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EXHIBIT 10.14
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 31, 1996, is among SECURITY
ASSOCIATES INTERNATIONAL, INC., a Delaware corporation ("SAI"), SECURITY
ASSOCIATES COMMAND CENTER II, L.L.C., a Michigan limited liability company
("SACC"), MONITOR SERVICE GROUP, L.L.C., a Delaware limited liability company
("MSG"), ALL-SECURITY MONITORING SERVICES, L.L.C., an Illinois limited
liability company ("ASMS"), and FINOVA CAPITAL CORPORATION, a Delaware
corporation ("FINOVA"), in its individual capacity and as agent for all Lenders
(this and all other capitalized terms used herein are defined in Section 1.1
below).
R E C I T A L S:
A. Borrowers desire to borrow up to a maximum of $15,000,000 from
FINOVA for the purpose of (i) paying the Existing Debt, (ii) consummating
Funded Acquisitions, (iii) paying transaction costs and (iv) providing working
capital.
B. FINOVA has agreed to make the Loan upon the terms and subject
to the conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in the
other Loan Instruments, unless otherwise expressly indicated herein or therein,
the following terms shall have the following meanings (such meanings to be
applicable equally to both the singular and plural forms of the terms defined):
Account Debtor: any Person who is obligated on or under an
Account Receivable.
Accountants: Xxxxxx Xxxxxxxx, L.L.P. or any other
independent certified public accounting firm selected by Borrowers
and reasonably satisfactory to Lenders.
Accounting Changes: has the meaning assigned to that term
in Section 1.3.
Accounts Receivable: all presently existing and hereafter
arising accounts receivable and other rights to payment owing to
any Borrower under Security Monitoring
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Contracts and/or Central Station Contracts.
Accounts Receivable Decrease: for any period, the excess
of the Eligible Accounts at the beginning of such period over the
Eligible Accounts at the end of such period.
Accounts Receivable Increase: for any period, the excess
of Eligible Accounts at the end of such period over the Eligible
Accounts at the beginning of such period.
Acquisition: the acquisition by of (i) Security Monitoring
Contracts by MSG or (ii) a Central Station Business by any
Borrower.
Acquisition Adjustment to Cash Flow: for any period in
which an Acquisition has occurred, an amount equal to the RMR of
the Property that is the subject of such Acquisition from the
beginning of such period until the date such Acquisition was
consummated, minus the aggregate of the pro forma expenses directly
and indirectly related to such RMR for such period, as determined
to the satisfaction of Agent based on financial and other
information submitted to Agent by Borrowers and subject to such
adjustments for such period as Agent deems appropriate.
Acquisition Closing: the consummation of a Funded
Acquisition.
Acquisition Closing Date: the date of an Acquisition
Closing.
Acquisition Instruments: the purchase agreement and
all other documents executed in connection with a Funded
Acquisition.
Acquisition Loan Instruments: collectively, the following
documents, as applicable, to be executed and delivered in
connection with a Funded Acquisition:
(i) any amendments to the Loan Instruments or any
mortgages, security agreements, UCC Financing
Statements and other agreements reasonably required
by Agent to (A) reflect the effect of such Funded
Acquisition and (B) grant to Agent a perfected
first Lien upon all Property acquired by any
Borrower pursuant to the applicable Acquisition
Instruments, subject only to Permitted Prior Liens;
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(ii) a Landlord Consent and Waiver executed by each
Landlord under each Lease assumed or executed by
any Borrower on such Acquisition Closing Date; and
(iii) such other instruments and documents as Agent may
reasonably require in connection with such Funded
Acquisition.
ADA: the Americans with Disabilities Act of 1990, as
amended, any successor statute thereto, and the rules and regulations
issued thereunder, as in effect from time to time.
Advance: a disbursement of the Future Portion.
Adjusted Annualized Operating Cash Flow: as of any date,
the Annualized Operating Cash Flow for the applicable period, plus the
Acquisition Adjustment to Cash Flow for the twelve month period ending
on such date.
Adjusted Leverage Ratio: as of any Funding Date, the ratio
of the Adjusted Total Debt as of such date to Adjusted Annualized
Operating Cash Flow for the period ending two months before such date.
Adjusted Total Debt: as of any applicable date, the Total
Debt as of such date plus the requested Advance.
Adjusted Operating Cash Flow: for any period for each
Borrower, the Operating Cash Flow of such Borrower for such period
plus the Acquisition Adjustment to Cash Flow for such period.
Affiliate: any Person that directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under
common control with another Person. The term "control" means
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of voting securities or equity interests, by contract or
otherwise. For the purposes hereof, any Person which owns or
controls, directly or indirectly, 10% or more of the securities or
equity interests, as applicable, whether voting or non-voting, of any
other Person shall be deemed to "control" such Person.
Agent: FINOVA, as agent for all Lenders.
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Alarm Licenses: a license or licenses issued by a state
licensing authority that authorize a Person to provide remote security
monitoring services to consumers and/or businesses within such state.
Annualized Operating Cash Flow: as of any applicable date,
the product of (i) the consolidated Operating Cash Flow of Borrowers
for the six month period ending on such date, multiplied by (ii) two.
Applicable Margin: as defined in subsection 2.4.1.
Applicable Margin Ratio: the ratio of Total Debt as of the
last day of any quarter to the consolidated Adjusted Operating Cash
Flow of Borrowers for the twelve month period ending on such day.
Applicable Ratio: on any day during a period set forth
below, the ratio set forth opposite such period:
Each Day During the Period Ratio
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Closing Date through 06/30/98 3.75
07/01/98 through 12/31/98 3.60
01/01/99 through 06/30/99 3.25
07/01/99 through 12/31/99 3.00
01/01/00 through 06/30/00 2.75
07/01/00 through 12/31/00 2.50
01/01/01 through 12/31/01 2.25
ASMS: has the meaning assigned to that term in the
Preamble to this Loan Agreement.
ASMS Membership Interests: all of the issued and
outstanding membership interests and options, warrants and other
rights to acquire membership interests of ASMS.
ASMS Membership Interest Pledge Agreement: a pledge
agreement with respect to the ASMS Membership Interests executed by
SAI and SACC, in form and substance satisfactory to Agent.
Assignee: any Person to which a Loan Assignment is made in
compliance with the provisions of subsection 9.1.1.
Assignments of Leases: collateral assignments of leases
executed by each Borrower in favor of Agent with respect to each Lease
under which such Borrower is the lessee, in each case in form and
substance satisfactory to Agent.
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Bankruptcy Code: the United States Bankruptcy Code and any
successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
Base Rate: the per annum rate of interest announced or
published publicly from time to time by Citibank, N.A. in New York,
New York as its corporate base (or equivalent) rate of interest, which
rate shall change automatically without notice and simultaneously with
each change in such corporate base rate. The Base Rate is a reference
rate and does not necessarily represent the lowest or best rate
actually charged to any customer by Citibank, N.A. in New York, New
York.
Basic Financial Statements: as defined in subsection
6.3.3.
Borrower: any of the Borrowers.
Borrowers: SAI, SACC, MSG, ASMS and each Permitted
Subsidiary.
Borrowers' Obligations: (i) any and all Indebtedness due
or to become due, now existing or hereafter arising, of each Borrower
to Lenders and/or Agent, including, without limitation, the Loan Fee,
pursuant to the terms of this Loan Agreement or any other Loan
Instrument and (ii) the performance of the covenants of Borrowers
contained in the Loan Instruments.
Xxxxxxx: Xxxxx X. Xxxxxxx.
Business Day: any day other than a Saturday, Sunday or
other day on which banks in Phoenix, Arizona are required to close.
Business Insurance: such property, casualty, business
interruption and other insurance, other than the Key Man Life
Insurance, as Agent from time to time reasonably requires Borrowers to
maintain.
Capital Expenditures: payments that are made or
liabilities that are incurred by any Borrower for the lease, purchase,
improvement, construction or use of any Property, the value or cost of
which under GAAP is required to be capitalized and appears on such
Borrower's balance sheet in the category of property, plant or
equipment, without regard to the manner in which such payments or the
instruments
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pursuant to which they are made are characterized by any Borrower or
any other Person. Except for the purpose of determining Excess Cash
Flow, a Capital Expenditure shall be deemed to be made as of the time
the Property which is the subject thereof is put into service by the
applicable Borrower.
Capital Stock: collectively, all of the issued and
outstanding capital stock, warrants, options and other equity
interests of SAI and each of the Holding Companies.
Capitalized Lease: any lease of Property, the obligations
for the rental of which are required to be capitalized in accordance
with GAAP.
Cash Equivalents: the aggregate of each Borrower's (i)
cash on hand or in any bank or trust company, and checks on hand and
in transit, (ii) monies on deposit in any money market account, and
(iii) treasury bills, certificates of deposit, commercial paper and
readily marketable securities at current market value having, in each
instance, a maturity of not more than 180 days.
Cash Instruments: all cash, checks, drafts and other
similar writings for the payment of money.
Central Station Business: the business of owning and
operating a central monitoring station, including but not limited to,
contracts between Dealers and SACC, ASMS or a Permitted Subsidiary.
Central Station Contracts: contracts with Dealers to
provide monitoring services to the customers of the Dealers.
Chief Financial Officer: the chief financial officer of
each Borrower, who shall be a duly elected officer, member or manager
of such Borrower.
Closing: the disbursement of the Initial Portion.
Closing Certificate: a closing certificate executed by
Borrowers in form and substance satisfactory to Agent.
Closing Date: the date of the Closing.
Code: the Internal Revenue Code of 1986, as amended, and
any successor statute thereto, and the rules and regulations issued
thereunder, as in effect from time to time.
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Collateral: (i) all existing and after-acquired Property
of Borrowers, including without limitation all existing and
after-acquired Accounts Receivable, equipment, inventory and general
intangibles, (ii) the Membership Interests and (iii) all proceeds of
the foregoing.
Compliance Certificate: a Compliance Certificate executed
by Borrowers in the form of EXHIBIT 1.1(A) attached hereto.
Contribution Agreement: a contribution agreement among
Borrowers with respect to Borrowers' Obligations, in form and
substance satisfactory to Agent.
Covenant Leverage Ratio: the ratio of Total Debt as of the
last day of any quarter to Adjusted Annualized Operating Cash Flow for
the period ending on such day.
Xxxxx: Xxxxxx Xxxxx.
Dealer: any Person whose primary business is the
installation of servicing alarm equipment and the sale of monitoring
services.
Dealer Holdback Debt: any Indebtedness for Borrowed Money
owed by MSG to Dealers in connection with the purchase of Security
Monitoring Contracts.
Dealer Holdback Report: the monthly report produced by
Borrowers which provides due dates and amounts owed to each Dealer to
whom a portion of the Dealer Holdback Debt is owed.
Debt Service: during any period, all payments of
principal, interest, premium, fees and other charges with respect to
Indebtedness for Borrowed Money, which payments are required or
permitted to be made pursuant to this Loan Agreement and are due and
payable during such period.
Debt Service Coverage Ratio: as of the end of any quarter,
the ratio of the consolidated Adjusted Operating Cash Flow of
Borrowers for the four quarter period ending as of such quarter to the
Debt Service for such four quarter period.
Default Rate: a per annum rate equal to the applicable
Base Rate in effect plus 4.0% per annum.
Default Rate Period: a period of time commencing on the
date that an Event of Default has occurred and ending on the date that
such Event of Default is cured or waived.
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Eligible Accounts: at any given time, the aggregate of the
face amount of the accounts receivable of each Borrower not over 75
days past due.
Employee Benefit Plan: any employee benefit plan within
the meaning of Section 3(3) of ERISA which (i) is maintained for
employees of any Borrower or any ERISA Affiliate or (ii) has at any
time within the preceding six years been maintained for the employees
of any Borrower or any current or former ERISA Affiliate.
Environmental Audit: (i) a Phase I audit report with
respect to a parcel of real estate and such other studies and reports
as Agent deems necessary after review of the results of such Phase I
audit report, including, if reasonably required by Agent, soil and
ground water tests, each such report and study to be in form and
content and issued by Persons reasonably acceptable to Agent and (ii)
a letter from each Person issuing each such report or study entitling
Lenders to rely thereon.
Environmental Certificate: an environmental certificate
executed by Borrowers in form and substance reasonably satisfactory to
Agent.
Environmental Compliance Certificate: an Environmental
Compliance Certificate in the form of EXHIBIT 1.1(B).
Environmental Laws: any and all federal, state and local
laws that relate to or impose liability or standards of conduct
concerning public or occupational health and safety or protection of
the environment, as now or hereafter in effect and as have been or
hereafter may be amended or reauthorized, including, without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C Section 9601 et seq.), the Hazardous Materials
Transportation Act (42 U.S.C. Section 1802 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.),
the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.), the
Clean Air Act (42 U.S.C. Section 7901 et seq.), the National
Environmental Policy Act (42 U.S.C. Section 4231, et seq.), the Refuse
Act (33 U.S.C. Section 407, et seq.), the Safe Drinking Water Act (42
U.S.C. Section 300(f) et seq.), the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.), and all rules, regulations, codes,
ordinances and guidance documents promulgated or published thereunder,
and the
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provisions of any licenses, permits, orders and decrees issued
pursuant to any of the foregoing.
ERISA: the Employee Retirement Income Security Act of
1974, as amended, any successor statute thereto, and the rules and
regulations issued thereunder, as in effect from time to time.
ERISA Affiliate: any Person who is a member of a group
which is under common control with any Borrower, who together with any
Borrower is treated as a single employer within the meaning of Section
414(b), (c) and (m) of the Code.
Event of Default: any of the Events of Default set forth
in Section 8.1.
Excess Cash Flow: for any period, (i) the consolidated
Operating Cash Flow of Borrowers for such period, (ii) plus, the
Accounts Receivable Decrease, if any, for such period and (iii) minus,
the sum of the following for such period: (A) Debt Service actually
paid during such period, (B) all Capital Expenditures made by
Borrowers during such period permitted pursuant to subsection 7.6, (C)
all expenditures made by Borrowers during such period for Non-Funded
Acquisitions and (D) the Accounts Receivable Increase, if any, for
such period.
Excess Interest: as defined in subsection 2.4.3.
Existing Debt: the Indebtedness described in EXHIBIT
1.1(C).
Funded Acquisition: an Acquisition that is funded with an
Advance.
Funding Date: the date of the disbursement of an Advance.
Future Portion: a portion of the Loan in an aggregate
amount not to exceed $7,696,000.
Future Portion Closing: the disbursement of any portion of
the Future Portion.
Future Portion Closing Date: the date of any Future
Portion Closing.
GAAP: generally accepted accounting principles as in
effect from time to time, which shall include but shall not
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be limited to the official interpretations thereof by the Financial
Accounting Standards Board or any successor thereto.
Good Funds: United States Dollars available in Federal
funds to (i) FINOVA at or before 2:00 p.m., Phoenix time, on a
Business Day and (ii) any other Lender at the place and at or before
the time designated in the written direction delivered by such Lender
to Borrowers pursuant to clause (ii) of Section 2.11.2.
Governmental Body: any foreign, federal, state, municipal
or other government or any department, commission, board, bureau,
agency, public authority or instrumentality thereof or any court or
arbitrator.
Hazardous Materials: any hazardous, toxic, dangerous or
other waste, substance or material defined as such in, regulated by or
for purposes of any Environmental Law.
Holding Companies: collectively, RMR Management Corp.,
Winnetka Investors, Inc. and MCAP Investors, Inc., each a Delaware
corporation.
Hurdle Amount: the monthly estimate of Borrowers' accrued
interest on the Principal Balance, as determined by Agent in its sole
and absolute discretion.
Incipient Default: any event or condition which, with the
giving of notice or the lapse of time, or both, would become an Event
of Default.
Indebtedness: all liabilities, obligations and reserves,
contingent or otherwise, which, in accordance with GAAP, would be
reflected as a liability on a balance sheet or would be required to be
disclosed in a financial statement, including, without duplication:
(i) Indebtedness for Borrowed Money, (ii) obligations secured by any
Lien upon Property, (iii) guaranties, letters of credit and other
contingent obligations and (iv) liabilities in respect of unfunded
vested benefits under any Pension Plan or in respect of withdrawal
liabilities incurred under ERISA by any Borrower or any ERISA
Affiliate to any Multiemployer Plan.
Indebtedness for Borrowed Money: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a
note, debenture or other like written obligation to pay money
(including, without limitation, all of Borrowers' Obligations and
Permitted Senior Indebtedness), (iii) in respect of rent or hire of
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Property under Capitalized Leases or for the deferred purchase price
of Property, (iv) in respect of obligations under conditional sales or
other title retention agreements and (v) all guaranties of any or all
of the foregoing.
Initial Portion: a portion of the Loan in the amount of
$7,304,000 to be disbursed on the Closing Date.
Instruments: collectively, the (i) Loan Instruments, (ii)
Contribution Agreement and (iii) Subordinated Debt Instruments.
Key Man Life Insurance: the life insurance on the lives of
Xxxxxxx and Xxxxx required pursuant to subsection 6.6.1.
Landlord: a lessor under a lease of real property.
Landlord Consent and Waiver: a landlord consent and waiver
in the form of EXHIBIT 1.1(D) attached hereto.
Leases: the leases of real property described in EXHIBIT
5.5.5.
Leasehold Property: any real estate which is the subject
of a Lease under which any Borrower is the lessee.
Lender Addition Agreement: an agreement executed by a
Lender and an Assignee pursuant to Section 9.1.
Lenders: FINOVA and each Assignee.
Lenders' Decisions: all determinations to be made by
Lenders pursuant to the terms of the Loan Instruments, including,
without limitation, any amendment or modification of any of the Loan
Instruments, determinations with respect to the declaration of Events
of Default and acceleration of Borrowers' Obligations or any other
obligation of any Obligor, waivers of affirmative or negative
covenants or other provisions of the Loan Instruments, advancement of
funds pursuant to any of the Loan Instruments or the exercise of any
rights or remedies granted to Lenders or Agent pursuant to the terms
of any of the Loan Instruments.
Lien: any mortgage, pledge, assignment, lien, charge,
encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, Capitalized
Lease or other title retention agreement.
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Loan: the term loan to be made by Lenders to Borrowers in
the maximum amount of $15,000,000, subject to the terms and conditions
of this Loan Agreement.
Loan Agreement: this Loan Agreement.
Loan Assignment: the assignment by a Lender of (i) any
portion of such Lender's interest in Borrowers' Obligations and (ii)
any of such Lender's other rights under any of the Loan Instruments.
Loan Fee: the fee to be paid by Borrowers to FINOVA in
accordance with Section 2.7.
Loan Instruments:
(i) Loan Agreement;
(ii) Note;
(iii) Security Instruments;
(iv) Subordination Agreement;
(v) Closing Certificate;
(vi) Solvency Certificate;
(vii) Environmental Certificate;
(viii) Uniform Commercial Code financing statements
filed in connection with the Closing; and
(ix) other instruments and documents as Agent
reasonably may require in connection with the
transactions contemplated by this Loan
Agreement.
Loan Year: a period of time from the Closing Date or any
anniversary of the Closing Date to the immediately succeeding
anniversary of the Closing Date.
Lockbox: the lockbox identified in the Lockbox Account
Agreement into which all Cash Instruments received by any Borrower
from an Account Debtor shall be deposited.
Lockbox Account: the account identified in the Lockbox
Account Agreement which shall be credited for all Cash Instruments
deposited in the Lockbox.
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Lockbox Account Agreement: an agreement among Lenders,
Borrowers and Lockbox Bank, in form and substance satisfactory to
Agent.
Lockbox Bank: shall mean American National Bank and Trust
Company of Chicago (or any other financial institution acceptable to
Lenders and Borrowers).
Manager: Xxxxxxx.
Material Adverse Effect: (i) a material adverse effect upon
the business, operations, Property or financial condition of any
Borrower or (ii) a material impairment of the ability of any Obligor
to perform its obligations under any Loan Instrument to which it is a
party.
Maximum Rate: as defined in subsection 2.4.3.
Membership Interests: collectively, the SACC Membership
Interests, the ASMS Membership Interests and the MSG Membership
Interests.
Mortgages: mortgages or deeds of trust executed by each
Borrower in favor of Agent encumbering each parcel of real estate
owned by such Borrower, in each case in form and substance reasonably
satisfactory to Agent.
MSG: has the meaning assigned to that term in the Preamble to
this Loan Agreement.
MSG Membership Interests: all of the issued and outstanding
membership interests and options, warrants and other rights to acquire
membership interests of MSG.
MSG Membership Interest Pledge Agreement: a pledge agreement
with respect to the MSG Membership Interests executed by the Holding
Companies, in form and substance satisfactory to Agent.
Multiemployer Plan: any multiemployer plan as defined
pursuant to Section 3(37) of ERISA to which any Borrower or any ERISA
Affiliate makes, or accrues an obligation to make, contributions, or
has made, or been obligated to make, contributions within the
preceding six years.
Non-Funded Acquisition: an Acquisition which is not funded
with an Advance, provided that immediately after such Acquisition,
Borrowers have Cash Equivalents of not less than (i) $25,000, if such
Acquisition occurs on or before June 30, 1997, or (ii) $150,000, if
such Acquisition occurs after
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June 30, 1997.
Note: a promissory note in form and substance satisfactory to
FINOVA in the principal amount of $15,000,000 executed and delivered
by Borrowers to FINOVA to evidence the Loan, and any notes issued in
substitution therefor pursuant to subsection 9.1.3.
Obligor: any of the Obligors.
Obligors: collectively, Borrowers and the Holding Companies.
Operating Cash Flow: for any period for each Borrower, the
net income of such Borrower for such period:
(i) plus the sum of the following (without
duplication), to the extent deducted in determining such
net income for such period:
(A) losses from sales, exchanges and
other dispositions of Property or other
extraordinary losses not in the ordinary course
of business;
(B) interest paid or accrued on
Indebtedness, including, without limitation,
interest on Capitalized Leases that is imputed
in accordance with GAAP and any other Debt
Service;
(C) depreciation and amortization of
assets; and
(D) income taxes which are accrued but
not paid during such period; and
(ii) minus the sum of the following (without
duplication), to the extent included in determining net
income for such period:
(A) gains from sales, transactions,
exchanges and other dispositions of Property or
other extraordinary gains not in the ordinary
course of business; and
(B) proceeds of any insurance other than
business interruption insurance.
Operating Lease: any lease which, under GAAP, is not required
to be capitalized.
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Participant: any Person to which a Lender sells or assigns a
Participation.
Participation: a sale or an assignment by a Lender of a
participating interest in (i) any portion of such Lender's interest in
Borrowers' Obligations and (ii) any of such Lender's rights under any
of the Loan Instruments.
Pay-Off Letters: collectively, a pay-off letter from each
holder of a portion of the Existing Debt, in form and substance
reasonably satisfactory to Agent.
PBGC: the Pension Benefit Guaranty Corporation or any
Governmental Body succeeding to the functions thereof.
Pension Plan: any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to the provisions of Part 3 of
Title I of ERISA, Title IV of ERISA, or Section 412 of the Code and
which (i) is maintained for employees of any Borrower or any ERISA
Affiliate, or (ii) has at any time within the preceding six years been
maintained for the employees of any Borrower or any of their current
or former ERISA Affiliates.
Permitted Liens: any of the following Liens:
(i) the Security Interests;
(ii) the Permitted Senior Indebtedness Liens;
(iii) Liens for taxes or assessments and similar
charges, which either are (A) not delinquent
or (B) being contested diligently and in good
faith by appropriate proceedings, and as to
which the applicable Borrower has set aside
reserves on its books which are satisfactory
to Agent;
(iv) statutory Liens, such as mechanic's,
materialman's, warehouseman's, carrier's or
other like Liens, incurred in good faith in
the ordinary course of business, provided
that the underlying obligations relating to
such Liens are paid in the ordinary course of
business, or are being contested diligently
and in good faith by appropriate proceedings
and as to which the applicable Borrower has
set aside reserves on its books satisfactory
to Agent, or the payment of which obligations
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are otherwise secured in a manner reasonably
satisfactory to Agent;
(v) zoning ordinances, easements, licenses,
reservations, provisions, covenants,
conditions, waivers or restrictions on the
use of Property and other title exceptions,
in each case, that are reasonably acceptable
to Agent;
(vi) Liens in respect of judgments or awards with
respect to which no Event of Default would
exist pursuant to subsection 8.1.6; and
(vii) Liens to secure payment of insurance premiums
(A) to be paid in accordance with applicable
laws in the ordinary course of business
relating to payment of worker's compensation,
or (B) that are required for the
participation in any fund in connection with
worker's compensation, unemployment
insurance, old-age pensions or other social
security programs.
Permitted Prior Liens: any of the following Liens:
(i) the Permitted Senior Indebtedness Liens;
(ii) the Permitted Liens described in clauses
(iii) and (iv) of the definition of Permitted
Liens that are accorded priority to the
Security Interests by law; and
(iii) the Permitted Liens described in clauses (v)
and (vii) of the definition of Permitted
Liens, subject to the limitations set forth
therein.
Permitted Senior Indebtedness: Indebtedness, other than
Borrowers' Obligations, incurred by any Borrower to purchase tangible
personal property or Indebtedness incurred to lease tangible personal
property pursuant to Capitalized Leases, provided that (i) the
aggregate amount of such Indebtedness of all Borrowers existing as of
the Closing Date shall not exceed $50,000, (ii) during any Loan Year
after the Closing Date the aggregate amount of such Indebtedness of
all Borrowers at any one time outstanding during such Loan Year shall
not exceed $50,000, and (iii) no Event of Default exists at the time
or will be caused as a result of the incurrence of any Indebtedness
described in clause (ii).
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Permitted Senior Indebtedness Liens: Liens that secure
Permitted Senior Indebtedness, provided that (i) each such Lien
attaches only to the Property purchased or leased with the proceeds of
the Permitted Senior Indebtedness incurred with respect to such
Property and (ii) Agent is granted a Lien upon such Property, subject
only to the Lien granted to the holder of the applicable Permitted
Senior Indebtedness.
Permitted Subsidiaries: any wholly owned subsidiary of any of
SAI, ASMS or SACC, provided that concurrently with its formation (i)
such subsidiary (A) becomes a "Borrower" under this Loan Agreement,
(B) grants Agent a perfected first Lien, subject to Permitted Prior
Liens, on all of its existing and after acquired property, (C)
executes such instruments and documents as Agent may reasonably
require to effectuate the foregoing, (D) becomes a party to the
Contribution Agreement and (E) delivers or causes to be delivered such
opinions of legal counsel and documents as Agent may reasonably
require in connection with the formation of such subsidiary and (ii)
Agent is granted a perfected first Lien on all of the capital stock of
such subsidiary pursuant to such instruments and documents as Agent
may reasonably require.
Person: any individual, firm, corporation, limited liability
company, business enterprise, trust, association, joint venture,
partnership, Governmental Body or other entity, whether acting in an
individual, fiduciary or other capacity.
Pledge Agreements: collectively, the SACC Membership
Interest Pledge Agreement, the ASMS Membership Interest Pledge
Agreement and the MSG Membership Interest Pledge Agreement.
Prepayment Premium: defined in subsection 2.9.1(a).
Principal Balance: the unpaid principal balance of the Loan
or any specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and
all types of tangible or intangible property.
Qualified Depository: a member bank of the Federal Reserve
System having a combined capital and surplus of at least $100,000,000.
RMR: the amount payable on Security Monitoring Contracts or
Central Station Contracts per month by an
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Account Debtor.
Xxxxx: Xxxxxx Xxxxx.
SACC Membership Interests: all of the issued and outstanding
membership interests and options, warrants and other rights to acquire
membership interests of SACC.
SACC Membership Interest Pledge Agreement: a pledge agreement
with respect to the SACC Membership Interests executed by SAI and MSG,
in form and substance satisfactory to Agent.
SAI: has the meaning assigned to that term in the Preamble to
this Loan Agreement.
Securities Act: the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder, as in
effect from time to time.
Security Agreement: a security agreement executed by
Borrowers in favor of Agent in form and substance satisfactory to
Agent.
Security Interests: the Liens in the Collateral granted to
Agent pursuant to the Security Instruments and any other document now
or hereafter executed by any Obligor which purports to xxxxx x Xxxx on
the Property of such Obligor in favor of Agent.
Security Instruments: collectively, the Assignments of
Leases, the Mortgages, the Assignments of Acquisition Instruments, the
Security Agreement, the Pledge Agreements and the Lockbox Account
Agreement.
Security Monitoring Business: the business of providing
remote security monitoring services and operating Central Station
Businesses.
Security Monitoring Contracts: any contract between MSG and a
retail customer involving the provision of remote security monitoring
services to such customer.
Solvency Certificate: a solvency certificate executed by
Borrowers in form and substance reasonably satisfactory to Agent.
Stated Rate: as defined in subsection 2.4.3.
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Subordinated Debt: the Indebtedness in the principal amount
of $8,441,639 owed by SAI to TJS Partners, as evidenced by the
Subordinated Debt Instruments.
Subordinated Debt Instruments: all instruments and documents
executed and/or delivered in connection with the Subordinated Debt.
Subordination Agreement: collectively, the (i) TJS
Subordination Agreement No. 1 of even date herewith and (ii) TJS
Subordinated Agreement No. 2 of even date herewith, each among Agent,
TJS Partners and SAI and each in form and substance reasonably
satisfactory to Agent.
Termination Event: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder; or (ii)
the withdrawal of any Borrower or any ERISA Affiliate from a Pension
Plan during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2); or (iii) the termination of a Pension
Plan, the filing of a notice of intent to terminate a Pension Plan or
the treatment of a Pension Plan amendment as a termination under
Section 4041 of ERISA; or (iv) the institution of proceedings to
terminate, or the appointment of a trustee with respect to, any
Pension Plan by the PBGC; or (v) any other event or condition which
would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan; or (vi) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii)
the imposition of a lien pursuant to Section 412 of the Code or
Section 302 of ERISA; or (viii) any event or condition which results
in the reorganization or insolvency of a Multiemployer Plan under
Sections 4241 or 4245 of ERISA; or (ix) any event or condition which
results in the termination of a Multiemployer Plan under Section 4041A
of ERISA or the institution by the PBGC of proceedings to terminate a
Multiemployer Plan under Section 4042 of ERISA.
TJS Partners: TJS Partners, L.P., a New York limited
partnership.
Total Debt: as of any applicable date, the sum of Borrowers'
Obligations and Dealer Holdback Debt as of such date.
UL Certification: underwriters laboratories approval of a
Central Station Business.
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Unused Commitment Fee: the fee to be paid by Borrowers to
FINOVA in accordance with Section 2.8.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan
Instruments, in the computation of periods of time from a specified date to a
later specified date, (i) the word "from" means "from and including," (ii) the
words "to" and "until" each mean "to, but excluding" and (iii) the words
"through," "end of" and "expiration" each mean "through and including." Unless
otherwise specified, all references in this Loan Agreement and the other Loan
Instruments to (i) a "month" shall be deemed to refer to a calendar month, (ii)
a "quarter" shall be deemed to refer to a calendar quarter and (iii) a "year"
shall be deemed to refer to a calendar year.
1.3 ACCOUNTING TERMS AND DETERMINATIONS. All accounting terms not
specifically defined herein shall be construed, all accounting determinations
hereunder shall be made and all financial statements required to be delivered
pursuant hereto shall be prepared in accordance with GAAP as in effect at the
time of such interpretation, determination or preparation, as applicable. In
the event that any "Accounting Changes" (as hereinafter defined) occur and such
changes result in a change in the method of calculation of financial covenants,
standards or terms contained in this Loan Agreement, then Borrowers and Lenders
agree to enter into negotiations to amend such provisions of this Loan
Agreement so as to reflect such Accounting Changes with the desired result that
the criteria for evaluating the financial condition of Borrowers shall be the
same after such Accounting Changes as if such Accounting Changes had not been
made. For purposes hereof, "Accounting Changes" shall mean (i) changes in
generally accepted accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or
any successor thereto) or other appropriate authoritative body and (ii) changes
in accounting principles as approved by the Accountants.
1.4 REFERENCES. All references contained in (i) this Loan
Agreement to "Article," "Section," "subsection," "subparagraph," "clause" or
"Exhibit," unless otherwise indicated, shall be deemed to refer to an Article,
Section, subsection, subparagraph, clause or Exhibit, as applicable, of this
Loan Agreement, and (ii) any Loan Instrument to any Loan Instrument at any
given time shall be to such Loan Instrument as the same shall have been
amended, supplemented, restated or otherwise modified as of such time.
1.5 LENDER'S OR AGENT'S DISCRETION. Whenever the terms
"satisfactory to Lenders or Agent," "determined by Lenders or Agent,"
"acceptable to Lenders or Agent," "Lenders or Agent shall
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elect," "Lenders or Agent shall request," "at the option or election of Lenders
or Agent," or similar terms are used in the Loan Instruments, except as
otherwise specifically provided therein, such terms shall mean satisfactory to,
at the election or option of, determined by, acceptable to or requested by
Lenders or Agent, as applicable, in their or its sole and unlimited discretion.
1.6 BORROWERS' KNOWLEDGE. Any statements, representations or
warranties that are based upon the best knowledge of Borrowers or an officer or
manager thereof shall be deemed to have been made after due inquiry by
Borrowers or an officer or manager, as applicable, with respect to the matter
in question.
ARTICLE II
LOAN AND TERMS OF PAYMENT
2.1 INITIAL PORTION.
2.1.1 AMOUNT AND DISBURSEMENT. The Initial Portion shall
consist of a disbursement to be made by Agent to Borrowers in the
amount of $7,304,000 on the Closing Date, provided that all of the
terms and conditions set forth in Section 4.1 have been satisfied.
2.1.2 USE OF PROCEEDS. The proceeds of the Initial Portion
shall be used (i) to pay the Existing Debt, (ii) to pay transaction
costs and (iii) for working capital.
2.2 FUTURE PORTION.
2.2.1 AMOUNT AND DISBURSEMENT. The Future Portion shall
consist of Advances to be made by Lenders to Borrowers up to the
maximum amount of $7,696,000 from time to time after the Closing Date
until the end of the first Loan Year, provided that all of the terms
and conditions set forth in subsection 2.2.3 have been satisfied.
2.2.2 USE OF PROCEEDS. The proceeds of the Future Portion
shall be used to (i) consummate Funded Acquisitions and (ii) pay
transaction costs.
2.2.3 CONDITIONS PRECEDENT TO ADVANCES. The obligation of
each Lender to make any Advance shall be subject to the satisfaction
of the following conditions:
(a) no Incipient Default or Event of Default
exists or would be created by the disbursement of such
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Advance;
(b) each such Advance shall be in a minimum
amount of $250,000 and integral multiples of $50,000 in excess
of that amount;
(c) Agent shall have received a Request for
Advance from Borrowers in the form of EXHIBIT 2.2.3 with
respect to each such Advance no later than 12:00 p.m., Chicago
time, at least three (3) Business Days prior to the proposed
Funding Date with respect to such Advance, which Funding Date
shall be on a Business Day;
(d) the terms and conditions of Section 4.2 shall
have been satisfied;
(e) the Property being acquired and the terms and
conditions of the Acquisition to be consummated with such
Advance must be approved by Agent; and
(f) on the applicable Funding Date the
representations and warranties of each Obligor set forth in
the Loan Instruments to which such Obligor is a party shall be
true and correct in all material respects when made and at and
as of the time of the Funding Date, except to the extent that
such representations and warranties expressly relate to an
earlier date.
2.3 NOTE AND REBORROWING.
2.3.1 NOTE. The Loan shall be evidenced by the Note.
2.3.2 REBORROWING. Borrowers shall not be entitled to
reborrow any portion of the Loan which is repaid or prepaid.
2.4 INTEREST.
2.4.1 INTEREST RATE. Except during a Default Rate Period as
provided in Section 2.10, Borrowers' Obligations shall bear interest
at the Base Rate in effect from time to time plus the Applicable
Margin. As used in this Loan Agreement, the term "Applicable Margin"
shall be determined on the first day of each quarter and shall mean,
as set forth below, the percentage opposite the Applicable Margin
Ratio calculated as of the last day of the second quarter immediately
preceding such quarter:
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Applicable Applicable
Margin Ratio Margin
------------ ----------
greater than 2.00%
or equal to 3.5
greater than 1.75%
or equal to 2.5
but less than 3.5
less than 2.5 1.50%
The Applicable Margin shall be 2.00% per annum until Lenders receive
(i) written notice from Borrowers requesting an adjustment in the
Applicable Margin accompanied by (ii) the financial statements
indicating that the requested adjustment is appropriate.
2.4.2 INTEREST COMPUTATION. Interest shall be computed on
the basis of a year consisting of 360 days and charged for the actual
number of days during the period for which interest is being charged.
In computing interest, the date of funding of an advance of the Loan
shall be included and the date of payment shall be excluded.
2.4.3 MAXIMUM INTEREST. Notwithstanding any provision to the
contrary contained herein or in any other Loan Instrument, Lenders
shall not collect a rate of interest on any obligation or liability
due and owing by Borrowers to Lenders in excess of the maximum
contract rate of interest permitted by applicable law ("Excess
Interest"). Lenders and Borrowers agree that the interest laws of the
State of Arizona govern the relationship among them, but in the event
of a final adjudication to the contrary, Borrowers shall be obligated
to pay, nunc pro tunc, to Lenders only such interest as then shall be
permitted by the laws of the state found to govern the contract
relationship among Lenders and Borrower. If any Excess Interest is
provided for or determined by a court of competent jurisdiction to
have been provided for in this Loan Agreement or any other Loan
Instrument, then in such event (i) no Obligor shall be obligated to
pay such Excess Interest, (ii) any Excess Interest collected by
Lenders shall be, at Lenders' option, (A) applied to the Principal
Balance or to accrued and unpaid interest not in excess of the maximum
rate permitted by applicable law or (B) refunded to the payor thereof,
(iii) the interest rates provided for herein (collectively, the
"Stated Rate") shall be automatically reduced to the maximum rate
allowed from time to time under applicable law (the "Maximum Rate")
and this Loan Agreement and the other Loan
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Instruments, as applicable, shall be deemed to have been, and shall
be, modified to reflect such reduction, and (iv) neither any Borrower
nor any other Obligor shall have any action against Lenders for any
damages arising out of the payment or collection of such Excess
Interest; provided, however, that if at any time thereafter the Stated
Rate is less than the Maximum Rate, Borrowers shall, to the extent
permitted by law, continue to pay interest at the Maximum Rate until
such time as the total interest received by Lenders is equal to the
total interest which Lenders would have received had the Stated Rate
been (but for the operation of this provision) the interest rate
payable. Thereafter, the interest rate payable shall be the Stated
Rate unless and until the Stated Rate again exceeds the Maximum Rate,
in which event the provisions contained in this subsection 2.4.3 shall
again apply.
2.5 PRINCIPAL AND INTEREST PAYMENTS.
2.5.1 INTEREST. Except as otherwise provided in subsections
2.9.1(c) and 2.9.2(c), interest on the Principal Balance shall be
payable monthly in arrears on the first Business Day of each month
beginning with the month following the month in which the Closing Date
occurs.
2.5.2 PRINCIPAL. The Principal Balance shall be payable in
consecutive quarterly installments on the first Business Day of each
quarter set forth below in an amount equal to the product of (i) the
percentage set forth below opposite such quarter, multiplied by (ii)
the outstanding Principal Balance as of the end of the first Loan Year
as follows:
Percentage of Outstanding
Principal Balance as of end
of first Loan Year Due as
Quarter Beginning an Installment
----------------- --------------------------
January, 1998 3.5%
April, 1998 3.5%
July, 1998 3.5%
October, 1998 3.5%
January, 1999 4.0%
April, 1999 4.0%
July, 1999 4.0%
October, 1999 4.0%
January, 2000 4.5%
April, 2000 4.5%
July, 2000 4.5%
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October, 2000 4.5%
January, 2001 5.0%
April, 2001 5.0%
July, 2001 5.0%
October, 2001 5.0%
The remaining Principal Balance, together with any other sums which
then are due and payable pursuant to the terms of the Loan
Instruments, shall be due and payable in full on the last Business Day
of the quarter commencing October, 2001.
2.6 LATE CHARGES. If a payment of principal or interest to be
made pursuant to this Loan Agreement becomes past due for a period in excess of
five days, Borrowers shall pay on demand to Lenders a late charge of 2% of the
amount of such overdue payment.
2.7 LOAN FEE. Borrowers shall pay a loan fee to FINOVA in the
amount of $262,500, which shall be deemed to be fully earned and payable on the
Closing Date. FINOVA shall credit the $50,000 deposit (net of expenses)
previously paid by Borrowers against the Loan Fee.
2.8 UNUSED COMMITMENT FEE. For the first Loan Year, Borrowers
shall pay to Agent a fee (the "Unused Commitment Fee") monthly in arrears on
the first Business Day of each month beginning with the month following the
month in which the Closing Date occurs in an amount equal to the product of (i)
(A) $15,000,000 minus (B) the average daily balance of the outstanding
Principal Balance during such preceding month, multiplied by (ii) one-half of
one percent (.50%) on a per annum basis. The Unused Commitment Fee expires at
the end of the first Loan Year.
2.9 PREPAYMENTS.
2.9.1 VOLUNTARY PREPAYMENT OF LOAN. Borrowers may at any
time voluntarily prepay in whole or in part the Principal Balance,
subject to the following conditions:
(a) PREPAYMENT PREMIUM. Except as provided in
subsection 2.9.3, concurrently with any voluntary prepayment
of all or any part of the Principal Balance, Borrowers shall
pay to Lenders a prepayment premium (the "Prepayment Premium")
equal to a percentage of the amount of the Principal Balance
prepaid, determined in accordance with the following schedule:
Percentage of Principal
Period of Prepayment Balance Prepaid
-------------------- ---------------
First Loan Year 4.0%
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Second Loan Year 3.0%
Third Loan Year 2.0%
Thereafter 0.0%
Notwithstanding the foregoing, with respect to prepayments of
the entire Principal Balance during the second or third Loan
Years, the Prepayment Premium shall be reduced to an amount
equal to 1.0% of such prepayment if the following terms and
conditions are satisfied: (i) Borrowers make a written request
for additional financing from FINOVA, which request shall set
forth the amount and terms of financing proposed by Borrowers
and be accompanied by all financial statements and other due
diligence information with respect to the proposed additional
financing as FINOVA reasonably shall request; (ii) within 30
days after such request FINOVA fails to commit in writing that
it will provide such additional financing on such terms or
proposes other terms not acceptable to Borrowers; (iii) within
30 days thereafter Borrowers obtain a written commitment for
such financing on terms and conditions substantially similar
to those proposed by Borrowers from another lender; and (iv)
within 60 days thereafter Borrowers prepay the entire balance
of Borrowers' Obligations from the proceeds of the financing
from such other lender.
(b) NOTICE OF PREPAYMENT; NUMBER AND AMOUNT OF
PREPAYMENTS. Not less than 20 days prior to the date upon
which Borrowers desire to make any voluntary prepayment of the
Principal Balance, Borrowers shall deliver to Lenders notice
of their intention to prepay, which notice shall state the
prepayment date and the amount of the Principal Balance to be
prepaid. The amount of any partial prepayment of the
Principal Balance shall be not less than $100,000 or integral
multiples thereof. A prepayment of the Principal Balance
shall not be made more frequently than once a month. If
Borrowers deliver to Lenders a notice of prepayment and fail
to make such prepayment, Borrowers shall reimburse Lenders on
demand in the amount of any loss, cost and/or expense
reasonably incurred by Lenders as a result of Lenders'
reliance on such notice, including without limitation, any
loss, cost or expense resulting from Lenders' contractual
obligations in connection with the reinvestment of the amount
indicated in such notice of prepayment.
(c) ADDITIONAL PAYMENTS. Concurrently with any
prepayment of the Principal Balance pursuant to this
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subsection 2.9.1, Borrowers shall pay to Lenders accrued and
unpaid interest on the portion of the Principal Balance which
is being prepaid to the date on which Lenders are in receipt
of Good Funds, and any other sums which are due and payable
pursuant to the terms of any of the Loan Instruments.
(d) APPLICATION OF PARTIAL PREPAYMENTS. Any
partial prepayment of the Principal Balance pursuant to this
subsection 2.9.1 shall be applied to the installments of the
Principal Balance in the inverse order of maturity.
2.9.2 MANDATORY PREPAYMENTS OF THE LOAN.
(a) EXCESS CASH FLOW PAYMENTS. Until the Loan is
paid in full, for each year commencing with the year 1997
Borrowers shall pay to Lenders not later than the earlier of
(x) 30 days after receipt by Lenders of the Basic Financial
Statements for such year and (y) 120 days after the end of
such year, an amount equal to the lesser of (i) 75% of the
Excess Cash Flow for such year and (ii) the amount by which
the Cash Equivalents as of December 31 of such year exceeds
$300,000.
(b) PROCEEDS OF KEY MAN LIFE INSURANCE. All
proceeds of Key Man Life Insurance received by Agent shall be
applied as a prepayment of Borrowers' Obligations in
accordance with subparagraph (c) below.
(c) APPLICATION OF MANDATORY PREPAYMENTS.
Prepayments received by Lenders pursuant to this subsection
2.9.2 shall be applied in the following order of priority to
the payment of: (i) any and all sums which are due and
payable pursuant to the terms of the Loan Instruments, except
the Principal Balance and accrued interest thereon, (ii)
accrued and unpaid interest on the portion of the Principal
Balance being prepaid and (iii) the installments of the
Principal Balance in the inverse order of maturity.
2.9.3 NO PREPAYMENT PREMIUM. No Prepayment Premium shall be
payable with respect to prepayments pursuant to subsection 2.9.2.
2.9.4 INVOLUNTARY PREPAYMENT. Concurrently with any payment
of the Principal Balance received by Lenders resulting from the
exercise by Agent and/or Lenders of any remedy available to Agent
and/or Lenders subsequent to the occurrence of an Event of Default and
the acceleration of
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Borrowers' Obligations, Borrowers shall pay to Lenders a Prepayment
Premium in an amount equal to the Prepayment Premium which would be
payable if such payment was made pursuant to subsection 2.9.1.
2.10 DEFAULT RATE PERIOD. During a Default rate period, (i)
Borrowers' Obligations shall bear interest at the Default Rate and (ii) all
payments received by Lenders shall be applied in accordance with Section 8.4.
2.11 METHOD OF PAYMENT.
2.11.1 LOCKBOX AND LOCKBOX ACCOUNT; PAYMENTS; APPLICATION OF
FUNDS.
(a) MAINTENANCE OF LOCKBOX AND LOCKBOX ACCOUNT.
Borrowers shall maintain at Lockbox Bank the Lockbox and
Lockbox Account. The Lockbox and Lockbox Account shall be
under the sole dominion and control of Agent and no Borrower
shall have any right of withdrawal therefrom. Promptly after
the Closing Date, each Borrower shall notify such Borrower's
Account Debtors under Security Monitoring Contracts that all
payments shall be made directly to the Lockbox or, if by wire
transfer, to the Lockbox Account. All items deposited in the
Lockbox shall be credited to the Lockbox Account.
(b) HURDLE AMOUNT. On the first Business Day of
each month, Agent shall notify Lockbox Bank of the Hurdle
Amount for such month. Upon the opening of business on each
Business Day of each month, Lockbox Bank shall calculate the
amount of collected funds on deposit in the Lockbox Account
for such month (the "Collected Funds"). For each month,
beginning with the second Business Day following the Business
Day on which the Lockbox Bank has determined that the
Collected Funds exceed the Hurdle Amount for such month (the
amount of such excess hereinafter is referred to as the
"Remainder Funds"), Lockbox Bank shall remit the Remainder
Funds to Borrowers until the end of such month.
(c) MONTHLY PAYMENTS FROM THE LOCKBOX. Beginning
with the first Business Day of the month following the month
in which the Closing Occurs, Lockbox Bank shall remit the
Hurdle Amount to Agent in Good Funds prior to 1:00 P.M.
Chicago time for application to Borrowers' Obligations in the
following order of priority: (i) first, to the payment of all
Borrowers' Obligations
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then due and payable other than the Principal Balance and
accrued and unpaid interest thereon, and (ii) second, to the
payment of accrued and unpaid interest then due and payable on
the Principal Balance. If no Event of Default or Incipient
Default then exists, Agent shall remit the remainder, if any,
to Borrowers. If an Event of Default exists such remainder
may, at the option of Agent, be applied in accordance with
Section 8.4.
(d) CASH INSTRUMENTS RECEIVED BY BORROWERS. At
the close of each Business Day following the Closing Date,
each Borrower shall transmit, in the form received, all Cash
Instruments received by such Borrower since the close of
business on the preceding Business Day to the Lockbox or
directly to the Lockbox Bank for deposit in the Lockbox
Account. All Cash Instruments received by each Borrower shall
be held in express trust for Lenders until delivery thereof is
made to the Lockbox or the Lockbox Bank for deposit in the
Lockbox Account and shall not be commingled with any other
Property of such Borrower.
2.11.2 OTHER PAYMENTS. All payments other than those
specified in subsection 2.11.1 to be made pursuant to the Loan
Instruments by Borrowers to (i) FINOVA shall be made by wire transfer
of Good Funds to the account of FINOVA at Citibank, N.A., 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, XXX 000000000, Credit: FINOVA Capital
Corporation, Credit Account No. 00000000, or to such other account as
FINOVA shall have given five Business Days prior written notice to
Borrowers, and (ii) any other Lender shall be made by wire transfer of
Good Funds to such account as such Lender shall notify Borrowers.
ARTICLE III
SECURITY
Borrowers' Obligations shall be secured by a Lien upon all of the
Collateral, which at all times shall be superior and prior to all other Liens,
except Permitted Prior Liens.
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ARTICLE IV
CONDITIONS OF CLOSING
4.1 INITIAL PORTION. The obligation of FINOVA to disburse the
Initial Portion shall be subject to the satisfaction of all of the following
conditions on or before the Closing Date in a manner, form and substance
reasonably satisfactory to FINOVA:
4.1.1 REPRESENTATIONS AND WARRANTIES. On the Closing Date
the representations and warranties of each Obligor set forth in the
Instruments to which such Obligor is a party shall be true and correct
in all material respects.
4.1.2 MINIMUM OPERATING CASH FLOW OF THE SECURITY
MONITORING BUSINESS. Borrowers shall demonstrate to the reasonable
satisfaction of FINOVA that the Annualized Operating Cash Flow of
Borrowers for the consecutive twelve month period ending one month
prior to the month in which Closing occurs is not less than
$1,850,000.
4.1.3 APPRAISAL. FINOVA shall have received an appraisal
of the Borrowers prepared by an independent firm of appraisers
acceptable to FINOVA indicating that the aggregate current fair market
value of the Borrowers' Security Monitoring Business is not less than
$12,750,000, which appraisal shall include an operational review
reasonably satisfactory to FINOVA.
4.1.4 DELIVERY OF DOCUMENTS. The following shall have been
delivered to FINOVA, each duly authorized and executed, where
applicable:
(a) the Loan Instruments;
(b) a good standing or similar certificate, dated
a recent date prior to the Closing Date, for each Borrower
from the Secretary of State in each state in which such
Borrower is qualified to transact business;
(c) copies of (i) the articles of organization of
ASMS, SACC and MSG, certified by the Secretaries of State of
Illinois, Michigan and Delaware, respectively, as of a recent
date prior to the Closing Date, (ii) the operating agreements
of each of ASMS, SACC and MSG, (iii) all other agreements
among the holders of any Membership Interests, (iv) the
articles of incorporation of SAI and each of the Holding
Companies, certified by the Secretary of State of Delaware as
of a recent date prior to the Closing Date, (v) the by-laws
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of SAI and each of the Holding Companies and (vi) all other
agreements among the shareholders of any of the Capital Stock,
together with all amendments thereto, certified by the Manager
or President of such Borrower, as applicable;
(d) certified copies of resolutions adopted by
the board of directors of SAI authorizing the execution and
delivery of the Instruments to which SAI is a party;
(e) signature and incumbency certificates of the
members or Manager of ASMS, SACC and MSG and the President of
SAI executing any of the Loan Instruments on behalf of such
Persons;
(f) certified or executed original copies of each
of the following, the terms and conditions of all of which
shall be satisfactory to FINOVA:
(i) the Contribution Agreement;
(ii) the Leases;
(iii) the Subordinated Debt Instruments; and
(iv) all instruments and documents
evidencing Permitted Senior Indebtedness existing as
of the Closing Date;
(g) such other instruments, documents,
certificates, consents, waivers and opinions as Lender may
reasonably request; and
(h) the Pay-Off Letters.
4.1.5 PERFORMANCE; NO DEFAULT. Each Obligor shall have, in
all material respects, performed and complied with all agreements and
conditions contained in the Instruments to be performed by or complied
with by such Person prior to or at the Closing, and no Event of
Default or Incipient Default then shall exist.
4.1.6 OPINIONS OF COUNSEL; DIRECTION FOR DELIVERY. FINOVA
shall have received (i) an opinion dated the Closing Date from
Xxxxxxxx & Xxxxxx, Ltd., special counsel to the Obligors, addressed
to FINOVA, as a Lender and as Agent, in such form and covering such
matters as FINOVA may require and (ii) a copy of the letter from
Borrowers addressed to the counsel described in clause (i), in form
and substance
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satisfactory to FINOVA, directing such counsel to deliver to FINOVA
the foregoing opinion.
4.1.7 APPROVAL OF INSTRUMENTS AND SECURITY INTERESTS.
FINOVA shall have received evidence that the approval or consent shall
have been obtained from all Governmental Bodies and all other Persons
whose approval or consent is required to enable (i) each Obligor to
enter into and perform their respective obligations under the
Instruments to which each such Person is a party and (ii) each Obligor
to grant to Agent the Security Interests contemplated in the
Instruments to which such Obligor is a party.
4.1.8 SECURITY INTERESTS. All filings of Uniform
Commercial Code financing statements, all recordings of the Mortgages
and all other filings and actions necessary to perfect and maintain
the Security Interests as first, valid and perfected Liens in the
Property covered thereby, subject only to Permitted Prior Liens, shall
have been filed or taken and FINOVA shall have received such UCC,
state and federal tax Lien, pending suit, judgment and other Lien
searches as it deems necessary to confirm the foregoing.
4.1.9 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS.
FINOVA shall have received (i) the statements of income and balance
sheets for Borrowers for the year ended December 31, 1995 and the nine
month period ended September 30, 1996, accompanied by a certificate of
Borrowers certifying that such statements of income and balance sheets
present fairly in all material respects the financial condition of
Borrowers for such periods, (ii) such other financial statements
relating to the operations of Borrowers as FINOVA shall request and
(iii) pro-forma balance sheets and operating projections for
Borrowers.
4.1.10 MATERIAL ADVERSE CHANGE. No event shall have
occurred since September 30, 1996 which has had or reasonably could be
expected to have a Material Adverse Effect.
4.1.11 PROCEEDINGS AND DOCUMENTS. All corporate, limited
liability company and other proceedings in connection with the
transactions contemplated by the Instruments and all documents and
instruments incident to such transactions shall be reasonably
satisfactory to FINOVA, and FINOVA shall have received all such
counterpart originals or certified or other copies as FINOVA may
reasonably request.
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4.1.12 USE OF ASSETS. FINOVA shall be reasonably satisfied
that Borrowers at all times shall be entitled to the use and quiet
enjoyment of all Property necessary for the continued ownership and
operation of the Security Monitoring Business conducted by Borrowers,
including, without limitation, the use of equipment, fixtures,
licenses, offices and means of ingress and egress thereto, and any
easements or rights-of-way necessary to reach any equipment or other
items necessary for the operation of such Security Monitoring
Business.
4.1.13 BROKER FEES. If the services of a broker or other
agent have been used in connection with the Loan, all fees owed to
such broker or agent shall have been paid by Borrowers and FINOVA
shall have received evidence of such payment.
4.1.14 LANDLORD CONSENT AND WAIVER. FINOVA shall have
received a Landlord Consent and Waiver from each Landlord under each
Lease designated by Agent.
4.1.15 INSURANCE. At least three Business Days prior to the
Closing Date Borrowers shall have delivered to FINOVA evidence
satisfactory to FINOVA that all insurance coverage required pursuant
to Section 6.6 is in full force and effect and all premiums then due
thereon have been paid in full.
4.1.16 ENVIRONMENTAL AUDIT. At the request of Agent, Agent
shall have received an Environmental Audit with respect to any real
estate which is the subject of a Lease.
4.1.17 EXISTING INDEBTEDNESS. FINOVA shall have received
evidence that all existing Indebtedness for Borrowed Money has been
paid in full or will be paid in full concurrently with the Closing,
except the (i) Permitted Senior Indebtedness, (ii) Subordinated Debt
and (iii) Dealer Holdback Debt.
4.1.18 PAYMENT OF FEES AND EXPENSES. Borrowers shall have
paid the Loan Fee and all fees and expenses described in subsection
11.1.1 incurred in connection with the Loan.
4.1.19 SECURITY MONITORING CONTRACTS. FINOVA shall have
received a certified copy of the assignment assigning all the Security
Monitoring Contracts owned by SAI to MSG prior to or on the Closing
Date.
4.1.20 UL CERTIFICATIONS. Agent shall have received
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(i) certified copies of the UL Certifications which are necessary for
the operation of Borrowers' Security Monitoring Business and (ii)
evidence that (A) such UL certifications are in full force and effect
as of the Closing Date and (B) no event has occurred which could
result in the termination, revocation or non-renewal of any such UL
Certification.
4.1.21 ALARM LICENSES. Agent shall have received (i)
certified copies of the Alarm Licenses which are necessary for the
operation of Borrowers' Security Monitoring Business and (ii) evidence
that (A) such Alarm Licenses are in full force and effect as of the
Closing Date and (B) no event has occurred which could result in the
termination, revocation or non-renewal of any such Alarm License.
4.1.22 COVENANT LEVERAGE RATIO. Agent shall have received
evidence that the Covenant Leverage Ratio does not exceed 3.75:1 as
calculated as of the quarter ended September 30, 1996.
4.1.23 RMR. Agent shall have received evidence that the
Total Debt as of the Closing Date does not exceed the sum of (i) 22
times the RMR for Security Monitoring Contracts which are owned by
Borrowers on the Closing Date and (ii) 12 times the RMR for Central
Station Contracts which are owned by Borrowers on the Closing Date.
4.2 ACQUISITIONS. The right of any Borrower to make a Funded
Acquisition shall be subject to the satisfaction of all of the following
conditions in a manner reasonably satisfactory to Agent:
4.2.1 CONSUMMATION OF ACQUISITIONS. Prior to or
concurrently with each Acquisition Closing, Agent shall have received
evidence that (i) such Acquisition is in accordance with the terms of
the applicable Acquisition Instruments with such modifications as are
reasonably satisfactory to Agent, (ii) the Borrower consummating such
Acquisition shall have acquired, or will acquire concurrently with the
Acquisition Closing, good and marketable title to all of the Property
which is being purchased pursuant to such Acquisition Instruments,
free and clear of all Liens and Indebtedness, except the Dealer
Holdback Debt.
4.2.2 DELIVERY OF DOCUMENTS. The following shall have been
delivered to Agent, each duly authorized and executed where
applicable:
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(a) the Acquisition Loan Instruments;
(b) such certificates of incumbency,
good-standing and corporate and limited liability company
resolutions as Agent may reasonably require in connection with
such Acquisition;
(c) certified or executed original copies of each
of the following, the terms and conditions of all of which
shall be reasonably satisfactory to Agent:
(i) the applicable Acquisition
Instruments; and
(ii) the Leases assumed or entered into
by any Borrower in connection with
such Acquisition; and
(d) such other instruments, documents,
certificates, consents, waivers and opinions as Agent may
reasonably require.
4.2.3 FINANCIAL STATEMENTS, REPORTS AND PROJECTIONS. Agent
shall have received such financial statements, reports and projections
with respect to the operation of the business which is the subject of
the Acquisition as Agent may reasonably require.
4.2.4 COMPLIANCE WITH APPLICABLE RATIO. After giving
effect to such Acquisition, the Adjusted Leverage Ratio shall not
exceed the Applicable Ratio as calculated as of the most recent month
preceding the date of closing of such Acquisition for which Borrowers
have delivered to Lenders the financial statements and other
information reasonably necessary to enable Lenders to make such
calculation, provided that such delivery shall occur not less than 30
days prior to such date of closing.
4.2.5 MAXIMUM TIMES RMR. The Adjusted Total Debt as of the
requested Funding Date shall not exceed the sum of (i) 22 times the
RMR for Security Monitoring Contracts which are (A) the subject of the
Acquisition and (B) owned by Borrowers prior to the consummation of
such Acquisition, and (ii) 12 times the RMR for Central Station
Contracts which are (A) the subject of the Acquisition and (B) owned
by Borrowers prior to the consummation of such Acquisition, in each
case as of the most recent month preceding the date of closing of such
Acquisition for which Borrowers have delivered to Lenders the
financial statements and other information reasonably necessary to
enable Lenders to make
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such calculation, provided that such delivery shall occur not less
than 30 days prior to such date of closing.
4.2.6 OPINIONS OF COUNSEL. Agent shall have received such
opinions of counsel as Agent reasonably may require in connection with
such Acquisition and the Liens to be granted to Agent upon the
Property acquired in connection therewith.
4.2.7 UL CERTIFICATIONS. With respect to any Central
Station Business which is the subject of such Acquisition, Agent shall
have received evidence that such Borrower has acquired, or will
acquire concurrently with the Acquisition Closing, the UL
Certification necessary for the operation of such Central Station
Business.
4.2.8 ALARM LICENSES. Agent shall have received (i)
certified copies of the Alarm Licenses which are necessary to own or
operate the Property which is the subject of such Acquisition and (ii)
evidence that (A) the transfer or assignment of such Alarm Licenses to
the applicable Borrower is final, (B) such Alarm Licenses are in full
force and effect as of the Acquisition Closing Date and (C) no event
has occurred which could reasonably be expected to result in the
termination, revocation or non-renewal of any such Alarm License.
4.2.9 SECURITY INTEREST. Agent shall have received
evidence that it has or will acquire upon the Acquisition Closing Date
a perfected first lien on all of the Property which is the subject of
such Acquisition, subject only to Permitted Prior Liens.
4.2.10 ENVIRONMENTAL AUDIT. Agent shall have received an
Environmental Audit with respect to any real estate which is being
acquired by any Borrower pursuant to such Acquisition and, at the
request of Agent, any real estate which is the subject of a Lease
which is being assumed or entered into by such Borrower in connection
with such Acquisition.
4.2.11 INSURANCE; SURVEY. Borrower shall deliver to Agent
such title insurance and surveys with respect to each parcel of real
estate being acquired in connection with such Acquisition.
4.2.12 PAYMENT OF FEES. Borrowers shall have paid all fees
and expenses described in subsection 11.1.1 incurred in connection
with such Acquisition and any Advance made in connection therewith.
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4.2.13 ACQUISITION OF A CENTRAL STATION BUSINESS. If the
subject of the Acquisition is a Central Station Business, SACC, ASMS
or a Permitted Subsidiary are the only Persons permitted to consummate
such Acquisition.
4.2.14 ACQUISITION OF SECURITY MONITORING CONTRACTS. If the
subject of the Acquisition is Security Monitoring Contracts, MSG shall
be the Borrower making such Acquisition.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to Agent and Lenders as follows:
5.1 EXISTENCE AND POWER. SAI and each of the Holding Companies is
a corporation duly formed and validly existing under the laws of the State of
Delaware. SACC is a limited liability company duly formed and validly existing
under the laws of the State of Michigan. MSG is a limited liability company
duly formed and validly existing under the laws of the State of Delaware. ASMS
is a limited liability company duly formed and validly existing under the laws
of the State of Illinois. Each Obligor is in good standing and qualified to
transact business in each jurisdiction in which the failure so to qualify could
have a Material Adverse Effect. Each Obligor has all requisite power and
authority to own its Property and to carry on its business as now conducted and
as proposed to be conducted following the Closing Date.
5.2 AUTHORITY. Each Obligor has full power and authority to enter
into, execute, deliver and carry out the terms of the Instruments to which it
is a party and to incur the obligations provided for therein, all of which have
been duly authorized by all proper and necessary action and are not prohibited
by the organizational instruments of such Obligor.
5.3 CAPITAL STOCK, MEMBERSHIP INTERESTS AND RELATED MATTERS.
5.3.1 CAPITALIZATION. There is set forth in EXHIBIT 5.3.1 a
complete description of the Capital Stock and the Membership
Interests. The Capital Stock and the Membership Interests are validly
issued, fully paid and non-assessable, and have been issued and sold
in compliance with all applicable federal and state laws, rules and
regulations, including, without limitation, all so-called "Blue-Sky"
laws.
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The Capital Stock and the Membership Interests are owned beneficially
and of record by the Persons and in the respective percentages set
forth on EXHIBIT 5.3.1, and are free and clear of all Liens except the
Security Interests.
5.3.2 RESTRICTIONS. Except as set forth on EXHIBIT 5.3.2, no
Obligor (i) is a party to or has knowledge of any agreements
restricting the transfer of the Capital Stock or the Membership
Interests, except the Loan Instruments, (ii) has issued any rights
which can be convertible into or exchangeable or exercisable for any
of such Obligor's capital stock or membership interests, or any rights
to subscribe for or to purchase, or any options for the purchase of,
or any agreements providing for the issuance (contingent or otherwise)
of, or any calls, commitments or claims of any character relating to,
any of such Obligor's capital stock or membership interests or any
securities convertible into or exchangeable or exercisable for any of
such Obligor's capital stock or membership interests and (iii) is
subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any of such Obligor's capital stock or
membership interests or any convertible rights or options. No Obligor
is required to file or has filed, pursuant the Securities Act of 1933
or Section 12 of the Securities Exchange Act of 1934, as amended, a
registration statement relating to any class of debt or equity
securities.
5.4 BINDING AGREEMENTS. This Loan Agreement and the other
Instruments, when executed and delivered, will constitute the valid and legally
binding obligations of each Obligor to the extent such Obligor is a party
thereto, enforceable against such Obligor in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally,
and (ii) equitable principles (whether or not any action to enforce such
document is brought at law or in equity).
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5.5 BUSINESS AND PROPERTY OF BORROWERS.
5.5.1 BUSINESS AND PROPERTY. Each Borrower is the owner of
all Property and the holder of all UL Certifications, Alarm Licenses,
Central Station Contracts and Security Monitoring Contracts necessary
to conduct such Borrower's Security Monitoring Business in the places
where it is now conducted. All of such UL Certifications, Alarm
Licenses, Central Station Contracts and Security Monitoring Contracts
are in full force and effect and no invalidity, default or breach
exists thereunder. There is set forth in EXHIBIT 5.5.1 a description
of all UL Certifications and Alarm Licenses which have been issued to
any Borrower. Borrowers do not engage or propose to engage in any
business or activity other than the Security Monitoring Business.
5.5.2 FACILITY SITES. There is set forth in EXHIBIT 5.5.2
the location of the chief executive office of each Borrower and the
locations all central station monitoring operations, offices and other
Property used in the operation of each Borrower's Security Monitoring
Business.
5.5.3 LEASES. There is set forth in EXHIBIT 5.5.3 a list of
all leases of real property under which any Borrower is the lessee,
together with a complete and accurate address and legal description of
each such parcel of Leasehold Property and the current Landlord under
each Lease. Each Lease is in full force and effect, there has been no
material default in the performance of any of its terms or conditions
by any party thereto, and no claims of default have been asserted with
respect thereto. To the best knowledge of Borrowers, the present and
contemplated use of the Leasehold Property is in material compliance
with all applicable zoning ordinances and regulations and other laws
and regulations.
5.5.4 REAL ESTATE. There is set forth in EXHIBIT 5.5.4 a
complete and accurate address and legal description of each parcel of
real property owned by any Borrower, together with the tax
identification numbers applicable thereto. To the best knowledge of
Borrowers, the present and contemplated use of the real estate is in
material compliance with all applicable zoning ordinances and
regulations and other laws and regulations.
5.5.5 OPERATION AND MAINTENANCE OF EQUIPMENT. To the best
knowledge of each Borrower, no Person owning or operating any
equipment necessary for the operation of Borrowers' Security
Monitoring Business has used, operated or maintained the same in a
manner which now or hereafter could result in the cancellation or
termination of the right of any
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Borrower to use or make use of the same or which could result in any
material liability of any Borrower for damages in connection
therewith. All of the equipment and other tangible personal property
owned by each Borrower on the Closing Date is, in all material
respects, in good operating condition and repair (subject to normal
wear and tear) and has to the best knowledge of each Borrower, been
used, operated and maintained in substantial compliance with all
applicable laws, rules and regulations.
5.6 TITLE TO PROPERTY; LIENS. Upon the Closing each Borrower
shall have (i) good and marketable title to all of its Property, except (A) any
UL Certification which cannot be transferred without the consent of a
Governmental Body and (B) the portion thereof consisting of a leasehold estate
and (ii) a valid leasehold estate in each portion of its Property which
consists of a leasehold estate. Upon the Closing, all of such Property shall
be free and clear of all Liens, except Permitted Liens. Upon the proper filing
with the appropriate Governmental Bodies of the Mortgages and appropriate
Uniform Commercial Code financing statements, the applicable Loan Instruments
will create valid and perfected Liens in the Property described therein,
subject only to Permitted Prior Liens.
5.7 PROJECTIONS AND FINANCIAL STATEMENTS.
5.7.1 FINANCIAL STATEMENTS. Borrowers have delivered to
FINOVA the financial statements described in EXHIBIT 5.7.1 pertaining
to Borrowers' Security Monitoring Business. Such financial statements
present fairly in all material respects the results of operations of
Borrowers' Security Monitoring Business for the periods covered
thereby and the financial condition of Borrowers' Security Monitoring
Business as of the dates indicated therein. All of such financial
statements have been prepared in conformity with GAAP. Since
September 30, 1996, there has been no change which has had a Material
Adverse Effect. Borrowers also have delivered to FINOVA a pro-forma
balance sheet as of the Closing Date. Such pro-forma balance sheet,
which assumes the consummation of the transactions contemplated by the
Loan Instruments, presents fairly in all material respects the
anticipated financial condition of Borrowers as of the Closing Date.
5.7.2 PROJECTIONS. Borrowers have delivered to FINOVA the
projections described in EXHIBIT 5.7.2 of the future operations of
Borrowers. Such projections represent the best estimates of Borrowers
as of the Closing Date of Borrowers' future financial performance.
5.8 LITIGATION. There is set forth in EXHIBIT 5.8 a
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description of all actions and suits, arbitration proceedings and claims
pending or, to the best knowledge of Borrowers, threatened against any Obligor
or maintained by any Obligor at law or in equity or before any Governmental
Body. None of the matters set forth in such EXHIBIT 5.8, if adversely
determined, could have a Material Adverse Effect.
5.9 DEFAULTS IN OTHER AGREEMENTS; CONSENTS; CONFLICTING
AGREEMENTS. No Borrower is in default under any agreement to which such
Borrower is a party or by which such Borrower or any of the Property of such
Borrower is bound, the effect of which default could have a Material Adverse
Effect. No authorization, consent, approval or other action by, and no notice
to or filing with, any Governmental Body or any other Person which has not
already been obtained, taken or filed, as applicable, is required (i) for the
due execution, delivery or performance by any Borrower of any of the Loan
Instruments to which such Borrower is a party or (ii) as a condition to the
validity or enforceability of any of the Loan Instruments to which any Borrower
is a party or any of the transactions contemplated thereby or the priority of
the Security Interests, except for certain filings to establish and perfect the
Security Interests. No provision of any material mortgage, indenture,
contract, agreement, statute, rule, regulation, judgment, decree or order
binding on any Borrower or affecting the Property of any Borrower conflicts
with, or requires any consent which has not already been obtained under, or
would in any way prevent the execution, delivery or performance of the terms of
any of the Loan Instruments or affect the validity or priority of the Security
Interests. The execution, delivery or performance of the terms of the Loan
Instruments will not constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon the Property of Borrowers
pursuant to the terms of any such material mortgage, indenture, contract or
agreement, other than the Loan Instruments.
5.10 TAXES. Each Borrower has filed all tax returns required to be
filed, and has paid, or made adequate provision for the payment of, all taxes
shown to be due and payable on such returns or in any assessments made against
any such Person, and no tax Liens have been filed and no claims are being
asserted in respect of such taxes which are required by GAAP to be reflected in
the financial statements of any Borrower and are not so reflected therein. The
charges, accruals and reserves on the books of each Borrower with respect to
all federal, state, local and other taxes are considered by the management of
such Borrower to be adequate, and there is no unpaid assessment which is or
might be due and payable by any Borrower or create a Lien against any
Borrower's Property, except such assessments as are being contested in good
faith and by appropriate proceedings diligently conducted, and for which
adequate reserves have been set aside in
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accordance with GAAP. None of the tax returns of any Borrower are under audit.
5.11 COMPLIANCE WITH APPLICABLE LAWS. No Borrower is in default in
respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body, which default would have a Material Adverse Effect. Except
as otherwise provided herein, each Borrower is in compliance in all material
respects with all applicable statutes and regulations, including, without
limitation, all laws, statutes and regulations relating to UL Certification,
all Environmental Laws, ERISA, ADA and all laws and regulations relating to
unfair labor practices, equal employment opportunity and employee safety, of
all Governmental Bodies, a violation of which could have a Material Adverse
Effect. No material condemnation, eminent domain or expropriation has been
commenced or, to the best knowledge of Borrowers, threatened against the
Property which Borrowers will own upon the Closing.
5.12 PATENTS, TRADEMARKS, FRANCHISES, AGREEMENTS. Upon the
Closing, Borrowers will own, possess or have the right to use all patents,
trademarks, service marks, tradenames, copyrights, franchises and rights with
respect thereto, necessary for the conduct of Borrowers' Security Monitoring
Business as proposed to be conducted by Borrowers after the Closing Date,
without any known conflict with the rights of others and, in each case, free of
any Liens.
5.13 ENVIRONMENTAL MATTERS. Each Borrower is in compliance with
all applicable Environmental Laws and no portion of the Leasehold Property has
been used as a land fill. There currently are not any known Hazardous
Materials generated, manufactured, released, stored, buried or deposited over,
beneath, in or on (or used in the construction and/or renovation of) the
Leasehold Property in violation of applicable Environmental Laws which could
have a Material Adverse Effect.
5.14 APPLICATION OF CERTAIN LAWS AND REGULATIONS. No Borrower or
Affiliate of any Borrower is:
5.14.1 INVESTMENT COMPANY ACT. An "investment company," or a
company "controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
5.14.2 HOLDING COMPANY ACT. A "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company,"
as such terms are defined in the Public Utility Holding Company Act of
1935, as amended.
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5.14.3 FOREIGN OR ENEMY STATUS. (i) An "enemy" or an "ally
of an enemy" within the meaning of Section 2 of the Trading with the
Enemy Act, (ii) a "national" of a foreign country designated in
Executive Order No. 8389, as amended, or of any "designated enemy
country" as defined in Executive Order No. 9095, as amended, of the
President of the United States of America, in each case within the
meaning of such Executive Orders, as amended, or of any regulation
issued thereunder, (iii) a "national of any designated foreign
country" within the meaning of the Foreign Assets Control Regulations
or of the Cuban Assets Control Regulations of the United States of
America (Code of Federal Regulations, Title 31, Chapter V, Part 515,
Subpart B, as amended), or (iv) an alien or a representative of any
alien or foreign government within the meaning of Section 310 of Title
47 of the United States Code.
5.14.4 REGULATIONS AS TO BORROWING. Subject to any statute
or regulation which regulates the incurrence of any Indebtedness for
Borrowed Money, including, without limitation, statutes or regulations
relative to common or interstate carriers or to the sale of
electricity, gas, steam, water, telephone, telegraph or other public
utility services.
5.15 MARGIN REGULATIONS. None of the transactions contemplated by
this Loan Agreement or any of the other Loan Instruments, including the use of
the proceeds of the Loan, will violate or result in a violation of Section 7 of
the Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T, U and X, and
no Borrower owns or intends to carry or purchase any "margin security" within
the meaning of such Regulation U or G.
5.16 OTHER INDEBTEDNESS. Upon the Closing, no Borrower will have
any Indebtedness for Borrowed Money, except (i) Borrowers' Obligations, (ii)
Permitted Senior Indebtedness permitted to exist as of the Closing Date
pursuant to this Loan Agreement, (iii) the Subordinated Debt and (iv) the
Dealer Holdback Debt. There is set forth in EXHIBIT 5.16 a true, correct and
complete copy of the Dealer Holdback Report dated as of November 30, 1996.
5.17 NO MISREPRESENTATION. Neither this Loan Agreement nor any
other Loan Instrument, certificate, information or report furnished or to be
furnished by or on behalf of any Borrower to Agent or any Lender in connection
with any of the transactions contemplated hereby or thereby, contains or will
contain a misstatement of material fact, or omits or will omit to state a
material fact required to be stated in order to make the statements contained
herein or therein, taken as a whole, not
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misleading in the light of the circumstances under which such statements were
made. There is no fact, other than information known to the public generally,
known to or reasonably foreseen by Borrowers after diligent inquiry, that would
be expected to have a Material Adverse Effect that has not expressly been
disclosed to FINOVA in writing.
5.18 EMPLOYEE BENEFIT PLANS.
5.18.1 NO OTHER PLANS. Neither any Borrower nor any ERISA
Affiliate maintains or contributes to, or has any obligation under,
any Employee Benefit Plan other than those identified on EXHIBIT
5.18.1. Borrowers have provided Agent accurate and complete copies of
all contracts, agreements and documents described on EXHIBIT 5.18.1.
5.18.2 ERISA AND CODE COMPLIANCE AND LIABILITY. Each
Borrower and each ERISA Affiliate is in compliance with all applicable
provisions of ERISA with respect to all Employee Benefit Plans except
where failure to comply would not result in a material liability to
any Borrower and except for any required amendments for which the
remedial amendment period as defined in Section 401(b) of the Code has
not yet expired. Each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code has been determined by the
Internal Revenue Service to be so qualified, and each trust related to
such plan has been determined to be exempt under Section 501(a) of the
Code, except for any amendments for which the remedial amendment
period as defined in Section 401(b) of the Code has not yet expired.
No material liability has been incurred by any Borrower or ERISA
Affiliate which remains unsatisfied for any taxes or penalties with
respect to any Employee Benefit Plan or any Multiemployer Plan.
5.18.3 FUNDING. No Pension Plan has been terminated, nor has
any accumulated funding deficiency (as defined in Section 412 of the
Code) been insured (without regard to any waiver granted under Section
412 of the Code), nor has any funding waiver from the Internal Revenue
Service been received or requested with respect to any Pension Plan,
nor has any Borrower or any ERISA Affiliate failed to make any
contributions or to pay any amounts due and owing as required by
Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been
any event requiring any disclosure under Section 4041(c)(3)(C),
4063(a) or 4068 of ERISA with respect to any Pension Plan.
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5.18.4 PROHIBITED TRANSACTIONS AND PAYMENTS. Neither any
Borrower nor any ERISA Affiliate has: (i) engaged in a nonexempt
"prohibited transaction" as such term is defined in Section 406 of
ERISA or Section 4975 of the Code; (ii) incurred any liability to the
PBGC which remains outstanding other than the payment of premiums and
there are no premium payments which are due and unpaid; (iii) failed
to make a required contribution or payment to a Multiemployer Plan; or
(iv) failed to make a required installment or other required payment
under Section 412 of the Code.
5.18.5 NO TERMINATION EVENT. No Termination Event has
occurred or is reasonably expected to occur.
5.18.6 ERISA LITIGATION. No material proceeding, claim,
lawsuit and/or investigation is existing or, to the best knowledge of
Borrowers, threatened concerning or involving any (i) employee welfare
benefit plan (as defined in Section 3(1) of ERISA) currently
maintained or contributed to by any Borrower, or any ERISA Affiliate,
(ii) Pension Plan or (iii) Multiemployer Plan.
5.19 EMPLOYEE MATTERS.
5.19.1 COLLECTIVE BARGAINING AGREEMENTS; GRIEVANCES. (i)
None of the employees of any Borrower is subject to any collective
bargaining agreement, (ii) no petition for certification or union
election is pending with respect to the employees of any Borrower and
no union or collective bargaining unit has sought such certification
or recognition with respect to the employees of any Borrower and (iii)
there are no strikes, slowdowns, work stoppages, unfair labor practice
complaints, grievances, arbitration proceedings or controversies
pending or, to the best knowledge of Borrowers, threatened against any
Borrower by any Borrower's employees, other than employee grievances
or controversies arising in the ordinary course of business that could
not in the aggregate be expected to have a Material Adverse Effect.
5.19.2 CLAIMS RELATING TO EMPLOYMENT. Neither any Borrower
nor, to Borrower's best knowledge, any partner, shareholder or
employee of any Borrower, is subject to any employment agreement or
non-competition agreement with any former employer or any other Person
which agreement would have a Material Adverse Effect due to (i) any
information which such Borrower would be prohibited from using under
the terms of such agreement or (ii) any legal considerations relating
to unfair competition, trade secrets or proprietary information.
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5.20 BURDENSOME OBLIGATIONS. After giving effect to the
transactions contemplated by the Loan Instruments, (i) neither Borrower (A)
will be a party to or be bound by any franchise, agreement, deed, lease or
other instrument, or be subject to any restriction, which is so unusual or
burdensome so as to cause, in the foreseeable future, a Material Adverse Effect
and (B) intends to incur, or believes that it will incur, debts beyond its
ability to pay such debts as they become due, and (ii) each Borrower (A) owns
and will own Property, the fair saleable value of which is (I) greater than the
total amount of its liabilities (including contingent liabilities) and (II)
greater than the amount that will be required to pay the probable liabilities
of its then existing debts as they become absolute and matured, and (B) has and
will have capital that is not unreasonably small in relation to its business as
presently conducted and as proposed to be conducted. No Borrower presently
anticipates that future expenditures needed to meet the provisions of federal
or state statutes, orders, rules or regulations will be so burdensome so as to
have a Material Adverse Effect.
5.21 SECURITY MONITORING CONTRACTS AS OF CLOSING DATE. As of the
Closing Date, Borrowers in the aggregate own not less than 13,500 Security
Monitoring Contracts. The number of Security Monitoring Contracts owned by
each Borrower as of November 30, 1996 is set forth on EXHIBIT 5.21.
5.22 CENTRAL STATION CONTRACTS AS OF CLOSING DATE. As of the
Closing Date, Borrowers in the aggregate monitor not less than 54,500 Central
Station Contracts. The number of Central Station Contracts monitored by each
Borrower as of November 30, 1996 is set forth on EXHIBIT 5.22.
5.23 HOLDING COMPANIES. the Holding Companies do not engage in any
business other than the ownership of the MSG Membership Interests.
ARTICLE VI
AFFIRMATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full
each Borrower agrees that it will:
6.1 LEGAL EXISTENCE; GOOD STANDING. Maintain its existence and
its good standing in the jurisdiction of its formation and its qualification in
each jurisdiction in which the failure so to qualify would have a Material
Adverse Effect, and in any event in each jurisdiction in which any portion of
the System owned or operated by such Borrower is located.
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6.2 INSPECTION. Permit representatives of Agent and Lenders, upon
two Business Days prior notice if no Event of Default exists, or at any time if
any Event of Default exists, to (i) visit its offices, (ii) examine its books
and records and Accountants' reports relating thereto, (iii) make copies or
extracts therefrom, (iv) discuss its affairs with its employees, (v) examine
and inspect its Property and (vi) meet and discuss its affairs with the
Accountants, and such Accountants, as a condition to their retention by such
Borrower, are hereby irrevocably authorized by such Borrower to fully discuss
and disclose all such affairs with Agent and Lenders (the foregoing items (i)
through (vi) hereinafter are referred to collectively as an "Inspection").
Notwithstanding the foregoing, if no Event of Default exists, Agent shall not
(A) conduct an Inspection more than once a quarter and (B) charge the Borrowers
more than $2,000 on account of such Inspection. For purposes of this Section
6.2, Agent agrees to comply with the rules and regulations with respect to UL
Certifications.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION. Maintain a
standard system of accounting in accordance with GAAP and furnish to each
Lender:
6.3.1 MONTHLY STATEMENTS. As soon as available and in any
event within 30 days after the close of each month:
(a) the consolidated balance sheet of Obligors
and the consolidating balance sheet for each Borrower as of
the end of such month,
(b) the consolidated statements of operations and
Operating Cash Flow of Obligors and the consolidating
statements of operations and Operating Cash Flow of each
Borrower for such month and for the period from the beginning
of the then current year to the end of such month, setting
forth in each case in comparative form the corresponding
figures for the corresponding period in the preceding year,
and
(c) a report providing the following information
as of the end of such month: (i) the number of Security
Monitoring Contracts owned by each Borrower; (ii) the number
of Central Station Contracts monitored by each Borrower; and
(iii) the RMR for the Security Monitoring Contracts and
Central Station Contracts.
all in reasonable detail, containing such information as Lenders
reasonably may require, and certified by the Chief Financial Officer
of such Borrower as complete and correct,
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subject to normal year-end adjustments.
6.3.2 QUARTERLY AGINGS. As soon as available and in any
event within 45 days after the close of each quarter of each year, an
aging of each Borrower's outstanding accounts payable and accounts
receivable as of the end of such quarter, all in reasonable detail,
containing such information as Lenders reasonably may require, and
certified by the Chief Financial Officer of such Borrower as complete
and correct, subject to normal year-end adjustments.
6.3.3 ANNUAL STATEMENTS. As soon as available and in any
event within 120 days after the close of each year:
(a) the consolidated balance sheet of Obligors as
of the end of such year and the consolidated statements of
operations, cash flows, shareholders' equity or members'
equity of Obligors for such year (collectively, the "Basic
Financial Statements"), the consolidating balance sheet of
each Borrower as of the end of such year, the consolidated
statements of operations, cash flows and shareholders' equity
or members' equity, as applicable, of Obligors for such year
and the consolidated and consolidating statements of Operating
Cash Flow and Excess Cash Flow of Obligors for such year,
setting forth in each case in comparative form the
corresponding figures for the preceding year,
(b) an opinion of the Accountants which shall
accompany the Basic Financial Statements, which opinion shall
be unqualified as to going concern and scope of audit, stating
that (i) the examination by the Accountants in connection with
such Basic Financial Statements has been made in accordance
with generally accepted auditing standards, (ii) such Basic
Financial Statements have been prepared in conformity with
GAAP and in a manner consistent with prior periods, and (iii)
such Basic Financial Statements fairly present in all material
respects the financial position and results of operations of
Borrowers, and
(c) a letter from the Accountants stating that
the statements of Operating Cash Flow and Excess Cash Flow
were computed in accordance with the requirements of this Loan
Agreement.
6.3.4 COMPLIANCE CERTIFICATES. The financial statements
described in subsections 6.3.1, 6.3.2 and 6.3.3 shall be accompanied
by a Compliance Certificate.
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6.3.5 ACCOUNTANTS' CERTIFICATE. Simultaneously with the
delivery of the certified Basic Financial Statements required by
subsection 6.3.3, copies of a certificate of the Accountants stating
that (i) they have checked the computations delivered by Borrowers in
compliance with subsection 6.3.3, and (ii) in making the examination
necessary for their audit of the Basic Financial Statements of
Borrowers for such year, nothing came to their attention of a
financial or accounting nature that caused them to believe that (A)
Borrowers were not in compliance with the terms, covenants, provisions
or conditions of any of the Loan Instruments, or (B) there shall have
occurred any condition or event which would constitute an Event of
Default, or, if so, specifying in such certificate all such instances
of non-compliance and the nature and status thereof.
6.3.6 AUDIT REPORTS. Promptly upon receipt thereof, a copy
of each report, other than the reports referred to in subsection
6.3.3, including any so-called "Management Letter" or similar report,
submitted to Borrowers by the Accountants in connection with any
annual, interim or special audit made by the Accountants of the books
of Borrowers.
6.3.7 BUSINESS PLANS. Before the end of each year, a
business plan for the following year setting forth in reasonable
detail the projected operations budget of the System for such year and
such other information as Lenders reasonably may request, for such
following year.
6.3.8 NOTICE OF DEFAULTS; LOSS. Prompt notice if: (i) any
Indebtedness of any Borrower is declared or shall become due and
payable prior to its declared or stated maturity, or called and not
paid when due, (ii) an event has occurred that enables the holder of
any note, or other evidence of such Indebtedness, certificate or
security evidencing any such Indebtedness of any Borrower to declare
such Indebtedness due and payable prior to its stated maturity, (iii)
there shall occur and be continuing an Incipient Default or Event of
Default, accompanied by a statement setting forth what action
Borrowers propose to take in respect thereof, or (iv) any event shall
occur which has a Material Adverse Effect, including the amount or the
estimated amount of any loss or depreciation or adverse effect.
6.3.9 NOTICE OF SUITS, ADVERSE EVENTS. Prompt notice of:
(i) any citation, summons, subpoena, order to show cause or other
order naming any Borrower a party to any proceeding before any
Governmental Body which might reasonably be
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expected to have a Material Adverse Effect and include with such
notice a copy of such citation, summons, subpoena, order to show cause
or other order, (ii) any lapse or other termination of any UL
Certification, Alarm License, license, permit, franchise, agreement or
other authorization issued to any Borrower by any Governmental Body or
any other Person that is material to the operation of Borrowers'
Security Monitoring Business, (iii) any refusal by any Governmental
Body or any other Person to renew or extend any such UL Certification,
Alarm License, license, permit, franchise, agreement or other
authorization and (iv) any dispute between Borrowers and any
Governmental Body or any other Person, which lapse, termination,
refusal or dispute referred to in clauses (ii) and (iii) above or in
this clause (iv) could reasonably be expected to have a Material
Adverse Effect.
6.3.10 REPORTS TO SHAREHOLDERS, MEMBERS, CREDITORS AND
GOVERNMENTAL BODIES.
(a) Promptly upon becoming available, copies of
all financial statements, reports, notices and other
statements sent or made available generally by any Borrower to
such Borrower's shareholders or members to the extent the same
contain any information not included in any financial
statements previously furnished to Lenders pursuant to
subsections 6.3.1, 6.3.2 or 6.3.3, of all regular and periodic
reports and all registration statements and prospectuses filed
by any Borrower with any securities exchange or with the
Securities and Exchange Commission or any Governmental Body
succeeding to any of its functions, and of all statements
generally made available by each Borrower or others concerning
material developments in the business of any Borrower.
(b) Promptly upon becoming available, copies of
any periodic or special reports filed by any Borrower with any
Governmental Body or Person, if such reports indicate any
material change in the business, operations, affairs or
condition of such Borrower, or if copies thereof are requested
by Lender, and copies of any material notices and other
communications from any Governmental Body or Person which
specifically relate to any Borrower.
6.3.11 ERISA NOTICES AND REQUESTS.
(a) With reasonable promptness, and in any event
within 25 Business Days after occurrence of any of the
following, Borrowers will give notice of and/or deliver
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to Agent copies of: (i) the establishment of any new Pension
Plan or Multiemployer Plan; (ii) the commencement of
contributions to any Pension Plan or Multiemployer Plan to
which any Borrower or any of its ERISA Affiliates was not
previously contributing or any increase in the benefits of any
existing Pension Plan or Multiemployer Plan; (iii) each
funding waiver request filed with respect to any Pension Plan
and all communications received or sent by any Borrower or any
ERISA Affiliate with respect to such request; and (iv) the
failure of any Borrower or ERISA Affiliate to make a required
installment or payment to a Pension Plan under Section 302 of
ERISA or Section 412 of the Code by the due date.
(b) Promptly and in any event within 10 Business
Days of becoming aware of the occurrence of or forthcoming
occurrence of any (i) Termination Event or (ii) non-exempt
"prohibited transaction", as such term is defined in Section
406 of ERISA or Section 4975 of the Code, in connection with
any Pension Plan or any trust created thereunder, Borrowers
will deliver to Agent a notice specifying the nature thereof,
what action the applicable Borrower has taken, is taking or
proposes to take with respect thereto and, when known, any
action taken or threatened by the Internal Revenue Service,
the Department of Labor or the PBGC with respect thereto.
(c) With reasonable promptness but in any event
within 10 Business Days after the occurrence of, or receipt
of, any of the following, Borrowers will deliver to Agent
copies of: (i) any favorable or unfavorable determination
letter from the Internal Revenue Service regarding the
qualification of an Employee Benefit Plan under Section 401(a)
of the Code; (ii) all notices received by any Borrower or any
ERISA Affiliate of the PBGC's intent to terminate any Pension
Plan or to have a trustee appointed to administer any Pension
Plan; (iii) each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by any Borrower or any
ERISA Affiliate with the Internal Revenue Service with respect
to each Pension Plan; and (iv) all notices received by any
Borrower or any ERISA Affiliate from a Multiemployer Plan
sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA. Borrowers will
notify Agent in writing within two Business Days of any
Borrower or any ERISA Affiliate that has filed a notice of
intent to terminate any Pension Plan under a
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distress termination within the meaning of Section 4041(c) of
ERISA.
6.3.12 OTHER INFORMATION.
(a) Immediate notice of any change in the
location of any Property of any Borrower which is material to
or necessary for the continued operation of such Borrower's
Security Monitoring Business, any change in the name of any
Borrower, any sale or purchase of Property outside the regular
course of business of any Borrower, and any change in the
business or financial affairs of any Borrower, which change
would have a Material Adverse Effect.
(b) Promptly upon request therefor, such other
information and reports relating to the past, present or
future financial condition, operations, plans and projections
of Borrowers as Lenders reasonably may request from time to
time.
6.4 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Timely file
all material reports, applications, documents, instruments and information
required to be filed pursuant to all rules, regulations or requests of any
Governmental Body or other Person having jurisdiction over the operation of
Borrowers' Security Monitoring Business, including, but not limited to, such of
the Loan Instruments as are required to be filed with any such Governmental
Body or other Person pursuant to applicable rules and regulations promulgated
by such Governmental Body or other Person.
6.5 MAINTENANCE OF UL CERTIFICATIONS, ALARM LICENSES, LICENSES,
FRANCHISES AND OTHER AGREEMENTS.
6.5.1 MAINTENANCE OF UL CERTIFICATIONS AND ALARM LICENSES.
Maintain in full force and effect at all times, and apply in a
timely manner for renewal of, all UL Certifications and Alarm Licenses
necessary for the operation of Borrowers' Security Monitoring
Business, the loss of any of which would have a Material Adverse
Effect, and deliver to Agent (i) at least 30 days prior notice of the
proposed amendment of any of such UL Certifications and Alarm Licenses
and (ii) (A) evidence of the filing of any application for renewal of
such UL Certifications and Alarm Licenses not less than the earlier of
(x) 60 days prior to the expiration of such UL Certifications and
Alarm Licenses or (y) the last day such application may be filed in
accordance with applicable law and (B) copies of any petition or other
document filed to
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deny or object to any such renewal application promptly after receipt
thereof by Borrowers.
6.5.2 MAINTENANCE OF LICENSES, FRANCHISES AND AGREEMENTS.
Maintain in full force and effect at all times, and apply in a
timely manner for renewal of licenses, franchises, trademarks,
tradenames and agreements necessary for the operation of Borrowers'
Security Monitoring Business, the loss of any of which would have a
Material Adverse Effect, and deliver to Agent (i) at least 30 days
prior notice of the proposed amendment of any of such licenses,
franchises, trademarks, tradenames and agreements and (ii) (A)
evidence of the filing of any application for renewal of such
licenses, franchises, trademarks, tradenames and agreements not less
than the earlier of (x) 60 days prior to the expiration of such
licenses, license or franchise or (y) the last day such application
may be filed in accordance with applicable law and (B) copies of any
petition or other document filed to deny or object to any such renewal
application promptly after receipt thereof by Borrowers.
6.6 INSURANCE.
6.6.1 KEY MAN LIFE INSURANCE. Maintain in full force and
effect at all times policies of insurance in such form and issued by
such insurers as shall be reasonably acceptable to Agent, insuring the
life of (i) Xxxxxxx in the amount of $2,000,000 and (ii) Xxxxx in the
amount of $500,000, and deliver to Agent, from time to time as Agent
reasonably may request, evidence of compliance with this subsection
6.6.1.
6.6.2 BUSINESS INSURANCE. Maintain in full force and
effect at all times Business Insurance as required by the insurance
letter agreement between Borrowers and FINOVA, a copy of which is
attached hereto as EXHIBIT 6.6.2, all of which shall be written by
insurers and in amounts and forms reasonably satisfactory to Agent and
otherwise comply with the terms of such insurance letter agreement,
and deliver to Agent, from time to time as Agent reasonably may
request, evidence of compliance with this subsection 6.6.2.
6.6.3 CLAIMS AND PROCEEDS. Each Borrower hereby directs all
insurers under all policies of Business Insurance to pay all proceeds
payable thereunder directly to Agent and each Borrower hereby
authorizes Agent to collect all such proceeds. Each Borrower
irrevocably appoints Agent (and all officers, employees or agents
designated by Agent) as such Borrower's true and lawful attorney and
agent in fact for the
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purpose of and with power to make, settle and adjust claims under such
policies of insurance, endorse the name of such Borrower on any check,
draft, instrument or other item of payment for the proceeds of such
policies of insurance, and to make all determinations and decisions
with respect to such policies of insurance. Each Borrower
acknowledges that such appointment of Agent as its attorney and agent
in fact is a power coupled with an interest and therefore is
irrevocable. Each Borrower shall promptly notify Agent of any loss,
damage, destruction or other casualty to the Collateral. The
insurance proceeds received on account of any loss, damage,
destruction or other casualty shall, at the option of Lenders, be (i)
applied in reduction of Borrowers' Obligations in the following order
of priority: (A) first, to the payment of any and all sums which are
then due and payable pursuant to the terms of the Loan Instruments,
other than the Principal Balance and accrued and unpaid interest
thereon, (B) next, to accrued and unpaid interest on the Principal
Balance and (C) then to the Principal Balance in the inverse order of
the maturity of the installments thereof, or (ii) held by Agent and
applied to pay for the cost of repair or replacement of the Collateral
subject to such loss, damage, destruction or other casualty, in which
event such proceeds shall be made available in the manner and under
such conditions as Agent reasonably may require. Notwithstanding
anything to the contrary contained in this subsection 6.6.3, if the
amount of the proceeds from any loss, damage, destruction or other
casualty to the Collateral reasonably is expected to be less than
$100,000 and neither an Event of Default nor an Incipient Default then
shall exist, Borrowers shall have the right to make, settle and adjust
any claim regarding such proceeds and Agent shall collect such
proceeds and make such proceeds available to Borrowers to pay for the
repair or replacement of the Collateral which was the subject of such
loss, damage, destruction or other casualty in the manner and under
such terms and conditions as Agent reasonably may require. In the
event the proceeds are to be applied to the repair or replacement of
Collateral, the Collateral shall be repaired or replaced so as to be
of at least equal value and substantially the same character as prior
to such loss, damage, destruction or other casualty.
6.7 FUTURE LEASES. Deliver to Agent, concurrently with the
execution by any Borrower, as lessee, of any lease pertaining to real property,
(i) an executed copy thereof, (ii) at the option of Agent, either a leasehold
mortgage upon or a collateral assignment of such lease in favor of Agent, in
either case in a form reasonably acceptable to Agent, and (iii) a Landlord
Consent and Waiver from the lessor under such lease.
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6.8 FUTURE ACQUISITIONS OF REAL PROPERTY. Deliver to Agent
concurrently with the (i) execution by any Borrower of any contract relating to
the purchase by such Borrower of real property, an executed copy of such
contract and (ii) closing of the purchase of such real property, (A) a first
mortgage or deed of trust in favor of Agent on such real property, in form and
content satisfactory to Agent, (B) a lender's policy of title insurance, in
such form and amount and containing such endorsements as shall be reasonably
satisfactory to Agent, (C) an ALTA/ACSM survey of such real property and (D)
such other documents and assurances with respect to such real property as Agent
may require.
6.9 ENVIRONMENTAL MATTERS.
6.9.1 COMPLIANCE. At all times comply with, and be
responsible for, its obligations under all Environmental Laws
applicable to the Leasehold Property, any parcel of real estate
acquired in connection with an Acquisition and any other Property
owned by such Borrower or used by such Borrower in the operation of
its business. At its sole cost and expense, each Borrower shall (i)
comply in all respects with (A) any notice of any violation or
administrative or judicial complaint or order having been filed
against such Borrower, any portion of the Leasehold Property, any
parcel of real estate acquired in connection with an Acquisition or
any other Property owned by such Borrower or used by such Borrower in
the operation of its business alleging violations of any law,
ordinance and/or regulation requiring such Borrower to take any action
in connection with the release, transportation and/or clean-up of any
Hazardous Materials, and (B) any notice from any Governmental Body or
any other Person alleging that such Borrower is or may be liable for
costs associated with a response or clean-up of any Hazardous
Materials or any damages resulting from such release or
transportation, or (ii) diligently contest in good faith by
appropriate proceedings any demands set forth in such notices,
provided (A) reserves in an amount satisfactory to Agent to pay the
costs associated with complying with any such notice are established
by such Borrower and (B) no Lien would or will attach to the Property
which is the subject of any such notice as a result of any compliance
by such Borrower which is delayed during any such contest. Promptly
upon receipt of any notice described in the foregoing clause (i),
Borrowers shall deliver to Agent a copy thereof.
6.9.2 CERTIFICATION. Deliver to Agent, not later than
January 1 of each year, an Environmental Compliance Certificate.
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6.10 COMPLIANCE WITH LAWS. Comply with all laws, statutes and
regulations relating to UL Certification and all other federal, state and local
laws, ordinances, requirements and regulations and all judgments, orders,
injunctions and decrees applicable to such Borrower and its operations, the
failure to comply with which would have a Material Adverse Effect.
6.11 TAXES AND CLAIMS. Pay and discharge all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or
profits, or upon any Property belonging to it, prior to the date on which
penalties attach thereto, and all lawful claims which, if unpaid, might become
a Lien (other than a Permitted Lien) upon the Property of such Borrower,
provided that so long as no Lien has attached to the Property of any Borrower
as a result of any of the foregoing, no Borrower shall be required by this
Section 6.11 to pay any such amount if the same is being contested diligently
and in good faith by appropriate proceedings and as to which the applicable
Borrower has set aside reserves on its books satisfactory to Agent.
6.12 MAINTENANCE OF PROPERTIES. Maintain all of its Property
necessary in the operation of such Borrower's Security Monitoring Business in
good working order and condition.
6.13 GOVERNMENTAL APPROVALS. Upon the exercise by Agent and/or
Lenders of any power, right or privilege pursuant to the provisions of any of
the Loan Instruments requiring any consent, approval or authorization of any
Governmental Body (including, without limitation, transfers of UL
Certifications), promptly execute and cause the execution of all applications,
certificates, instruments and other documents that Agent and/or Lenders may
reasonably be required to obtain for such consent, approval or authorization.
6.14 NON-FUNDED ACQUISITION. Promptly after the consummation of
each Non-Funded Acquisition, Borrowers shall notify Agent of the terms and
conditions of such acquisition and provide Agent with any other information
with respect thereto as Agent may reasonably request.
ARTICLE VII
NEGATIVE COVENANTS
Until all of Borrowers' Obligations are paid and performed in full, no
Borrower shall:
7.1 BORROWING. Create, incur, assume or suffer to exist
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any liability for Indebtedness for Borrowed Money except (i) Borrowers'
Obligations, (ii) Permitted Senior Indebtedness, (iii) the Subordinated Debt
and (iv) the Dealer Holdback Debt.
7.2 LIENS. Create, incur, assume or suffer to exist any Lien upon
any of its Property, whether now owned or hereafter acquired, except Permitted
Liens.
7.3 MERGER AND ACQUISITION. Consolidate with or merge with or
into any Person, or acquire directly or indirectly all or substantially all of
the capital stock, equity interests membership interests or Property of any
Person, except Funded Acquisitions and Non-Funded Acquisitions.
7.4 CONTINGENT LIABILITIES. Assume, guarantee, endorse,
contingently agree to purchase, become liable in respect of any letter of
credit, or otherwise become liable upon the obligation of any Person, except
(i) Dealer Holdback Debt, (ii) liabilities arising from the endorsement of
negotiable instruments for deposit or collection or (iii) the posting of bonds
to secure performance to the extent necessary in connection with Borrowers'
Security Monitoring Business and similar transactions in the ordinary course of
business.
7.5 DISTRIBUTIONS. Pay any dividends or make any distributions
with respect to, or purchase or redeem all or any portion of, the Capital Stock
or the Membership Interests.
7.6 CAPITAL EXPENDITURES. Make or incur any Capital Expenditures
in any year set forth in EXHIBIT 7.6 if the aggregate amount of all Capital
Expenditures made by Borrowers with respect to such year would exceed the
amount set forth opposite such year.
7.7 PAYMENTS OF INDEBTEDNESS FOR BORROWED MONEY. Make any
voluntary or optional prepayment of any Indebtedness for Borrowed Money other
than Borrowers' Obligations and payments made in the ordinary course of
business with respect to the Dealer Holdback Debt.
7.8 OBLIGATIONS AS LESSEE UNDER OPERATING LEASES. Enter into any
arrangement as lessee of Property under any Operating Lease if the aggregate
rentals for Borrowers for all such Operating Leases during any year set forth
in EXHIBIT 7.8 would exceed the amount set forth opposite such year.
7.9 INVESTMENTS, LOANS. At any time purchase or otherwise
acquire, hold or invest in the capital stock of, or any other interest in, any
Person, or make any loan or advance to, or enter into any arrangement for the
purpose of providing funds or credit to, or make any other investment, whether
by way of capital
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contribution or otherwise, in or with any Person, including, without
limitation, any Affiliate, except (i) investments in direct obligations of, or
instruments unconditionally guaranteed by, the United States of America or in
certificates of deposit issued by a Qualified Depository, (ii) investments in
commercial or finance paper which, at the time of investment, is rated either
"A" or better by Xxxxx'x Investors Service, Inc., or Standard & Poor's
Corporation, respectively, or at the equivalent rate by any of their respective
successors, (iii) any interests in any money market account maintained, at the
time of investment, with a Qualified Depository, the investments of which, at
the time of investment, are restricted to the types specified in clause (i)
above and (iv) the formation and capitalization of Permitted Subsidiaries. All
investments permitted pursuant to clauses (i), (ii) and (iii) of this Section
7.9 shall have a maturity not exceeding one year.
7.10 FUNDAMENTAL BUSINESS CHANGES. Materially change the nature of
its business or engage in any business other than the Security Monitoring
Business.
7.11 FACILITY SITES. Change the locations of its chief executive
office, Central Station Businesses, studios, offices or other Property used in
the operation of such Borrower's Security Monitoring Business unless (i) Agent
shall have received at least 30 days' prior notice thereof, (ii) Borrowers
shall have complied with all applicable laws, rules and regulations and shall
have received all required consents and approvals from any Governmental Body,
(iii) Agent shall have received satisfactory evidence that such change could
not reasonably be expected to affect adversely the operations or business
prospects of Borrowers and (iv) Borrowers shall have executed and delivered to
Agent any documents Agent may reasonably require in order to maintain the
validity and priority of the Security Interests.
7.12 SALE OR TRANSFER OF ASSETS. Sell, lease, assign, transfer or
otherwise dispose of any Property (other than in the ordinary course of
business) except for the sale or disposition of (i) Property which is not
material to or necessary for the continued operation of its business and (ii)
obsolete or unusable items of equipment which promptly are replaced with new
items of equipment of like function and comparable value to the unusable items
of equipment when the same were new or not obsolete or unusable, provided such
replacement items of equipment shall become subject to the Security Interests.
7.13 AMENDMENT OF CERTAIN DOCUMENTS. Amend, modify or waive any
term or provision of the (i) the articles of organization or operating
agreements of SACC, MSG or ASMS, (ii) the articles of incorporation or by-laws
of SAI or the Holding Companies or (iii)
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the Contribution Agreement.
7.14 ACQUISITION OF ADDITIONAL PROPERTIES. Acquire any additional
Property except (i) such Property as is necessary to or useful in the operation
of such Borrower's Security Monitoring Business, provided such acquisitions
shall be subject to the conditions and limitations set forth in this Loan
Agreement, (ii) Funded Acquisitions and (iii) Non-Funded Acquisitions.
7.15 ISSUANCE OF MEMBERSHIP INTERESTS. Issue or sell, permit to be
issued or sold, or otherwise consent to the transfer of, any additional
membership interests or any interests convertible into or exercisable for any
such additional membership interests, other than membership interests issued by
a Permitted Subsidiary upon its formation.
7.16 TRANSACTIONS WITH AFFILIATES. Sell, lease, assign, transfer
or otherwise dispose of any Property to any Obligor or any Affiliate of any
Obligor, lease Property, render or receive services or purchase assets from any
Obligor or any such Affiliate, or otherwise enter into any contractual
relationship with any Obligor or any Affiliate of any Obligor, except that (i)
subject to the restrictions contained in Section 7.21, Borrowers may pay an
annual salaries to Xxxxxxx, Xxxxx and Xxxxx and (ii) Borrowers may engage in
the transactions described on EXHIBIT 7.16.
7.17 COMPLIANCE WITH ERISA.
(a) Permit the occurrence of any Termination Event which
would result in a liability to any Borrower or ERISA Affiliate in
excess of $50,000;
(b) Permit the present value of all benefit liabilities
under all Pension Plans to exceed the current value of the assets of
such Pension Plans allocable to such benefit liabilities by more than
$50,000;
(c) Permit any accumulated funding deficiency in excess
of $50,000 (as defined in Section 302 of ERISA and Section 412 of the
Code) with respect to any Pension Plan, whether or not waived;
(d) Fail to make any contribution or payment to any
Multiemployer Plan which any Borrower or ERISA Affiliate may be
required to make under any agreement relating to such Multiemployer
Plan, or any law pertaining thereto which results in or is likely to
result in a liability in excess of $50,000;
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(e) Engage, or permit any Borrower or ERISA Affiliate to
engage, in any "prohibited transaction" as such term is defined in
Section 406 of ERISA or Section 4975 of the Code for which a civil
penalty pursuant to Section 502(i) of ERISA or a tax pursuant to
Section 4975 of the Code in excess of $50,000 is imposed;
(f) Permit the establishment of any Employee Benefit Plan
providing post-retirement welfare benefits or establish or amend any
Employee Benefit Plan which establishment or amendment could result in
liability to any Borrower or ERISA Affiliate or increase the
obligation of any Borrower or ERISA Affiliate to a Multiemployer Plan
which liability or increase, individually or together with all similar
liabilities and increases, is material to any Borrower or ERISA
Affiliate; or
(g) Fail, or permit any Borrower or ERISA Affiliate to
fail, to establish, maintain and operate each Employee Benefit Plan in
compliance in all material respects with ERISA, the Code and all other
applicable laws and regulations and interpretations thereof.
7.18 COVENANT LEVERAGE RATIO. Permit the Covenant Leverage Ratio
as of the last day of any quarter to be greater than the Applicable Ratio for
such day.
7.19 DEBT SERVICE COVERAGE RATIO. Permit the Debt Service Coverage
Ratio for each four quarter period ending as of each quarter to be less than
the ratio of 1.25:1.
7.20 MINIMUM RMR.
7.20.1 MINIMUM RMR FOR SECURITY MONITORING CONTRACTS.
Permit the RMR with respect to Security Monitoring Contracts for any
quarter set forth in EXHIBIT 7.20.1 to be less than the amount set
forth opposite such quarter.
7.20.2 MINIMUM RMR FOR CENTRAL STATION CONTRACTS. Permit
the RMR with respect to Central Station Contracts for any quarter set
forth in EXHIBIT 7.20.2 to be less than the amount set forth opposite
such quarter.
7.21 COMPENSATION. Pay any salary, bonuses, fees or other forms of
compensation to Xxxxxxx, Xxxxx or Xxxxx if the aggregate amount thereof paid by
all Borrowers to (i) Xxxxxxx would exceed $250,000 per year, (ii) Xxxxx would
exceed $250,000 per year and (iii) Xxxxx would exceed $200,000 per year.
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7.22 HOLDING COMPANIES. Permit any Holding Company to engage in
any business other than the ownership of the MSG Membership Interests.
7.23 NON-FUNDED ACQUISITION. Consummate a Non-Funded Acquisition
if Cash Equivalents after such consummation are less than (i) $25,000, if such
Acquisition occurs on or before June 30, 1997, or (ii) $150,000, if such
Acquisition occurs after June 30, 1997.
ARTICLE VIII
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an Event of Default under the Loan Instruments:
8.1.1 DEFAULT IN PAYMENT. If any Borrower shall fail to pay
all or any portion of Borrowers' Obligations when the same become due
and payable.
8.1.2 BREACH OF COVENANTS.
(a) If any Borrower shall fail to observe or
perform any covenant or agreement made by such Borrower
contained in Section 6.1, 6.2, 6.5.1, 6.6, 6.9 or in Article
VII;
(b) If any Obligor shall fail to observe or
perform any covenant or agreement (other than those referred
to in subparagraph (a) above or specifically addressed
elsewhere in this Section 8.1) made by such Person in any of
the Loan Instruments to which such Person is a party, and such
failure shall continue for a period of 30 days after notice of
such failure is given by Lenders, provided that, if such
failure is in connection with subsection 6.5.2, such Obligor
shall have an additional 30 days to cure such failure, if such
Obligor (i) is diligently pursuing a cure for such failure and
(ii) provides Agent with evidence to that effect in form and
substance reasonably satisfactory to Agent.
8.1.3 BREACH OF WARRANTY. If any representation or warranty
made by or on behalf of any Obligor in or pursuant to any of the Loan
Instruments or in any instrument or document furnished in compliance
with the Loan Instruments shall prove to be false or misleading in any
material respect
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on the date as of which made.
8.1.4 DEFAULT UNDER OTHER INDEBTEDNESS FOR BORROWED MONEY.
If (i) any Borrower at any time shall be in default (as principal or
guarantor or other surety) in the payment of any principal of or
premium or interest on any Indebtedness for Borrowed Money (other than
Borrowers' Obligations) beyond the grace period, if any, applicable
thereto and the aggregate amount of such payments then in default
beyond such grace period shall exceed $25,000 or (ii) any default
shall occur in respect of any issue of Indebtedness for Borrowed Money
of any Borrower (other than Borrowers' Obligations) outstanding in a
principal amount of at least $50,000, or in respect of any agreement
or instrument relating to any such issue of Indebtedness for Borrowed
Money, and such default shall continue beyond the grace period, if
any, applicable thereto.
8.1.5 BANKRUPTCY.
(a) If any Obligor shall (i) generally not be
paying its, his or her debts as they become due, (ii) file, or
consent, by answer or otherwise, to the filing against it, him
or her of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy or insolvency
under the laws of any jurisdiction, (iii) make an assignment
for the benefit of creditors, (iv) consent to the appointment
of a custodian, receiver, trustee or other officer with
similar powers for such Obligor, or for any substantial part
of the Property of such Obligor or (v) be adjudicated
insolvent.
(b) If any Governmental Body of competent
jurisdiction shall enter an order appointing, without consent
of such Obligor, a custodian, receiver, trustee or other
officer with similar powers with respect to such Obligor, or
with respect to any substantial part of the Property belonging
to any such Person, or if an order for relief shall be entered
in any case or proceeding for liquidation or reorganization or
otherwise to take advantage of any bankruptcy or insolvency
law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of any Obligor or if any petition
for any such relief shall be filed against any Obligor and
such petition shall not be dismissed or stayed within 60 days.
8.1.6 JUDGMENTS. If there shall exist a final judgment or
award against any Borrower which shall have been
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outstanding for a period of 30 days or more from the date of the entry
thereof and shall not have been discharged or paid in full or stayed
pending appeal, if the aggregate amount of all such judgments and
awards exceeds $50,000.
8.1.7 IMPAIRMENT OF LICENSES; OTHER AGREEMENTS. If (i) any
Governmental Body shall revoke, terminate, suspend or adversely modify
any UL Certification or Alarm License of any Borrower, the
non-continuation of which could reasonably be expected to have a
Material Adverse Effect, or (ii) there shall exist any violation or
default in the performance of, or a material failure to comply with
any agreement, or condition or term of any UL Certification or Alarm
License, which violation, default or failure has a Material Adverse
Effect, or any such UL Certification or Alarm Licenses shall cease to
be in full force and effect, or (iii) any agreement which is necessary
to the operation of any Borrower's Security Monitoring Business shall
be revoked or terminated and not replaced by a substitute acceptable
to Lenders within 30 days after the date of such revocation or
termination, and such revocation or termination and non-replacement
could reasonably be expected to have a Material Adverse Effect.
8.1.8 COLLATERAL. If any material portion of the Collateral
shall be seized or taken by a Governmental Body or Person, or
Borrowers shall fail to maintain or cause to be maintained the
Security Interests and priority of the Loan Instruments as against any
Person, or the title and rights of any Obligor to any material portion
of the Collateral shall have become the subject matter of litigation
which could reasonably be expected to result in impairment or loss of
the security provided by the Loan Instruments.
8.1.9 INTERRUPTION OF OPERATIONS. If the operations of any
portion of Borrowers' Security Monitoring Business is interrupted at
any time for more than 48 hours during any period of 10 consecutive
days, unless Borrowers shall be entitled to receive during such period
of interruption proceeds of business interruption insurance sufficient
to assure that the per diem Operating Cash Flow of such portion of
Borrowers' Security Monitoring Business during such period is at least
equal to its per diem Operating Cash Flow for the month preceding the
initial date of interruption.
8.1.10 PLANS. If an event or condition specified in
subsection 6.3.11 hereof shall occur or exist with respect to any
Pension Plan or Multiemployer Plan and, as a result of such event or
condition, together with all other such events or conditions,
Borrowers or any member of a Controlled Group shall incur, or in the
opinion of Lender be reasonably likely
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to incur, a liability to a Pension Plan or Multiemployer Plan or the
PBGC (or any of them) which, in the reasonable judgment of Lender,
would have a Material Adverse Effect.
8.1.11 CHANGE IN CONTROL. If at any time (i) SAI ceases to
be the sole shareholder of each of the Holding Companies, (ii) SAI and
SACC cease to be the only members in ASMS, (iii) SAI and MSG cease to
be the only members in SACC or (iv) the Holding Companies cease to be
the only members in MSG.
8.1.12 CHANGE IN MANAGEMENT. If at any time (i) Xxxxxxx, or
any successor to Xxxxxxx reasonably acceptable to Agent, ceases to (A)
be the President and Chief Executive Officer of SAI, (B) be the
Manager of each of SACC, MSG and ASMS, or (C) manage the day to day
operation of Borrowers' Security Monitoring Business or (ii) Xxxxx, or
any successor to Xxxxx reasonably acceptable to Agent, ceases to be
the Chairman of SAI.
8.2 ACCELERATION OF BORROWERS' OBLIGATIONS. Upon the occurrence
of:
(a) any Event of Default described in clauses (ii),
(iii), (iv) and (v) of subsection 8.1.5(a) or in 8.1.5(b), all of
Borrowers' Obligations at that time outstanding automatically shall
mature and become due, and
(b) any other Event of Default, Lenders, at any time
(unless such Event of Default shall have been waived in writing or
remedied), at their option, without further notice or demand, may
declare all of Borrowers' Obligations due and payable, whereupon
Borrowers' Obligations immediately shall mature and become due and
payable,
all without presentment, demand, protest or notice (other than the declaration
referred to in clause (b) above), all of which hereby are waived.
8.3 REMEDIES ON DEFAULT. If Borrowers' Obligations have been
accelerated pursuant to Section 8.2, Lenders, at their option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce their
rights and remedies under the Loan Instruments in accordance with
their respective terms.
8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies
accorded to Lenders and/or Agent at equity or law, by virtue of
statute or otherwise.
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8.4 APPLICATION OF FUNDS. Any funds received by Lenders or Agent
pursuant to the exercise of any rights accorded to Lenders and/or Agent
pursuant to, or by the operation of any of the terms of, any of the Loan
Instruments, including, without limitation, insurance proceeds, condemnation
proceeds or proceeds from the sale of Collateral, shall be applied to
Borrowers' Obligations in the following order of priority:
8.4.1 EXPENSES. First, to the payment of (i) all reasonable
fees and expenses actually incurred, including, without limitation,
court costs, fees of appraisers, title charges, costs of maintaining
and preserving the Collateral, costs of sale, and all other costs
incurred by Lenders and Agent in exercising any rights accorded to
such Persons pursuant to the Loan Instruments or by applicable law,
including, without limitation, reasonable attorneys' fees, and (ii)
all Liens (excluding Permitted Liens other than the Security
Interests) superior to the Liens of Agent except such superior Liens
subject to which any sale of the Collateral may have been made.
8.4.2 BORROWERS' OBLIGATIONS. Next, to the payment of the
remaining portion of Borrowers' Obligations in such order as Lenders
may determine.
8.4.3 SURPLUS. Any surplus, to the Person or Persons
entitled thereto.
8.5 PERFORMANCE OF BORROWERS' OBLIGATIONS. If any Borrower fails
to (i) maintain in force and pay for any insurance policy or bond which such
Borrower is required to provide pursuant to any of the Loan Instruments, (ii)
keep the Collateral free from all Liens except for Permitted Liens, (iii) pay
when due all taxes, levies and assessments on or in respect of the Collateral,
except as otherwise permitted pursuant to the terms hereof, (iv) make all
payments and perform all acts on the part of such Borrower to be paid or
performed in the manner required by the terms hereof and by the terms of the
other Loan Instruments with respect to any of the Collateral, including,
without limitation, all expenses of protecting, storing, warehousing, insuring,
handling and maintaining the Collateral, (v) keep fully and perform promptly
any other of the obligations of such Borrower hereunder or under any of the
other Loan Instruments, and (vi) keep fully and perform promptly the
obligations of such Borrower with respect to any issue of Indebtedness for
Borrowed Money secured by a Permitted Prior Lien, then Agent or Lenders may
(but shall not be required to) procure and pay for such insurance policy or
bond, place such Collateral in good repair and operating condition, pay,
contest or settle such Liens or taxes or any judgments based thereon or
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otherwise make good any other aforesaid failure of such Borrower. Borrowers
shall reimburse Agent and Lenders immediately upon demand for all reasonable
sums paid or advanced on behalf of any Borrower for any such purpose, together
with reasonable and/or necessary costs and expenses (including reasonable
attorneys' fees) paid or incurred by Agent and Lenders in connection therewith
and interest on all sums advanced from the date of advancement until repaid to
Agent and Lenders at the Default Rate. All such sums advanced by Agent and
Lenders, with interest thereon, immediately upon advancement thereof, shall be
deemed to be part of Borrowers' Obligations.
ARTICLE IX
ADDITIONAL LENDERS AND PARTICIPANTS
9.1 ASSIGNMENT TO OTHER LENDERS.
9.1.1 ASSIGNMENT. FINOVA may make one or more Loan
Assignments, and each Assignee, with the prior written consent of
FINOVA (which may be given or denied in the sole discretion of
FINOVA), may make a Loan Assignment of the rights and obligations
which were assigned to such Assignee. Each Person making a Loan
Assignment shall give notice thereof to Borrowers within 10 Business
Days thereafter. Notwithstanding the foregoing, FINOVA shall not
assign at any one time or collectively during the term of the Loan
more than 49.9% of FINOVA's interest in Borrowers' Obligations.
9.1.2 EFFECT OF LOAN ASSIGNMENT. Each Assignee to which
FINOVA makes a Loan Assignment, and each subsequent Assignee, to the
extent of such Loan Assignment, shall have the same rights, benefits
and obligations under the Loan Instruments as such Assignee would have
had if such Assignee were an original party to the Loan Instruments.
Borrowers shall not incur any costs or expenses in connection with any
Loan Assignment.
9.1.3 SUBSTITUTION OF NOTE. Simultaneously with the delivery
by any Lender to Borrowers of any Note which is the subject of a Loan
Assignment and which is marked "cancelled," Borrowers shall execute
and deliver to such Lender for delivery to (i) the Assignee to which
such Loan Assignment is made, a promissory note payable to the order
of such Assignee in an amount equal to the amount assigned to such
Assignee, and (ii) such Lender making such Loan Assignment, a
promissory note payable to the order of such assigning Lender in an
amount equal to the amount retained by such Lender, each such Note to
be substantially in the form of the
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canceled Note.
9.1.4 INSPECTIONS. Any action which any Assignee shall
desire to undertake pursuant to Section 6.2 of the Loan Agreement
shall be coordinated by such Assignee through Agent, and Agent shall
accompany each such Assignee which desires to undertake any such
action pursuant to such Section 6.2.
9.2 PARTICIPATIONS. Each Lender shall have the right to sell
Participations. In the event of the sale of a Participation, the obligations
of the Lender selling such a Participation shall remain unchanged, such Lender
shall remain solely responsible for the performance thereof, such Lender shall
remain the holder of any Note which previously has been delivered to Lender
pursuant to the terms of this Loan Agreement, and Borrowers shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Loan Agreement. Notwithstanding the sale of
any Participation, all amounts payable by Borrowers pursuant to the terms of
the Loan Instruments shall be determined as if no such Participation had been
sold. No Participant shall be entitled to require a Lender to take or omit to
take any action pursuant to the Loan Instruments except as provided in the
Participation Agreement executed by and between the Participant and such
Lender.
9.3 APPOINTMENT AND FUNCTION OF AGENT. FINOVA is hereby appointed
as Agent hereunder to act in such capacity on behalf of all Lenders under this
Loan Agreement and the other Loan Instruments. FINOVA agrees that it shall
continue to act as Agent throughout the term of the Loan. In performing its
functions and duties under this Agreement, Agent shall act solely as an agent
of Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for any other
Person. Notwithstanding the appointment of FINOVA as Agent hereunder, Agent
shall have the same rights hereunder as any other Lender, and may exercise such
rights as though FINOVA had not been appointed as Agent hereunder.
9.4 SET OFF AND SHARING OF PAYMENTS. Upon the occurrence of any
Event of Default and the acceleration of Borrowers' Obligations, each Lender is
authorized by Borrowers, at any time or from time to time thereafter, without
notice to Borrowers or to any other Person, to set off and to appropriate and
apply any and all balances held by such Lender for the account of Borrowers,
and any other Property at any time held or owing by such Lender to or for the
credit or for the account of Borrowers, against and on account of any of
Borrowers' Obligations which are not paid when due. Borrowers agree that (i)
each Lender may exercise its right to set off with respect to amounts in excess
of such Lender's
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share of Borrowers' Obligations and may sell Participations in such excess to
other Lenders and (ii) any Lender so purchasing a Participation in the Loan
made or other of Borrowers' Obligations held by other Lenders may exercise all
rights of set-off, bankers' lien, counterclaim or similar rights with respect
to such Participation as fully as if such Lender were a direct holder of the
Loan and other of Borrowers' Obligations in the amount of such Participation.
9.5 LENDERS' DECISIONS. Until a Loan Assignment is made, all
Lenders' Decisions shall be made solely by FINOVA. After a Loan Assignment is
made, any Lenders' Decisions which may be made pursuant to the Loan Instruments
by Lenders or as to which the Lenders shall have the right to consent shall be
made as set forth in the applicable Lender Addition Agreements.
ARTICLE X
CLOSING
The Closing Date shall be such date as the parties shall determine,
and the Closing shall take place on such date, provided all conditions for the
Closing as set forth in this Loan Agreement have been satisfied or otherwise
waived by FINOVA. The Closing shall take place at the office of Xxxxxx Xxxxxx
& Xxxxx, 000 X. Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, or such other place as the
parties hereto shall agree. Unless the Closing occurs on or before January 31,
1997, this Loan Agreement shall terminate and be of no further force or effect
and, except for any obligation of Borrowers to FINOVA pursuant to Article XI,
none of the parties hereto shall have any further obligation to any other
party.
ARTICLE XI
EXPENSES AND INDEMNITY
11.1 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any
of the transactions contemplated by this Loan Agreement shall be
consummated, Borrowers agree to pay to Lenders on demand all reasonable expenses
incurred by Lenders in connection with the transactions contemplated hereby
(including, without limitation, any appraisal fees, environmental audit fees and
title and recording charges) and in connection with any amendments,
modifications or waivers (whether or not the same become effective) under or in
respect of any of the Loan Instruments, including, without limitation:
11.1.1 FEES AND EXPENSES FOR PREPARATION OF LOAN
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INSTRUMENTS. All reasonable expenses, disbursements and reasonable
attorneys' fees, actually incurred (including, without limitation,
charges for required mortgagee's title insurance, lien searches,
reproduction of documents, long distance telephone calls and overnight
express carriers) of special counsel and other counsel retained by
Lenders in connection with the preparation and negotiation of the Loan
Instruments or any amendments, modifications or waivers hereto or
thereto.
11.1.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE
OF LOAN INSTRUMENTS. Any reasonable expenses or other costs,
including reasonable attorneys' fees and expert witness fees, actually
incurred by Agent or Lenders in connection with the enforcement or
collection against any Obligor of any provision of any of the Loan
Instruments, and in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental Body or any
other Person with respect to any of the Loan Instruments, whether or
not suit is instituted, including, but not limited to, such costs or
expenses arising from the enforcement or collection against any
Obligor of any provision of any of the Loan Instruments in any state
or federal bankruptcy or reorganization proceeding.
11.2 INDEMNITY. Borrowers agree to indemnify and save Agent and
Lenders harmless of and from the following:
11.2.1 BROKERAGE FEES. The fees, if any, of brokers and
finders engaged by Borrowers.
11.2.2 GENERAL. Any loss, cost, liability, damage or expense
(including reasonable attorneys' fees and expenses) incurred by Agent
or Lenders in investigating, preparing for, defending against,
providing evidence, producing documents or taking other action in
respect of any commenced or threatened litigation, administrative
proceeding, suit instituted by any Person or investigation under any
law, including any federal securities law, the Bankruptcy Code, any
relevant state corporate statute or any other securities law,
bankruptcy law or law affecting creditors generally of any
jurisdiction, or any regulation pertaining to any of the foregoing, or
at common law or otherwise, relating to the transactions contemplated
by or referred to in, or any other matter related to, the Loan
Instruments, whether or not Agent or any Lender is a party to such
litigation, proceeding or suit, or is subject to such investigation.
11.2.3 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss,
cost, liability, damage or expense (including
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reasonable attorneys' fees and expenses) incurred in connection with
the ownership, operation or maintenance of the Collateral, the
construction of Agent or any Lender and Borrowers as having the
relationship of joint venturers or partners or the determination that
Agent or any Lender has acted as agent for Borrowers.
11.2.4 ENVIRONMENTAL INDEMNITY. Any and all claims, losses,
damages, out of pocket response costs, clean-up costs and expenses
suffered and/or incurred at any time by Agent or any Lender arising
out of or in any way relating to the existence at any time of any
Hazardous Materials in, on, under, at, transported to or from, or used
in the construction and/or renovation of, any of the Leasehold
Property, any parcel of real estate acquired in connection with an
Acquisition, or otherwise with respect to any Environmental Law,
and/or the failure of Borrowers to perform its obligations and
covenants hereunder with respect to environmental matters, including,
but not limited to: (i) claims of any Persons for damages, penalties,
response costs, clean-up costs, injunctive or other relief, (ii) costs
of removal and restoration, including fees of attorneys and experts,
and costs of reporting the existence of Hazardous Materials to any
Governmental Body, and (iii) any expenses or obligations, including
reasonable attorneys' fees and expert witness fees, incurred at,
before and after any trial or other proceeding before any Governmental
Body or appeal therefrom whether or not taxable as costs, including,
without limitation, witness fees, deposition costs, copying and
telephone charges and other expenses, all of which shall be paid by
Borrowers to Agent or such Lender when incurred by Agent or such
Lender, except where such costs were directly caused by the gross
negligence or willful misconduct of FINOVA, any Lender, or by any
agent or third party acting on behalf of and at the direction of
FINOVA or any Lender.
ARTICLE XII
MISCELLANEOUS
12.1 NOTICES. All notices and communications under this Loan
Agreement shall be in writing and shall be (i) delivered in person, (ii)
sent by facsimile, or (iii) mailed, postage prepaid, either by registered or
certified mail, return receipt requested, or by overnight express carrier,
addressed in each case as follows:
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To Borrowers: Security Associates International, Inc.
0000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, President
Facsimile No.: 847/956-9360
Copy to: Xxxxxxxx & Xxxxxx, Ltd.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile No.: 312/207-6400
To Lender: FINOVA Capital Corporation
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Facsimile No.: 312/322-3530
Copy to: FINOVA Capital Corporation
0000 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Vice President, Law
Facsimile No.: 602/207-5036
Copy to: Xxxxxx Xxxxxx & Zavis
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile No.: 312/902-1061
or to any other address or facsimile number, as to any of the parties hereto,
as such party shall designate in a notice to the other parties hereto. All
notices sent pursuant to the terms of this Section 12.1 shall be deemed
received (i) if personally delivered, then on the Business Day of delivery,
(ii) if sent by facsimile before 2:00 p.m. Phoenix time, on the day sent if a
Business Day or if such day is not a Business Day or if sent after 2:00 p.m.
Phoenix time, then on the next Business Day, (iii) if sent by overnight,
express carrier, on the next Business Day immediately following the day sent,
or (iv) if sent by registered or certified mail, on the earlier of the fifth
Business Day following the day sent or when actually received. Any notice by
facsimile shall be followed by delivery on the next Business Day by overnight,
express carrier or by hand.
12.2 SURVIVAL OF LOAN AGREEMENT; INDEMNITIES. All covenants,
agreements, representations and warranties made in this Loan Agreement and in
the certificates delivered pursuant hereto shall survive the making by Lender of
the Loan and the execution
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and delivery to Lenders of the Note and of all other Loan Instruments, and
shall continue in full force and effect so long as any of Borrowers'
Obligations remain outstanding, unperformed or unpaid. Notwithstanding the
repayment of all amounts due under the Loan Instruments, the cancellation of
the Note and the release and/or cancellation of any and all of the Loan
Instruments or the foreclosure of any Liens on the Collateral, the obligations
of Borrowers to indemnify Agent and Lenders with respect to the expenses,
damages, losses, costs and liabilities described in Section 11.2 shall survive
until all applicable statute of limitations periods with respect to actions
which may be brought against Agent or any Lender have run.
12.3 FURTHER ASSURANCE. From time to time, Borrowers shall execute
and deliver to Agent and Lenders such additional documents as Lenders reasonably
may require to carry out the purposes of the Loan Instruments and to protect
Lenders' rights thereunder, including, without limitation, using its best
efforts in the event any Collateral is to be sold to secure the approval by any
Governmental Body of any application required by such Governmental Body in
connection with such sale, and not take any action inconsistent with such sale
or the purposes of the Loan Instruments.
12.4 TAXES AND FEES. Should any tax (other than taxes based upon the
net income of any Lender), recording or filing fees become payable in respect of
any of the Loan Instruments, or any amendment, modification or supplement
thereof, Borrowers agree to pay the same on demand, together with any interest
or penalties thereon attributable to any delay by Borrowers in meeting any
Lender's demand, and agree to hold Lenders harmless with respect thereto.
12.5 SEVERABILITY. In the event that any provision of this Loan
Agreement is deemed to be invalid by reason of the operation of any law, this
Loan Agreement shall be construed as not containing such provision and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
12.6 WAIVER. No delay on the part of Agent or any Lender in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, and no single or partial exercise of any right, power or
privilege hereunder shall preclude other or further exercise thereof, or be
deemed to establish a custom or course of dealing or performance between the
parties hereto, or preclude the exercise of any other right, power or privilege.
12.7 MODIFICATION OF LOAN INSTRUMENTS. No modification or
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waiver of any provision of any of the Loan Instruments shall be effective
unless the same shall be in writing, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on Borrowers in any case shall entitle Borrowers to any
other or further notice or demand in the same, similar or other circumstances.
12.8 CAPTIONS. The headings in this Loan Agreement are for purposes
of reference only and shall not limit or otherwise affect the meaning hereof.
12.9 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective
successors and assigns of the parties hereto.
12.10 REMEDIES CUMULATIVE. All rights and remedies of Agent and
Lenders pursuant to this Loan Agreement, any other Loan Instruments or
otherwise, shall be cumulative and non-exclusive, and may be exercised
singularly or concurrently. Neither Agent nor any Lender shall be required to
prosecute collection, enforcement or other remedies against any Obligor before
proceeding against any other Obligor or to enforce or resort to any security,
liens, collateral or other rights of Agent or Lenders. One or more successive
actions may be brought against Borrowers and/or any other Obligor, either in the
same action or in separate actions, as often as Lenders deem advisable, until
all of Borrowers' Obligations are paid and performed in full.
12.11 ENTIRE AGREEMENT; CONFLICT. This Loan Agreement and the other
Loan Instruments executed pursuant hereto constitute the entire agreement among
the parties hereto with respect to the transactions contemplated hereby or
thereby and supersede any prior agreements, whether written or oral, relating to
the subject matter hereof. In the event of a conflict between the terms and
conditions set forth herein and the terms and conditions set forth in any other
Loan Instrument, the terms and conditions set forth herein shall govern.
12.12 APPLICABLE LAW. THE LOAN INSTRUMENTS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ARIZONA.
FOR PURPOSES OF THIS SECTION 12.12, THE LOAN INSTRUMENTS SHALL BE DEEMED TO
BE PERFORMED AND MADE IN THE STATE OF ARIZONA.
12.13 JURISDICTION AND VENUE. EACH BORROWER HEREBY AGREES THAT ALL
ACTIONS OR PROCEEDINGS INITIATED BY SUCH BORROWER AND ARISING DIRECTLY OR
INDIRECTLY OUT OF THE LOAN INSTRUMENTS SHALL BE LITIGATED IN THE SUPERIOR COURT
OF MARICOPA COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA OR, IF
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AGENT OR ANY LENDER INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS,
ANY COURT IN WHICH AGENT OR SUCH LENDER SHALL INITIATE OR TO WHICH AGENT OR
SUCH LENDER SHALL REMOVE SUCH ACTION, TO THE EXTENT SUCH COURT HAS
JURISDICTION. EACH BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE
TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY AGENT OR ANY
LENDER IN OR REMOVED BY AGENT OR ANY LENDER TO ANY OF SUCH COURTS, AND HEREBY
AGREES THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR
PAPERS ISSUED THEREIN MAY BE SERVED IN THE MANNER PROVIDED FOR NOTICES HEREIN,
AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER PROCESS OR
PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH BORROWER
AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO SECTION 12.1. EACH
BORROWER WAIVES ANY CLAIM THAT MARICOPA COUNTY, ARIZONA OR THE DISTRICT OF
ARIZONA IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE.
TO THE EXTENT PROVIDED BY LAW, SHOULD ANY BORROWER, AFTER BEING SO SERVED, FAIL
TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED
WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, SUCH
BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED
BY THE COURT AGAINST SUCH BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWERS SET
FORTH IN THIS SECTION 12.13 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY
AGENT OR ANY LENDER OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING
BY AGENT OR ANY LENDER OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER
APPROPRIATE JURISDICTION, AND EACH BORROWER HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
12.14 WAIVER OF RIGHT TO JURY TRIAL. AGENT, LENDERS AND BORROWERS
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN
INSTRUMENTS OR WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE
BASED UPON DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT
ANY LAWSUIT ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
12.15 TIME OF ESSENCE. TIME IS OF THE ESSENCE FOR THE PERFORMANCE BY
BORROWERS OF THE OBLIGATIONS SET FORTH IN THIS LOAN AGREEMENT AND THE OTHER LOAN
INSTRUMENTS.
12.16 ESTOPPEL CERTIFICATE. Within 15 days after Agent or any Lender
reasonably requests any Borrower to do so, such Borrower will execute and
deliver to Agent or such Lender a statement certifying (i) that this Loan
Agreement is in full force and effect and has not been modified except as
described in such statement, (ii) the date to which interest on the Note has
been paid, (iii) the Principal Balance, (iv) whether or not to its knowledge an
Incipient Default or Event of Default has occurred
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and is continuing, and, if so, specifying in reasonable detail each such
Incipient Default or Event of Default of which it has knowledge, (v) whether to
its knowledge it has any defense, setoff or counterclaim to the payment of the
Note in accordance with its terms, and, if so, specifying each defense, setoff
or counterclaim of which it has knowledge in reasonable detail (including where
applicable the amount thereof), and (vi) as to any other matter reasonably
requested by Agent or such Lender.
12.17 CONSEQUENTIAL DAMAGES. Neither Agent nor any Lender nor any
agent or attorney of Agent or such Lender shall be liable to any Borrower for
consequential damages arising from any breach of contract, tort or other wrong
relating to the establishment, administration or collection of the Borrowers'
Obligations, except in the case of such Person's gross negligence or willful
misconduct.
12.18 COUNTERPARTS. This Loan Agreement may be executed by the parties
hereto in several counterparts and each such counterpart shall be deemed to be
an original, but all such counterparts shall together constitute one and the
same agreement.
12.19 NO FIDUCIARY RELATIONSHIP. No provision in this Loan Agreement
or in any other Loan Instrument, and no course of dealing among the parties
hereto, shall be deemed to create any fiduciary duty by Agent or any Lender to
any Borrower.
12.20 NO STRICT CONSTRUCTION. The language used in this Loan Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party hereto.
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IN WITNESS WHEREOF, this Loan Agreement has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on the date first set forth above.
SECURITY ASSOCIATES INTERNATIONAL,
INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
President
FEIN: 00-0000000
SECURITY ASSOCIATES COMMAND CENTER II, L.L.C.,
a Michigan limited liability company,
ALL-SECURITY MONITORING SERVICES, L.L.C., an
Illinois limited liability company and MONITOR
SERVICE GROUP, L.L.C., a Delaware limited
liability company
By: /s/ Jams X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx, Manager of each of
the foregoing limited liability
companies
FEIN for SACC: 00-0000000
FEIN for ASMS: 00-0000000
FEIN for MSG: 00-0000000
FINOVA CAPITAL CORPORATION, a Delaware
corporation, in its individual capacity and as
agent for Lender
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President
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