x Investors Service, Inc. on the date of
acquisition;
(iii) demand
deposits, time deposits or certificates of deposit maturing within one year
in
commercial banks whose obligations are rated A-1, A or the equivalent or better
by Standard & Poor's on the date of acquisition;
(iv) money
market mutual funds maintained as part of a mutual funds complex with assets
under management of not less than $1,000,000,000; and
(v)
Permitted
Acquisitions.
Permitted
Liens
shall
mean:
(i) Liens
for
taxes, assessments, or similar charges, incurred in the ordinary course of
business and which are not yet due and payable or liens on property to secure
claims for labor, materials or supplies relating to such property and pertaining
to obligations not yet overdue;
12
(ii) Pledges
or deposits made in the ordinary course of business to secure payment of worker
compensation, or to participate in any fund in connection with worker
compensation, unemployment insurance, old-age pensions or other social security
programs;
(iii) Liens
of
mechanics, materialmen, warehousemen, carriers, or other like Liens imposed
by
law, securing obligations incurred in the ordinary course of business that
are
not yet due and payable and Liens of landlords securing obligations to pay
lease
payments that are not yet either due and payable or in default;
(iv) Good-faith
pledges or deposits made in the ordinary course of business to secure
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, not in excess of the aggregate amount due thereunder,
or to secure statutory obligations, appeal bonds or surety, indemnity,
performance or other similar bonds required in the ordinary course of
business;
(v) Encumbrances
consisting of zoning ordinances and restrictions, easements, encroachments,
covenants, rights of way, minor defects, irregularities or encumbrances on
title
or other restrictions on the use of real property, none of which materially
impairs the use of such property or the value thereof, and none of which is
violated in any material respect by existing or proposed structures or land
use;
(vi) Liens,
security interests and mortgages in favor of the Agent for the benefit of the
Banks;
(vii) Liens
on
property leased by any Loan Party under capital and operating leases not
prohibited by this Agreement and securing obligations of the Loan Parties to
the
lessor under such leases, provided there is no default by any Loan Party under
such leases;
(viii) Any
Lien
existing on the date of this Agreement and described on Schedule
1.1(P),
provided that the principal amount secured thereby is not hereafter increased,
and no additional assets become subject to such Lien;
(ix) Purchase
Money Security Interests, provided
that the
aggregate amount of loans and deferred payments secured by such Purchase Money
Security Interests shall not exceed $100,000
(excluding for the purpose of this computation any loans or deferred payments
secured by Liens described on Schedule
1.1(P));
(x) The
Liens
existing on the date of this Agreement on those wholesale alarm contracts
granted in connection with the Convertible Debt;
(xi) Liens
granted to the Second Lien Noteholders by the Second Lien Loan Documents;
and
(xi) The
following, (A) if the validity or amount thereof is being contested in good
faith by appropriate and lawful proceedings diligently conducted so long as
levy
and execution thereon have been stayed and continue to be stayed or (B) if
a
final judgment is entered and such judgment is discharged within thirty (30)
days of entry, and in either case they do not affect the Collateral or, in
the
aggregate, impair the ability of the Loan Parties to perform their Obligations
hereunder or under the other Loan Documents:
13
(1) Claims
or
Liens for taxes, assessments or charges due and payable and subject to interest
or penalty, provided
that the
applicable Loan Parties maintain such reserves or other appropriate provisions
as shall be required by GAAP and pay all such taxes, assessments or charges
forthwith upon the commencement of proceedings to foreclose upon any such
Lien;
(2) Claims,
Liens or encumbrances upon, and defects of title to, real or personal property,
including any attachment of personal or real property or other legal process
prior to adjudication of a dispute on the merits;
(3) Claims
or
Liens of mechanics, materialmen, warehousemen, carriers, or other statutory
nonconsensual Liens; or
(4) Liens
resulting from final judgments or orders described in Section 8.1.6 not in
excess of the amount set forth therein.
Person
shall
mean any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, joint
venture, government or political subdivision or agency thereof, or any other
entity.
Plan
shall
mean at any time an employee pension benefit plan (including a Multiple Employer
Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or
is
subject to the minimum funding standards under Section 412 of the Internal
Revenue Code and either (i) is maintained by any member of the ERISA Group
for
employees of any member of the ERISA Group or (ii) has at any time within the
preceding five years been maintained by any entity which was at such time a
member of the ERISA Group for employees of any entity which was at such time
a
member of the ERISA Group.
Pledge
Agreement
shall
mean the Pledge Agreement dated the Closing Date executed and delivered by
IASG
in respect of all of the outstanding stock of the other Borrowers and the
Guarantors.
Pledged
Collateral
shall
mean the property of the Loan Parties in which security interests are to be
granted under the Pledge Agreement, the Collateral Assignment of Contracts
or
the Collateral Assignment of Telephone Numbers.
Potential
Default
shall
mean any event or condition that if it continues uncured will with the passage
of time or the giving of notice or any combination of the foregoing, constitute
an Event of Default.
Principal(s)
means,
individually and/or collectively, XxXxxx and Few.
Principal
Office
shall
mean the main banking office of the Agent in Chicago, Illinois.
14
Prior
Security Interest
shall
mean a valid and enforceable perfected first-priority security interest under
the Uniform Commercial Code in the Collateral which is subject only to Permitted
Liens.
Prohibited
Transaction
shall
mean any prohibited transaction as defined in Section 4975 of the Internal
Revenue Code or Section 406 of ERISA for which neither an individual nor a
class
exemption has been issued by the United States Department of Labor.
Property
shall
mean all real property owned or leased by any Loan Party or Subsidiary of any
Loan Party; all such property is described on Schedule 5.1.16.
Purchasing
Bank
shall
mean a Bank which becomes a party to this Agreement by executing an Assignment
and Assumption Agreement.
Purchase
Money Security Interest
shall
mean Liens upon tangible personal property securing loans to any Loan Party
or
deferred payments by such Loan Party for the purchase, construction, repair
or
improvement of such tangible personal property.
Ratable
Share
shall
mean the proportion that a Bank's Commitment bears to the Commitments of all
of
the Banks.
Regulation
U
shall
mean Regulation U, T or X as promulgated by the Board of Governors of the
Federal Reserve System, as amended from time to time.
Reportable
Event
shall
mean a reportable event described in Section 4043 of ERISA and regulations
thereunder with respect to a Plan or Multiemployer Plan.
Required
Banks
shall
mean (i) if there are no Loans outstanding, (a) Banks whose Commitments
aggregate at least 66 2/3% of the Commitments of all of the Banks, or (b) if
there are two (2) or fewer Banks, all such Banks, (ii) if there are Loans
outstanding, any Bank or group of Banks (a) if the sum of the Loans of such
Banks then outstanding aggregates at least 66 2/3% of the total principal amount
of all of the Loans then outstanding or (b) if there are two (2) or fewer Banks,
all such Banks.
Revolving
Credit Commitment
shall
mean, as to any Bank at the time, the amount set forth opposite its name on
Schedule 1.1(B) in the column labeled "Amount of Commitment for Revolving Credit
Loans," and all as may be reduced from time to time hereunder.
Revolving
Credit Loans
shall
mean the loans provided pursuant to the terms of Section 2.1.
Revolving
Credit Note
shall
mean the Note.
Revolving
Facility Usage
shall
mean the principal amount of all Loans outstanding.
15
RMR
shall
mean recurring revenues calculated on a monthly basis, whether received monthly,
quarterly or annually (net of pass-through charges for signal circuit telephone
lines, utility company or third-party pass-through charges, antenna rentals,
panel use, franchise and licensing
fees, assessments of taxes, charges payable to third parties responding to
alarms associated with customer contracts and any customer discounts) then
being
received by a Loan Party; provided, however, that with respect to any rate
increase affecting such revenue, the additional revenue generated by such
an
increase shall not be included in the calculation of RMR until such time
as the
additional revenue is actually received by Borrower; provided that upon the
occurrence and during the continuation of an Event of Default (i) the Borrower
cannot implement a rate increase with respect to such revenue without the
Agent's prior written consent and (ii) no amount of additional revenue generated
by any rate increase which has not previously been taken into account in
determining Eligible RMR shall be included in the calculation of
RMR.
Second
Lien Loan Documents
shall
mean the Indenture, the Intercreditor Agreement, the Noteholder Collateral
Documents (as defined in the Intercreditor Agreement) and any other agreements
entered into in connection with the Indenture.
Second
Lien Noteholders
means
those certain holders of the Second Lien Notes and any other trustee or other
representative therefor.
Second
Lien Notes
means
those notes issued by IASG pursuant to the Indenture evidencing Indebtedness
extended by the Second Lien Noteholders.
Section
20 Subsidiary
shall
mean the Subsidiary of the bank holding company controlling any Bank, which
Subsidiary has been granted authority by the Federal Reserve Board to underwrite
and deal in certain Ineligible Securities.
Security
Agreement
shall
mean the Security Agreement executed and delivered on the Closing Date by the
Borrower to the Agent for the benefit of the Banks in respect of the personal
property of Borrower in order to secure the respective obligations of the
Borrower under the Loan Documents.
Senior
Revolving Debt
means an
amount equal to the Revolving Facility Usage.
Shares
shall
mean the authorized, issued and outstanding LLC Interests, shares of capital
stock or Partnership Interests, as the case may be, of a Loan
Party.
Standard
& Poor's
shall
mean Standard & Poor's Ratings Services, a division of The XxXxxx-Xxxx
Companies, Inc.
Subordinated
Debt
shall
mean that portion of the Liabilities of the Borrower which is subordinated
to
the Obligations in a manner reasonably satisfactory to the Bank, including,
but
not limited to, right and time of payment of principal and
interest.
Subsidiary
of any
Person at any time shall mean (i) any corporation or trust of which 50% or
more
(by number of shares or number of votes) of the outstanding capital stock or
shares of beneficial interest normally entitled to vote for the election of
one
or more directors or trustees (regardless of any contingency which does or
may
suspend or dilute the voting rights) is at such time owned directly or
indirectly by such Person or one or more of such Person's Subsidiaries, (ii)
any
partnership of which such Person is a general partner or
16
of
which
50% or more of the partnership interests is at the time directly or indirectly
owned by such Person or one or more of such Person's Subsidiaries, (iii) any
limited liability company of which such Person is a manager or of which 50%
or
more of the limited liability company interests is at the time directly or
indirectly owned by such Person or one or more of such Person's Subsidiaries
or
(iv) any corporation, trust, partnership, limited liability company or other
entity which is controlled or capable of being controlled by such Person or
one
or more of such Person's Subsidiaries.
Subsidiary
Borrower
shall
mean each Subsidiary of IASG or another Person which is identified herein as
a
Borrower or hereafter joins this Agreement as a Borrower in accordance with
Section 10.18.
Subsidiary
Shares
shall
have the meaning assigned to that term in Section 5.1.3.
Tangible
Assets
shall
mean the total of all assets appearing on a balance sheet of the Borrower
prepared in accordance with GAAP (with Inventory being valued at the lower
of
cost or market), after deducting all proper reserves (including reserves for
Depreciation, obsolescence and amortization) less the sum of (i) goodwill,
patents, trademarks, prepaid expenses, deposits, deferred charges and other
personal property which is classified as intangible property in accordance
with
GAAP, and (ii) any amounts due from shareholders, affiliates, officers or
employees of the Borrower.
Transferor
Bank
shall
mean the selling Bank pursuant to an Assignment and Assumption
Agreement.
Trustee
shall
mean Xxxxx Fargo Bank, N.A. in its capacity as Trustee under the
Indenture.
Type,
when
used in reference to any Loan, refers to whether the rate of interest on such
Loan or Loans is determined by reference to the LIBOR Rate or the Base
Rate.
UCC
Collateral
shall
mean the property of the Loan Parties in which security interests are to be
granted under the Security Agreement (including the "Intellectual Property"
described therein) and the Patent, Trademark and Copyright Security
Agreement.
Uniform
Commercial Code
shall
have the meaning assigned to that term in Section 5.1.15.
1.2 |
Construction.
|
Unless
the context of this Agreement otherwise clearly requires, the following rules
of
construction shall apply to this Agreement and each of the other Loan
Documents:
1.2.1 Number;
Inclusion.
references
to the plural include the singular, the plural, the part and the whole; "or"
has
the inclusive meaning represented by the phrase "and/or," and "including" has
the meaning represented by the phrase "including without
limitation";
17
1.2.2 Determination.
references
to "determination" of or by the Agent or the Banks shall mean good-faith
estimates by the Agent or the Banks (in the case of quantitative determinations)
and good-faith beliefs by the Agent or the Banks (in the case of qualitative
determinations) and such determination shall be conclusive absent manifest
error;
1.2.3 Agent's
Discretion and Consent.
whenever
the Agent or the Banks are granted the right herein to act in its or their
sole
discretion or to grant or withhold consent such right shall be exercised in
good
faith;
1.2.4 Documents
Taken as a Whole.
the
words
"hereof," "herein," "hereunder," "hereto" and similar terms in this Agreement
or
any other Loan Document refer to this Agreement or such other Loan Document
as a
whole and not to any particular provision of this Agreement or such other Loan
Document;
1.2.5 Headings.
the
section and other headings contained in this Agreement or such other Loan
Document and the Table of Contents (if any), preceding this Agreement or such
other Loan Document are for reference purposes only and shall not control or
affect the construction of this Agreement or such other Loan Document or the
interpretation thereof in any respect;
1.2.6 Implied
References to this Agreement.
any
references to article, section, subsection, clause, schedule and exhibit are
to
this Agreement or other Loan Document, as the case may be, unless otherwise
specified;
1.2.7 Persons.
reference
to any Person includes such Person's successors and assigns but, if applicable,
only if such successors and assigns are permitted by this Agreement or such
other Loan Document, as the case may be, and reference to a Person in a
particular capacity excludes such Person in any other capacity;
1.2.8 Modifications
to Documents.
reference
to any agreement (including this Agreement and any other Loan Document together
with the schedules and exhibits hereto or thereto), document or instrument
means
such agreement, document or instrument as amended, modified, replaced,
substituted for, superseded or restated;
1.2.9 From,
To
and Through.
relative
to the determination of any period of time, "from" means "from and including,"
"to" means "to but excluding," and "through" means "through and including";
and
18
1.2.10 Shall;
Will.
references
to "shall" and "will" are intended to have the same meaning.
1.3 |
Accounting
Principles.
|
Except
as
otherwise provided in this Agreement, all computations and determinations as
to
accounting or financial matters and all financial statements to be delivered
pursuant to this Agreement shall be made and prepared in accordance with GAAP
(including principles of consolidation where appropriate), and all accounting
or
financial terms shall have the meanings ascribed to such terms by GAAP;
provided,
however,
that
all accounting terms used in Section 7.2 [Negative Covenants] (and all defined
terms used in the definition of any accounting term used in Section 7.2 shall
have the meaning given to such terms (and defined terms) under GAAP as in effect
on the date hereof applied on a basis consistent with those used in preparing
the Annual Statements referred to in Section 5.1.8 [Historical Statements].
In
the event of any change after the date hereof in GAAP, and if such change would
result in the inability to determine compliance with the financial covenants
set
forth in Section 7.2 based upon the Borrower's regularly prepared financial
statements by reason of the preceding sentence, then the parties hereto agree
to
endeavor, in good faith, to agree upon an amendment to this Agreement that
would
adjust such financial covenants in a manner that would not affect the substance
thereof, but would allow compliance therewith to be determined in accordance
with the Borrower's financial statements at that time.
1.4 |
Concerning
Corporate Terms.
|
When
terms such as "stock", "shares", "shareholders", "corporate", "company" and
similar terms generally associated with corporations are used herein or in
the
Loan Documents, they shall be deemed as well to refer as applicable to limited
liability member interests, owners of those interests and a limited liability
company or similar entity, as the context may require, and references to
corporate governance documents and procedures shall have their appropriate
and
correlative meanings with respect to limited liability companies, as the context
may require.
2. |
REVOLVING
CREDIT FACILITY
|
2.1 |
Revolving
Credit Commitments.
|
2.1.1 Generally
Subject
to the terms and conditions hereof, and relying upon the representations
and
warranties herein set forth, each Bank severally agrees to make Revolving
Credit
Loans to the Borrower at any time or from time to time on or after the date
hereof to the Expiration Date, provided
that,
after
giving effect to such Loan, the aggregate amount of Loans from such Bank
shall
not exceed such Bank's Revolving Credit Commitment and provided further that
Revolving Facility Usage may never exceed the Maximum Availability. Within
such
limits of time and amount and subject to the other provisions of this Agreement,
the Borrower may borrow, repay and reborrow pursuant to this Section 2.1.
The
Borrower shall, on or before the day of delivery of the reports under Section
7.3 which show an excess of Revolving Facility Usage over Maximum Availability,
prepay the principal amount of the Loans to the extent of such excess. As
used
herein, "Maximum Availability" shall mean, as of the date of calculation,
an
aggregate amount expressed in Dollars determined to be the product of (i)
Eligible RMR multiplied
by
(ii) ten
(10). Eligible RMR shall be calculated based on the information and amounts
reported on the Borrowing Base Certificate and the other reports delivered
to
the Agent pursuant to Sections 7.3.
19
2.2 |
Nature
of Banks' Obligations with Respect to Revolving Credit Loans.
|
Each
Bank
shall be obligated to participate in each request for Revolving Credit Loans
pursuant to Section 2.4 [Revolving Credit Loan Requests] in accordance with
its
Ratable Share. The aggregate of each Bank's Revolving Credit Loans outstanding
hereunder to the Borrower at any time shall never exceed its Revolving Credit
Commitment. The obligations of each Bank hereunder are several. The failure
of
any Bank to perform its obligations hereunder shall not (i) affect the
Obligations of the Borrower to any other party, (ii) make any other
party
liable for such failure, or (iii) excuse any other Bank from performing
its
obligations hereunder. The Banks shall have no obligation to make Revolving
Credit Loans hereunder on or after the Expiration Date.
2.3 |
Commitment
Fee.
|
The
Borrower agrees to pay to LaSalle Bank a commitment fee with respect to the
Revolving Credit Loan in the amount of Five Hundred Fifty Thousand and 00/100
Dollars ($550,000.00), Seventy-five Thousand and 00/100 Dollars ($75,000.00)
of
which Borrower has already paid to Bank and the balance of which shall be paid
to Bank on the Closing Date.
2.4 |
Revolving
Credit Loan Requests.
|
Except
as
otherwise provided herein, the Borrower may from time to time prior to the
Expiration Date request the Banks to make Revolving Credit Loans, or renew
or
convert the Interest Rate Option applicable to existing Revolving Credit Loans
pursuant to Section 3.2 [Interest Periods], by delivering to the Agent, not
later than 10:00 a.m., Chicago time, (i) three (3) Business Days prior to the
proposed Borrowing Date with respect to the making of Revolving Credit Loans
to
which the LIBOR Rate Option applies or the conversion to or the renewal of
the
LIBOR Rate Option for any Loans; and (ii) on the proposed Borrowing Date with
respect to the making of a Revolving Credit Loan to which the Base Rate Option
applies or the last day of the preceding Interest Period with respect to the
conversion to the Base Rate Option for any Loan, of a duly completed request
therefor substantially in the form of Exhibit 2.4 or a request by telephone
promptly confirmed in writing by letter or facsimile in such form (each, a
"Loan
Request"), it being understood that the Agent may
20
rely
on
the authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Loan Request shall
be
irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the
aggregate amount of the proposed Loans comprising each Borrowing Tranche, which
shall be in integral multiples of $100,000 and not less than $1,000,000 for
each
Borrowing Tranche to which the LIBOR Rate Option applies and not less than
the
lesser of $100,000 or the maximum amount available for Borrowing Tranches to
which the Base Rate Option applies; (iii) whether the LIBOR Rate Option or
Base
Rate Option shall apply to the proposed Loans comprising the applicable
Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the
LIBOR Rate Option applies, an appropriate Interest Period for the Loans
comprising such Borrowing Tranche.
2.5 |
Making
Revolving Credit Loans.
|
The
Agent
shall, promptly after receipt by it of a Loan Request pursuant to Section 2.4
[Revolving Credit Loan Requests], notify the Banks of its receipt of such Loan
Request specifying: (i) the proposed Borrowing Date and the time and method
of
disbursement of the Revolving Credit Loans requested thereby; (ii) the amount
and type of each such Revolving Credit Loan and the applicable Interest Period
(if any); and (iii) the apportionment among the Banks of such Revolving Credit
Loans as determined by the Agent in accordance with Section 2.2 [Nature of
Banks' Obligations]. Each Bank shall remit the principal amount of each
Revolving Credit Loan to the Agent such that the Agent is able to, and the
Agent
shall, to the extent the Banks have made funds available to it for such purpose
and subject to Section 6.2 [Each Additional Loan], fund such Revolving Credit
Loans to the Borrowers in U.S. Dollars and immediately available funds at the
Principal Office prior to 2:00 p.m., Chicago time, on the applicable Borrowing
Date, provided that if any Bank has not notified the Agent prior to the date
on
which it is scheduled to make payment to the Agent that it does not intend
to
make such payment and fails to remit such funds to the Agent in a timely manner,
the Agent may elect in its sole discretion to fund with its own funds the
Revolving Credit Loans of such Bank on such Borrowing Date, and such Bank shall
be subject to the repayment obligation in Section 9.16 [Availability of
Funds].
2.6 |
Revolving
Credit Notes.
|
The
obligation of the Borrower to repay the aggregate unpaid principal amount of
the
Revolving Credit Loans made to it by each Bank, together with interest thereon,
shall be evidenced by a Revolving Credit Note dated the Closing Date payable
to
the order of such Bank in a face amount equal to the Revolving Credit Commitment
of such Bank. The obligations of Borrower under the Notes and the other Loan
Documents shall be joint and several.
2.7 |
Use
of Proceeds.
|
The
proceeds of the Revolving Credit Loans shall be used for the purposes described
in and in accordance with Section 7.1.10 [Use of Proceeds].
2.8 |
Unused
Commitment Fee.
|
Borrowers
shall pay the Agent a fee (the "Unused Commitment Fee") in the amount of
one-half of one percent (.50%) per annum payable based upon the daily unused
portion
of the Revolving Credit Commitment amount hereunder. The Unused Commitment
Fee
shall be calculated quarterly and shall be payable quarterly in arrears
commencing on [December 31, 2004] and continuing on the last day of each fiscal
quarter thereafter.
21
3. |
INTEREST
RATES
|
3.1 |
Interest
Rate Options.
|
The
Borrower shall pay interest in respect of the outstanding unpaid principal
amount of the Loans as selected by it from the Base Rate Option or LIBOR Rate
Option set forth below applicable to the Loans, it being understood that,
subject to the provisions of this Agreement, the Borrower may select different
Interest Rate Options and different Interest Periods to apply simultaneously
to
the Loans comprising different Borrowing Tranches and may convert to or renew
one or more Interest Rate Options with respect to all or any portion of the
Loans comprising any Borrowing Tranche, provided that there shall not be at
any
one time outstanding more than seven (7) Borrowing Tranches in the aggregate
among all of the Loans using the LIBOR Rate Option. If at any time the
designated rate applicable to any Loan made by any Bank exceeds such Bank's
highest lawful rate, the rate of interest on such Bank's Loan shall be limited
to such Bank's highest lawful rate.
3.1.1 Revolving
Credit Interest Rate Options.
The
Borrower shall have the right to select from the following Interest Rate Options
applicable to the Revolving Credit Loans:
(i) Revolving
Credit Base Rate Option: A fluctuating rate per annum (computed on the basis
of
a year of 360 days, and actual days elapsed) equal to the Base Rate plus the
Applicable Margin, such rate to change automatically from time to time effective
as of the date of each change in the Base Rate; or
(ii) Revolving
Credit LIBOR Rate Option: A rate per annum (computed on the basis of a year
of
360 days and actual days elapsed) equal to the LIBOR Rate plus the Applicable
Margin.
3.1.2 Amount
of
Borrowing Tranche.
Each
Borrowing Tranche of LIBOR Rate Loans shall be not less than $1,000,000 and
in
integral multiples of $100,000, and the Borrowing Tranche of Base Rate Loans
shall be not less than $100,000 and in integral multiples of
$100,000.
3.1.3 Rate
Quotations.
The
Borrower may call the Agent on or before the date on which a Loan Request is
to
be delivered to receive an indication of the rates then in effect, but it is
acknowledged that such projection shall not be binding on the Agent or the
Banks
nor affect the rate of interest which thereafter is actually in effect when
the
election is made.
3.2 |
Interest
Periods.
|
At
any
time when the Borrower shall select, convert to or renew a LIBOR Rate Option,
the Borrower shall notify the Agent thereof at least three (3) Business Days
prior to the effective date of such LIBOR Rate Option by delivering a Loan
Request. The notice shall specify an Interest Period during which such Interest
Rate Option shall apply. Notwithstanding the preceding sentence, in the case
of
the renewal of a LIBOR Rate Option at the end of an Interest Period, the first
day of the new Interest Period shall be the last day of the preceding Interest
Period, without duplication in payment of interest for such day.
22
3.3 |
Interest
After Default.
|
To
the
extent permitted by Law, upon the occurrence of an Event of Default and until
such time such Event of Default shall have been cured or waived the principal
balance of the Loans and each other Obligation hereunder if not paid when due
shall bear interest at a rate per annum equal to the sum of 3% per annum plus
the highest Applicable Margin set forth in the definition of Applicable Margin
for both Base Rate Loans and LIBOR Loans from the time such Obligation becomes
due and payable and until it is paid in full.
3.3.1 Acknowledgment.
The
Borrower acknowledges that the increase in rates referred to in this Section
3.3
reflects, among other things, the fact that such Loans or other amounts have
become a substantially greater risk given their default status and that the
Banks are entitled to additional compensation for such risk, and all such
interest shall be payable by the Borrower upon demand by Agent.
3.4 |
LIBOR
Rate Unascertainable; Illegality; Increased Costs; Deposits Not
Available.
|
3.4.1 LIBOR
Rate Unascertainable.
If,
with
respect to any Interest Period, on any date on which a LIBOR Rate would
otherwise be determined, the Agent shall have determined that:
(i) deposits
in Dollars (in the applicable amounts) in the Eurodollar market are unavailable
or adequate and reasonable means do not exist for ascertaining such LIBOR Rate,
or
(ii) a
contingency has occurred which adversely affects the London interbank Eurodollar
market relating to the LIBOR Rate, then the Agent shall have the rights
specified in Section 3.4.3.
3.4.2 Illegality;
Increased Costs; Deposits Not Available.
If
at any
time any Bank shall have determined that:
(i) the
making, maintenance or funding of any Loan to which a LIBOR Rate Option applies
has been made impracticable or unlawful by compliance by such Bank in good
faith
with any Law or any interpretation or application thereof by any Official
Body
or with any request or directive of any such Official Body (whether or not
having the force of Law), or
23
(ii) such
LIBOR Rate Option will not adequately cover the cost to such Bank of the
establishment or maintenance of any such Loan, or
(iii) after
making all reasonable efforts, deposits of the relevant amount in Dollars for
the relevant Interest Period for a Loan, or to banks generally, to which a
LIBOR
Rate Option applies, respectively, are not available to such Bank with respect
to such Loan, or to banks generally, in the interbank Eurodollar
market,
then
the
Agent shall have the rights specified in Section 3.4.3.
3.4.3 Agent's
and Bank's Rights.
In
the
case of any event specified in Section 3.4.1 above, the Agent shall promptly
so
notify the Banks and the Borrower thereof, and in the case of an event specified
in Section 3.4.2 above, such Bank shall promptly so notify the Agent and endorse
a certificate to such notice as to the specific circumstances of such notice,
and the Agent shall promptly send copies of such notice and certificate to
the
other Banks and the Borrower. Upon such date as shall be specified in such
notice (which shall not be earlier than the date such notice is given), the
obligation of (i) the Banks, in the case of such notice given by the Agent,
or
(ii) such Bank, in the case of such notice given by such Bank, to allow the
Borrower to select, convert to or renew a LIBOR Rate Option shall be suspended
until the Agent shall have later notified the Borrower, or such Bank shall
have
later notified the Agent, of the Agent's or such Bank's, as the case may be,
determination that the circumstances giving rise to such previous determination
no longer exist. If at any time the Agent makes a determination under Section
3.4.1 and the Borrower has previously notified the Agent of its selection of,
conversion to or renewal of a LIBOR Rate Option and such Interest Rate Option
has not yet gone into effect, such notification shall be deemed to provide
for
selection of, conversion to or renewal of the Base Rate Option otherwise
available with respect to such Loans. If any Bank notifies the Agent of a
determination under Section 3.4.2, the Borrower shall, as to any Loan of the
Bank to which a LIBOR Rate Option applies, on the date specified in such notice
either convert such Loan to the Base Rate Option otherwise available with
respect to such Loan or prepay such Loan in accordance with Section 4.4
[Voluntary Prepayments]. Absent due notice from the Borrower of conversion
or
prepayment, such Loan shall automatically be converted to the Base Rate Option
otherwise available with respect to such Loan upon such specified
date.
3.5 |
Selection
of Interest Rate Options.
|
If
the
Borrower fails to select a new Interest Period to apply to any Borrowing Tranche
of Loans under the LIBOR Rate Option at the expiration of an existing Interest
Period applicable
to such Borrowing Tranche in accordance with the provisions of Section 3.2
[Interest Periods], the Borrower shall be deemed to have converted such
Borrowing Tranche to the Revolving Credit Base Rate Option commencing upon
the
last day of the existing Interest Period.
24
4. |
PAYMENTS
|
4.1 |
Payments.
|
All
payments and prepayments to be made in respect of principal, interest, Facility
Fees, Agent's Fee or other fees or amounts due from the Borrower hereunder
shall
be payable prior to 11:00 a.m., Chicago time, on the date when due without
presentment, demand, protest or notice of any kind, all of which are hereby
expressly waived by the Borrower, and without set-off, counterclaim or other
deduction of any nature, and an action therefor shall immediately accrue. Such
payments shall be made to the Agent at the Principal Office for the ratable
accounts of the Banks with respect to the Loans in U.S. Dollars and in
immediately available funds, and the Agent shall promptly distribute such
amounts to the Banks in immediately available funds, provided that in the event
payments are received by 11:00 a.m., Chicago time, by the Agent with respect
to
the Loans and such payments are not distributed to the Banks on the same day
received by the Agent, the Agent shall pay the Banks the Federal Funds Effective
Rate with respect to the amount of such payments for each day held by the Agent
and not distributed to the Banks. The Agent's and each Bank's statement of
account, ledger or other relevant record shall, in the absence of manifest
error
be conclusive as the statement of the amount of principal of and interest on
the
Loans and other amounts owing under this Agreement and shall be deemed an
"account stated."
4.2 |
Pro
Rata Treatment of Banks.
|
Each
borrowing shall be allocated to each Bank according to its Ratable Share, and
each selection of, conversion to or renewal of any Interest Rate Option and
each
payment or prepayment by the Borrower with respect to principal, interest,
Facility Fees or other fees (except for the fees payable to the Agent pursuant
to the Agent's Letter) or amounts due from the Borrower hereunder to the Banks
with respect to the Loans, shall (except as provided in Section 3.4.3 [Agent's
and Bank's Rights] in the case of an event specified in Section 3.4 [LIBOR
Rate
Unascertainable; Etc.], 4.4.2 [Replacement of a Bank] or 4.6 [Additional
Compensation in Certain Circumstances]) be made in proportion to the applicable
Loans outstanding from each Bank and, if no such Loans are then outstanding,
in
proportion to the Ratable Share of each Bank.
4.3 |
Interest
Payment Dates.
|
Interest
on Loans to which the Base Rate Option applies shall be due and payable in
arrears on the last Business Day of each month after the date hereof and on
the
Expiration Date or upon acceleration of the Note. Interest on Loans to which
the
LIBOR Rate Option applies shall be due and payable on the last day of each
Interest Period for those Loans. Interest on mandatory prepayments of principal
under Section 4.5 [Mandatory Prepayments] shall be due on the date such
mandatory prepayment is due. Interest on the principal amount of each Loan
or
other
monetary Obligation shall be due and payable on demand after such principal
amount or other monetary Obligation becomes due and payable (whether on the
stated maturity date, upon acceleration or otherwise).
25
4.4 |
Voluntary
Prepayments.
|
4.4.1 Right
to
Prepay.
The
Borrower shall have the right at its option from time to time to prepay the
Loans in whole or part without premium or penalty (except as provided in Section
4.4.2 below or in Section 4.6 [Additional Compensation in Certain
Circumstances]):
(i) at
any
time with respect to any Loan to which the Base Rate Option
applies,
(ii) on
the
last day of the applicable Interest Period with respect to Loans to which a
LIBOR Rate Option applies (or on another date if the amounts required under
Section 4.6.2 are paid contemporaneously therewith),
(iii) on
the
date specified in a notice by any Bank pursuant to Section 3.4 [LIBOR Rate
Unascertainable, Etc.] with respect to any Loan to which a LIBOR Rate Option
applies.
Whenever
the Borrower desires to prepay any part of the Loans, it shall provide a written
prepayment notice to the Agent by 11:00 a.m. (i) two (2) Business Days prior
to
any prepayment of LIBOR Rate Loans (except that no notice shall be required
with
respect to a prepayment pursuant to Section 4.4.1 (iii)) and (ii) one (1)
Business Day prior to the prepayment of any Base Rate Loans setting forth the
following information:
(x) the
date,
which shall be a Business Day, on which the proposed prepayment is to be made;
and
(y) the
total
principal amount of such prepayment, which shall not be less than
$100,000.00.
All
prepayment notices shall be irrevocable. The principal amount of the Loans
for
which a prepayment notice is given, together with interest on such principal
amount except with respect to Loans to which the Base Rate Option applies,
shall
be due and payable on the date specified in such prepayment notice as the date
on which the proposed prepayment is to be made. Except as provided in Section
3.4.3 [Agent's and Bank's Rights], if the Borrower prepays a Loan but fails
to
specify the applicable Borrowing Tranche which the Borrower is prepaying, the
prepayment shall be applied first to Loans to which the Base Rate Option
applies, then to Loans to which the LIBOR Rate Option applies. Any prepayment
hereunder shall be subject to the Borrower's obligations to indemnify the Banks
under Section 4.6.2 [Indemnity].
26
4.4.2 Replacement
of a Bank.
In
the
event any Bank (i) gives notice under Section 3.4 [LIBOR Rate Unascertainable,
Etc.] or Section 4.6.1 [Increased Costs, Etc.], (ii) does not fund Revolving
Credit Loans, or (iii) becomes subject to the control of an Official Body (other
than normal and customary supervision), then the Borrower shall have the right
at its option, with the consent of the Agent, which shall not be unreasonably
withheld, (a) to prepay the Loans of such Bank in whole, together with all
interest accrued thereon, and terminate such Bank's Commitment one-hundred
twenty (120) days after (x) receipt of such Bank's notice under Section 3.4
[LIBOR Rate Unascertainable, Etc.] or 4.6.1 [Increased Costs, Etc.], (y) the
date such Bank has failed to fund Revolving Credit Loans, or (z) the date such
Bank became subject to the control of an Official Body, as applicable; provided
that the Borrower shall also pay to such Bank at the time of such prepayment
any
amounts required under Section 4.6 [Additional Compensation in Certain
Circumstances] and any accrued interest due on such amount and any related
fees;
provided, however, that the Commitment of such Bank shall be provided by one
or
more of the remaining Banks or a replacement bank acceptable to the Agent;
provided, further, the remaining Banks shall have no obligation hereunder to
increase their Commitments or (b) to replace such Bank with a lender of its
choosing and reasonably acceptable to the Agent. Notwithstanding the foregoing,
the Agent may only be replaced subject to the requirements of Section 9.14
[Successor Agent].
4.4.3 Change
of
Lending Office.
Each
Bank
agrees that upon the occurrence of any event giving rise to increased costs
or
other special payments under Section 3.4.2 [Illegality, Etc.] or 4.6.1
[Increased Costs, Etc.] with respect to such Bank, it will if requested by
the
Borrower, use reasonable efforts (subject to overall policy considerations
of
such Bank) to designate another lending office for any Loans affected by such
event, provided
that
such designation is made on such terms that such Bank and its lending office
suffer no economic, legal or regulatory disadvantage, with the object of
avoiding the consequence of the event giving rise to the operation of such
Section. Nothing in this Section 4.4.3 shall affect or postpone any of the
Obligations of the Borrower or any other Loan Party or the rights of the Agent
or any Bank provided in this Agreement.
4.5 |
Mandatory
Prepayments.
|
4.5.1 Sale
of
Assets.
Within
five (5) Business Days of any sale of assets authorized by Section 7.2.7(v)
[Disposition of Assets or Subsidiaries], the Borrower shall make a mandatory
prepayment of principal on the Loans together with accrued interest on such
principal amount, and the Commitments shall, unless otherwise agreed by the
Required Banks in their sole discretion, permanently and automatically reduce
in
an amount equal to the after-tax proceeds of such sale.
4.5.2 Application
Among Interest Rate Options.
All
prepayments required pursuant to this Section 4.5 shall first be applied among
the Interest Rate Options to the principal amount of the Loans subject to the
Base Rate Option, then to Loans subject to a LIBOR Rate Option. In accordance
with Section 4.6.2 [Indemnity], the Borrower shall indemnify the Banks for
any
loss or expense, including loss of margin, incurred with respect to any such
prepayments applied against Loans subject to a LIBOR Rate Option on any day
other than the last day of the applicable Interest Period.
27
4.6 |
Additional
Compensation in Certain
Circumstances.
|
4.6.1 Increased
Costs or Reduced Return Resulting from Taxes, Reserves, Capital Adequacy
Requirements, Expenses, Etc.
If
any
Law, guideline or interpretation or any change in any Law, guideline or
interpretation or application thereof by any Official Body charged with the
interpretation or administration thereof or compliance with any request or
directive (whether or not having the force of Law) of any central bank or other
Official Body:
(i) subjects
any Bank to any tax or changes the basis of taxation with respect to this
Agreement, the Notes, the Loans or payments by the Borrower of principal,
interest, Facility Fees, or other amounts due from the Borrower hereunder or
under the Notes (except for taxes on the overall net income of such
Bank),
(ii) imposes,
modifies or deems applicable any reserve, special deposit or similar requirement
against credits or commitments to extend credit extended by, or assets (funded
or contingent) of, deposits with or for the account of, or other acquisitions
of
funds by, any Bank, or
(iii) imposes,
modifies or deems applicable any capital adequacy or similar requirement (A)
against assets (funded or contingent) of, or letters of credit, other credits
or
commitments to extend credit extended by, any Bank, or (B) otherwise applicable
to the obligations of any Bank under this Agreement,
and
the
result of any of the foregoing is to increase the cost to, reduce the income
receivable by, or impose any expense (including loss of margin) upon any Bank
with respect to this Agreement, the Notes or the making, maintenance or funding
of any part of the Loans (or, in the case of any capital adequacy or similar
requirement, to have the effect of reducing the rate of return on any Bank's
capital, taking into consideration such Bank's customary policies with respect
to capital adequacy) by an amount which such Bank in its sole discretion deems
to be material, such Bank shall from time to time notify the Borrower and the
Agent of the amount determined in good faith (using any averaging and
attribution methods employed in good faith) by such Bank to be necessary to
compensate such Bank for such increase in cost, reduction of income, additional
expense or reduced rate of return. Such notice shall set forth in reasonable
detail the basis for such determination. Such amount shall be due and payable
by
the Borrower to such Bank ten (10) Business Days after such notice is
given.
4.6.2 Indemnity.
In
addition to the compensation required by Section 4.6.1 [Increased Costs, Etc.],
the Borrower shall indemnify each Bank against all liabilities, losses or
expenses (including loss of margin, any loss or expense incurred in liquidating
or employing deposits from third parties and any loss or expense incurred in
connection with funds acquired by a Bank to fund or maintain Loans subject
to a
LIBOR Rate Option) which such Bank sustains or incurs as a consequence of
any:
28
(i) payment,
prepayment, conversion or renewal of any Loan to which a LIBOR Rate Option
applies on a day other than the last day of the corresponding Interest Period
(whether or not such payment or prepayment is mandatory, voluntary or automatic
and whether or not such payment or prepayment is then due) other than a
prepayment required by Section 3.4 [LIBOR Rate Unascertainable; Illegality,
etc.],
(ii) attempt
by the Borrower to revoke (expressly, by later inconsistent notices or
otherwise) in whole or part any Loan Requests under Section 2.4 [Revolving
Credit Loan Requests] or Section 3.2 [Interest Periods] or notice relating
to
prepayments under Section 4.4 [Voluntary Prepayments], or
(iii) default
by the Borrower in the performance or observance of any covenant or condition
contained in this Agreement or any other Loan Document, including any failure
of
the Borrower to pay when due (by acceleration or otherwise) any principal,
interest, Facility Fee or any other amount due hereunder.
If
any
Bank sustains or incurs any such loss or expense, it shall from time to time
notify the Borrower of the amount determined in good faith by such Bank (which
determination may include such assumptions, allocations of costs and expenses
and averaging or attribution methods as such Bank shall deem reasonable) to
be
necessary to indemnify such Bank for such loss or expense. Such notice shall
set
forth in reasonable detail the basis for such determination. Such amount shall
be due and payable by the Borrower to such Bank ten (10) Business Days after
such notice is given.
5. |
REPRESENTATIONS
AND WARRANTIES
|
5.1 |
Representations
and Warranties.
|
The
Loan
Parties, jointly and severally, represent and warrant to the Agent and each
of
the Banks as follows:
5.1.1 Organization
and Qualification.
IASG
is a
corporation duly organized, validly existing and in good standing under the
laws
of Delaware. Each other Loan Party is a corporation or other legal entity duly
organized, validly existing and in good standing under the laws of its
respective state of formation. Each Loan Party has the lawful power to own
or
lease its properties and to engage in the
business it presently conducts or proposes to conduct. Each Loan Party is duly
licensed or qualified and in good standing in each jurisdiction listed on
Schedule
5.1.1
and in
all other jurisdictions where the property owned or leased by it or the nature
of the business transacted by it, or both, makes such licensing or qualification
necessary.
29
5.1.2 Capitalization
and Ownership.
The
authorized, issued and outstanding shares of IASG and the Shares of each other
Loan Party have been validly issued and sold in compliance with applicable
Federal and state laws, rules and regulations and are owned as indicated on
Schedule 5.1.2,
except
that in the case of IASG only those shareholders holding at least a five percent
(5%) ownership interest in IASG shall be listed on Schedule 5.1.2.
With
respect to any Loan Party which is a corporation, all of the Shares of such
Loan
Party have been validly issued and are fully paid and nonassessable. There
are
no options, warrants or other rights outstanding to purchase any such Shares
except as indicated on Schedule
5.1.2.
5.1.3 Subsidiaries.
Schedule
5.1.3
states
the name of each Subsidiary, if any (including the names of the Guarantors
and
the Borrowers other than IASG), and its jurisdiction of organization, its
authorized capital stock, the issued and outstanding Shares and the owners
thereof if it is a corporation, its outstanding Partnership Interests if it
is a
partnership and its outstanding LLC Interests if it is a limited liability
company (collectively, the "Subsidiary Shares"). IASG has good title to all
of
the Subsidiary Shares, free and clear in each case of any Lien other than Liens
in favor of the Agent under the Pledge Agreement and Liens granted to the Second
Lien Noteholders. All Subsidiary Shares have been validly issued, and, if
corporate Shares, are fully paid and nonassessable. All Subsidiaries of IASG
are
and shall either be Borrowers or Guarantors. All capital contributions and
other
consideration required to be made or paid in connection with the issuance of
all
Subsidiary Shares have been made or paid, as the case may be. There are no
options, warrants or other rights outstanding to purchase any such Subsidiary
Shares except as indicated on Schedule
5.1.3.
5.1.4 Power
and
Authority.
Each
Loan
Party has full power to enter into, execute, deliver and carry out this
Agreement and the other Loan Documents to which it is a party, to incur and
to
perform its Obligations under the Loan Documents to which it is a party, and
all
such actions have been duly authorized by all necessary proceedings on its
part.
5.1.5 Validity,
Delivery, and Binding Effect.
This
Agreement has been duly and validly executed and delivered by each of the Loan
Parties, and each other Loan Document which the Loan Parties are required to
execute and deliver on or after the date hereof will have been duly executed
and
delivered by the Loan Parties that are parties to each such Loan Document on
or
before the required date of delivery of such Loan Document. This Agreement
and
each other Loan Document constitutes, or will constitute, legal, valid and
binding obligations of the Loan Parties which are or will be a party thereto
on
and after its date of delivery thereof, enforceable against such Loan Party
in
accordance with its terms,
except to the extent that enforceability of any such Loan Document may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforceability of creditors' rights generally or limiting
the
right of specific performance.
5.1.6 No
Conflict.
Neither
the execution and delivery of this Agreement or the other Loan Documents
by any
Loan Party nor the consummation of the transactions herein or therein
contemplated nor compliance with the terms and provisions hereof or thereof
by
any of them will conflict with, constitute a default under or result in any
breach of (i) the terms and conditions of the certificate of incorporation,
the
certificate of limited partnership, the certificate of formation or organization
or other organizational documents of any Loan Party or (ii) any Law, order,
writ, judgment, injunction or decree by which any Loan Party or any of its
Subsidiaries is bound or to which it is subject, or result in the creation
or
enforcement of any
30
Lien,
charge or encumbrance whatsoever upon any property (now or hereafter acquired)
of any Loan Party or any of its Subsidiaries (other than Liens granted under
the
Loan Documents and Liens granted to the Second Lien Noteholders). In addition,
neither the execution and delivery of this Agreement or the other Loan Documents
by any Loan Party nor the consummation of the transactions herein or therein
contemplated nor compliance with the terms and provisions hereof or thereof
by
any of them will conflict with, constitute a default under or result in any
breach of (x) the terms and conditions of the bylaws, the partnership agreement
or the limited liability company agreement of any Loan Party or (y) any
agreement or instrument to which any Loan Party is a party; provided that with
respect to (x) and (y) such breach is material to the business or financial
condition of any Loan Party.
5.1.7 Litigation.
Except
as set forth
in Schedule 5.1.7 [Litigation],
there
are no actions, suits, proceedings or investigations pending or threatened
against any Loan Party at law or equity before any Official Body which
individually or in the aggregate would cause or constitute a Material Adverse
Change. No Loan Party is in violation of any order, writ, injunction or any
decree of any Official Body which would cause or constitute a Material Adverse
Change.
5.1.8 Financial
Statements.
(i) Historical
Statements.
Borrower has delivered to the Agent copies of the audited consolidated year-end
financial statements of Borrower for and as of the end of the fiscal years
ended
December 31, 2002 and December 31, 2003 (the "Annual Statements"). In addition,
Borrower has delivered to the Agent copies of unaudited monthly consolidated
financial statements of the Borrower for the fiscal year ended December 31,
2002
and for the fiscal year ended December 31, 2003 (the "Interim Statements")
(the
Annual and Interim Statements being collectively referred to as the "Historical
Statements"). The Historical Statements were compiled from the books and records
maintained by Borrower, are correct and complete and fairly represent in all
material respects the consolidated financial condition of Borrower and its
Subsidiaries (subject to footnote disclosures and year-end audit adjustments
for
unaudited financial statements) as of their dates and the results of operations
for the fiscal periods then ended and have been prepared in accordance with
GAAP
consistently applied.
(ii) Financial
Projections.
The
consolidated financial projections of Borrower attached hereto as Schedule
5.1.8,
include
a pro forma consolidated financial statement of Borrower as of June 30, 2004
and
such projections and pro forma financial statement have been derived from
various assumptions of Borrower's management reasonably made in accordance
with
all applicable industry and accounting standards (the "Financial Projections").
The Financial Projections represent expected results in light of the history
of
the business, present and foreseeable conditions and the intentions of
Borrowers' management and are based upon and give effect to the terms hereof
and
the other Loan Documents. The Financial Projections accurately and completely
disclose all liabilities, contingent or otherwise, and forward and long-term
commitments and there are no unrealized or anticipated losses from commitments
of Borrower. Forward projections and forecasts provided to the Agent and Banks
are based on good faith assumptions and estimates believed by Borrower to be
reasonable as of the date of the applicable projections and assumptions and
the
Agent and the Banks acknowledge that such Financial Projections contain forward
looking statements and actual results or performance may differ from such
Financial Projections.
31
5.1.9.1 General.
The
Loan Parties
shall use the proceeds of the Loans in accordance with Section 7.1.10 [Use
of
Proceeds].
5.1.9.2 Margin
Stock.
None
of the Loan
Parties engages or intends to engage in the business of extending credit for
the
purpose, immediately, incidentally or ultimately, of purchasing or carrying
margin stock (within the meaning of Regulation U). No part of the proceeds
of
any Loan has been or will be used, immediately, incidentally or ultimately,
to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock or to refund Indebtedness originally
incurred for such purpose, or for any purpose which entails a violation of
or
which is inconsistent with the provisions of the regulations of the Board of
Governors of the Federal Reserve System. None of the Loan Parties intends to
hold margin stock in such amounts that more than 25% of the reasonable value
of
the assets of such Loan Party are or will be represented by margin
stock.
5.1.9.3 Section
20 Subsidiaries.
The
Loan Parties
shall not use any portion of the proceeds of the Loans, directly or indirectly,
to purchase during the underwriting period, or for thirty (30) days thereafter,
Ineligible Securities being underwritten by a Section 20
Subsidiary.
5.1.10 Full
Disclosure.
Neither
this
Agreement nor any other Loan Document, nor the American Express Tax and Business
Services operational review dated September 24, 2004 concerning the Loan
Parties, nor the Financial Projections regarding Borrower prepared by or on
behalf of Borrower, nor any certificate, agreement or other documents executed
and furnished to the Agent or any Bank in connection herewith or any other
Loan
Document, contains any untrue statement of a material fact or omits to state
a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to any Loan Party (other than general
economic conditions or matters affecting the security alarm industry as a whole)
which materially adversely affects the business, property, assets, financial
condition, results of operations or prospects of any Loan Party which has not
been set forth in this Agreement or in the certificates, statements, agreements
or other documents furnished in writing to the Agent and the Banks prior to
or
at the date hereof in connection with the transactions contemplated
hereby.
32
5.1.11 Taxes.
All
federal, state, local and other tax returns required to have been filed with
respect to the Loan Parties have been filed, and payment or adequate provision
has been made for the payment of all taxes, fees, assessments and other
governmental charges which have or may become due pursuant to said returns
or to
assessments received, except to the extent that such taxes, fees, assessments
and other charges are being contested in good faith by appropriate proceedings
diligently conducted and for which such reserves or other appropriate provisions
as shall be required by GAAP shall have been made. As of the Closing Date,
there
are no agreements or waivers extending the statutory period of limitations
applicable to any federal income tax return of any Loan Party for any
period.
5.1.12 Consents
and Approvals.
Except
for the filing of financing statements in the state and, if required, county
filing offices, and filings in the United States Patent and Trademark Office
or
the United States Copyright Office in respect of the Collateral consisting
of
certain intellectual property, no consent, approval, exemption, order or
authorization of, or a registration or filing with, any Official Body or any
other Person is required by any Law or any agreement in connection with the
execution, delivery and carrying out of this Agreement and the other Loan
Documents by any Loan Party, except as listed on Schedule
5.1.12,
and
except for any which shall have been obtained or made on or prior to the Closing
Date.
5.1.13 No
Event
of Default; Compliance with Instruments.
No
event
has occurred and is continuing, and no condition exists or will exist after
giving effect to the borrowings or other extensions of credit to be made on
the
Closing Date and to the borrowings on other extensions of credit to be made
on
the date of any additional Loans and to the borrowings or other extensions
of
credit under or pursuant to the Loan Documents, which constitutes an Event
of
Default or Potential Default. None of the Loan Parties is in violation of (i)
any term of its certificate of incorporation, bylaws, certificate of limited
partnership, partnership agreement, certificate of formation or organization,
limited liability company agreement or other organizational documents or (ii)
any agreement or instrument to which it is a party or by which it or any of
its
properties may be subject or bound which is material to the business or
financial condition of the Loan Parties.
5.1.14 Patents,
Trademarks, Copyrights, Licenses, Etc.
Each
Loan
Party owns or possesses all the patents, trademarks, service marks, trade names,
copyrights, licenses, registrations, franchises, permits and rights necessary
to
own and operate their properties and to carry on their business as presently
conducted and contemplated by the Loan Parties, without any possible, alleged
or
actual conflict with the rights of others except for such breaches which do
not
cause a Material Adverse Change. All such patents, trademarks, service marks,
trade names, registered copyrights, licenses, registrations, franchises, and
other types of items referenced in or required under this Section 5.1.14
are listed and described on Schedule
5.1.14.
33
5.1.15 Security
Interests.
The
Liens
on and security interests in the Collateral granted to the Agent for the benefit
of the Banks pursuant to the Collateral Assignment of Contracts, the Pledge
Agreement, the Security Agreement, the Assignment of Lease, the Collateral
Assignment of Telephone Numbers, the Patent, Trademark and Copyright Security
Agreement and the other Loan Documents constitute and will continue to
constitute Prior Security Interests under the Uniform Commercial Code as in
effect from time to time in each applicable jurisdiction (the "Uniform
Commercial Code") or other applicable Law, entitled to all the rights, benefits
and priorities provided by the Uniform Commercial Code or such Law. Upon the
filing of financing statements relating to said security interests in each
office and in each jurisdiction where required in order to perfect the security
interests described above, taking possession of any stock certificates or other
certificates evidencing the Pledged Collateral and recordation in the United
States Patent and Trademark Office and United States Copyright Office, as
applicable, all such action as is necessary or advisable to establish such
rights of the Agent will have been taken, and there will be upon execution
and
delivery of the Collateral Assignment, the Pledge Agreement and the Security
Agreement, and upon such filings and such taking of possession, no necessity
for
any further action in order to preserve, protect and continue such rights,
except the filing of continuation statements with respect to such financing
statements within six months prior to each five-year anniversary of the filing
of such financing statements and the continuation of possession of any such
stock certificates or other certificates evidencing the Pledged Collateral.
All
filing fees and other expenses in connection with each such action have been
or
will be paid by the Borrower.
5.1.16 Real
Property.
Monital
is the record owner, free and clear of all Liens and encumbrances, except for
Permitted Encumbrances (as defined in the Mortgage), of the real property listed
on Schedule
5.1.16.
The
Loan Parties occupy the locations described on Schedule
5.1.16
(which
sets forth the street address, state, owner, lessor and lessee). All central
station or other monitoring locations are also separately described on
Schedule
5.1.16.
The
Loan Parties have valid leasehold interest in all properties, assets and other
rights which it purports to lease or which are reflected as leased on its books
and records, free and clear of all Liens and encumbrances except Permitted
Liens, and subject to the terms and conditions of the applicable leases.
All leases of property are in full force and effect without the necessity for
any consent which has not previously been obtained upon consummation of the
transactions contemplated hereby.
5.1.17 Status
of
the Pledged Collateral.
All
the
shares of capital stock, Partnership Interests or LLC Interests included in
the
Pledged Collateral to be pledged pursuant to the Pledge Agreement or the
Collateral Assignment are or will be upon issuance validly issued and
nonassessable and owned beneficially and of record by the pledgor free and
clear
of any Lien or restriction on transfer, except as otherwise provided by the
Pledge Agreement or the Collateral Assignment and except as the right of the
Banks to dispose of the Shares, Partnership Interests or LLC Interests may
be
limited by the Securities Act of 1933, as amended, and the regulations
promulgated by the Securities and Exchange Commission thereunder and by
applicable
34
state
securities laws, except for the Lien of the Second Lien Noteholders. There
are
no shareholder, partnership, limited liability company or other agreements
or
understandings with respect to the shares of capital stock, Partnership
Interests or LLC Interests included in the Pledged Collateral except for
certificates of incorporation or organization and bylaws and except for the
partnership agreements, security agreements, pledge agreements and limited
liability company agreements described on Schedule
5.1.17.
The
Loan Parties have delivered true and correct copies of such certificates
and
agreements to the Agent.
5.1.18 Insurance.
Schedule
5.1.18
lists as
of the Closing Date all insurance policies and other bonds to which any Loan
Party is a party, all of which are as of the Closing Date valid and in full
force and effect. No notice has been given or claim made and no grounds exist
to
cancel or avoid any of such policies or bonds or to reduce the coverage provided
thereby except to the extent replaced by coverage under other policies. Such
policies and bonds provide adequate coverage from reputable and financially
sound insurers in amounts sufficient to insure the assets and risks of each
Loan
Party in accordance with prudent business practice in the industry of the Loan
Parties. Without limiting the foregoing, Schedule
5.1.18
describes the errors and omissions insurance coverage as of the Closing Date,
each Loan Party's existing insurance policies and the key man life insurance
policies covered by the Collateral Assignment of Life Insurance.
5.1.19 Compliance
with Laws.
The
Loan
Parties are, and after giving effect to the terms hereof and the other Loan
Documents will be, in compliance in all respects with all applicable Laws in
all
jurisdictions in which the Loan Parties are presently or will be doing business
except where the failure to do so does not constitute a Material Adverse Change.
Without limiting the foregoing, the Loan Parties have provided, and after the
Closing Date will provide and will require all dealers under any dealer program
to provide, each residential customer with the 3-day right of rescission in
strict compliance with the provisions of 16 CFR Part 429 (Cooling-Off Period
for
Door-to-Door Sales) and any applicable state laws. Each Loan Party acknowledges
that any failure on its behalf to strictly comply with such regulation and
laws
in connection with any transaction
involving a residential customer may result in such customer having the right
to
rescind or cancel such transaction.
5.1.20 Material
Contracts; Burdensome Restrictions.
Schedule
5.1.20
lists,
as of the Closing Date, all material contracts relating to the business
operations of the Loan Parties, including all employee benefit plans and Labor
Contracts. All such material contracts are valid, binding and enforceable upon
the Loan Parties and each of the other parties thereto in accordance with their
respective terms subject to bankruptcy laws and other laws affecting creditors'
rights generally and except as enforcement thereof is subject to the general
principals of equity and there is no default thereunder. No Loan Party is nor
is
any Subsidiary bound by any contractual obligation, or subject to any
restriction in any organization document, or any requirement of Law which could
result in a Material Adverse Change.
35
5.1.21 Investment
Companies; Regulated Entities.
None
of
the Loan Parties is an "investment company" registered or required to be
registered under the Investment Company Act of 1940 or under the "control"
of an
"investment company" as such terms are defined in the Investment Company Act
of
1940 and shall not become such an "investment company" or under such "control."
No Loan Party is subject to any other Federal or state statute or regulation
limiting its ability to incur Indebtedness for borrowed money.
5.1.22 Plans
and
Benefit Arrangements.
Except
as
set forth on Schedule
5.1.22:
(i) The
Borrower and each other member of the ERISA Group is in compliance in all
material respects with any applicable provisions of ERISA with respect to all
Benefit Arrangements, Plans and Multiemployer Plans. There has been no
Prohibited Transaction with respect to any Benefit Arrangement or any Plan
or
with respect to any Multiemployer Plan or Multiple Employer Plan. The Borrower
and all other members of the ERISA Group has made when due any and all payments
required to be made under any agreement relating to a Multiemployer Plan or
a
Multiple Employer Plan or any Law pertaining thereto. With respect to each
Plan
and Multiemployer Plan, the Borrower and each other member of the ERISA Group
(i) has fulfilled its obligations under the minimum funding standards of ERISA,
(ii) has not incurred any liability to the PBGC, and (iii) has not had asserted
against them any penalty for failure to fulfill the minimum funding requirements
of ERISA.
(ii) Each
Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder
when due.
(iii) No
Borrower or any other member of the ERISA Group has instituted or intends to
institute proceedings to terminate any Plan.
(iv) No
event
requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has occurred
or
is reasonably expected to occur with respect to any Plan, and no amendment
with respect to which security is required under Section 307 of ERISA has been
made or is reasonably expected to be made to any Plan.
(v) The
aggregate actuarial present value of all benefit liabilities (whether or not
vested) under each Plan, determined on a plan termination basis, as disclosed
in, and as of the date of, the most recent actuarial report for such Plan,
does
not exceed the aggregate fair market value of the assets of such
Plan.
(vi) Neither
the Borrower nor any other member of the ERISA Group has incurred or reasonably
expects to incur any withdrawal liability under ERISA to any Multiemployer
Plan
or Multiple Employer Plan. The Borrower has not nor has any other member of
the
ERISA Group been notified by any Multiemployer Plan or Multiple Employer Plan
that such Multiemployer Plan or Multiple Employer Plan has been terminated
within the meaning of Title IV of ERISA and no Multiemployer Plan or Multiple
Employer Plan is reasonably expected to be reorganized or terminated, within
the
meaning of Title IV of ERISA.
36
(vii) To
the
extent that any Benefit Arrangement is insured, the Borrower and all other
members of the ERISA Group have paid when due all premiums required to be paid
for all periods through the Closing Date. To the extent that any Benefit
Arrangement is funded other than with insurance, the Borrower and all other
members of the ERISA Group have made when due all contributions required to
be
paid for all periods through the Closing Date.
(viii) All
Plans, Benefit Arrangements and Multiemployer Plans have been administered
in
accordance with their terms and applicable Law.
5.1.23 Employment
Matters.
Each
Loan
Party is in compliance with the Labor Contracts and all applicable federal,
state and local labor and employment Laws including those related to equal
employment opportunity and affirmative action, labor relations, minimum wage,
overtime, child labor, medical insurance continuation, worker adjustment and
relocation notices, immigration controls and worker and unemployment
compensation. There are no outstanding grievances, arbitration awards or appeals
therefrom arising out of the Labor Contracts or current or threatened strikes,
picketing, handbilling or other work stoppages or slowdowns at facilities of
the
Loan Parties. Borrower has delivered to the Agent true and correct copies of
each of the Labor Contracts.
5.1.24 Environmental
Matters.
Except
as
set forth on Schedule
5.1.24,
as of
the Closing Date, there are no violations, or allegations thereof, of any
Environmental Law applicable to any Property or to any real estate owned by
any
Loan Party and, to the best knowledge of the Loan Parties, to any property
of
any predecessor of the Loan Parties.
5.1.25 Alarm
Contracts.
All
of
the Alarm Contracts are valid, enforceable and in full force and effect in
accordance with their terms subject to bankruptcy laws and other laws affecting
creditors' rights generally
and except as enforcement thereof is subject to the general principals of
equity, are assignable to Agent without obtaining the consent of or providing
notice to any customer or other Person, and contain terms and conditions which
are standard within the electronic security industry, including those involving
limitation of liability/liquidated damages, third-party indemnification,
automatic renewals and specifications regarding the right to increases in
customer rates. Upon demand of the Agent after the occurrence of an Event of
Default, the Loan Parties shall deliver the originals of all of the Alarm
Contracts. Without limiting the foregoing, the Borrower's business and all
equipment used in connection with it, are now being utilized, operated and
maintained in substantial conformity with the Alarm Contracts. The Loan Parties
have not in any manner at any time failed to so utilize, operate and maintain
its business in a manner that could now or hereafter result in cancellation
or
termination of any number of the Alarm Contracts, or in liability for damages
under
37
any
of
the Alarm Contracts nor has any Loan Party defaulted in its obligations pursuant
to any of the Alarm Contracts. The Loan Parties' predecessors under Alarm
Contracts acquired by a Loan Party were, on and after the date of acquisition,
governed by noncompetition or nonsolicitation agreements with at least 5
years
remaining on them and which are assignable to Agent. No person has any right
to
acquire any of the Borrower's accounts. None of the Loan Parties have sold
or
otherwise made its customer lists available to any third
party.
5.1.26 Alarm
Systems.
All
of
the alarm systems installed by the Loan Parties, or by sellers or their
predecessors under contracts acquired by the Loan Parties, are in good working
order and condition (subject to ordinary wear and tear, routine service needs
and customer misuse), and have been installed and maintained in accordance
with
good and workmanlike practices prevailing in the security alarm industry at
the
time of installation in accordance with the specifications or standards
appropriate for its business and all governmental authorities. All such alarm
systems conform in all material respects to the contracts pursuant to which
they
were installed and in no case has an installation been made by a Loan Party
or
any predecessor of a Loan Party which at the time of installation was in
violation of any applicable law, code or regulation. To the extent freely
assignable, all manufacturer's warranties applicable to any such alarm systems
are hereby assigned to Agent to secure the Obligations. No Loan Party is aware
of any difficulty in obtaining replacement parts for its product lines or
installed panels and equipment.
5.1.27 Telephone
Numbers.
The
Loan
Parties have the exclusive contractual right to use all of the telephone lines
and numbers applicable to the Loan Parties' accounts and can convert all such
lines and numbers to communicate with another central station by means of a
line
switch. Schedule A to the Collateral Assignment of Telephone Numbers sets forth
a list of all of the telephone numbers used in connection with the operation
of
the Loan Parties' business, which the Loan Parties shall assign to Agent
pursuant to such Collateral Assignment of Telephone Numbers. To the Loan
Parties' knowledge, as of the Closing Date, there are no announced pending
plans
by any telephone company to change the dialing procedures or exchange numbers
within the areas servicing the Loan Parties' customers such that each Loan
Party
would need to reprogram their
customer's
digital dialers except to the extent specific plans so to reprogram in a timely
fashion have been made.
5.1.28 Regarding
Borrowers.
The
business conducted by the Borrowers is (i) providing financing to dealers,
secured by subscriber alarm contracts, (ii) installing alarm and
alarm-monitoring equipment (iii) providing services under Monitoring
Contracts, and (iv) otherwise generating RMR, including Eligible RMR
through the acquisition and monitoring of Alarm Contracts. The nature of the
RMR
generated by or owing to the Borrowers has been fully described to the
Agent.
5.1.29 Convertible
Debt
The
Convertible Debt is secured only by wholesale Alarm Contracts.
38
5.2 |
Updates
to Schedules.
|
Should
any of the information or disclosures provided on any of the Schedules attached
hereto become outdated or incorrect, the Borrower shall promptly provide the
Agent in writing with such revisions or updates to such Schedule as may be
necessary or appropriate to update or correct same. Such revisions shall become
effective upon the Borrower's delivery of the same to the Agent together with
a
certificate of an Authorized Officer, that such revision and restatement
reflects changes that are permitted by this Agreement and the other Loan
Documents but no such update or revision shall constitute a waiver of any breach
under any Loan Document.
6. |
CONDITIONS
OF LENDING.
|
The
obligation of each Bank to make Loans hereunder is subject to the performance
by
each of the Loan Parties of its Obligations to be performed hereunder at or
prior to the making of any such Loans or issuance of such Loans and to the
satisfaction of the following further conditions:
6.1 |
On
the Closing Date:
|
6.1.1 Officer's
Certificate.
The
representations and warranties of each of the Loan Parties contained in Section
5 and in each of the other Loan Documents executed on the Closing Date shall
be
true and accurate on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date (except
representations and warranties which relate solely to an earlier date or time,
which representations and warranties shall be true and correct on and as of
the
specific dates or times referred to therein), and each of the Loan Parties
shall
have performed and complied with all covenants and conditions hereof and
thereof, and no Event of Default or Potential Default shall have occurred and
be
continuing or shall exist.
6.1.2 Secretary's
Certificate.
There
shall be delivered to the Agent for the benefit of each Bank a certificate
dated
the Closing Date and signed by the Secretary, an Assistant Secretary, Manager
or
Managing Member of each of the Loan Parties, certifying as appropriate as
to:
(i) all
organizational or corporate actions taken by such Loan Party as are necessary
or
appropriate in connection with authorizing, entering into and performance of
this Agreement and the other Loan Documents;
(ii) the
names
of the officer or officers authorized to sign this Agreement and the other
Loan
Documents and the true signatures of such officer or officers and specifying
the
Authorized Officers permitted to act on behalf of such Loan Party for purposes
of this Agreement and the true signatures of such officers, on which the Agent
and each Bank may conclusively rely; and
(iii) copies
of
its organizational documents, including its certificate of incorporation,
bylaws, certificate of limited partnership, partnership agreement, certificate
of formation, and limited liability company agreement as in effect on the
Closing Date certified by the appropriate state official where such documents
are filed in a state office together with certificates from the appropriate
state officials as to the continued existence and good standing of each Loan
Party in each state where organized or qualified to do business.
39
6.1.3 Delivery
of Loan Documents.
The
Loan
Documents shall have been duly executed and delivered to the Agent for the
benefit of the Banks, together with all appropriate stock powers and
certificates evidencing the Subsidiary Shares, the Partnership Interests and
the
LLC Interests and all financing statements in respect of the Loan Documents
shall have been delivered to the Agent for the benefit of the
Banks.
6.1.4 Opinion
of Counsel.
There
shall be delivered to the Agent for the benefit of each Bank a written opinion
of Xxxxxxx, Savage, Kaplowitz, Wolf & Marcus, LLP, counsel for the Loan
Parties relating to the Loan Documents dated the Closing Date, and in form
and
substance satisfactory to the Agent and its counsel.
6.1.5 Legal
Details.
All
legal
details and proceedings in connection with the transactions contemplated by
this
Agreement and the other Loan Documents shall be in form and substance
satisfactory to the Agent and counsel for the Agent, and the Agent shall have
received all such other counterpart originals or certified or other copies
of
such documents and proceedings in connection with such transactions, in form
and
substance satisfactory to the Agent and said counsel, as the Agent or said
counsel may reasonably request. Without limiting the foregoing, the Acquisition
shall have been
completed on the Closing Date in accordance with the terms of the Acquisition
Purchase Agreement.
6.1.6 Payment
of Fees.
The
Borrower shall have paid or caused to be paid to the Agent for itself and for
the account of the Banks, to the extent not previously paid, any fees due under
Section 9.15 [Agent's Fees], the Bank's commitment fee and all other fees
accrued through the Closing Date and the costs and expenses for which the Agent
and the Banks are entitled to be reimbursed.
6.1.7 Officer's
Certificate Regarding MACs.
Since
December 31, 2003, no Material Adverse Change shall have occurred and, prior
to
the Closing Date, there shall have been no change in the senior management
of
the Loan Parties and there shall have been delivered to the Agent for the
benefit of each Bank a certificate to such effect dated the Closing Date and
signed by the Chief Executive Officer, President or Chief Financial Officer
of
each Loan Party to such effect.
40
6.1.8 Due
Diligence.
The
Agent
shall have received the due diligence report prepared by American Express and
an
analysis of each Loan Parties' business matters as the Agent may require in
form
and substance satisfactory to the Agent in all respects. Without limiting the
foregoing, the Loan Parties shall deliver to the Agent on or before the Closing
Date lien searches in respect of the Loan Parties demonstrating the absence
of
Liens on any of such Loan Parties' properties and assets other than Permitted
Liens.
6.1.9 Consents.
All
consents and approvals required to effectuate the transactions contemplated
hereby shall have been obtained.
6.1.10 No
Violation of Laws.
The
making of the Loans shall not contravene any Law applicable to the Loan Parties
or any of the Banks.
6.1.11 No
Actions or Proceedings.
No
action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed in writing before any court, governmental
agency or legislative body to enjoin, restrain or prohibit, or to obtain damages
in respect of, this Agreement, the other Loan Documents or the consummation
of
the transactions contemplated hereby or thereby or which, in the Agent's sole
discretion, would make it inadvisable to consummate the transactions
contemplated by this Agreement or any of the other Loan Documents.
41
6.1.12 Insurance
Policies; Certificates of Insurance; Endorsements.
The
Loan
Parties shall have delivered evidence acceptable to the Agent that adequate
insurance in compliance with Section 7.1.3 [Maintenance of Insurance], together
with a certified copy of the Loan Parties' casualty insurance policy or policies
evidencing coverage satisfactory to the Agent, with additional insured,
mortgagee and lender loss payable special endorsements attached thereto in
form
and substance satisfactory to the Agent and its counsel naming the Agent as
additional insured, mortgagee and lender loss payee.
6.1.13 Intentionally
omitted.
6.1.14 Repayment
of Debt.
All
debt
listed on Borrower's balance sheet dated September 30, 2004 shall have been
repaid with the proceeds received by IASG in connection with the Second Lien
Notes, other than the Convertible Debt and other amounts owed to the
Bank.
6.1.15
Second Lien Note Offering.
42
IASG
shall successfully complete an offering of the Second Lien Notes and receive
all
net cash proceeds in connection therewith.
6.2 |
On
the Funding Date.
|
On
or
prior to the Funding Date, Borrower shall have delivered to Agent (i) updated
Financial Projections dated as of the most recent fiscal quarter end in form
and
substance as set forth in Section 5.1.8(ii), (ii) an executed Landlord's Waiver
from the lessor for each leased Collateral location, as listed on Schedule
A to
the Security Agreement and (iii) copies of policies of key man life insurance
along with the Collateral Assignment of Life Insurance in respect of $2,000,000
of such coverage for each of XxXxxx and Few, along with evidence satisfactory
to
the Agent that such policies are in full force and effect and that all premiums
then due thereon have been paid.
6.3 |
Each
Additional Loan.
|
At
the
time of making any Loans and after giving effect to the proposed extensions
of
credit: the representations and warranties of the Loan Parties contained in
Section 5 and in the other Loan Documents shall be true and correct on and
as of
the date of such additional Loan with the same effect as though such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier
date
or time, which representations and warranties shall be true and correct on
and
as of the specific dates or times referred to therein) and the Loan Parties
shall have performed and complied with all covenants and conditions hereof;
no
Event of Default or Potential Default shall have occurred and be continuing
or
shall exist; the making of the Loans shall not contravene
any Law applicable to the Loan Parties or any of the Banks; and the Borrower
shall have delivered to the Agent a duly executed and completed Loan Request.
7. |
COVENANTS
|
7.1 |
Affirmative
Covenants.
|
Each
Loan
Party, jointly and severally, covenants and agrees that until payment in full
of
the Loans and interest thereon, satisfaction of all of the Loan Parties' other
Obligations under the Loan Documents (other than contingent and indemnification
obligations, which shall survive termination of this Agreement) and termination
of the Commitments, the Loan Parties shall comply at all times with the
following affirmative covenants:
7.1.1 Preservation
of Existence, Etc.
Each
Loan
Party shall maintain its current legal existence as a corporation, limited
partnership or limited liability company and its license or qualification and
good standing in each jurisdiction in which its ownership or lease of property
or the nature of its business makes such license or qualification necessary,
except as otherwise expressly permitted in Section 7.2.6 [Liquidations, Mergers,
Etc.] and except where failure to do so would not violate any other provision
of
this Agreement and cause or constitute a Material Adverse Change.
43
7.1.2 Payment
of Liabilities, Including Taxes, Etc.
Each
Loan
Party shall duly pay and discharge all liabilities to which it is subject or
which are asserted against it, promptly as and when the same shall become due
and payable, including all taxes, assessments and governmental charges upon
it
or any of its properties, assets, income or profits, prior to the date on which
penalties attach thereto, except to the extent that such liabilities, including
taxes, assessments or charges, are being contested in good faith and by
appropriate and lawful proceedings diligently conducted and for which such
reserve or other appropriate provisions, if any, as shall be required by GAAP
shall have been made, but only to the extent that failure to discharge any
such
liabilities would not in the reasonable judgment of Agent constitute a Material
Adverse Change; provided that the Loan Parties will pay all such liabilities
forthwith upon the commencement of proceedings to foreclose any Lien which
may
have attached as security therefor.
7.1.3 Maintenance
of Insurance.
7.1.3.1 Each
Loan
Party shall maintain, and cause each of its Subsidiaries to maintain, insurance
covering its properties and assets against loss or damage by fire and against
such other insurable hazards as such assets are commonly insured (including
fire, extended coverage, property damage, workers' compensation, public
liability and business interruption insurance) and against other risks
(including errors and omissions) in such amounts as similar properties and
assets are insured by prudent companies in similar circumstances carrying on
similar businesses, and with reputable and financially sound insurers, including
self-insurance to the extent customary. At the request of the Agent, the Loan
Parties shall deliver to the
Agent
and each of the Banks (x) on the Closing Date and annually thereafter an
original certificate of insurance signed by the Loan Parties' independent
insurance broker describing and certifying as to the existence of the insurance
on the Collateral required to be maintained by this Agreement and the other
Loan
Documents, together with a copy of the endorsement described in the next
sentence attached to such certificate and (y) from time to time a summary
schedule indicating all insurance then in force with respect to the Loan
Parties. Such policies of insurance shall contain special endorsements, in
form
and substance acceptable to the Agent, which shall (i) specify the Agent as
an
additional insured, mortgagee and lender loss payee as its interests may appear,
with the understanding that any obligation imposed upon the insured (including
the liability to pay premiums) shall be the sole obligation of the Loan Parties
and not that of the insured, (ii) provide that the interest of the Banks shall
be insured regardless of any breach or violation by the Loan Parties of any
warranties, declarations or conditions contained in such policies or any action
or inaction of the Loan Parties or others insured under such
44
policies,
(iii) provide a waiver of any right of the insurers to set off or counterclaim
or any other deduction, whether by attachment or otherwise, (iv) provide
that
any and all rights of subrogation which the insurers may have or acquire
shall
be, at all times and in all respects, junior and subordinate to the prior
payment in full of the Indebtedness hereunder and that no insurer shall exercise
or assert any right of subrogation until such time as the Indebtedness hereunder
has been paid in full and the Commitments have terminated, (v) provide, except
in the case of public liability insurance and worker's compensation insurance,
that all insurance proceeds for losses of less than $500,000
shall be
adjusted with and payable to the Loan Parties and that all insurance proceeds
for losses of $500,000
or more
shall be adjusted with and payable to the Agent, (vi) include effective waivers
by the insurer of all claims for insurance premiums against the Agent, (vii)
provide that no cancellation of such policies for any reason (including
non-payment of premium) nor any change therein shall be effective until at
least
thirty (30) days after receipt by the Agent of written notice of such
cancellation or change, (viii) be primary without right of contribution of
any
other insurance carried by or on behalf of any additional insureds with respect
to their respective interests in the Collateral, and (ix) provide that inasmuch
as the policy covers more than one insured, all terms, conditions, insuring
agreements and endorsements (except limits of liability) shall operate as
if
there were a separate policy covering each insured. The Loan Parties shall
notify the Agent promptly of any occurrence causing a material loss or decline
in value of the Collateral and the estimated (or actual, if available) amount
of
such loss or decline. Without limiting the foregoing, the Borrower shall
have on
the Funding Date, $2,000,000 key-man insurance policies on each of the lives
of
XxXxxx and Few, which have been collaterally assigned to the Agent pursuant
to
the Collateral Assignment of Life Insurance.
7.1.3.2 UNLESS
THE BORROWER PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE COVERAGE REQUIRED
BY THIS AGREEMENT, THE AGENT MAY PURCHASE INSURANCE AT THE BORROWER'S EXPENSE
TO
PROTECT THE AGENT'S AND THE BANKS' INTERESTS IN THE COLLATERAL. THIS INSURANCE
MAY, BUT NEED NOT, PROTECT THE BORROWERS' INTERESTS. THE COVERAGE THAT THE
AGENT
PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST THE BORROWER IN CONNECTION
WITH THE COLLATERAL. THE BORROWER MAY LATER CANCEL ANY INSURANCE PURCHASED
BY
THE AGENT, BUT ONLY AFTER PROVIDING THE AGENT WITH EVIDENCE THAT THE BORROWER
HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT PURCHASES
INSURANCE FOR THE COLLATERAL,
THE BORROWER WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING
INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF THE
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE PRINCIPAL AMOUNT
OF
THE LOANS OWING HEREUNDER. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE
COST
OF THE INSURANCE THE BORROWER MAY BE ABLE TO OBTAIN ON ITS OWN.
7.1.4 Maintenance
of Properties and Leases.
The
Loan
Parties shall maintain in good repair, working order and condition (ordinary
wear and tear excepted) in accordance with the general practice of other
businesses of similar character and size, all of those properties useful or
necessary to its business, and from time to time, the Loan Parties will make
or
cause to be made all appropriate repairs, renewals or replacements thereof.
The
Loan Parties shall have and maintain certification by Underwriters Laboratories,
Inc. of their central stations as such and shall, upon request, provide the
Banks with evidence of such certification on the Closing Date.
45
7.1.5 Maintenance
of Patents, Trademarks, Etc.
The
Loan
Parties shall maintain in full force and effect all patents, trademarks, service
marks, trade names, copyrights, licenses, franchises, permits and other
authorizations necessary for the ownership and operation of its properties
and
business if the failure so to maintain the same would constitute a Material
Adverse Change.
7.1.6 Visitation
Rights.
Each
Loan
Party shall permit any of the officers or authorized employees or
representatives of the Agent or any of the Banks to visit and inspect, during
regular business hours, any of its properties and to examine and make excerpts
from its books and records and discuss its business affairs, finances and
accounts with its officers, all in such detail and at such times and as often,
during regular business hours, as the Agent or any of the Banks may reasonably
request, provided that upon and during the continuance of an Event of Default,
such inspections and visits shall not be confined to regular business hours.
7.1.7 Keeping
of Records and Books of Account.
The
Borrower shall maintain and keep its books and records in accordance with sound
business practices sufficient to enable the Borrower and its Subsidiaries to
issue financial statements in accordance with GAAP and as otherwise required
by
applicable Laws of any Official Body having jurisdiction over the Borrower
and
in which full, true and correct entries shall be made in all material respects
of all their dealings and business and financial affairs.
7.1.8 Plans
and
Benefit Arrangements.
Each
Borrower shall, and shall cause each other member of the ERISA Group to, comply
with ERISA, the Internal Revenue Code and other applicable Laws applicable
to
Plans and
Benefit Arrangements except where such failure, alone or in conjunction with
any
other failure, would not result in a Material Adverse Change. The Borrower
shall
cause all of their Plans and all Plans maintained by any member of the ERISA
Group to be funded in accordance with the minimum funding requirements of ERISA
and shall make, and cause each member of the ERISA Group to make, in a timely
manner, all contributions due to Plans, Benefit Arrangements and Multiemployer
Plans.
7.1.9 Compliance
with Laws.
Each
Loan
Party shall comply with all applicable Laws, provided that it shall not be
deemed to be a violation of this Section 7.1.9 if any failure to comply with
any
Law would not result in fines, penalties, remediation costs, other similar
liabilities or injunctive relief which in the aggregate would constitute a
Material Adverse Change. Without limiting the foregoing, each Loan Party shall
comply with all laws described in Section 5.1.19 [Compliance With
Laws.]
46
7.1.10 Use
of
Proceeds.
The
Loan
Parties will use the proceeds of the Loans only (i) for general corporate
purposes, (ii) to finance the purchase price of the acquisitions of security
alarm companies and the fees and expenses incurred in connection therewith,
(iii) to finance acquisitions of wholesale security alarm companies and related
subscriber accounts or (iv) to finance the acquisition of bulk RMR contracts
pursuant to the terms and conditions hereof. The Loan Parties shall not use
the
proceeds of the Loans for any purpose which contravenes any applicable Law
or
any provision hereof.
7.1.11 Further
Assurances.
Each
Loan
Party shall, from time to time, at its expense, faithfully preserve and protect
the Agent's Lien on and Prior Security Interest in the Collateral as a
continuing first priority perfected Lien, subject only to Permitted Liens,
and
shall do such other acts and things as the Agent may deem necessary or advisable
from time to time in order to preserve, perfect and protect the Liens granted
under the Loan Documents.
7.1.12 Intentionally
Omitted.
7.1.13 Interest
Rate Hedging.
The
Loan
Parties shall enter into on or before sixty (60) days after the date that any
amount of the Revolving Credit Facility Usage first becomes outstanding,
Interest Rate Agreements or similar arrangements, in form and substance
reasonably satisfactory to the Agent, with a term at least equal to the lesser
of three years or the period remaining (from time to time) until the Expiration
Date, on an ISDA standard form with one or more Banks or Affiliates thereof
or
with counterparties reasonably acceptable to the Agent, to hedge the interest
rate with respect to not less than fifty percent (50%) of the Revolving Facility
Usage; the Loan Parties shall continuously maintain such Interest Rate
Agreements or similar arrangements with respect to met less than fifty percent
(50%) of the Revolving Facility Usage until the Expiration Date, and any
extension or renewal thereof.
7.1.14 Operating
and Lockbox Accounts.
Within
one
hundred and twenty (120)
days
after the Closing Date, the Loan Parties shall maintain their principal
operating and cash management accounts (including without limitations, lockbox
accounts and blocked accounts) at Agent and shall grant to the Agent a security
interest in such accounts and set off rights with respect to such
accounts.
7.1.15 Field
Audits.
The
Loan
Parties shall allow the Agent, at the Loan Parties' sole expense, to conduct
a
field examination of the accounts, inventory, books and records of the Loan
Parties after the date hereof and prior to the Funding Date and, in addition,
two
(2) such
field examinations per year
thereafter so long as no Event of Default exists or is continuing. Upon the
occurrence and during the continuance of an Event of Default, the Bank may
conduct such field audits at Bank's sole discretion.
47
7.1.16 Compliance
with Federal Law - Patriot Act. Borrower shall (a) ensure, and cause
each
subsidiary to ensure, that no person who owns a controlling interest in or
otherwise controls Borrower or any subsidiary is or shall be listed on the
Specifically Designated Nationals and Blocked Person List or other similar
lists
maintained by the Office of Foreign Assets Control ("OFAC"), the Department
of
the Treasury or included in any Executive Orders, (b) not use or permit the
use
of the proceeds of the Loans to violate any of the foreign asset control
regulations of OFAC or any enabling statute or Executive Order relating thereto,
and (c) comply, and cause each subsidiary to comply, with all applicable
Bank Secrecy Act ("BSA") laws and regulations, as amended. As required by
federal law and Lender's policies and practices, Lender may need to obtain,
verify and record certain customer identification information and documentation
in connection with opening or maintaining accounts, or establishing or
continuing to provide services.
7.2 |
Negative
Covenants.
|
Each
Loan
Party, jointly and severally, covenants and agrees, that until payment in full
of the Loans, and interest thereon, satisfaction of all of the Loan Parties'
other Obligations under the Loan Documents (other than contingent and
indemnification obligations, which shall survive termination of this Agreement,
and termination of the Commitments), the Loan Parties shall comply with the
following negative covenants:
7.2.1 Indebtedness.
The
Loan
Parties shall not at any time create, incur, assume or suffer to exist any
Indebtedness, except:
(i) Indebtedness
under the Loan Documents;
(ii) Indebtedness
related to Permitted Liens;
(iii) Trade
payables and accrued expenses incurred in the ordinary course of business which
are not represented by a promissory note or other evidence of indebtedness
and
which are not the subject of a genuine dispute or are not more than ninety
(90)
days past due or, if more than ninety (90) days past due, for which adequate
reserves in conformity with GAAP have been established on the books of the
Loan
Parties.
(iv) Indebtedness
in respect of any Interest Rate Agreement entered into pursuant to Section
7.1.13 [Interest Rate Hedging] or in the ordinary course of business and not
for
speculative purposes;
(v) Indebtedness
resulting from a Loan Party's Guaranty of Indebtedness to the extent such
Indebtedness is otherwise permitted by this Section 7.2.1;
(vi) Capitalized
leases;
(vii) Indebtedness
existing on the date hereof extended by the Agent to any Loan
Party;
48
(viii) the
Subordinated Debt; and
(ix) the
Convertible Debt.
7.2.2 Liens.
The
Loan
Parties shall not at any time create, incur, assume or suffer to exist any
Lien
on any of its respective property or assets, tangible or intangible, now owned
or hereafter acquired, or agree or become liable to do so, except Permitted
Liens.
7.2.3 Guaranties.
The
Loan
Parties shall not at any time, directly or indirectly, become or be liable
in
respect of any Guaranty, or assume, guarantee, become surety for, endorse or
otherwise agree, become or remain directly or contingently liable upon or with
respect to any obligation or liability of any other Person, except for
Guaranties of Indebtedness of the Loan Parties to (i) the Banks and (ii) the
Second Lien Noteholders.
7.2.4 Loans
and
Investments.
The
Loan
Parties shall not at any time make or suffer to remain outstanding any loan
or
advance to, or purchase, acquire or own any stock, bonds, notes or securities
of, or any partnership interest (whether general or limited) or limited
liability company interest in, or any other investment or interest in, or make
any capital contribution to, any other Person, or agree, become or remain liable
to do any of the foregoing, except:
(i) trade
credit extended on usual and customary terms in the ordinary course of
business;
(ii) advances
to employees to meet routine expenses incurred by such employees in the ordinary
course of business;
(iii) the
existing Indebtedness of Loan Parties to Protect America, Inc. which is
guaranteed by Tyco International, Ltd.;
(iv) the
existing fifty percent (50%) ownership interest in Everest Video, LLC, a
Delaware limited liability company; and
(v) Permitted
Investments.
7.2.5 Dividends
and Related Distributions.
The
Loan
Parties shall not make or pay, or agree to become or remain liable to make
or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of its shares
of
capital stock, partnership interests or limited liability company interests,
including without limitation, distributions on account of the purchase,
redemption, retirement or acquisition of its shares of capital stock (or
warrants, options or rights therefor), partnership interests or limited
liability company interests, except distributions by any Subsidiary of a
Borrower to a Borrower.
49
7.2.6 Liquidations,
Mergers, Consolidations, Acquisitions.
Each
of
the Loan Parties shall not dissolve, liquidate or wind-up its affairs, or become
a party to any merger or consolidation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any other
Person, provided that
(1) any
Loan
Party other than IASG may consolidate, liquidate or merge into another Loan
Party,
(2) a
Loan
Party may acquire, whether by purchase or by merger, (A) all of the ownership
interests of another Person if such Loan Party obtains the prior written consent
of the Agent with respect to transactions where the total Consideration paid
for
such Person to be acquired is $5,000,000.00 or less and the prior written
consent of the Required Banks for all other transactions, which consent shall
not be unreasonably withheld, (B) all of the assets of another Person or of
a
business or division of another Person or (C) a bulk purchase of Alarm Accounts,
provided
that
each of the following requirements is met (a "Permitted
Acquisition"):
(i) if
such
Loan Party is acquiring the ownership interests in such Person, such Person
shall execute a joinder to this Agreement as a Loan Party pursuant to Section
10.18 [Joinder of Guarantors and Borrowers] on or before the date of such
Permitted Acquisition;
(ii) such
Loan
Party, such Person and its owners, as applicable, shall grant Liens in the
assets of or acquired from, and stock or other ownership interests in, such
50
Person
acquired in such acquisition and otherwise comply with Section 10.18 [Joinder
of
Borrowers and Guarantors] on or before the date of such Permitted Acquisition;
(iii) the
board
of directors or other equivalent governing body of such Person shall have
approved such Permitted Acquisition;
(iv) the
business acquired or the business conducted by the Person whose ownership
interests are being acquired shall be substantially the same as one or more
line
or lines of business conducted by the Loan Parties and, after giving effect
to
such Permitted Acquisition, the Loan Parties shall still comply with Section
7.2.10 [Continuation of or Change in Business];
(v) no
Potential Default or Event of Default shall exist immediately prior to and
after
giving effect to such Permitted Acquisition;
(vi) the
Loan
Parties shall demonstrate that they shall be in compliance with all loan
covenants contained in Section 7 [Covenants] based upon calculations as of
the
end of the most recent period for which certificates under Section 7.3.3
[Certificate of the Borrower] shall have been delivered and with the covenant
contained in Section 7.2.18 [Availability Requirement] calculated as of the
date
of the acquisition, all giving effect to such Permitted Acquisition on a
consolidated pro forma basis (including in such
51
computation
Indebtedness or other liabilities assumed or incurred in connection with
such
Permitted Acquisition and including RMR, but excluding income earned or expenses
incurred by the Person, business or assets to be acquired prior to the date
of
such Permitted Acquisition) by delivering at least five (5) Business Days
prior
to such Permitted Acquisition a certificate in the form of Exhibit
7.2.6
evidencing such compliance;
(vii) the
Consideration paid by the Loan Parties for any one Permitted Acquisition shall
not exceed $5,000,000.00 and the aggregate of the Consideration paid by the
Loan
Parties for all Permitted Acquisitions (other than as permitted by Sections
7.2.6(3) and 7.2.6(4)) made in any twelve month period shall not exceed
$15,000,000.00;
(viii) the
Loan
Parties shall have collaterally assigned (or caused to be assigned) to the
Agent
the non-compete agreements and restrictive covenants arising out of or delivered
in connection with such Permitted Acquisition (and the consent of the person
bound thereby shall either have been obtained or shall not be required) and
any
seller notes or right to receive deferred payments or retain holdback,
contingent payments or purchase price adjustments shall have been subordinated
to the Loans on terms acceptable to the Agent;
(ix) the
Loan
Parties shall deliver to the Agent, at least five (5) Business Days before
such
Permitted Acquisition, copies of any agreements entered into or proposed to
be
entered into by such Loan Parties in connection with such Permitted Acquisition
and shall deliver to the Agent such other information about such Person or
its
assets as any Loan Party may reasonably require;
(x) the
assets acquired must consist of subscriber contracts made in the ordinary course
of business;
(xi) the
key
employees of the target shall have entered into five (5) year Non-compete
Agreements; and
(xii) in
the
case of 7.2.6(2) (B) and (C) above, all such assets or accounts purchased must
be free and clear of any and all liens or encumbrances at the time of such
acquisition, and
(3) Permitted
Acquisitions shall also include such other acquisitions or RMR purchase
transactions involving the business described in Section 7.2.10 as may be
approved by the Agent in its sole discretion based on the criteria set forth
on
Schedule 7.2.6 (3) hereto.
7.2.7 Dispositions
of Assets or Subsidiaries.
Each
of
the Loan Parties shall not sell, convey, assign, lease, abandon or otherwise
transfer or dispose of, voluntarily or involuntarily, any of its properties
or
assets, tangible or intangible (including sale, assignment, discount or other
disposition of accounts, contract rights, chattel paper, equipment or general
intangibles with or without recourse or of capital stock, shares of beneficial
interest, partnership interests or limited liability company interests of a
Subsidiary of a Loan Party), except:
52
(i) transactions
involving the sale of inventory in the ordinary course of business;
(ii) any
sale,
transfer or lease in the ordinary course of business of assets which are no
longer necessary or required in the conduct of a Loan Party or such Subsidiary?s
business;
(iii) any
sale,
transfer or lease in the ordinary course of business of assets which are
replaced by substitute assets acquired, provided such substitute assets are
subject to the Banks? Prior Security Interest;
(iv) the
sale
of other assets so long as the aggregate amount of after-tax proceeds from
sales
pursuant to this clause (iv) does not exceed $500,000.00
in any
one fiscal year;
(v) any
sale,
transfer or lease of assets, other than those specifically excepted pursuant
to
clauses (i) through (iv) above, which is approved in advance by Agent so long
as
the after-tax proceeds (as demonstrated by the Loan Parties) are applied in
accordance with the provisions of Section 4.5.1 [Sale of Assets]
above.
7.2.8 Affiliate
Transactions.
The
Loan
Parties shall not enter into or carry out any transaction with any Affiliate
of
any Loan Party (including purchasing property or services from or selling
property or services
to) except for: transactions not otherwise prohibited by this Agreement and
entered into in the ordinary course of business upon fair and reasonable
arm?s-length terms and conditions, in accordance with all applicable Law, and
after the terms of which have been fully disclosed in writing to Agent in form
and substance satisfactory to Agent.
7.2.9 Subsidiaries,
Partnerships and Joint Ventures.
The
Loan
Parties shall not own or create directly or indirectly any Subsidiaries except
after thirty (30) days prior written notice to Agent and, in all events,
provided that such Subsidiary shall, on the date of formation, become a Borrower
or Guarantor hereunder pursuant to Section 10.18 and, together with
the
other Loan Parties as necessary, shall grant to and cause to be perfected a
Prior Security Interest in favor of the Agent for the benefit of the Banks
in
the assets held by, and stock of or other ownership interests in, such
Subsidiary. Each Loan Party shall not become or agree to become (i) a general
or
limited partner in any general or limited partnership, (ii) a member or manager
of, or hold a limited liability company interest in, a limited liability company
which is not a Loan Party, or (iii) a joint venturer or hold a joint venture
interest in any joint venture. In all events, IASG shall not own, acquire or
create any direct Subsidiaries other than a Borrower or Guarantor and shall
conduct no business other than owning Subsidiaries which have become Borrowers
or Guarantors hereunder. The Loan Parties shall not permit any material amount
of the business of the Loan Parties described in Section 7.2.10
[Continuation if or Change in Business] to be conducted by any Affiliate other
than a Borrower.
53
7.2.10 Continuation
of or Change in Business.
The
Loan
Parties shall not engage in any business other than as described in
Section 5.1.28 [Regarding Borrowers] and the Loan Parties shall not
permit
any material change in such business.
7.2.11 Plans
and
Benefit Arrangements.
The
Loan
Parties shall not:
(i) fail
to
satisfy the minimum funding requirements of ERISA and the Internal Revenue
Code
with respect to any Plan;
(ii) request
a
minimum funding waiver from the United States Internal Revenue Service (?IRS?)
with respect to any Plan;
(iii) engage
in
a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer
Plan which, alone or in conjunction with any other circumstances or set of
circumstances resulting in liability under ERISA, would constitute a Material
Adverse Change;
(iv) permit
the aggregate actuarial present value of all benefit liabilities (whether or
not
vested) under each Plan, determined on a plan termination basis, as disclosed
in
the most recent actuarial report completed with respect to such Plan, to exceed,
as of any actuarial valuation date, the fair market value of the assets of
such
Plan;
(v) fail
to
make when due any contribution to any Multiemployer Plan that the Borrower
or
any member of the ERISA Group may be required to make under any agreement
relating to such Multiemployer Plan, or any Law pertaining thereto;
(vi) withdraw
(completely or partially) from any Multiemployer Plan or withdraw (or be deemed
under Section 4062(e) of ERISA to withdraw) from any Multiple Employer Plan,
where any such withdrawal is likely to result in a material liability of the
Borrower or any member of the ERISA Group;
(vii) terminate,
or institute proceedings to terminate, any Plan, where such termination is
likely to result in a material liability to the Borrower or any member of the
ERISA Group;
(viii) make
any
amendment to any Plan with respect to which security is required under Section
307 of ERISA; or
(ix) fail
to
give any and all notices and make all disclosures and governmental filings
required under ERISA or the Internal Revenue Code, where such failure is likely
to result in a Material Adverse Change.
54
7.2.12 Fiscal
Year.
The
Loan
Parties shall not change their fiscal year from the twelve-month period ending
December 31.
7.2.13 Issuance
of Stock.
After
the
occurrence of and during the continuance of an Event of Default, the Loan
Parties shall not issue any additional shares of its capital stock or LLC
Interests or any options, warrants or other rights in respect thereof except
for
such as is pledged to the Agent as Collateral or pursuant to any warrants
described in Schedule
5.1.2.
Further, both before and after such issuance, the Loan Parties must be in
compliance with all of the terms and conditions hereof and the use of proceeds
of such issuance must not deviate from the business purposes as set forth in
Section 5.1.28 hereof.
7.2.14 Changes
in Documents.
The
Loan
Parties shall not amend in any respect their respective certificate of
incorporation (including any provisions or resolutions relating to capital
stock), by-laws, certificate of limited partnership, partnership agreement,
certificate of formation or organization, limited liability company agreement
or
other organizational documents without providing at least thirty (30) calendar
days? prior written notice to the Agent and the Banks and, in the event such
change would be adverse to the Banks as determined by the Agent in its sole
discretion, obtaining the prior written consent of the Agent.
7.2.15 Minimum
Fixed Charge Coverage Ratio.
At
all
times hereunder and measured monthly, the Loan Parties shall not permit the
Fixed Charge Coverage Ratio to be less than 2.0 to 1.0.
7.2.16 Intentionally
Omitted.
7.2.17 Senior
Revolving Debt to Eligible RMR.
At
all
times hereunder and measured monthly, the Loan Parties shall not permit the
Senior Revolving Debt to be greater than ten times (10x) Eligible
RMR.
7.2.18 Availability
Requirement.
The
Loan
Parties shall not permit Revolving Facility Usage to exceed Maximum
Availability.
7.3 |
Reporting
Requirements.
|
The
Loan
Parties covenant and agree that until payment in full of the Loans, and interest
thereon, and termination of the Commitments, the Loan Parties will furnish
or
cause to be furnished to the Agent and each of the Banks:
55
7.3.1 Monthly
Financial Statements.
As
soon
as available and in any event within thirty (30) calendar days after the end
of
each calendar month commencing with the month in which the Closing Date occurs,
consolidated financial statements of the Borrower, consisting of a consolidated
balance sheet as of the end of such month and related consolidated statements
of
income, stockholders? equity and cash flows for the month then ended and the
fiscal year through that date, all in reasonable detail and certified (subject
to footnote disclosures and year-end adjustments) by the Chief Executive
Officer, President or Chief Financial Officer of Borrower as having been
prepared in accordance with GAAP, consistently applied, and, on a quarterly
basis, setting forth in comparative form the respective financial statements
for
the corresponding date and period in the previous fiscal year, together with
a
comparison of such results against the Financial Projections.
7.3.2 Annual
Financial Statements.
As
soon
as available and in any event within one hundred twenty (120) days after the
end
of each fiscal year (commencing with the period ending December 31, 2004) of
IASG, audited financial statements of Borrower consisting of a consolidated
and,
upon Agent's request, consolidating balance sheet as of the end of such fiscal
year, and related consolidated and consolidating statements of income,
stockholders' and members' equity and cash flows for the fiscal year then ended,
all in reasonable detail and setting forth in comparative form the financial
statements as of the end of and for the preceding fiscal year, and certified
by
independent certified public accountants of nationally recognized standing
satisfactory to the Agent. The certificate
or report of accountants shall be free of qualifications (other than any
consistency qualification that may result from a change in the method used
to
prepare the financial statements as to which such accountants concur) and shall
not indicate the occurrence or existence of any event, condition or contingency
which would impair the prospect of payment or performance of any covenant,
agreement or duty of the Loan Parties under any of the Loan Documents. The
Loan
Parties shall deliver with such financial statements and certification by their
accountants a letter of such accountants to the Agent and the Banks
substantially (i) to the effect that, based upon their ordinary and customary
examination of the affairs of the Borrower, performed in connection with the
preparation of such consolidated financial statements, and in accordance with
generally accepted auditing standards, they are not aware of the existence
of
any condition or event which constitutes an Event of Default or Potential
Default insofar as they relate to accounting matters or, if they are aware
of
such condition or event, stating the nature thereof and confirming the
Borrower's calculations with respect to the certificate to be delivered pursuant
to Section 7.3.3 [Certificate of the Borrower] with respect to such financial
statements and (ii) to the effect that the Banks are intended to rely upon
such
accountant's certification of the annual financial statements and that such
accountants authorize the Loan Parties to deliver such reports and certificate
to the Banks on such accountants' behalf.
7.3.3 Certificate
of the Borrower.
(i) Concurrently
with the financial statements of the Borrower furnished to the Agent and to
the
Banks pursuant to Sections 7.3.1 [Monthly Financial Statements] and 7.3.2
[Annual Financial Statements], a certificate of the Borrower signed by the
Chief
Executive Officer, President or Chief Financial Officer of Borrower, in the
form
of Exhibit
7.3.3
(the
"Compliance Certificate"), to the effect that, except as described pursuant
to
Section 7.3.5 [Notice of Default], (a) the representations and warranties of
the
Borrower
56
contained
in Section 5 and in the other Loan Documents are true on and as of the date
of
such certificate in all material respects with the same effect as though
such
representations and warranties had been made on and as of such date (except
representations and warranties which expressly relate solely to an earlier
date
or time) and the Loan Parties have performed and complied with all covenants
and
conditions hereof, and (b) no Event of Default or Potential Default exists
and
is continuing on the date of such certificate, and such certificate shall
contain calculations in sufficient detail to demonstrate compliance as of
the
date of such financial statements with all financial covenants contained
in
Section 7.2 [Negative Covenants]. Without limiting in any way Borrower's
obligation to retain records for any other purpose, Borrower shall archive
and
maintain all RMR data upon which all monthly reports hereunder are based,
organizing the data in a manner corresponding to such
reports.
(ii) With
each
such Compliance Certificate, the Loan Parties shall deliver reports of monthly
cash collections in respect of Alarm Contracts and monthly xxxxxxxx in respect
of Alarm Contracts.
(iii) With
each
such Compliance Certificate, the Loan Parties shall deliver RMR roll forward
reports.
(iv)
With
each
such Compliance Certificate, the Loan Parties shall deliver an accounts
receivable aging summary report.
(v) Attached
to the Compliance Certificate submitted on a quarterly basis shall be an updated
Schedule A to the Collateral Assignment of Contract Rights and Schedule A to
the
Collateral Assignment of Telephone Numbers and such Schedules to this Agreement
or the other Loan Documents as, by changes in circumstances, become materially
incorrect, incomplete or misleading.
(vi) With
each
such Compliance Certificate, the Loan Parties hereby agree to deliver a schedule
consisting of the following items with respect to all Permitted Acquisitions
completed during the term hereof: the amount of the purchase price, the purchase
multiple, RMR purchased, any holdback percentage, any holdback amount and the
holdback funds paid out, if any.
7.3.4 Borrowing
Base Certificate.
IASG,
on
behalf of all Borrowers, shall deliver a consolidated and consolidating
Borrowing Base Certificate to the Agent and the Banks on each of the following
dates:
(i) at
the
request of the Agent;
(ii) as
soon
as practical, but in no event later than 30 calendar days from the end of each
calendar month if the Revolving Facility Usage is less than 97.5% of the Maximum
Availability as of the end of such calendar month;
57
(iii) if
any
determination has been made that the Revolving Facility Usage equals or exceeds
97.5% of the Maximum Availability, then with each Loan Request; and
(iv) with
each
Permitted Acquisition.
7.3.5 Notice
of
Default.
Promptly
after any officer of any Loan Party has learned of the occurrence of an Event
of
Default or Potential Default, a certificate signed by the Chief Executive
Officer, President or Chief Financial Officer of the Borrower setting forth
the
details of such Event of Default or Potential Default and the action which
each
Loan Party proposes to take with respect thereto.
7.3.6 Notice
of
Litigation.
Promptly
after any Officer of any Loan Party has learned thereof, notice of all actions,
suits, proceedings or investigations before or by any Official Body or any
other
Person against the Loan Parties or any Subsidiary of any Loan Party which relate
to the Collateral, involve a claim or series of claims in excess of $100,000
or which
if adversely determined would constitute a Material Adverse Change.
7.3.7 Certain
Events.
Written
notice to the Agent:
(i) at
least
thirty (30) calendar days prior thereto, with respect to any proposed sale
or
transfer of assets pursuant to Section 7.2.7 (v) [Dispositions of Assets or
Subsidiaries];
(ii) within
the time limits set forth in Section 7.2.14 [Changes in Organizational
Documents], any amendment to the organizational documents of any Loan
Party;
(iii) at
least
thirty (30) calendar days prior thereto, with respect to any change in any
Loan
Parties' locations from the locations set forth in Schedule A to the Security
Agreement; and
(iv) immediately
upon the occurrence of any material loss or depreciation in the value of the
Collateral, and such notice shall specify the amount of such loss or
depreciation to the extent practicable.
7.3.8 Budgets,
Forecasts, Other Reports and Information.
(i) the
consolidated final annual budget and any forecasts or projections of the
Borrower, to be supplied not later than sixty (60) days after the commencement
of the fiscal year to which any of the foregoing may be applicable;
and
(ii) promptly
upon their becoming available to the Borrower:
58
(A) any
final
reports including management letters submitted to the Borrower by independent
accountants in connection with any annual, interim or special
audit,
(B) any
final
reports, notices or proxy statements generally distributed by IASG to its
stockholders on a date no later than the date supplied to such stockholders
(if
such documents are not readily available on the XXXXX online
service),
(C)
regular
or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements
and prospectuses, if any, filed by IASG with the Securities and Exchange
Commission (if such documents are not readily available on the XXXXX online
service),
(D) a
copy of
any order in any proceeding to which the Borrower or any of its Subsidiaries
is
a party issued by any Official Body which would cause or constitute a Material
Adverse Change, and
(E) such
other reports and information as any of the Banks may from time to time
reasonably request. The Borrower shall also notify the Banks promptly upon
the
Borrower's becoming aware of the enactment or adoption of any Law which would
cause or constitute a Material Adverse Change.
7.3.9 Notices
Regarding Plans and Benefit Arrangements.
7.3.9.1 Certain
Events.
Promptly
upon becoming aware of the occurrence thereof, notice (including the nature
of
the event and, when known, any action taken or threatened by the IRS or the
PBGC
with respect thereto) of:
(i) any
Reportable Event with respect to the Borrower or any other member of the ERISA
Group (regardless of whether the obligation to report said Reportable Event
to
the PBGC has been waived),
(ii) any
Prohibited Transaction which could subject the Borrower or any other member
of
the ERISA Group to a material civil penalty assessed pursuant to Section 502(i)
of ERISA or a material tax imposed by Section 4975 of the Internal Revenue
Code
in connection with any Plan, any Benefit Arrangement or any trust created
thereunder,
(iii) any
assertion of material withdrawal liability with respect to any Multiemployer
Plan,
(iv) any
partial or complete withdrawal from a Multiemployer Plan by the Borrower or
any
other member of the ERISA Group under Title IV of ERISA (or assertion thereof),
where such withdrawal is likely to result in material withdrawal
liability,
(v) any
cessation of operations (by the Borrower or any other member of the ERISA Group)
at a facility in the circumstances described in Section 4062(e) of
ERISA,
59
(vi) withdrawal
by the Borrower or any other member of the ERISA Group from a Multiple Employer
Plan,
(vii) a
failure
by the Borrower or any other member of the ERISA Group to make a payment to
a
Plan required to avoid imposition of a Lien under Section 302(f) of
ERISA,
(viii) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 307 of ERISA, or
(ix) any
change in the actuarial assumptions or funding methods used for any Plan, where
the effect of such change is to materially increase or materially reduce the
unfunded benefit liability or obligation to make periodic
contributions.
7.3.9.2 Notices
of Involuntary Termination and Annual Reports.
Promptly
after receipt thereof, copies of (a) all notices received by the Borrower or
any
other member of the ERISA Group of the PBGC's intent to terminate any Plan
administered or maintained by the Borrower or any member of the ERISA Group,
or
to have a trustee
appointed to administer any such Plan; and (b) at the request of the Agent
or
any Bank each annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports and the most recent financial
information concerning the financial status of each Plan administered or
maintained by the Borrower or any other member of the ERISA Group, and schedules
showing the amounts contributed to each such Plan by or on behalf of the
Borrower or any other member of the ERISA Group in which any of their personnel
participate or from which such personnel may derive a benefit, and each Schedule
B (Actuarial Information) to the annual report filed by the Borrower or any
other member of the ERISA Group with the IRS with respect to each such
Plan.
7.3.9.3 Notice
of
Voluntary Termination.
Promptly
upon the filing thereof, copies of any Form 500 or 600, or any successor or
equivalent form to Forms 500 or 600, filed with the PBGC in connection with
the
termination of any Plan.
8. |
DEFAULT
|
8.1 |
Events
of Default.
|
An
Event
of Default shall mean the occurrence or existence of any one or more of the
following events or conditions (whatever the reason therefor and whether
voluntary, involuntary or effected by operation of Law):
8.1.1 Payments
Under Loan Documents.
The
Borrower shall fail to pay (i) any principal of or interest on any Loan
(including scheduled installments, mandatory prepayments or the payment due
at
maturity), when such principal or interest becomes due or (ii) shall fail to
pay
any other amount owing hereunder or under the other Loan Documents after such
other amount becomes due in accordance with the terms hereof or
thereof;
60
8.1.2 Breach
of
Warranty.
Any
representation or warranty made at any time by the Loan Parties herein or by
the
Loan Parties in any other Loan Document, or in any certificate, other instrument
or statement furnished pursuant to the provisions hereof or thereof, shall
prove
to have been false or misleading as of the time it was made or
furnished;
8.1.3 Breach
of
Certain Covenants or Visitation Rights.
Any
of
the Loan Parties shall default in the observance or performance of any covenant
contained in Section 7.1.6 [Visitation Rights] or contained in Section 7.2,
or
contained in Sections 7.3.1 through 7.3.4.
8.1.4 Breach
of
Other Covenants.
Any
of
the Loan Parties shall default in the observance or performance of any other
covenant, condition or provision hereof or of any other Loan Document, and
any
of the foregoing defaults shall continue unremedied for a period of thirty
(30)
calendar
days (such grace period to be applicable only in the event such default can
be
remedied by corrective action of the Loan Parties during such time period as
determined by the Agent in its sole discretion);
8.1.5 Defaults
in Other Agreements or Indebtedness.
A
default
or event of default shall occur at any time under the terms of any other
agreement involving borrowed money or the extension of credit or any other
Indebtedness under which any Loan Party may be obligated as a borrower or
guarantor in excess of $250,000
in the
aggregate or any default or event of default by a Loan Party at any time under
the terms of the Second Lien Notes, and such breach, default or event of default
consists of the failure to pay (beyond any period of grace permitted with
respect thereto) any Indebtedness when due (whether at stated maturity, by
acceleration or otherwise) or if such breach or default permits or causes the
acceleration of any Indebtedness (whether or not such right shall have been
waived) or the termination of any commitment to lend;
8.1.6 Final
Judgments or Orders.
Any
final
judgments or orders for the payment of money in excess of $250,000 in
the
aggregate shall be entered against any Loan Party by a court having jurisdiction
in the premises, which judgment is not discharged, vacated, bonded or stayed
pending appeal within a period of sixty (60) days from the date of
entry;
61
8.1.7 Loan
Document Unenforceable.
Any
of
the Loan Documents shall cease to be legal, valid and binding agreements
enforceable against the party executing the same or such party's successors
and
assigns (as permitted under the Loan Documents) in accordance with the
respective terms thereof or shall in any way be terminated (except in accordance
with its terms) or become or be declared ineffective or inoperative or shall
in
any way be challenged or contested or cease to give or provide the respective
Liens, security interests, rights, titles, interests, remedies, powers or
privileges intended to be created thereby;
8.1.8 Uninsured
Losses; Proceedings Against Assets.
There
shall occur any uninsured damage to or loss, theft or destruction of any of
the
Collateral in excess of $100,000
or the
Collateral or any other of any Loan Party or any of its Subsidiaries' assets
are
attached, seized, levied upon or subjected to a writ or distress warrant; or
such come within the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors and the same is not cured within thirty (30) days
thereafter;
8.1.9 Notice
of
Lien or Assessment.
A
notice
of Lien or assessment in excess of $100,000
which is
not a Permitted Lien is filed of record with respect to all or any part of
any
Loan Party's or any of its Subsidiaries' assets by the United States, or any
department, agency or instrumentality thereof, or by any state, county,
municipal or other governmental agency, including the PBGC, or any taxes or
debts owing at any time or times hereafter to any one of these becomes payable
and the same is not paid within thirty (30) days after the same becomes
payable;
8.1.10 Insolvency.
Any
Loan
Party ceases to be solvent or becomes unable, admits in writing its inability
to, or fails to pay its debts as they mature;
8.1.11 Events
Relating to Plans and Benefit Arrangements.
Any
of
the following occurs: (i) any Reportable Event, which the Agent reasonably
determines constitutes grounds for the termination of any Plan by the PBGC
or
the appointment of a trustee to administer or liquidate any Plan, shall have
occurred and be continuing; (ii) proceedings shall have been instituted or
other
action taken to terminate any Plan, or a termination notice shall have been
filed with respect to any Plan; (iii) a trustee shall be appointed to administer
or liquidate any Plan; (iv) the PBGC shall give notice of its intent to
institute proceedings to terminate any Plan or Plans or to appoint a trustee
to
administer or liquidate any Plan; and, in the case of the occurrence of (i),
(ii), (iii) or (iv) above, the Agent reasonably determines that the amount
of
the Borrower's liability is likely to exceed 10% of their consolidated tangible
net worth (as determined according to GAAP); (v) the Borrower or any member
of
the ERISA Group shall fail to make any contributions when due to a Plan or
a
Multiemployer Plan; (vi) the Borrower or any other member of the ERISA Group
shall make any amendment to a Plan with respect to which security is required
under Section 307 of ERISA; (vii) the Borrower or any other member of the ERISA
Group shall withdraw completely or partially from a Multiemployer Plan; (viii)
the Borrower or any other member of the ERISA Group shall withdraw (or shall
be
deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer
Plan; or (ix) any applicable Law is adopted, changed or interpreted by any
Official Body with respect to or otherwise affecting one or more Plans,
Multiemployer Plans or Benefit Arrangements and, with respect to any of the
events specified in (v), (vi), (vii), (viii) or (ix), the Agent reasonably
determines that any such occurrence would be reasonably likely to affect the
total enterprise represented by the Borrower and the other members of the ERISA
Group in such a manner as to constitute a Material Adverse Change;
62
8.1.12 Cessation
of Business.
Any
Loan
Party ceases to conduct its business as contemplated by Section 7.2.10, except
as expressly permitted under Section 7.2.6 [Liquidations, Mergers, Etc.] or
7.2.7 [Dispositions of Assets], or any Loan Party is enjoined, restrained or
in
any way prevented by court order from conducting all or any part of its business
and such injunction, restraint or other preventive order is not dismissed within
thirty (30) days after the entry thereof;
8.1.13 Change
of
Control.
A. The
ownership of capital stock and debt instruments, or the capital structure of
IASG's Subsidiaries shall cease to be as set forth in Schedule
5.1.2;
B. IASG
shall cease to own 100% of the Shares of any Guarantor or any Subsidiary
Borrower, except in the case of Monital;
C. IASG
shall cease to own 99.2% of the Shares of Monital;
D. The
employment of XxXxxx or Few terminates, voluntarily or involuntarily, for any
reason, or materially changes.
8.1.14 Involuntary
Proceedings.
A
proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of any Loan Party
in an
involuntary case under any applicable bankruptcy, insolvency, reorganization
or
other similar law now or hereafter in effect, or for the appointment of a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or similar official) of any Loan Party for any substantial part of its
property, or for the winding-up or liquidation of its affairs, and such
proceeding shall remain undismissed or unstayed and in effect for a period
of
thirty (30) days or such court shall enter a decree or order granting any of
the
relief sought in such proceeding; or
8.1.15 Voluntary
Proceedings.
Any
Loan
Party shall commence a voluntary case under any applicable bankruptcy,
insolvency, reorganization or other similar law now or hereafter in effect,
shall consent to the entry of an order for relief in an involuntary case under
any such law, or shall consent to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator
(or other similar official) of itself or for any substantial part of its
property or shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall take any
action in furtherance of any of the foregoing.
63
8.2 |
Consequences
of Event of Default.
|
8.2.1 Events
of
Default Other Than Bankruptcy, Insolvency or Reorganization
Proceedings.
If
an
Event of Default specified under Sections 8.1.1 through 8.1.13 shall occur
and
be continuing, the Banks and the Agent shall be under no further obligation
to
make Loans, and the Agent may, and upon the request of a majority of the Banks
shall, by written notice to the Borrower, declare the entire unpaid principal
balance of the Notes then outstanding and all interest accrued thereon, any
unpaid fees and all other Indebtedness of the Borrower to the Banks hereunder
and thereunder to be forthwith due and payable, and the same shall thereupon
become and
be
immediately due and payable to the Agent for the benefit of each Bank without
presentment, demand, protest or any other notice of any kind, all of which
are
hereby expressly waived.
8.2.2 Bankruptcy,
Insolvency or Reorganization Proceedings.
If
an
Event of Default specified under Section 8.1.14 [Involuntary Proceedings] or
8.1.15 [Voluntary Proceedings] shall occur, the Banks shall be under no further
obligations to make Loans hereunder and the unpaid principal balance of the
Loans then outstanding and all interest accrued thereon, any unpaid fees and
all
other Indebtedness of the Borrower to the Banks hereunder and thereunder shall
be immediately due and payable, without presentment, demand, protest or notice
of any kind, all of which are hereby expressly waived; and
8.2.3 Set-off.
If
an
Event of Default shall occur and be continuing, any Bank to whom any Obligation
is owed by the Loan Parties hereunder or under any other Loan Document or any
participant of such Bank which has agreed in writing to be bound by the
provisions of Section 9.13 [Equalization of Banks] and any branch, Subsidiary,
assignee or Affiliate of such Bank or participant anywhere in the world shall
have the right, in addition to all other rights and remedies available to it,
without notice to such Loan Party, to set-off against and apply to the then
unpaid balance of all the Loans and all other Obligations of the Borrower
hereunder or under any other Loan Document any debt owing to, and any other
funds held in any manner for the account of, any Loan Party by such Bank or
participant or by such branch, Subsidiary, assignee or Affiliate, including
all
funds in all deposit accounts (whether time or demand, general or special,
provisionally credited or finally credited, or otherwise) now or hereafter
maintained by any or such other Loan Party for its own account (but not
including funds held in custodian or trust accounts) with such Bank or
participant or such branch, Subsidiary, assignee or Affiliate. Such right shall
exist whether or not any Bank or the Agent shall have made any demand under
this
Agreement or any other Loan Document, whether or not such debt owing to or
funds
held for the account of any Loan Party is or are matured or unmatured and
regardless of the existence or adequacy of any Collateral, Guaranty or any
other
security, right or remedy available to any Bank or the Agent; and
64
8.2.4 Suits,
Actions, Proceedings.
If
an
Event of Default shall occur and be continuing, and whether or not the Agent
shall have accelerated the maturity of Loans pursuant to any of the foregoing
provisions of this Section 8.2, the Agent or any Bank, if owed any amount with
respect to the Loans, may proceed to protect and enforce its rights by suit
in
equity, action at law and/or other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Agreement
or
the other Loan Documents and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of the Agent or such Bank; and
8.2.5 Application
of Proceeds.
From
and
after the date on which the Agent has taken any action pursuant to this Section
8.2 and until all Obligations of the Loan Parties have been paid in full, any
and all proceeds received by the Agent or any Bank from any sale or other
disposition of the Collateral, or any part thereof, or the exercise of any
other
remedy by the Agent, shall be applied as follows:
(i) first,
to
reimburse the Agent and the Banks for reasonable out-of-pocket costs, expenses
and disbursements, including reasonable attorneys' and paralegals' fees and
legal expenses, incurred by the Agent or the Banks in connection with realizing
on the Collateral or collection of any Obligations of the Loan Parties under
any
of the Loan Documents, including advances made by the Banks or any one of them
or the Agent for the reasonable maintenance, preservation, protection or
enforcement of, or realization upon, the Collateral, including advances for
taxes, insurance, repairs and the like and reasonable expenses incurred to
sell
or otherwise realize on, or prepare for sale or other realization on, any of
the
Collateral;
(ii) second,
to the repayment of all Indebtedness then due and unpaid of the Loan Parties
to
the Banks incurred under this Agreement or any of the other Loan Documents,
whether of principal, interest, fees, expenses or otherwise, in such manner
as
the Agent may determine in its sole discretion; and
(iii) the
balance, if any, as required by Law.
8.2.6 Rights
with Respect to Collateral Assignment of Telephone Numbers.
The
Agent
agrees that it shall only be able to exercise its rights under this Section
8
with respect to the Collateral Assignment of Telephone Numbers if an Event
of
Default shall have occurred and be continuing.
8.2.7 Other
Rights and Remedies.
In
addition to all of the rights and remedies contained in this Agreement or in
any
of the other Loan Documents, the Agent shall have all of the rights and remedies
of a secured party under the Uniform Commercial Code or other applicable Law,
all of which rights and remedies shall be cumulative and non-exclusive, to
the
extent permitted by Law. The Agent may, and upon the request of the Required
Banks shall, exercise all post-default rights granted to the Agent and the
Banks
under the Loan Documents or applicable Law.
65
8.3 |
Notice
of Sale.
|
Any
notice required to be given by the Agent of a sale, lease, or other disposition
of the Collateral or any other intended action by the Agent, if given ten (10)
days prior to such proposed action, shall constitute commercially reasonable
and
fair notice thereof to the Borrower.
8.4 |
Notice
of Default.
|
The
Agent
and the Banks shall not be deemed to have knowledge or notice of the occurrence
of any Potential Default or Event of Default unless the Agent has received
written notice from the Borrower referring to this Agreement, describing such
Potential Default or Event of Default and stating that such notice is a "notice
of default."
9. |
THE
AGENT
|
9.1 |
Appointment.
|
Each
Bank
hereby irrevocably designates, appoints and authorizes LaSalle Bank to act
as
Agent for such Bank under this Agreement and to execute and deliver or accept
on
behalf of each of the Banks the other Loan Documents. Each Bank hereby
irrevocably authorizes, and each holder of any Note by the acceptance of a
Note
shall be deemed irrevocably to authorize, the Agent to take such action on
its
behalf under the provisions of this Agreement and the other Loan Documents
and
any other instruments and agreements referred to herein, and to exercise such
powers and to perform such duties hereunder as are specifically delegated to
or
required of the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto. LaSalle Bank agrees to act as the Agent on behalf
of the Banks to the extent provided in this Agreement.
9.2 |
Delegation
of Duties.
|
The
Agent
may perform any of its duties hereunder by or through agents or employees
(provided such delegation does not constitute a relinquishment of its duties
as
Agent) and, subject to Sections 9.5 [Reimbursement of Agent by the Borrower,
Etc.] and 9.6 [Exculpatory Provisions, Etc.], shall be entitled to engage and
pay for the advice or services of any attorneys, accountants or other experts
concerning all matters pertaining to its duties hereunder and to rely upon
any
advice so obtained.
9.3 |
Nature
of Duties; Independent Credit
Investigation.
|
The
Agent
shall have no duties or responsibilities except those expressly set forth in
this Agreement and no implied covenants, functions, responsibilities, duties,
obligations, or liabilities shall be read into this Agreement or otherwise
exist
except as otherwise provided for under applicable law. The duties of the Agent
shall be mechanical and administrative in nature; the Agent shall not have
by
reason of this Agreement a fiduciary or trust relationship in respect of any
Bank; and nothing in this Agreement, expressed or implied, is intended to or
shall be so construed as to impose upon the Agent any obligations in respect
of
this Agreement except as expressly set forth herein. Without limiting the
generality of the foregoing, the use of the term "agent" in this Agreement
with
reference to the Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable Law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative
66
relationship
between independent contracting parties. Each Bank expressly acknowledges (i)
that the Agent has not made any representations or warranties to it and that
no
act by the Agent hereafter taken, including any review of the affairs of the
Loan Parties, shall be deemed to constitute any representation or warranty
by
the Agent to any Bank; (ii) that it has made and will continue to make, without
reliance upon the Agent, its own independent investigation of the financial
condition and affairs and its own appraisal of the creditworthiness of the
Loan
Parties in connection with this Agreement and the making and continuance of
the
Loans hereunder; and (iii) except as expressly provided herein, that the Agent
shall have no duty or responsibility, either initially or on a continuing basis,
to provide any Bank with any credit or other information with respect thereto,
whether coming into its possession before the making of any Loan or at any
time
or times thereafter.
9.4 |
Actions
in Discretion of Agent; Instructions From the
Banks.
|
9.5 |
Reimbursement
and Indemnification of Agent by the
Borrower.
|
The
Borrower unconditionally agrees to pay or reimburse the Agent and hold the
Agent
harmless against (i) liability for the payment of all reasonable out-of-pocket
costs, expenses and disbursements, including fees and expenses of counsel
(including the allocated costs of staff counsel), appraisers and environmental
consultants, incurred by the Agent (a) in connection with the development,
negotiation, preparation, printing, execution, administration, syndication,
interpretation and performance of this Agreement and the other Loan Documents,
(b) relating to any requested amendments, waivers or consents pursuant to the
provisions hereof, (c) in connection with the enforcement of this Agreement
or
any other Loan Document or collection of amounts due hereunder or thereunder
or
the proof and allowability of any claim arising under this Agreement or any
other Loan Document, whether in bankruptcy or receivership proceedings or
otherwise and (d) in any workout or restructuring or in connection with the
protection, preservation, exercise or enforcement of any of the terms hereof
or
of any rights hereunder or under any other Loan Document or in connection with
any foreclosure, collection or bankruptcy proceedings and (ii) all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by or asserted against the Agent, in its capacity as such, in
any
way relating to or arising out of this Agreement or any other Loan Documents
or
any action taken or omitted by the Agent hereunder or thereunder, provided
that
the Borrower shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements if the same results from the Agent's gross
negligence or willful misconduct. In addition, the Borrower agrees to reimburse
and pay all reasonable out-of-pocket expenses of the Agent's regular employees
and agents engaged periodically to perform audits of the Loan Parties' books,
records and business properties.
67
9.6 |
Exculpatory
Provisions; Limitation of
Liability.
|
Neither
the Agent nor any of its directors, officers, employees, agents, attorneys
or
Affiliates shall (i) be liable to any Bank for any action taken or omitted
to be
taken by it or them hereunder, or in connection herewith including pursuant
to
any Loan Document, unless caused by its or their own gross negligence or willful
misconduct, (ii) be responsible in any manner to any of the Banks for the
effectiveness, enforceability, genuineness, validity or the due execution of
this Agreement or any other Loan Documents or for any recital, representation,
warranty, document, certificate, report or statement herein or made or furnished
under or in connection with this Agreement or any other Loan Documents, or
(iii)
be under any obligation to any of the Banks to ascertain or to inquire as to
the
performance or observance of any of the terms, covenants or conditions hereof
or
thereof on the part of the Loan Parties, or the financial condition of the
Loan
Parties, or the existence or possible existence of any Event of Default or
Potential Default. No claim may be made by any Loan Party, any Bank, the Agent
or any of their respective Subsidiaries against the Agent, any Bank or any
of
their respective directors, officers, employees, agents, attorneys or
Affiliates, or any of them, for any special, indirect or consequential damages
or, to the fullest extent permitted by Law, for any punitive damages in respect
of any claim or cause of action (whether based on contract, tort, statutory
liability, or any other ground) based on, arising out of or related to any
Loan
Document or the transactions contemplated hereby or any act, omission or event
occurring in connection therewith, including the negotiation, documentation,
administration or collection of the Loans, and the Loan Parties, the Agent
and
each Bank hereby waive, release and agree never to xxx upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether
or
not it is now known or suspected to exist in its favor. Each Bank agrees that,
except for notices, reports and other documents expressly required to be
furnished to the Banks by the Agent hereunder or given to the Agent for the
account of or with copies for the Banks, the Agent and each of its directors,
officers, employees, agents, attorneys or Affiliates shall not have any duty
or
responsibility to provide any Bank with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Loan Parties which may come
into the possession of the Agent or any of its directors, officers, employees,
agents, attorneys or Affiliates.
9.7 |
Reimbursement
and Indemnification of Agent by
Banks.
|
Each
Bank
agrees to reimburse and indemnify the Agent (to the extent not reimbursed by
the
Borrower and without limiting the Obligation of the Borrower to do so) in
proportion to its Ratable Share from and against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements, including attorneys' fees and disbursements (including the
allocated costs of staff counsel), and costs of appraisers and environmental
consultants, of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent, in its capacity as such, in any way relating
to or arising out of this Agreement or any other Loan Documents or any action
taken or omitted by the Agent hereunder
or thereunder, provided that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements if the same results from the Agent's gross
negligence or willful misconduct. In addition, each Bank agrees promptly upon
demand to reimburse the Agent (to the extent not reimbursed by the Borrower
and
without limiting the Obligation of Borrower to do so) in proportion to its
Ratable Share for all amounts due and payable by the Borrower to the Agent
in
connection with the Agent's periodic audit of the Loan Parties' books, records
and business properties.
68
9.8 |
Reliance
by Agent.
|
The
Agent
shall be entitled to rely upon any writing, telegram or teletype message,
resolution, notice, consent, certificate, letter, cablegram, statement, order
or
other document or conversation by telephone or otherwise believed by it to
be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon the advice and opinions of counsel and other professional
advisers selected by the Agent. The Agent shall be fully justified in failing
or
refusing to take any action hereunder unless it shall first be indemnified
to
its satisfaction by the Banks against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.
9.9 |
Notice
of Default.
|
The
Agent
shall not be deemed to have knowledge or notice of the occurrence of any
Potential Default or Event of Default unless the Agent has received written
notice from a Bank or the Borrower referring to this Agreement, describing
such
Potential Default or Event of Default and stating that such notice is a "notice
of default."
9.10 |
Notices.
|
The
Agent
shall promptly send to each Bank a copy of all notices received from the
Borrower pursuant to the provisions of this Agreement or the other Loan
Documents promptly upon receipt thereof.
9.11 |
Banks
in Their Individual Capacities; Agent in its Individual
Capacity.
|
With
respect to its Revolving Credit Commitment, the Revolving Credit Loans, and
any
other rights and powers given to it as a Bank hereunder or under any of the
other Loan Documents, the Agent shall have the same rights and powers hereunder
as any other Bank and may exercise the same as though it were not the Agent,
and
the term "Bank" and "Banks" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. LaSalle Bank and its Affiliates
and each of the Banks and their respective Affiliates may, without liability
to
account, except as prohibited herein, make loans to, issue letters of credit
for
the account of, acquire equity interests in, accept deposits from, discount
drafts for, act as trustee under indentures of, and generally engage in any
kind
of banking, trust, financial advisory, underwriting or other business with,
the
Loan Parties and their Affiliates, in the case of the Agent, as though it were
not acting as Agent hereunder and in the case of each Bank, as though such
Bank
were not a Bank hereunder, in each case
69
without
notice to or consent of the other Banks. The Banks acknowledge that, pursuant
to
such activities, the Agent or its Affiliates may (i) receive information
regarding the Loan Parties or any of its Subsidiaries or Affiliates (including
information that may be subject to confidentiality obligations in favor of
the
Loan Parties or such Subsidiary or Affiliate) and acknowledge that the Agent
shall be under no obligation to provide such information to them, and (ii)
accept fees and other consideration from the Loan Parties for services in
connection with this Agreement and otherwise without having to account for
the
same to the Banks.
9.12 |
Holders
of Notes.
|
The
Agent
may deem and treat any payee of any Note as the owner thereof for all purposes
hereof unless and until written notice of the assignment or transfer thereof
shall have been filed with the Agent. Any request, authority or consent of
any
Person who at the time of making such request or giving such authority or
consent is the holder of any Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of such Note or of any Note or Notes
issued in exchange therefor.
9.13 |
Equalization
of Banks.
|
The
Banks
and the holders of any participations in any Notes agree among themselves that,
with respect to all amounts received by any Bank or any such holder for
application on any Obligation hereunder or under any Note or under any such
participation, whether received by voluntary payment, by realization upon
security, by the exercise of the right of set-off or banker's lien, by
counterclaim or by any other non-pro rata source, equitable adjustment will
be
made in the manner stated in the following sentence so that, in effect, all
such
excess amounts will be shared ratably among the Banks and such holders in
proportion to their interests in payments under the Notes, except as otherwise
provided in Section 3.4.3 [Agent's and Bank's Rights], 4.4.2 [Replacement of
a
Bank] or 4.6 [Additional Compensation in Certain Circumstances]. The Banks
or
any such holder receiving any such amount shall purchase for cash from each
of
the other Banks an interest in such Bank's Loans in such amount as shall result
in a ratable participation by the Banks and each such holder in the aggregate
unpaid amount under the Notes, provided that if all or any portion of such
excess amount is thereafter recovered from the Bank or the holder making such
purchase, such purchase shall be rescinded and the purchase price restored
to
the extent of such recovery, together with interest or other amounts, if any,
required by law (including court order) to be paid by the Bank or the holder
making such purchase.
9.14 |
Successor
Agent.
|
The
Agent
may resign as Agent by giving not less than thirty (30) days' prior written
notice to the Banks and the Borrower. If the Agent shall resign under this
Agreement, then either (i) the Required Banks shall appoint from among the
Banks
a successor agent for the Banks, subject to the consent of the Borrower, such
consent not to be unreasonably withheld, or (ii) if a successor agent shall
not
be so appointed and approved within the thirty (30) day period following the
Agent's notice to the Banks of its resignation, then the Agent shall appoint,
with the consent of the Borrower, such consent not to be unreasonably withheld,
a successor agent who shall serve as Agent until such time as the
70
9.15 |
Agent's
Fees.
|
In
the
event of a syndication of the Loan, the Borrower shall pay to the Agent a
nonrefundable fee and a periodic agent fee under and in accordance with the
terms of a mutually agreeable letter (the "Agent's Letter") between the Borrower
and the Agent, as amended from time to time.
9.16 |
Availability
of Funds.
|
The
Agent
may assume that each Bank has made or will make the proceeds of a Loan available
to the Agent unless the Agent shall have been notified by such Bank on or before
the later of (1) the close of Business on the Business Day preceding the
Borrowing Date with respect to such Loan or (2) two (2) hours before the time
on
which the Agent actually funds the proceeds of such Loan to the Borrower
(whether using their own funds pursuant to this Section 9.16 or using proceeds
deposited with the Agent by the Banks and whether such funding occurs before
or
after the time on which Banks are required to deposit the proceeds of such
Loan
with the Agent). The Agent may, in reliance upon such assumption (but shall
not
be required to), make available to the Borrower a corresponding amount. If
such
corresponding amount is not in fact made available to the Agent by such Bank,
the Agent shall be entitled to recover such amount on demand from such Bank
(or,
if such Bank fails to pay such amount forthwith upon such demand from the
Borrower) together with interest thereon, in respect of each day during the
period commencing on the date such amount was made available to the Borrower
and
ending on the date the Agent recovers such amount, at a rate per annum equal
to
(i) the Federal Funds Effective Rate during the first three (3) days after
such
interest shall begin to accrue and (ii) the applicable interest rate in respect
of such Loan after the end of such three-day period.
9.17 |
Calculations.
|
In
the
absence of gross negligence or willful misconduct, the Agent shall not be liable
for any error in computing the amount payable to any Bank whether in respect
of
the Loans, fees or any other amounts due to the Banks under this Agreement.
In
the event an error in computing any amount payable to any Bank is made, the
Agent, the Borrower and each affected Bank shall, forthwith upon discovery
of
such error, make such adjustments as shall be required to correct such error,
and any compensation therefor will be calculated at the Federal Funds Effective
Rate.
71
9.18 |
Beneficiaries.
|
Except
as
expressly provided herein or as required by applicable law, the provisions
of
this Section 9 are solely for the benefit of the Agent and the Banks, and the
Loan Parties shall not have any rights to rely on or enforce any of the
provisions hereof. In performing its functions and duties under this Agreement,
the Agent shall act solely as agent of the Banks and does not assume and shall
not be deemed to have assumed any obligation toward or relationship of agency
or
trust with or for any of the Loan Parties.
9.19 |
Addition
of Additional Banks.
|
The
terms
of this Section 9 shall apply in the event any financial institutions are added
to this Agreement as a Bank. Notwithstanding anything contained herein to the
contrary, Agent shall have no obligation to permit such addition or to seek
or
obtain Additional Banks by syndication, participation, assignment or otherwise.
Moreover, in the event Agent agrees with Borrowers to assist in the procurement
of Additional Banks with respect to the Loans or any increase in the Loans,
Agent's obligation shall be limited to exercising its reasonable efforts to
identify and add Additional Banks hereto pursuant to terms and conditions
substantially in the form of the Bank Addition Agreement; nothing contained
in
this Section 9.19 shall be construed as a commitment or representation by Agent
that Additional Banks can reasonably be added as a Bank hereunder. Any financial
institution added as a Bank hereunder must execute a Bank Addition Agreement
and
shall be bound by all the terms of such Bank Addition Agreement as well as
all
of the terms hereof, and any Borrower's obligations hereunder to the Bank shall
inure to the benefit of any such Additional Banks. Any assignment shall be
in
the minimum of [$5,000,000.00] and shall be subject to the consent of the Agent
and assigning Bank, in their sole and absolute discretion, and the consent
of
the Borrower, which consent shall not be unreasonably withheld. Each such
Additional Bank shall only have voting rights with respect to (i) a decrease
in
fees, interest rate spreads or principal, (ii) an increase in the Commitments
only if such Additional Bank's commitment is increased, (iii) an extension
in
the Expiration Date or (iv) any release of a Guarantor or a release of all
or
substantially all of the Collateral. Upon the consummation of an assignment,
the
assigning Bank shall pay a fee of $3,500.00 to the Agent.
9.20 |
Borrower
Cooperation.
|
Each
Borrower agrees in connection with any syndication, sale or assignment by Agent
or other Bank to assist and cooperate with Agent and any such Bank in any manner
reasonably requested by Agent or such Bank to effect such syndication or any
such sale of a participation or an assignment, including without limitation
assistance in the preparation of appropriate disclosure documents.
72
10. |
MISCELLANEOUS
|
10.1 |
Modifications,
Amendments or Waivers.
|
The
Agent, acting on behalf of all the Banks, and the Loan Parties, may from time
to
time enter into written agreements amending or changing any provision of this
Agreement or any
other
Loan Document or the rights of the Banks or the Loan Parties hereunder or
thereunder, or may grant written waivers or consents to a departure from the
due
performance of the Obligations of the Loan Parties hereunder or thereunder.
Any
such agreement, waiver or consent made with such written consent shall be
effective to bind all the Banks and the Loan Parties; provided, that, without
the written consent of all the Banks, no such agreement, waiver or consent
may
be made which will:
10.1.1 Increase
of Commitment; Extension of Expiration Date.
Increase
the amount of the Revolving Credit Commitment of any Bank hereunder or extend
the Expiration Date;
10.1.2 Extension
of Payment; Reduction of Principal, Interest or Fees; Modification of Terms
of
Payment.
Whether
or not any Loans are outstanding, extend the time for payment of principal
or
interest of any Loan, the Facility Fee or any other fee payable to any Bank,
or
reduce the principal amount of or the rate of interest borne by any Loan or
reduce the Facility Fee or any other fee payable to any Bank, or otherwise
affect the terms of payment of the principal of or interest of any Loan, the
Facility Fee or any other fee payable to any Bank (it being understood that
a
waiver of the application of the default rate of interest pursuant to Section
3.3 shall require only the approval of the Required Banks);
10.1.3 Release
of Collateral.
Except
for sales of assets permitted by Section 7.2.7 [Dispositions of Assets or
Subsidiaries], or as a result of any merger or consolidation permitted by
Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], release
any
Collateral consisting of capital stock or other ownership interests of any
Borrower or any Subsidiary or substantially all of the assets of any Loan Party,
or any other security for any of the Loan Parties' Obligations; or
10.1.4 Miscellaneous.
Amend
Section 4.2 [Pro Rata Treatment of Banks], 7.2.7 [Dispositions of Assets or
Subsidiaries], 7.2.18 [Availability Requirement], 9.6 [Exculpatory Provisions,
Etc.] or 9.13 [Equalization of Banks] or this Section 10.1, alter any provision
regarding the pro rata treatment of the Banks, change the definition of Required
Banks, or change any requirement providing for the Banks or the Required Banks
to authorize the taking of any action hereunder;
provided,
further, that no agreement, waiver or consent which would modify the interests,
rights or obligations of the Agent in its capacity as Agent shall be effective
without the written consent of the Agent.
73
10.2 |
No
Implied Waivers; Cumulative Remedies; Writing
Required.
|
No
course
of dealing and no delay or failure of the Agent or any Bank in exercising any
right, power, remedy or privilege under this Agreement or any other Loan
Document shall affect any other or future exercise thereof or operate as a
waiver thereof, nor shall
any
single or partial exercise thereof or any abandonment or discontinuance of
steps
to enforce such a right, power, remedy or privilege preclude any further
exercise thereof or of any other right, power, remedy or privilege. The rights
and remedies of the Agent and the Banks under this Agreement and any other
Loan
Documents are cumulative and not exclusive of any rights or remedies which
they
would otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of any Bank of any breach or default under this Agreement
or any such waiver of any provision or condition of this Agreement must be
in
writing and shall be effective only to the extent specifically set forth in
such
writing.
10.3 |
Reimbursement
and Indemnification of Banks by the Borrower;
Taxes.
|
The
Borrower agrees unconditionally upon demand to pay or reimburse to each Bank
(other than the Agent, as to which the Borrower's Obligations are set forth
in
Section 9.5 [Reimbursement and Indemnification of Agent By the Borrower.])
and
to indemnify and save such Bank harmless against all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against such Bank, in its capacity as such, in any way relating
to or arising out of this Agreement or any other Loan Documents or any action
taken or omitted by such Bank hereunder or thereunder, provided that the
Borrower shall not be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements if the same results from such Bank's gross negligence or willful
misconduct. The Banks will attempt to minimize the fees and expenses of legal
counsel for the Banks which are subject to reimbursement by the Borrower
hereunder by considering the usage of one law firm to represent the Banks and
the Agent if appropriate under the circumstances. The Borrower agrees
unconditionally to indemnify and pay all stamp, document, transfer, recording
or
filing taxes or fees and similar impositions now or hereafter determined by
the
Agent or any Bank to be payable in connection with this Agreement or any other
Loan Document, and the Borrower agrees unconditionally to indemnify and save
the
Agent and the Banks harmless from and against any and all present or future
claims, liabilities or losses with respect to or resulting from any omission
to
pay or delay in paying any such taxes, fees or impositions.
10.4 |
Holidays.
|
Whenever
payment of a Loan to be made or taken hereunder shall be due on a day which
is
not a Business Day, such payment shall be due on the next Business Day and
such
extension of time shall be included in computing interest and fees, except
that
the Loans shall be due on the Business Day preceding the Expiration Date if
the
Expiration Date is not a Business Day. Whenever any payment or action to be
made
or taken hereunder (other than payment of the Loans) shall be stated to be
due
on a day which is not a Business Day, such payment or action shall be made
or
taken on the next following Business Day (except as provided in Section 3.2
[Interest Periods] with respect to Interest Periods under the LIBOR Rate
Option), and such extension of time shall be included in computing interest
or
fees, if any, in connection with such payment or action.
74
10.5 |
Funding
by Branch, Subsidiary or Affiliate.
|
10.5.1 Notional
Funding.
Each
Bank
shall have the right from time to time, without notice to the Borrower, to
deem
any branch, Subsidiary or Affiliate (which for the purposes of this Section
10.5
shall mean any corporation or association which is directly or indirectly
controlled by or is under direct or indirect common control with any corporation
or association which directly or indirectly controls such Bank) of such Bank
to
have made, maintained or funded any Loan to which the LIBOR Rate Option applies
at any time, provided that immediately following (on the assumption that a
payment were then due from the Borrower to such other office), and as a result
of such change, the Borrower would not be under any greater financial obligation
pursuant to Section 4.6 [Additional Compensation in Certain Circumstances]
than
it would have been in the absence of such change. Notional funding offices
may
be selected by each Bank without regard to such Bank's actual methods of making,
maintaining or funding the Loans or any sources of funding actually used by
or
available to such Bank.
10.5.2 Actual
Funding.
Each
Bank
shall have the right from time to time to make or maintain any Loan by arranging
for a branch, Subsidiary or Affiliate of such Bank to make or maintain such
Loan
subject to the last sentence of this Section 10.5.2. If any Bank causes a
branch, Subsidiary or Affiliate to make or maintain any part of the Loans
hereunder, all terms and conditions of this Agreement shall, except where the
context clearly requires otherwise, be applicable to such part of the Loans
to
the same extent as if such Loans were made or maintained by such Bank, but
in no
event shall any Bank's use of such a branch, Subsidiary or Affiliate to make
or
maintain any part of the Loans hereunder cause such Bank or such branch,
Subsidiary or Affiliate to incur any cost or expenses payable by the Borrower
hereunder or require the Borrower to pay any other compensation to any Bank
(including any expenses incurred or payable pursuant to Section 4.6 [Additional
Compensation in Certain Circumstances]) which would otherwise not be
incurred.
10.6 |
Notices.
|
All
notices, requests, demands, directions and other communications (as used in
this
Section 10.6, collectively referred to as "notices") given to or made upon
any
party hereto under the provisions of this Agreement shall be by telephone or
in
writing (including facsimile communication) unless otherwise expressly permitted
hereunder and shall be delivered or sent by facsimile or via
nationally-recognized overnight courier, by hand or U.S. mail to the respective
parties at the addresses and numbers set forth under their respective names
on
Schedule 1.1(B) hereof or in accordance with any subsequent unrevoked written
direction from any party to the others. All notices shall, except as otherwise
expressly herein provided, be effective (a) in the case of facsimile, when
received, (b) in the case of hand-delivered notice, when hand-delivered, (c)
in
the case of telephone, when telephoned, provided, however, that in order to
be
effective, telephonic notices must be confirmed in writing no later than the
next Business Day by letter or facsimile, (d) if given by
75
mail,
four (4) days after such communication is deposited in the mail with first-class
postage prepaid, return receipt requested, and (e) if given by any other means
(including by air courier), when delivered; provided, that notices to the Agent
shall not be effective until received. Any Bank giving any notice to any Loan
Party shall simultaneously send a copy thereof to the Agent, and the Agent
shall
promptly notify the other Banks of the receipt by it of any such
notice.
10.7 |
Severability.
|
The
provisions of this Agreement are intended to be severable. If any provision
of
this Agreement shall be held invalid or unenforceable in whole or in part in
any
jurisdiction, such provision shall, as to such jurisdiction, be ineffective
to
the extent of such invalidity or unenforceability without in any manner
affecting the validity or enforceability thereof in any other jurisdiction
or
the remaining provisions hereof in any jurisdiction.
10.8 |
Governing
Law.
|
This
Agreement shall be deemed to be a contract made within, and under the Laws
of,
the State of Illinois and for all purposes shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois
without regard to its conflict of laws principles.
10.9 |
Prior
Understanding.
|
This
Agreement and the other Loan Documents supersede all prior understandings and
agreements, whether written or oral, between the parties hereto and thereto
relating to the transactions provided for herein and therein, including any
prior confidentiality agreements and commitments.
10.10 |
Duration;
Survival.
|
All
representations and warranties of the Loan Parties contained herein or made
in
connection herewith shall survive the making of Loans and shall not be waived
by
the execution and delivery of this Agreement, any investigation by the Agent
or
the Banks, the making of Loans, or payment in full of the Loans. All covenants
and agreements of the Loan Parties contained in Sections 7.1 [Affirmative
Covenants], 7.2 [Negative Covenants] and 7.3 [Reporting Requirements] herein
shall continue in full force and effect from and after the date hereof so long
as the Borrower may borrow hereunder and until termination of the Commitments
and payment in full of the Loans. All covenants and agreements of the Borrower
contained herein relating to the payment of principal, interest, premiums,
additional compensation or expenses and indemnification, including those set
forth in the Notes, Section 4 [Payments] and Sections 9.5 [Reimbursement of
Agent by the Borrower, Etc.], 9.7 [Reimbursement of Agent by Banks, Etc.] and
10.3 [Reimbursement of Banks by the Borrower; Etc.], shall survive payment
in
full of the Loans and termination of the Commitments.
76
10.11 |
Successors
and Assigns.
|
(i)
This
Agreement shall be binding upon and shall inure to the benefit of the Banks,
the
Agent, the Loan Parties and their respective successors and assigns, except
that
the Loan
Parties may not assign or transfer any of their rights and Obligations hereunder
or any interest herein and any attested assignment or transfer in violation
of
this provision shall be deemed void. Each Bank may, at its own cost, make
assignments of or sell participations in all or any part of its Commitments
and
the Loans made by it to one or more banks or other entities, subject to the
consent of the Borrower and the Agent with respect to any assignee which is
not
a Bank or an Affiliate thereof, such consent not to be unreasonably withheld,
provided that (1) no consent of the Borrower shall be required (A) if an Event
of Default exists and is continuing, or (B) in the case of an assignment by
a
Bank to an Affiliate of such Bank, and (2) any assignment by a Bank to a Person
other than an Affiliate of such Bank may not be made in amounts less than the
lesser of $5,000,000
or the
amount of the assigning Bank's Commitment. In the case of an assignment, upon
receipt by the Agent of the Assignment and Assumption Agreement, the assignee
shall have, to the extent of such assignment (unless otherwise provided
therein), the same rights, benefits and obligations as it would have if it
had
been a signatory Bank hereunder, the Commitments shall be adjusted accordingly,
and upon surrender of any Note subject to such assignment, the Borrower shall
execute and deliver a new Note to the assignee in an amount equal to the amount
of the Revolving Credit Commitment assumed by it and a new Note to the assigning
Bank in an amount equal to the Revolving Credit Commitment retained by it
hereunder. Any Bank which assigns any or all of its Commitment or Loans to
a
Person other than an Affiliate of such Bank shall pay to the Agent a service
fee
in the amount of $5,000 for each assignment. In the case of a participation,
the
participant shall only have the rights specified in Section 8.2.3 [Set-off]
(the
participant's rights against such Bank in respect of such participation to
be
those set forth in the agreement executed by such Bank in favor of the
participant relating thereto and not to include any voting rights except with
respect to changes of the type referenced in Sections 10.1.1 [Increase of
Commitment, Etc.], 10.1.2 [Extension of Payment, Etc.], or 10.1.3 [Release
of
Collateral]), all of such Bank's obligations under this Agreement or any other
Loan Document shall remain unchanged, and all amounts payable by any Loan Party
hereunder or thereunder shall be determined as if such Bank had not sold such
participation.
(ii) Any
assignee or participant which is not incorporated under the Laws of the United
States of America or a state thereof shall deliver to the Borrower and the
Agent
the form of certificate described in Section 10.17 [Tax Withholding Clause]
relating to federal income tax withholding. Each Bank may furnish any publicly
available information concerning any Loan Party and any other information
concerning any Loan Party in the possession of such Bank from time to time
to
assignees and participants (including prospective assignees or participants),
provided that such assignees and participants agree to be bound by the
provisions of Section 10.12 [Confidentiality].
(iii) Notwithstanding
any other provision in this Agreement, any Bank may at any time pledge or grant
a security interest in all or any portion of its rights under this Agreement,
its Note and the other Loan Documents to any Federal Reserve Bank in accordance
with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14
without notice to or consent of the Borrower or the Agent. No such pledge or
grant of a security interest shall release the transferor Bank of its
obligations hereunder or under any other Loan Document.
77
10.12 |
Confidentiality.
|
10.12.1 General.
The
Agent
and the Banks each agree to keep confidential all information obtained from
the
Loan Parties or their Subsidiaries which is nonpublic and confidential or
proprietary in nature (including, without limitation, any information the
Borrower specifically designates as confidential, such as financial information
disclosed in Schedule 5.1.8(ii) hereof), except as provided below, and to use
such information only in connection with their respective capacities under
this
Agreement and for the purposes contemplated hereby. The Agent and the Banks
shall be permitted to disclose such information (i) to outside legal counsel,
accountants and other professional advisors who need to know such information
in
connection with the administration and enforcement of this Agreement, subject
to
agreement of such Persons to maintain the confidentiality subject to the
provisions of this Section 10.12.1, (ii) to assignees and participants as
contemplated by Section 10.11, and prospective assignees and participants
subject to agreement of such Persons to maintain the confidentiality subject
to
the provisions of this Section 10.12.1, (iii) to the extent requested by any
bank regulatory authority or as otherwise required by applicable Law or by
any
subpoena or similar legal process, or in connection with any investigation
or
proceeding arising out of the transactions contemplated by this Agreement,
(iv)
if it becomes publicly available other than as a result of a breach of this
Agreement or becomes available from a source not known to be subject to
confidentiality restrictions or (v) if the Loan Party whose confidential
information is disclosed shall have consented to such disclosure.
10.12.2 Sharing
Information With Affiliates of the Banks.
The
Loan
Parties acknowledge that from time to time financial advisory, investment
banking and other services may be offered or provided to the Borrower or one
or
more of its or their Affiliates (in connection with this Agreement or otherwise)
by any Bank or by one or more Subsidiaries or Affiliates of such Bank and,
effective upon any such Person's engagement or request for such service, each
Loan Party hereby authorizes each Bank to share any information delivered to
such Bank by the Loan Parties pursuant to this Agreement, or in connection
with
the decision of such Bank to enter into this Agreement, to any such Subsidiary
or Affiliate of such Bank, it being understood that any such Subsidiary or
affiliate of any Bank receiving such information shall be bound by the
provisions of Section 10.12.1 as if it were a Bank hereunder. Such authorization
shall survive the repayment of the Loans and other Obligations and the
termination of the Commitments.
10.13 |
Counterparts.
|
This
Agreement may be executed by different parties hereto on any number of separate
counterparts, each of which, when so executed and delivered, shall be deemed
to
be an original, and all such counterparts shall together constitute one and
the
same instrument.
78
10.14 |
Agent's
or Bank's Consent.
|
Whenever
the Agent's or any Bank's consent is required to be obtained under this
Agreement or any of the other Loan Documents as a condition to any action,
inaction, condition or event, the Agent and each Bank shall be authorized to
give or withhold such consent in its sole and absolute discretion and to
condition its consent upon the giving of additional collateral, the payment
of
money or any other matter.
10.15 |
Exceptions.
|
The
representations, warranties and covenants contained herein shall be independent
of each other, and no exception to any representation, warranty or covenant
shall be deemed to be an exception to any other representation, warranty or
covenant contained herein unless expressly provided, nor shall any such
exceptions be deemed to permit any action or omission that would be in
contravention of applicable Law.
10.16 |
CONSENT
TO FORUM; WAIVER OF JURY TRIAL.
|
EACH
LOAN
PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE
CIRCUIT COURT OF XXXX COUNTY, ILLINOIS AND THE UNITED STATES DISTRICT COURT
FOR
THE NORTHERN DISTRICT OF ILLINOIS, EASTERN DIVISION, AND WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
BE
MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE
ADDRESSES PROVIDED FOR IN SECTION 10.6 AND SERVICE SO MADE SHALL BE DEEMED
TO BE
COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY OBJECTION
TO
JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN
AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE.
EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT
PERMITTED BY LAW.
10.17 |
Tax
Withholding Clause.
|
Each
Bank
or assignee or participant of a Bank that is not incorporated under the Laws
of
the United States of America or a state thereof (and, upon the written request
of the Agent, each other Bank or assignee or participant of a Bank) agrees
that
it will deliver to each of the Borrower and the Agent two (2) duly completed
appropriate valid Withholding Certificates (as defined under "1.1441-1(c)(16)
of
the Income Tax Regulations ("Regulations")) certifying its status (i.e., U.S.
or
foreign person) and, if appropriate, making a claim of reduced, or exemption
from, U.S. withholding tax on the basis of an income tax treaty or an exemption
provided by the Internal Revenue Code. Such delivery may be made by electronic
transmission as described in "1.1441-1(e)(4)(iv) of the Regulations if the
Agent
establishes an electronic delivery system. The term "Withholding Certificate"
means a Form
79
W-9;
a
Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and
certifications as required under "1.1441-1(e)(3) of the Regulations; a statement
described in "1.871-14(c)(2)(v) of the Regulations; or any other certificates
under the Code or Regulations that certify or establish the status of a payee
or
beneficial owner as a U.S. or foreign person. Each Bank, assignee or participant
required to deliver to the Borrower and the Agent a valid Withholding
Certificate pursuant to the preceding sentence shall deliver such valid
Withholding Certificate as follows: (A) each Bank which is a party hereto on
the
Closing Date shall deliver such valid Withholding Certificate at least five
(5)
Business Days prior to the first date on which any interest or fees are payable
by the Borrower hereunder for the account of such Bank; (B) each assignee or
participant shall deliver such valid Withholding Certificate at least five
(5)
Business Days before the effective date of such assignment or participation
(unless the Agent in its sole discretion shall permit such assignee or
participant to deliver such Withholding Certificate less than five (5) Business
Days before such date in which case it shall be due on the date specified by
the
Agent). Each Bank, assignee or participant which so delivers a valid Withholding
Certificate further undertakes to deliver to each of the Borrower and the Agent
two (2) additional copies of such Withholding Certificate (or a successor form)
on or before the date that such Withholding Certificate expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent Withholding Certificate so delivered by it, and such amendments thereto
or extensions or renewals thereof as may be reasonably requested by the Borrower
or the Agent. Notwithstanding the submission of a Withholding Certificate
claiming a reduced rate of, or exemption from, United States withholding tax,
the Agent shall be entitled to withhold United States federal income taxes
at
the full 30% withholding rate if in its reasonable judgment it is required
to do
so under the due diligence requirements imposed upon a withholding agent under
"1.1441-7(b) of the Regulations. Further, the Agent is indemnified under
"1.1461-1(e) of the Regulations against any claims and demands of any Bank
or
assignee or participant of a Bank for the amount of any tax it deducts and
withholds in accordance with regulations under "1441 of the Internal Revenue
Code.
10.18 |
Joinder
of Borrowers and Guarantors.
|
Any
Subsidiary of the Borrower which is required to join this Agreement as a
Borrower pursuant to Section 7.2.9 [Subsidiaries, Partnerships and Joint
Ventures] and any Person permitted or required to be a Guarantor hereunder
shall
execute and deliver to the Agent (i) a Joinder in substantially the form
attached hereto as Exhibit
1.1(J)
or
Exhibit
1.1(G)
pursuant
to which it shall join as a Borrower or as a Guarantor respectively in each
of
the Loan Documents to which a Borrower and a Guarantor are a party; (ii)
documents in the forms described in Section 6.1 [First Loans] modified
as
appropriate to relate to such Subsidiary or new Guarantor; and (iii) documents
necessary to grant and perfect Prior Security Interests to the Agent for the
benefit of the Banks in all Collateral held by such Subsidiary or new Guarantor.
The Loan Parties shall deliver such Joinder and related documents to the Agent
within five (5) Business Days after the date of the filing of such Subsidiary's
or new Guarantor's articles of incorporation if such party is a newly-formed
corporation, the date of the filing of its certificate of limited partnership
if
it is a newly-formed limited partnership or the date of its organization if
it
is a newly-formed entity other than a limited partnership or corporation or
the
date of its acquisition by the Borrower if permitted.
80
10.19 |
Loan
Party Agency.
|
Each
Loan
Party hereby unconditionally and irrevocably agrees that IASG shall have the
right to take on behalf of such Loan Party any and all actions required to
be
taken by Loan Parties under this Agreement and each of the other Loan Documents
and such Loan Party hereby irrevocably makes, constitutes and appoints IASG
(and
any of IASG's officers, employees or agents, as designated by IASG) as its
true
and lawful attorney with power to execute such documents, instruments and
certificates and to take any and all actions required to be taken by of such
Loan Party under this Agreement or any other Loan Document. Such power, being
coupled with an interest, is irrevocable until all of the Obligations have
been
fully paid and performed, and the Commitments have terminated, all in accordance
with this Agreement and the other Loan Documents. Without limiting the
generality of the foregoing, each Loan Party hereby agrees that on behalf of
such Loan Party, IASG shall:
(a)
Deliver certificates and make certifications required to be delivered by or
on
behalf of the Loan Parties to the Agent including without limitation financial
certificates, compliance certificates, and such other certificates, information
and notices required to be delivered to the Agent under this Agreement or the
Loan Documents and otherwise provide information on behalf of the Loan
Parties;
(b)
Receive notices and communications from the Agent (it being agreed that notice
to IASG shall be deemed to be notice to all Loan Parties); and
(c)
Take
such other actions as any Loan Party may request on behalf of such Loan Party
under this Agreement.
Although
IASG is authorized and directed to take the foregoing actions on behalf of
each
Loan Party, notwithstanding the foregoing, nothing contained herein shall in
any
way release any Loan Party from the performance of its obligations under this
Agreement or under any other Loan Document, it being acknowledged and agreed
that the actions authorized to be taken by IASG hereunder are solely for the
purpose of administrative ease. Without limiting the foregoing, nothing herein
shall vitiate or be held contrary to any Loan Party's representations, express
or implied, or covenants or undertakings. The Agent shall be entitled to rely
exclusively (but is not required to rely exclusively) on IASG's authority to
act
in each instance without inquiry or investigation, and each of IASG and the
other Loan Parties hereby agrees to indemnify and hold harmless the Agent for
any losses, costs, delays, errors, claims, penalties or charges arising from
or
out of Loan Parties' actions pursuant to this Section 10.19 provided that the
Loan Parties shall not be liable for any losses, costs, delays, errors, claims,
penalties or charges if the same results from Agent's gross negligence or
willful misconduct. IASG, in the role described in this Section 10.19, is
sometimes referred to as "Loan Agent."
81
10.20 |
Entire
Agreement.
|
This
Agreement is an integrated document, contains the entire agreement between
the
parties and wholly cancels, terminates and supercedes any and all previous
and/or contemporaneous oral agreements, negotiations, commitments and writings
between the parties with
respect to the subject matter. No change, modification, extension, termination,
discharge, abandonment or waiver of this Agreement or any of its provisions,
nor
any representation, promise or condition relating to this Agreement will be
binding upon the parties unless made in writing and signed by each of the
parties hereto (or in the case of Loan Parties, by IASG as the agent for such
parties). The parties further agree that the prior drafts of this Agreement
will
not be used to interpret this Agreement and will not be admissible into evidence
at any time.
11. |
Nonsolicitation
and Nondisclosure
|
11.1 |
Nonsolicitation
and Nonacceptance.
|
If
any
Event of Default shall have occurred which results in the acceleration of any
of
the Loans by Agent, each Principal hereby agrees not to, for a period of
five
(5)
years
from the date of such acceleration, for themselves, as agent or employee, or
on
behalf of any person, association, partnership or corporation, either directly
or indirectly, solicit or attempt to obtain business from, accept business
from,
do business with or service or indirectly aid or assist anyone else in the
solicitation or acceptance of business from any of the then current customers
or
accounts of the Borrower included as part of the Collateral pursuant to the
Credit Agreement (hereinafter, the "Customers") for the purpose of providing
electronic security, monitoring of alarm security systems, guard, intercom,
central vacuum, home automation, home theater, audio systems or related services
or to provide financing for any of such activities or related contracts
(collectively, the "Services"). This provision applies both to the Customers
and
the residence or place of business occupied by such Customers. In the event
either Principal is contacted by such Customers, they will inform such Customers
that they cannot provide Services to such Customer. Each Principal agrees to
do
so in a polite manner and to refer such Customers to Agent or its assignee
with
a positive recommendation. In addition, each Principal agrees that he will
never
disparage the services, business or reputation of Agent or its assignee by
making false or misleading statements to another person. This Section 11, the
parties' obligations hereunder and the period referred to in this Section 11.1,
shall terminate upon the repayment in full of all of the
Obligations.
Notwithstanding
the foregoing, each Principal is permitted to have up to an aggregate 3% passive
ownership interest in a public company which solicits or accepts business from
any of the customers or accounts included in the Collateral.
11.2 |
Nondisclosure.
|
Each
Principal acknowledges that he possesses certain confidential, proprietary
and
trade secret information, materials and business concepts and know-how with
respect to the Collateral, including information regarding marketing, sales
volume, sales methods, sales proposals, products, services, vendors, customer
lists and files, and other confidential customer information (including current,
prospective and former customers), accounting data and methods, operating
procedures, pricing policies, strategic plans, intellectual property, customer
contracts and other agreements, manufacturer's warranties, information about
Borrowers' employees or other confidential or proprietary information belonging
to or related to Borrowers' affairs (collectively, the "Proprietary
Information"). If any Event of Default shall have occurred which results in
the
acceleration of any of the Loans by Agent, each Principal agrees: (a) never
to
82
publish,
copy, disclose, allow to be disclosed or use for his own benefit or for the
benefit of any other person, firm, corporation or entity, other than for the
benefit of the Borrowers, the Proprietary Information without the prior written
consent of Agent, which can be withheld in its sole discretion; and (b) to
maintain strictly the confidentiality of the Proprietary Information at all
times; provided, however, that Principal may disclose such Proprietary
Information to his and the Borrowers' attorneys, accountants, other advisors,
tax and governmental authorities who need to know such information to fulfill
their duties. Principals agree to take all necessary precautions to protect
the
Proprietary Information from unauthorized disclosure or use. Each Principal
acknowledges and agrees that in any proceeding to enforce this Agreement it
will
be presumed that the Proprietary Information constitutes protectable trade
secrets, and that the Principals will bear the burden of proving that any
portion of the Proprietary Information was publicly or rightfully known and
disclosed by such Principal. Upon the request of Agent, Principals agree to
execute and deliver to Agent an affidavit as to the complete and proper return
of all Proprietary Information.
11.3 |
Employees.
|
For
a
period of two
(2)
years
following the acceleration of any of the Loans by Agent, the Principals will
not, directly or indirectly, individually or through any other entity or
otherwise, without the prior written consent of Agent or its assignee, which
can
be withheld in its sole discretion, knowingly solicit the Loan Parties' then
current employees to engage in the security alarm business in any of the states
in which any Loan Party then conducts business or maintains an office or
facility for
an
employer other than the Loan Parties.
11.4 |
Acknowledgment.
|
Each
Principal acknowledges and recognizes that: (a) this Agreement is necessary
for the protection of the legitimate business interests of Agent in making
the
Loans contemplated by the Credit Agreement; (b) the execution and delivery
of this Agreement is a mandatory condition precedent to the closing of the
transactions contemplated by the Credit Agreement and the Loan Documents,
without which such transactions will not close; (c) the enforcement
of the
language contained in this Section 11 is unrelated to, independent from
and
unaffected by any dispute that may arise under the Credit Agreement or the
Loan
Documents; (d) the scope of the language contained in this Section 11
regarding duration and the level of activities restricted is reasonable;
(e) each Principal has no intention of violating this Agreement;
(f) the breach of the terms and provisions of this Section 11
will be
such that Agent will not have an adequate remedy at law because of the unique
nature of the Collateral and the Proprietary Information, and the confusion
to
customers and the public that a breach would create; and (g) such Principal
has a duty to inform his future employers of the restrictions imposed upon
him
by this Agreement, and in the event Agent has a reasonable belief that such
Principal is violating this Agreement, Agent will be entitled to contact such
Principal's employers to inform the employers of this Agreement and such
Principal's obligations under it.
11.5 |
Representations.
|
Each
Principal represents and warrants that: (a) he has the authority to
enter
into this Agreement and that, in doing so, he will not violate any agreement,
order or law; (b) there are
no
third-party consents required for him to enter into this Agreement which have
not been obtained and delivered to Agent; and (c) such Principal's
expertise and capabilities are such that his obligations under this Agreement
(and the enforcement thereof by injunction or otherwise) will not prevent him
from earning a livelihood.
83
11.6 |
Remedies.
|
Each
Principal acknowledges and agrees that the rights of Agent with respect to
the
terms and conditions contained in this Section are of a specialized and unique
character and that immediate and irreparable damage will result to Agent and
the
Collateral if such Principal fails to or refuses to perform his obligations
under this Agreement and, notwithstanding any election by Agent to claim damages
from such Principal as a result of any such failure or refusal, Agent may,
in
addition to any other remedies and damages available, seek an injunction in
a
court of competent jurisdiction, without the posting of a bond or other security
to restrain any such failure or refusal. Each Principal further acknowledges
that the obligations set forth in Sections 11.1 and 11.2 of this Agreement
will be extended by the length of time during which any Principal is in breach
of any of these obligations. These remedies are cumulative with all other
remedies provided by law or contract and will not preclude Agent from later
obtaining a judgment for money damages or specific acts against the breaching
Principal or otherwise affect any other remedies that Agent may have. The
exercise of any right or remedy will be without prejudice to the right to
exercise any other right or remedy provided in this Section 11, by law or in
equity. In any action by Agent to enforce its rights under this Section 11,
any
claims asserted by any Principal against Agent will not constitute a defense
to
Agent's enforcement action.
11.7 |
Severability.
|
If
any
provisions of this Section 11 as applied to any part or to any
circumstances are adjudged by a court of competent jurisdiction to be invalid
or
unenforceable, the same will in no way affect any other provisions of this
Agreement, the application of such provision in any other circumstances or
the
validity or enforceability of this Section of the Agreement. Agent and
Principals intend this Section to be enforced as written. If any provision
or
any part of it is held to be invalid or unenforceable because of its scope
or
duration, the parties agree that the court making such determination will have
the power to delete specific words or phrases and, in its modified form, such
provision will then be enforceable. The foregoing clause is not intended to
be
an admission or evidence that the scope or duration of this Section is
unreasonable.
11.8 |
Consent
to Jurisdiction, Service and Venue.
|
FOR
THE
PURPOSE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
SECTION, PRINCIPALS IRREVOCABLY CONSENT AND SUBMIT TO THE JURISDICTION AND
VENUE
OF ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING IN ILLINOIS.
Principals
agree that service of the summons and complaint and all other process which
may
be served in any such suit, action or proceeding may be effected by mailing
by
registered mail a copy of such process to Principal at the following
address:
84
Xxxxxxx
X. XxXxxx
00
Xxxx Xxxxx Xxxxx
Xxxxxxxxxxx,
XX 00000
|
Xxxxxx
X. Few
0
Xxxx Xxxxx
Xxxxxxx,
XX 00000
|
Each
Principal irrevocably waives any objections which they may now or hereafter
have
to the venue of any such suit, action or proceeding brought in such court and
any claim that such suit, action or proceeding brought in such court has been
brought in an inconvenient forum and agrees that service of process in
accordance with this Section will be deemed in every respect effective and
valid
personal service of process upon Principals. Nothing in this Section will be
construed to prohibit service of process by any other method permitted by law.
The provisions of this Section will not limit or otherwise affect the right
of
Agent to institute and conduct an action in any other appropriate manner,
jurisdiction or court. Each Principal agrees that final judgment in such suit,
action or proceeding will be conclusive and may be enforced in any other
jurisdiction by suit on the judgment or in any other manner provided by
law.
85
INTEGRATED
ALARM SERVICES GROUP,
INC.,
a
Delaware corporation,
as Borrower
|
|
|
By:
/s/
Xxxxxxx X. XxXxxx
|
Xxxxxxx
X. XxXxxx, Chairman
and CEO
|
|
|
CRITICOM
INTERNATIONAL CORPORATION,
a
New Jersey
corporation, as Borrower
|
|
|
By:
/s/
Xxxxxx X. Few, Sr.
|
Xxxxxx
X. Few, Sr., CEO
|
|
|
MONITAL
SIGNAL CORPORATION,
a New Jersey corporation, as Borrower
|
|
|
By:
/s/
Xxxxxx X. Few Sr.
|
Xxxxxx
X. Few, Sr., Chairman
and CEO
|
|
|
INTEGRATED
ALARM SERVICES, INC.,
a Delaware corporation, as Borrower
|
|
|
By:
/s/
Xxxxxxx X. XxXxxx
|
Xxxxxxx
X. XxXxxx, Chairman
and CEO
|
|
|
XXXXX
SECURITY GROUP, L.L.C.,
a New Jersey limited liability company, as
Borrower
|
|
|
By:
/s/
Xxxxxxx X. XxXxxx
|
Xxxxxxx
X. XxXxxx, Manager
|
86
|
|
AMERICAN
HOME SECURITY, INC.,
a Nevada corporation, as Borrower
|
|
|
By:
/s/
Xxxxxxx X. XxXxxx
|
Xxxxxxx
X. XxXxxx, Chairman
|
|
|
|
LASALLE
BANK NATIONAL ASSOCIATION,
individually as a Bank and as Agent
|
|
By:
/s/
Xxxxxxx Xxxxxxxxxx
|
Xxxxxxx
Xxxxxxxxxx, First
Vice President
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The
Principals hereby acknowledge agree to be bound the terms and obligations set
forth in Section 11 above
/s/
Xxxxxxx X. XxXxxx
Xxxxxxx
X. XxXxxx
/s/
Xxxxxx X. Few, Sr.
Xxxxxx
X.
Few, Sr.
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