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EXHIBIT 10.50
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of January 16, 2001
Among
SECURITY ASSOCIATES INTERNATIONAL, INC.,
SAI NORTHWEST COMMAND CENTER - SEATTLE, INC.,
SAI SOUTHWEST COMMAND CENTERS, INC.,
and
SAI NORTH CENTRAL COMMAND CENTER, INC.,
as Sellers
and
SAI FUNDING CORPORATION
as Purchaser
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PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of January 16, 2001
Security Associates International, Inc., a Delaware corporation ("SAI")
with its chief executive offices at 0000 X. Xxxxxxxxx Xxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, XX 00000, SAI Northwest Command Center - Seattle, Inc., a Washington
corporation with its chief executive offices at 0000 Xxxxxxxxx 000xx Xxxxxx,
X.X. Xxx 00000, Xxxxxxx, XX 00000, SAI Southwest Command Centers, Inc., a Texas
corporation with its chief executive offices at 0000 Xxxxxxxxx Xxxxx, Xxxxxx, XX
00000, and SAI North Central Command Center, Inc., an Ohio corporation with its
chief executive offices at 0000 Xxxx 000xx Xxxxxx, X.X. Xxx 00000, Xxxxxx, XX
00000 (each, a "Seller", and, collectively with SAI, the "Sellers"), and SAI
Funding Corporation, a Delaware corporation with its chief executive offices at
0000 XX 00xx Xxxxxx, Xxxxxxx Xxxxx, XX 00000-0000 (the "Purchaser"), agree as
follows:
PRELIMINARY STATEMENTS.
(a) Certain terms which are capitalized and used throughout this
Agreement (in addition to those defined above) are defined in Article I of this
Agreement.
(b) Each Seller has Receivables that it wishes to sell to the
Purchaser, and the Purchaser is prepared to purchase such Receivables on the
terms set forth herein.
(c) SAI may also wish to contribute Receivables to the capital of the
Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Adverse Claim" means a lien, security interest or other charge or
encumbrance, or any other type of preferential arrangement.
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"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by or is under common control with
such Person or is a director or officer of such Person.
"Business Day" means any day on which banks are not authorized or
required to close in Cleveland, Ohio.
"Central Station" means at any time the Person then authorized pursuant
to Section 6.05 to provide central station monitoring services to Obligors under
the Transferred Contracts.
"Collection Agent" means at any time the Person then authorized
pursuant to Section 6.01 to service, administer and collect the Transferred
Receivables.
"Collection Agent Fee" has the meaning specified in Section 6.03.
"Collections" means, with respect to any Transferred Receivable, all
cash collections and other cash proceeds of such Transferred Receivable,
including, without limitation, all cash proceeds of Related Security with
respect to such Transferred Receivable, and all funds deemed to have been
received by any Seller or any other Person as a Collection pursuant to Section
2.04.
"Contract" means an agreement between a Seller and an Obligor,
substantially in the form of one of the written contracts approved by the
Purchaser, pursuant to or under which such Obligor shall be obligated to pay for
central-station monitoring services from time to time.
"Contributed Receivable" has the meaning specified in Section 2.06.
"Credit and Collection Policy" means those written receivables credit
and collection policies and practices of the Sellers in effect on the date of
this Agreement applicable to the Contracts and delivered to the Purchaser, as
modified in compliance with this Agreement.
"Debt" means (a) indebtedness for borrowed money, (b) obligations
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases which shall have been or should be, in
accordance with generally accepted accounting principles, recorded as capital
leases, (e) obligations under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire, or
otherwise to assure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clauses (a) through (d) above
and (f) liabilities in respect of unfunded vested benefits under plans covered
by Title IV of ERISA.
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"Defaulted Receivable" means a Receivable:
(a) under a Contract under which payments are 90 or more days
delinquent on a recency-of-payment basis;
(b) as to which the Obligor or any other Person obligated thereon has
taken any action, or suffered any event to occur, of the type described in
Section 7.01(g);
(c) which, consistent with the Credit and Collection Policy, would be
written off as uncollectible; or
(d) which has been terminated by the Obligor thereon.
"Deferred Purchase Price" means the portion of the Purchase Price of
Purchased Receivables purchased on any Purchase Date exceeding the amount of the
Purchase Price under Section 2.02 to be paid in cash, which portion, when added
to the cumulative amount of all previous Deferred Purchase Prices (after giving
effect to any payments made on account thereof), shall not at any time exceed
$20,000,000. The obligations of the Purchaser in respect of the Deferred
Purchase Price are hereby subordinated to the payment by the Purchaser of all
amounts due under the Financing Agreement. The Deferred Purchase Price shall be
evidenced by promissory notes in the form of Exhibit A.
"Delinquent Receivable" means a Receivable that is not a Defaulted
Receivable and:
(a) under a Contract under which payments are 45 or more days
delinquent on a recency-of-payment basis or
(b) which, consistent with the Credit and Collection Policy, would be
classified as delinquent by the applicable Seller.
"Designated Obligor" means, at any time, each Obligor which has
satisfied the Purchaser's due diligence requirements; provided, however, that
any Obligor shall cease to be a Designated Obligor upon three Business Days'
notice by the Purchaser to the Sellers.
"Dilution" means, with respect to any Transferred Receivable, the
aggregate amount of any reductions or adjustments in the Outstanding Balance of
such Transferred Receivable as a result of any defective or rejected services or
any cash discount or other adjustment or setoff.
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"Eligible Receivable" means a Receivable:
(a) the Obligor of which is a United States resident, is not an
Affiliate of any of the parties hereto and is not a government or a governmental
subdivision or agency;
(b) the Obligor of which, at the time of the transfer of such
Receivable under this Agreement, is a Designated Obligor and is not the Obligor
of any Defaulted Receivables;
(c) which, at the time of the transfer thereof to the Purchaser under
this Agreement, is not a Defaulted Receivable;
(d) which, according to the Contract related thereto, is required to be
paid in full within 30 days of the original billing date therefor;
(e) which is an "account" within the meaning of Section 9-106 of the
UCC of the applicable jurisdictions;
(f) which is denominated and payable only in United States dollars in
the United States;
(g) which arises under a Contract which, together with such Receivable,
is in full force and effect and constitutes the legal, valid and binding
obligation of the Obligor of such Receivable and is not subject to any dispute,
offset, counterclaim or defense whatsoever (except the potential discharge in
bankruptcy of such Obligor);
(h) which, together with the Contract related thereto, does not
contravene in any material respect any law, rule or regulation applicable
thereto (including, without limitation, any law, rule or regulation relating to
usury, consumer protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
and with respect to which no party to the Contract related thereto is in
violation of any such law, rule or regulation in any material respect;
(i) the transfer, sale or assignment of which hereunder does not
contravene any applicable law, rule or regulation or any agreement to which the
applicable Seller is a party;
(j) which arises under a Contract which (i) does not require the
Obligor thereunder to consent to the transfer, sale or assignment of the rights
and duties of the Seller under such Contract and (ii) does not contain a
confidentiality provision that purports to restrict the ability of the Purchaser
and its assigns to exercise their rights under this Agreement, including,
without limitation, their right to review the Contract; and
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(k) which (i) satisfies all applicable requirements of the Credit and
Collection Policy and (ii) complies with such other criteria and requirements
(other than those relating to the collectibility of such Receivable) as the
Purchaser or its designee may from time to time specify to the Sellers upon 30
days' notice.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"Event of Termination" has the meaning specified in Section 7.01.
"Facility Termination Date" means the date on which the Purchases
hereunder shall cease.
"Finance Agreement" means that certain Monitoring Receivables Finance
Agreement, dated as of the date hereof, among the Purchaser, as seller, XxXxxx,
Xxxxx Capital Holdings Corp., as purchaser, and the Sellers, as collection
agents, as amended or restated from time to time.
"Incipient Event of Termination" means an event that but for notice or
lapse of time or both would constitute an Event of Termination.
"Indemnified Amounts" has the meaning specified in Section 8.01.
"Lockbox" means one or more accounts, under the exclusive ownership and
control of the Purchaser (or its assigns or designees), maintained for the
purpose of receiving Collections. The Lockbox initially shall be lockbox # 2973
at American National Bank & Trust Company of Chicago.
"Monthly Revenue" means, with respect to any Contract on the date of a
Purchase or the date it is contributed to the Purchaser hereunder, the number of
Installations covered by such Contract as of such date multiplied by the average
monthly revenue payable with respect to such Contract for the three months
preceding such date; provided that in determining such monthly revenue any
discount under such Contract shall be excluded if the duration of such discount
is three months or less.
"Obligor" means a Person obligated to make payments to the Seller
pursuant to a Contract.
"Outstanding Balance" of any Receivable at any time means the then
outstanding principal balance thereof.
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"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Purchase" means a purchase by the Purchaser of Receivables from the
Sellers pursuant to Article II.
"Purchase Date" has the meaning specified in Section 2.02(a).
"Purchase Price" for any Purchase of Receivables means an amount equal
to the aggregate Monthly Revenues of each Contract the Receivables under which
are the subject of such Purchase multiplied by 30.
"Purchased Receivable" means any Receivable which, pursuant to the
procedure described in Section 2.02(c), has been identified as a Purchased
Receivable.
"Purchaser Account" shall mean Account account number 5330345235 at
American National Bank & Trust Company of Chicago, or such other account under
the exclusive control of the Purchaser (or its assigns) as is specified from
time to time by the Purchaser.
"Purchaser Loan" means a loan made by the Purchaser, at its option, to
a Seller, upon such Seller's request; provided that no such loan may be made,
and all such loans shall become immediately due and payable, upon the date that
any Event of Termination has occurred and is continuing. Each Purchaser Loan
shall be evidenced by promissory notes in substantially the form of Exhibit B.
"Receivable" means the indebtedness of an Obligor under a Contract, and
includes any other obligations of such Obligor with respect thereto. Each
Purchase or contribution of a Receivable hereunder shall be deemed to include
the Contract under which such Receivable arose and all amounts payable under
such Contract, whether or not earned at the time of such Purchase or
contribution.
"Receivables Report" means a report, in form and substance satisfactory
to the Purchaser, furnished by the Collection Agent to the Purchaser pursuant to
Section 6.02(b).
"Related Security" means with respect to any Receivable:
(a) all of the interest of the Seller of such Receivable in any
merchandise (including returned merchandise) relating to any sale giving rise to
such Receivable;
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(b) all security interests or liens and property subject thereto from
time to time purporting to secure payment of such Receivable, whether pursuant
to the Contract related to such Receivable or otherwise, together with all
financing statements signed by an Obligor describing any collateral securing
such Receivable;
(c) all guaranties, insurance and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Receivable, whether pursuant to the Contract related to such Receivable or
otherwise; and
(d) the Contract and all other books, records and other information
(including, without limitation, computer programs, tapes, discs, punch cards,
data processing software and related property and rights) relating to such
Receivable and the related Obligor to the extent such books, records and
information is transferable by the relevant Seller.
"Settlement Date" means the first day of each month (or if such day is
not a Business Day, the immediately succeeding Business Day).
"Transferred Receivable" means a Purchased Receivable or a Contributed
Receivable.
"UCC" means the Uniform Commercial Code as from time to time in effect
in the specified jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions hereinafter set
forth and without recourse to any Seller (except to the extent specifically
provided herein), each Seller shall sell, or SAI shall contribute, to the
Purchaser all Receivables originated or acquired by it from time to time and the
Purchaser shall purchase from the Sellers or accept as a contribution from SAI
all Receivables so sold or contributed from time to time.
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SECTION 2.02. Making Purchases.
(a) Initial Purchase. The Sellers shall give the Purchaser at least one
Business Day's notice of their request for the initial Purchase hereunder, which
request shall (i) specify the date of such Purchase (which shall be a Business
Day) and the proposed aggregate Purchase Price for such Purchase and (ii) list
the Receivables to be sold hereunder. The Purchaser shall promptly notify the
Sellers whether it has determined to make such Purchase. On the date of such
Purchase, the Purchaser shall, upon satisfaction of the applicable conditions
set forth in Article III, pay the Purchase Price for such Purchase in the manner
provided in Section 2.02(c).
(b) Subsequent Purchases. Upon the request of the Purchaser, on the
last day of each month following the initial Purchase (each such day, including
the date of the initial purchase under Section 2.02(a), a "Purchase Date"), the
Sellers shall sell to the Purchaser and the Purchaser shall purchase from the
Seller all Receivables originated by the Sellers which have not previously been
sold or contributed to the Purchaser; provided, however, that, at the option of
SAI, the Sellers may sell such Receivables to SAI and SAI may, at its option on
any Purchase Date, contribute all or any of such Receivables to the Purchaser
pursuant to Section 2.06, instead of the Sellers selling such Receivables to the
Purchaser pursuant to this Section 2.02(b). On the date of each such Purchase,
the Purchaser shall, upon satisfaction of the applicable conditions set forth in
Article III, pay the Purchase Price for such Purchase in the manner provided in
Section 2.02(c).
(c) Payment of Purchase Price. The Purchase Price for the initial
Purchase hereunder shall be paid by (A) a deposit in same day funds to an
account of the Sellers designated by SAI of $16,600,000.00 and (B) the delivery
by the Purchaser to SAI of a note in the form of Exhibit A hereto reflecting a
Deferred Purchase Price of $5,375,000. The Purchase Price for each Purchase
following the initial Purchase shall be paid on the Purchase Date therefor by
means of (i) a deposit in same day funds to an account designated by SAI, (ii)
an increase in the Deferred Purchase Price (subject at all times to the
limitations contained in the definition thereof) or (iii) a credit against
interest and/or principal owed by one or more Sellers with respect to any
Purchaser Loan. The allocation of the Purchase Price as among such methods of
payment shall be subject in each instance to the approval of the Purchaser and
the Sellers.
(d) Ownership of Contracts, Receivables and Related Security. On each
Purchase Date, after giving effect to the Purchase (and any contribution of
Receivables) on such date, the Purchaser shall own all Receivables originated by
the Sellers as of such date (including Receivables which have been previously
sold or contributed to the Purchaser hereunder). The Purchase or contribution of
any Receivable shall include the Contract and all Related Security with respect
to such Receivable.
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SECTION 2.03. Collections. All Collections on the Transferred
Receivables shall be directed to the Lockbox, except as otherwise directed by
the Purchaser or its assigns. If any Seller believes that collections which are
not Collections of Transferred Receivables have been deposited into an account
of the Purchaser, such Seller shall so advise the Purchaser and, on the Business
Day following such identification, the Purchaser shall remit, or shall cause to
be remitted, all collections so deposited which are identified, to the
Purchaser's satisfaction, to be collections of Receivables which are not
Transferred Receivables to the Seller.
SECTION 2.04. Settlement Procedures.
(a) If on any day the Outstanding Balance of any Purchased Receivable
is reduced or adjusted as a result of any defective or rejected services, any
cash discount or other adjustment made by any Seller or any set-off or dispute
in respect of any claim by the Obligor thereof against any Seller (whether such
claim arises out of the same or a related transaction or an unrelated
transaction but excluding adjustments, reductions or cancellations in respect of
such Obligor's bankruptcy), the Seller of such Purchased Receivable shall be
deemed to have received on such day a Collection of such Purchased Receivable in
the amount of such reduction or adjustment and shall remit to the Purchaser
Account on or prior to the next Settlement Date all amounts so deemed to have
been received pursuant to this subsection.
(b) Upon discovery by any Seller or the Purchaser of a breach of any of
the representations and warranties made by any Seller in Section 4.01 with
respect to any Transferred Receivable under any Contract, such party shall give
prompt written notice thereof to each other party, as soon as practicable and in
any event within three Business Days following such discovery. Such Seller
shall, upon not less than two Business Days' notice from the Purchaser or its
assign or designee, repurchase all Transferred Receivables under such Contract
on the next succeeding Settlement Date for a repurchase price equal to the
Purchase Price of such Transferred Receivable. Each repurchase of a Transferred
Receivable shall include the Related Security with respect to such Transferred
Receivable. The proceeds of any such repurchase shall be deemed to be a
Collection in respect of such Transferred Receivable. The applicable Seller
shall remit to the Purchaser Account on or prior to the next Settlement Date the
repurchase price required to be paid pursuant to this subsection.
(c) Except as stated in subsection (a) or (b) of this Section 2.04 or
as otherwise required by law or the underlying Contract, all Collections of any
Transferred Receivable shall be applied to the Receivables of each Obligor in
the order of the age of such Receivables, starting with the oldest such
Receivable, unless such Obligor designates its payment for application to
specific Receivables.
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SECTION 2.05. Payments and Computations, Etc. All amounts to be paid or
deposited by the Sellers or the Collection Agent hereunder shall be paid or
deposited no later than 11:00 A.M. (Cleveland time) on the day when due in same
day funds to the Purchaser Account.
SECTION 2.06. Contributions. SAI may from time to time at its option,
by notice to the Purchaser on or prior to the date of the proposed contribution,
identify Receivables which it proposes to contribute to the Purchaser as a
capital contribution. On the date of each such contribution and after giving
effect thereto, the Purchaser shall own in fee simple the Receivables so
identified and contributed (collectively, the "Contributed Receivables") and the
Contracts and all Related Security with respect thereto.
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase. The initial
Purchase of Receivables hereunder is subject to the conditions precedent that
the Purchaser shall have received on or before the date of such Purchase the
following, each (unless otherwise indicated) dated such date, in form and
substance satisfactory to the Purchaser:
(a) Certified copies of the resolutions of the Board of Directors of
each Seller approving this Agreement and certified copies of all documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement.
(b) A certificate of the Secretary or Assistant Secretary of each
Seller certifying the names and true signatures of the officers of such Seller
authorized to sign this Agreement and the other documents to be delivered by it
hereunder.
(c) Acknowledgment copies or time-stamped receipt copies of proper
financing statements, duly filed on or before the date of the initial Purchase,
naming each Seller as the seller/debtor and the Purchaser as the
purchaser/secured party, or other similar instruments or documents, as the
Purchaser may deem necessary or desirable under the UCC of all appropriate
jurisdictions or other applicable law to perfect the Purchaser's ownership of
and security interest in the Transferred Receivables and the Contracts, Related
Security and Collections with respect thereto.
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(d) Acknowledgment copies or time-stamped receipt copies of proper
financing statements, if any, necessary to release all security interests and
other rights of any Person in the Transferred Receivables, Contracts or Related
Security previously granted by the Sellers.
(e) Completed requests for information, dated on or before the date of
such initial Purchase, listing the financing statements referred to in
subsection (c) above and all other effective financing statements filed in the
jurisdictions referred to in subsection (c) above that name the Sellers as
debtors, together with copies of such other financing statements (none of which
shall cover any Transferred Receivables, Contracts or Related Security).
(f) An opinion of counsel to the Sellers in form and substance
satisfactory to the Purchaser.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
(including the initial Purchase) hereunder shall be subject to the further
conditions precedent that:
(a) on or prior to the date of such Purchase, SAI shall have delivered
to the Purchaser a written report identifying, among other things, the
Receivables (including the underlying Contracts) to be included in such Purchase
and the then outstanding Purchased Receivables and the aged balance thereof, in
each case correlated to Purchases;
(b) on or prior to the date of such Purchase, the Collection Agent
shall have delivered to the Purchaser, in form and substance satisfactory to the
Purchaser, a completed Receivables Report for the most recently ended reporting
period for which information is required pursuant to Section 6.02(b) and
containing such additional information as may reasonably be requested by the
Purchaser;
(c) each Seller shall have marked its master data processing records
and, at the request of the Purchaser, each Contract giving rise to Purchased
Receivables and all other relevant records evidencing the Receivables which are
the subject of such Purchase with a legend, acceptable to the Purchaser, stating
that such Receivables, the Contracts, Related Security and Collections with
respect thereto, have been sold in accordance with this Agreement; and
(d) on the date of such Purchase the following statements shall be true
(and each Seller, by accepting the amount of such Purchase, shall be deemed to
have certified that):
(i) the representations and warranties of such Seller
contained in Section 4.01 are correct on and as of the date of such
Purchase as though made on and as of such date,
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(ii) no event has occurred and is continuing, or would result
from such Purchase, that constitutes an Event of Termination or would
constitute an Incipient Event of Termination and
(iii) the Purchaser shall not have delivered to the Sellers a
notice that the Purchaser shall not make any further Purchases
hereunder; and
(e) the Purchaser shall have received such other approvals, opinions or
documents as the Purchaser may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Sellers. Each
Seller represents and warrants as follows:
(a) Such Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation, and is
duly qualified to do business, and is in good standing, in every jurisdiction
where the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by such Seller of this
Agreement and the other documents to be delivered by it hereunder, including
such Seller's sale and (with respect to SAI) contribution of Receivables
hereunder and such Seller's use of the proceeds of Purchases, (i) are within
such Seller's corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (A) such Seller's charter or by-laws,
(B) any law, rule or regulation applicable to such Seller, (C) any contractual
restriction binding on or affecting such Seller or its property or (D) any
order, writ, judgment, award, injunction or decree binding on or affecting such
Seller or its property and (iv) do not result in or require the creation of any
lien, security interest or other charge or encumbrance upon or with respect to
any of its properties (except for the transfer of such Seller's interest in the
Transferred Receivables pursuant to this Agreement). This Agreement has been
duly executed and delivered by such Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution, delivery and performance by such Seller of this Agreement or
any other document to be delivered thereunder.
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(d) This Agreement constitutes the legal, valid and binding obligation
of such Seller, enforceable against such Seller in accordance with its terms.
(e) Each sale and contribution made pursuant to this Agreement will
constitute a valid sale, transfer and assignment of Transferred Receivables to
Purchaser, enforceable against creditors of, and purchasers from, such Seller.
Such Seller shall have no remaining property interest in any Transferred
Receivable.
(f) Except as disclosed in filings made by SAI with the Securities and
Exchange Commission in the section entitled "Legal Proceedings", there is no
pending or threatened action or proceeding affecting such Seller before any
court, governmental agency or arbitrator which may materially adversely affect
the financial condition or operations of such Seller or the ability of such
Seller to perform its obligations under this Agreement, or which purports to
affect the legality, validity or enforceability of this Agreement.
(g) No proceeds of any Purchase will be used by such Seller to acquire
any equity security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
(h) No transaction contemplated hereby requires compliance by any
Seller with any bulk sales act or similar law.
(i) Each Receivable purported to be sold by such Seller hereunder is an
Eligible Receivable, and each such Receivable and each Transferred Receivable,
together with the Related Security, is owned (prior to its sale or contribution
hereunder) by such Seller free and clear of any Adverse Claim (other than any
Adverse Claim arising solely as the result of any action taken by the
Purchaser). When the Purchaser makes a Purchase from such Seller it shall
acquire valid and perfected first priority ownership of each Purchased
Receivable and the Related Security and Collections with respect thereto, free
and clear of any Adverse Claim and no effective financing statement or other
instrument similar in effect covering any Transferred Receivable, any interest
therein, the Related Security or Collections with respect thereto is on file in
any recording office except such as may be filed in favor of the Purchaser in
accordance with this Agreement or in connection with any Adverse Claim arising
solely as the result of any action taken by the Purchaser.
(j) Each Receivable Report (if prepared by SAI, or to the extent that
information contained therein is supplied by SAI), information, exhibit,
financial statement, document, book, record or report furnished or to be
furnished at any time by such Seller to the Purchaser in connection with this
Agreement is or will be accurate in all material respects as of its date or
(except as otherwise disclosed to the Purchaser at such time) as of the date so
furnished, and no such document contains or will contain any untrue statement of
a material fact or omits or will omit to
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state a material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading.
(k) The principal place of business and chief executive office of such
Seller and the office where such Seller keeps its records concerning the
Transferred Receivables are located at the address of such Seller set forth on
the first page of this Agreement.
(l) Such Seller is not known by and does not use any tradename or
doing-business-as name other than as set forth on Schedule A hereto.
(m) With respect to any program or intellectual property used by such
Seller in the servicing of the Receivables, no sublicensing agreement is
necessary in connection with the designation of a new Collection Agent pursuant
to Section 6.01(b) so that such new Collection Agent shall have the benefit of
such programs.
(n) The transfers of Transferred Receivables by such Seller to the
Purchaser pursuant to this Agreement, and all other transactions between such
Seller and the Purchaser, have been and will be made in good faith and without
intent to hinder, delay or defraud creditors of such Seller.
(o) (i) The fair value of the property of such Seller is greater than
the total amount of liabilities, including contingent liabilities, of such
Seller, (ii) the present fair salable value of the assets of such Seller is not
less than the amount that will be required to pay all probable liabilities of
such Seller on its debts as they become absolute and matured, (iii) such Seller
does not intend to, and does not believe that it will, incur debts or
liabilities beyond its ability to pay such debts and liabilities as they mature
and (iv) such Seller is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which its property would
constitute unreasonably small capital.
(p) Each Transferred Receivable transferred hereunder by such Seller
(i) arose in connection with the provision of bona fide services in the ordinary
course of such Seller's business; (ii) is for a liquidated amount as stated in
the related Contract; (iii) to the knowledge of such Seller, is not subject to
any defense, deduction, offset or counterclaim; (iv) constitutes the valid,
legal and binding obligation of the related Obligor thereof, enforceable in
accordance with its terms; (v) complies with all federal, state and local laws,
rules and regulations; and (vi) as of the date of its inclusion in a Receivable
Report hereunder, is an Eligible Receivable. With respect to each Transferred
Receivable, the Obligor thereon is obligated and liable for payment of the
amounts stated therein and has no known reason to exercise any right of
rejection, return, offset, defense, counterclaim, discount or deduction. No
Transferred Receivable is, as of the relevant Purchase Date, a Delinquent
Receivable or a Defaulted Receivable or subject to any dispute. To the best of
such
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Seller's knowledge: (A) all statements made in any Contract related to a
Transferred Receivable, including names and addresses, locations and
descriptions of property or services, down-payments and unpaid balances, are in
all respects true, complete and accurate; (B) all signatures and endorsements
that appear on each Contract related to a Transferred Receivable, or any
agreement or instrument relating thereto, are genuine and all signatories and
endorsers, if any, have full legal capacity to contract; and (C) no Obligor on
the Contract related to any Transferred Receivable has been induced to enter
into such Contract by fraud or misrepresentation as to price, quality of
products or services.
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Sellers. From the date hereof until the
first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) Compliance with Laws, Etc. Each Seller will comply in all material
respects with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications and
privileges except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Transferred Receivables or the
ability of such Seller to perform its obligations under this Agreement.
(b) Offices, Records and Books of Account. Each Seller will keep its
principal place of business and chief executive office and the office where it
keeps its records concerning the Transferred Receivables at the address of such
Seller set forth on the first page of this Agreement or, upon 30 days' prior
written notice to the Purchaser, at any other locations in jurisdictions where
all actions required by Section 5.01(j) shall have been taken and completed.
Each Seller also will maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate records
evidencing Transferred Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Transferred Receivables (including, without limitation,
records adequate to permit the daily identification of each new Transferred
Receivable and all Collections of and adjustments to each existing Transferred
Receivable). Each Seller shall make a notation in its books and records,
including its computer files, to indicate which Receivables have been sold or
contributed to the Purchaser hereunder.
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(c) Performance and Compliance with Contracts and Credit and Collection
Policy. Each Seller will, at its expense, timely and fully perform and comply
with all material provisions, covenants and other promises required to be
observed by it under the Contracts related to the Transferred Receivables, and
timely and fully comply in all material respects with the Credit and Collection
Policy in regard to each Transferred Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the sales and contributions of
Receivables contemplated herein, none of the Sellers will sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Adverse Claim upon or with respect to, any Transferred Receivable,
Related Security, related Contract or Collections, or upon or with respect to
any account to which any Collections of any Transferred Receivable are sent, or
assign any right to receive income in respect thereof.
(e) Extension or Amendment of Transferred Receivables. Except as
provided in Section 6.02(c), none of the Sellers will extend, amend or otherwise
modify the terms of any Transferred Receivable, or amend, modify or waive any
term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. None of the
Sellers will make any change in the character of its business or in the Credit
and Collection Policy that would, in either case, materially adversely affect
the collectibility of the Transferred Receivables or the ability of such Seller
to perform its obligations under this Agreement.
(g) Audits. Each Seller will, from time to time during regular business
hours as requested by the Purchaser or its assigns, permit the Purchaser, or its
agents, representatives or assigns, to (i) examine and make copies of and
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of such Seller
relating to Transferred Receivables and the Related Security, including, without
limitation, the related Contracts and (ii) visit the offices and properties of
such Seller for the purpose of examining such materials described in clause (i)
above and discuss matters relating to Transferred Receivables and the Related
Security or such Seller's performance hereunder or under the Contracts with any
of the officers or employees of such Seller having knowledge of such matters.
(h) Change in Payment Instructions to Obligors. None of the Sellers
will terminate the Lockbox or make any change in its instructions to Obligors
regarding payments to be made to the Lockbox.
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(i) Deposits to Lockbox. Except as otherwise specified by the
Purchaser, each Seller will deposit, or cause to be deposited, all Collections
of Transferred Receivables into the Lockbox, and none of the Sellers will
deposit or otherwise credit, or cause or permit to be so deposited or credited,
to the Lockbox or the Purchaser Account cash or cash proceeds other than
Collections of Transferred Receivables.
(j) Further Assurances.
(i) Each Seller will from time to time, at its expense,
promptly execute and deliver all further instruments and documents, and
take all further actions, that may be necessary, or that the Purchaser
or its assignee may reasonably request, to perfect, protect or more
fully evidence the sale and contribution of Receivables under this
Agreement or to enable the Purchaser or its assignee to exercise and
enforce its respective rights and remedies under this Agreement.
Without limiting the foregoing, each Seller will, upon the request of
the Purchaser or its assign, (A) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments and documents, that may be reasonably necessary or
desirable to perfect, protect or evidence such Transferred Receivables
and (B) deliver to the Purchaser or its assign the original of each
Contract relating to the Transferred Receivables and (on each
Settlement Date) copies of all records relating to such Contracts and
the Transferred Receivables, whether in hard copy or in magnetic tape
or diskette format (which if in magnetic tape or diskette format shall
be compatible with the computer equipment of the Purchaser or its
assign).
(ii) Each Seller authorizes the Purchaser or its assign to
file financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Transferred Receivables and the
Related Security, the related Contracts and the Collections with
respect thereto without the signature of the Seller where permitted by
law. A photocopy or other reproduction of this Agreement shall be
sufficient as a financing statement where permitted by law.
(iii) Each Seller shall perform its obligations under the
Contracts related to the Transferred Receivables to the same extent as
if the Transferred Receivables had not been sold or transferred.
(k) Reporting Requirements. SAI will provide to the Purchaser the
following:
(i) as soon as available and in any event within 30 days after
the end of each fiscal quarter of SAI, consolidated and consolidating
balance sheets of SAI as of the end of such quarter and consolidated
and consolidating statements of income and retained earnings
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of SAI for the period commencing at the end of the previous fiscal year
and ending with the end of such quarter, certified by the chief
financial officer of SAI;
(ii) as soon as available and in any event within 120 days
after the end of each fiscal year of SAI, financial statements for such
year audited by its independent public accountants;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Termination or Incipient Event of
Termination, a statement of the chief financial officer of SAI setting
forth details of such Event of Termination or Incipient Event of
Termination and the action that SAI has taken and proposes to take with
respect thereto;
(iv) promptly after the filing or receipt thereof, copies of
all reports and notices that SAI or any Affiliate files under ERISA
with the Internal Revenue Service, the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that SAI or any
Affiliate receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to which SAI
or any Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition which could, in the
aggregate, result in the imposition of liability on SAI and/or any such
Affiliate;
(v) at least ten Business Days prior to any change in any
Seller's name, a notice setting forth the new name and the effective
date thereof;
(vi) concurrently with the delivery of each Receivables Report
by the Collection Agent, a statement as to whether or not all of the
Receivables under all Contracts arising during the immediately
preceding month have been transferred by the Sellers to the Purchaser
and, if less than all of such Receivables have been transferred, a
summary of those Receivables not transferred; and
(vii) such other information respecting the Transferred
Receivables or the condition or operations, financial or otherwise, of
any Seller as the Purchaser may from time to time reasonably request.
(l) Separate Conduct of Business. Each Seller will: (i) maintain
separate corporate records and books of account from those of the Purchaser;
(ii) conduct its business from an office separate from that of the Purchaser;
(iii) ensure that all oral and written communications, including, without
limitation, letters, invoices, purchase orders, contracts, statements and
applications, will be made solely in its own name and not in the name of the
Purchaser; (iv) have stationery and other
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business forms and a mailing address and a telephone number separate from those
of the Purchaser; (v) not hold itself out as having agreed to pay, or as being
liable for, the obligations of the Purchaser; (vi) not engage in any transaction
with the Purchaser except as contemplated by this Agreement; (vii) continuously
maintain as official records the resolutions, agreements and other instruments
underlying the transactions contemplated by this Agreement; and (viii) disclose
on its annual financial statements (A) the effects of the transactions
contemplated by this Agreement in accordance with generally accepted accounting
principles and (B) that the assets of the Purchaser are not available to pay the
creditors of such Seller.
SECTION 5.02. Grant of Security Interest. To secure all obligations of
the Sellers arising in connection with this Agreement, and each other agreement
entered into in connection with this Agreement, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, Indemnified Amounts, payments on account of
Collections received or deemed to be received and any other amounts due the
Purchaser hereunder, each Seller hereby assigns and grants to the Purchaser a
security interest in all of such Seller's right, title and interest now or
hereafter existing in, to and under all Receivables which do not constitute
Transferred Receivables, the Related Security and the related Contracts and all
Collections with regard thereto. In addition, to secure its obligations to
repurchase certain Purchased Receivables hereunder and to secure its other
obligations hereunder, each Seller hereby grants to the Purchaser a first
priority security interest (but only to the extent of such Seller's interest
therein) in any computer software, disks and the like necessary or desirable for
collection of the Purchased Receivables. If, at any time, any Seller fails to
perform its duty to sell additional Receivables to the Purchaser, the Purchaser
may enter the premises of such Seller and effectuate a Purchase of all Eligible
Receivables then owned by such Seller in exchange for an increase in the
Deferred Purchase Price. If, at any time, any Seller fails to perform its duty
to make any payment to the Purchaser in excess of $25,000 in accordance with the
terms of this Agreement, the Purchaser may exercise all of the rights of a
secured party under the UCC with respect to the Eligible Receivables then owned
by such Seller.
SECTION 5.03. Covenant of the Sellers and the Purchaser. The Sellers
and the Purchaser have structured this Agreement with the intention that each
Purchase of Receivables hereunder be treated as a sale of such Receivables by
the Sellers to the Purchaser for all purposes. The Sellers and the Purchaser
shall record each Purchase as a sale or purchase, as the case may be, on its
books and records, and reflect each Purchase in its financial statements and tax
returns as a sale or purchase, as the case may be. In the event that, contrary
to the mutual intent of the Sellers and the Purchaser, any Purchase of
Receivables hereunder is not characterized as a sale with respect to any Seller,
such Seller shall, effective as of the date hereof, be deemed to have granted
(and such Seller hereby does grant) to the Purchaser a first priority security
interest in and to any and all Receivables and the proceeds thereof, all to
secure the repayment of all amounts advanced to the
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Seller hereunder with accrued interest thereon, and this Agreement shall be
deemed to be a security agreement.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Collection Agent. The servicing,
administration and collection of the Transferred Receivables with respect to all
Contracts related to the Transferred Receivables, shall be conducted by such
Person (the "Collection Agent") so designated hereunder from time to time. Until
the Purchaser or its assign gives notice to SAI of the designation of a new
Collection Agent, SAI is hereby designated as, and hereby agrees to perform the
duties and obligations of, the Collection Agent pursuant to the terms hereof.
SAI agrees that such notice may be given at any time in the discretion of the
Purchaser or its assign. Upon the receipt by SAI of such notice, SAI agrees that
it will terminate its activities as Collection Agent hereunder in a manner which
the Purchaser (or its assign) believes will facilitate the transition of the
performance of such activities to the new Collection Agent, and SAI shall use
its best efforts to assist the Purchaser (or its assign) to take over the
servicing, administration and collection of the Transferred Receivables,
including, without limitation, providing access to and copies of all computer
tapes or disks and other documents or instruments that evidence or relate to
Transferred Receivables maintained in its capacity as Collection Agent and
access to all employees and officers of SAI responsible with respect thereto.
The Purchaser at any time after giving such notice may designate as Collection
Agent any Person (including itself) to succeed SAI or any successor Collection
Agent, if such Person shall consent and agree to the terms hereof. The
Collection Agent may, with the prior consent of the Purchaser, subcontract with
any other Person, including any of the Sellers, for the servicing,
administration or collection of Transferred Receivables and the related
Contracts. Any such subcontract shall not affect the liability of the Sellers
for performance of its duties and obligations pursuant to the terms hereof.
SECTION 6.02. Duties of Collection Agent.
(a) The Collection Agent shall take or cause to be taken all such
actions as may be necessary or advisable to collect each Transferred Receivable
from time to time, all in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Credit and Collection Policy. The Purchaser hereby appoints the Collection
Agent, from time to time designated pursuant to Section 6.01, as agent to
enforce its ownership and other rights in the Transferred Receivables, the
Related Security and the Collections with respect thereto. In performing its
duties as Collection Agent, the Collection Agent shall exercise the same care
and
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apply the same policies as it would exercise and apply if it owned the
Transferred Receivables and shall act in the best interests of the Purchaser and
its assignees.
(b) Prior to the tenth Business Day of each month, the Collection Agent
shall prepare and forward to the Purchaser (i) a Receivables Report, relating to
all then outstanding Transferred Receivables, and the Related Security and
Collections with respect thereto, in each case, as of the close of business of
the Collection Agent on the last day of the immediately preceding month and (ii)
a listing by Obligor of all Transferred Receivables correlating Purchased
Receivables and Purchases, together with an aging report of such Transferred
Receivables.
(c) If no Event of Termination or Incipient Event of Termination shall
have occurred and be continuing, SAI, while it is the Collection Agent, may, in
accordance with the Credit and Collection Policy, extend the maturity or adjust
the Outstanding Balance of any Transferred Receivable as XXX xxxxx appropriate
to maximize Collections thereof.
(d) The Seller shall deliver to the Collection Agent, and the
Collection Agent shall hold in trust for the Sellers and the Purchaser in
accordance with their respective interests, all documents, instruments and
records (including, without limitation, computer tapes or disks) which evidence
or relate to Transferred Receivables.
(e) The Collection Agent shall, as soon as practicable following
receipt, return to the Sellers any cash collections or other cash proceeds
received with respect to Receivables not constituting Transferred Receivables,
less, in the event SAI is not the Collection Agent, all reasonable and
appropriate out-of-pocket costs and expenses of the Collection Agent of
servicing, collecting and administering the Receivables to the extent not
covered by the Collection Agent Fee received by it.
(f) The Collection Agent also shall perform the other obligations of
the "Collection Agent" set forth in this Agreement with respect to the
Transferred Receivables.
(g) In addition to its other duties specified herein, the Collection
Agent shall, until its duties hereunder are terminated by the Purchaser, perform
or cause the performance of all monitoring services required under each of the
Contracts as if such Contracts had not been sold or contributed to the Purchaser
hereunder.
SECTION 6.03. Collection Agent Fee. The Purchaser shall pay to the
Collection Agent a periodic fee (the "Collection Agent Fee") of $4.10 per month
for each Installation that is represented by a Transferred Receivable (other
than Installations related to Transferred Receivables that are Defaulted
Receivables), payable on each Settlement Date or such other day during each
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calendar month as the Purchaser and the Collection Agent shall agree. The
Collection Agent Fee shall be inclusive of all fees charged by and payable to
the Central Station, the payment of which shall be the responsibility of the
Collection Agent.
SECTION 6.04. Certain Rights of the Purchaser.
(a) The Purchaser may, at any time, give notice of ownership and/or
direct the Obligors of Transferred Receivables and any Person obligated on any
Related Security, or any of them, that payment of all amounts payable under any
Transferred Receivable shall be made directly to the Purchaser or its designee.
Each Seller hereby transfers to the Purchaser (and its assigns and designees)
the exclusive ownership and control of the Lockbox.
(b) Each Seller shall, at any time upon the Purchaser's request and at
the Sellers' joint and several expense, give notice of such ownership to each
Obligor of Transferred Receivables and direct that payments of all amounts
payable under such Transferred Receivables be made directly to the Purchaser or
its designee.
(c) At the Purchaser's request and at the Sellers' joint and several
expense, each Seller and the Collection Agent shall (i) assemble all documents,
instruments and other records (including, without limitation, computer tapes and
disks) that evidence or relate to the Transferred Receivables and the related
Contracts and Related Security, or that are otherwise necessary or desirable to
collect the Transferred Receivables, and shall make the same available to the
Purchaser at a place selected by the Purchaser or its designee and (ii)
segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Transferred Receivables in a manner acceptable
to the Purchaser and, promptly upon receipt, remit all such cash, checks and
instruments, duly indorsed or with duly executed instruments of transfer, to the
Lockbox. The Purchaser shall also have the right to make copies of all such
documents, instruments and other records at any time.
(d) Each Seller authorizes the Purchaser to take any and all steps in
such Seller's name and on behalf of the Seller that are necessary or desirable,
in the determination of the Purchaser, to collect amounts due under the
Transferred Receivables, including, without limitation, endorsing the name of
any Seller on any check or other instrument representing Collections of
Transferred Receivables and enforcing the Transferred Receivables and the
Related Security and related Contracts.
SECTION 6.05. Designation of Central Station. The performance of
monitoring services required under the Transferred Receivables shall be
conducted by the Central Station so designated hereunder from time to time.
Until the Purchaser gives notice to SAI of the designation of a new Central
Station, SAI is hereby designated as, and hereby agrees to perform the duties
and
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obligations of, the Central Station pursuant to the terms hereof. The Purchaser
at any time following the occurrence of an Event of Termination or a Central
Station Termination Event (as defined below) may designate as Central Station
any other Person to succeed SAI or any successor Central Station, if such Person
shall consent and agree to the terms hereof. The Central Station may, with the
prior consent of the Purchaser (which consent shall not be unreasonably
withheld), subcontract with any other Person for the performance of monitoring
services required under the Contracts; provided, that no such consent shall be
required with respect to subcontracting with any Seller. Any such subcontract
shall not affect the Central Station's liability for performance of its duties
and obligations pursuant to the terms hereof. For purposes hereof, a "Central
Station Termination Event" means the occurrence of any one or more of the
following:
(i) The filing of a petition for bankruptcy protection with
respect to the Central Station, either voluntary or involuntary;
(ii) The Central Station or any of its officers being found
guilty of any felony or upon a finding of liability in any criminal or
civil action involving impropriety in business dealings or operations
which, in either case, materially affects the operation of the Central
Station, or its performance under any Transferred Receivable;
(iii) The abandonment of monitoring service operations by the
Central Station, which shall be deemed to have occurred if the Central
Station fails to provide monitoring services as required for a period
of 72 hours or longer, whether or not such interruption in service has
been caused by acts of force majeure beyond the control of the Central
Station; or
(iv) Upon the occurrence of a material default in the
performance of its duties hereunder.
SECTION 6.06. Duties of the Central Station.
(a) The Central Station shall in all material respects fulfill
all of its responsibilities under the Transferred Receivables in accordance with
applicable laws, rules and regulations, with reasonable care and diligence, and
in accordance with generally accepted industry standards.
(b) The Central Station shall, promptly after becoming aware
thereof, notify the Purchaser of any material dispute or claim asserted by any
Obligor under any Transferred Receivable.
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(c) The Central Station shall maintain comprehensive general
liability insurance which cannot be canceled with less than 30 days notice to
the Purchaser, including errors and omissions coverage on monitoring operations,
in the minimum amount of $1,000,000 covering bodily injury and property damage
resulting from the performance of monitoring services under the Transferred
Receivables.
SECTION 6.07. Rights and Remedies.
(a) If the Collection Agent, the Central Station or any Seller fails to
perform any of its obligations under this Agreement, the Purchaser may (but
shall not be required to) itself perform, or cause performance of, such
obligation, and, if any Seller (as Collection Agent or otherwise) fails to so
perform, the costs and expenses of the Purchaser incurred in connection
therewith shall be jointly and severally payable by the Seller as provided in
Section 8.01 or Section 9.04 as applicable.
(b) Each Seller shall perform all of its obligations under the
Contracts related to the Transferred Receivables to the same extent as if such
Seller had not sold or contributed Receivables hereunder and the exercise by the
Purchaser of its rights hereunder shall not relieve any Seller from such
obligations or its obligations with respect to the Transferred Receivables. The
Purchaser shall not have any obligation or liability with respect to any
Transferred Receivables or related Contracts, nor shall the Purchaser be
obligated to perform any of the obligations of any Seller thereunder.
(c) Each Seller shall cooperate with the Collection Agent in collecting
amounts due from Obligors in respect of the Transferred Receivables.
(d) Each Seller hereby grants to the Collection Agent an irrevocable
power of attorney, with full power of substitution, coupled with an interest, to
take in the name of such Seller all steps necessary or advisable to endorse,
negotiate or otherwise realize on any writing or other right of any kind held or
transmitted by such Seller or transmitted or received by the Purchaser (whether
or not from such Seller) in connection with any Transferred Receivable.
SECTION 6.08. Transfer of Records to Purchaser. Each Purchase and
contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of each Seller's right and title to and interest in the records
relating to such Receivables and shall include an irrevocable non-exclusive
license to the use of such Seller's computer software system to access and
create such records. Such license shall be without royalty or payment of any
kind, is coupled with an interest, and shall be irrevocable until all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables. Each Seller shall take such action requested by the Purchaser, from
time to time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Transferred Receivables and rights (whether by ownership, license or sublicense)
to the use of the computer software system of such Seller to access
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and create such records. In recognition of the Sellers' need to have access to
the records transferred to the Purchaser hereunder, the Purchaser hereby grants
to each Seller an irrevocable license to access such records in connection with
any activity arising in the ordinary course of such Seller's business or in
performance of its duties as Collection Agent and Central Station, provided that
(i) none of the Sellers shall disrupt or otherwise interfere with the
Purchaser's use of and access to such records during such license period and
(ii) each Seller consents to the assignment and delivery of the records
(including any information contained therein relating to such Seller or its
operations) to any assignees or transferees of the Purchaser provided they agree
to hold such records confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
("Events of Termination") shall occur and be continuing:
(a) the Collection Agent or the Central Station (if SAI or any of its
Affiliates) shall fail to (i) perform or observe in any material respect any
term, covenant or agreement under this Agreement (other than as referred to in
clause (ii) of this subsection (a)) and such failure shall remain unremedied for
three Business Days or (ii) make when due any payment or deposit to be made by
it under this Agreement; or
(b) any Seller shall fail to (i) transfer to the Purchaser when
requested any rights, pursuant to this Agreement, which such Seller then has as
Collection Agent or as Central Station or (ii) make any payment required under
this Agreement; or
(c) any representation or warranty made or deemed made by any Seller
under or in connection with this Agreement or any information or report
delivered by any Seller pursuant to this Agreement shall prove to have been
incorrect or untrue in any material respect when made or deemed made or
delivered; or
(d) any Seller shall fail to perform or observe in any material respect
any other term, covenant or agreement contained in this Agreement on its part to
be performed or observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to such Seller by the
Purchaser or its assign; or
(e) any Seller shall fail to pay any principal of or premium or
interest on any of its Debt when the same becomes due and payable (whether by
scheduled maturity, required prepayment,
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acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Debt; or any other event shall occur or condition shall exist
under any agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate, or to
permit the acceleration of, the maturity of such Debt; or any such Debt shall be
declared to be due and payable, or required to be prepaid (other than by a
regularly scheduled required prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such Debt shall be required to be
made, in each case prior to the stated maturity thereof; or
(f) any Purchase or contribution of Receivables hereunder, the Related
Security and the Collections with respect thereto shall for any reason cease to
constitute valid and perfected ownership of such Receivables, Related Security
and Collections free and clear of any Adverse Claim; or
(g) any Seller shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Seller seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial part
of its property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain undismissed or
unstayed for a period of 30 days, or any of the actions sought in such
proceeding (including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur; or
any Seller shall take any corporate action to authorize any of the actions set
forth above in this subsection (g); or
(h) an Event of Termination shall have occurred under the Finance
Agreement; or
(i) there shall have occurred any material adverse change in the
financial condition or operations of any Seller since the date hereof; or there
shall have occurred any event which has a reasonable likelihood of having a
material adverse effect on the collectibility of the Transferred Receivables or
the ability of any Seller to collect Transferred Receivables or otherwise
perform its obligations under this Agreement;
then, and in any such event, the Purchaser may, by notice to the Sellers, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the
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Facility Termination Date shall be deemed to have occurred) and (y) without
limiting any right under this Agreement to replace the Collection Agent and/or
Central Station, designate another Person to succeed SAI as Collection Agent
and/or Central Station; provided, that, automatically upon the occurrence of any
event (without any requirement for the passage of time or the giving of notice)
described in paragraph (g) of this Section 7.01, the Facility Termination Date
shall occur, SAI (if it is then serving as the Collection Agent or Central
Station) shall cease to be the Collection Agent and the Central Station, and the
Purchaser (or its assign or designee) shall become the Collection Agent and the
Central Station. Upon any such declaration or designation or upon such automatic
termination, the Purchaser shall have, in addition to the rights and remedies
under this Agreement, all other rights and remedies with respect to the
Receivables provided after default under the UCC and under other applicable law,
which rights and remedies shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Sellers. Without limiting any other
rights which the Purchaser may have hereunder or under applicable law, the
Sellers hereby jointly and severally agree to indemnify the Purchaser and its
assigns and transferees (each, an "Indemnified Party") from and against any and
all damages, claims, losses, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts"), awarded against or
incurred by any Indemnified Party arising out of or as a result of:
(a) the inclusion, or purported inclusion, in any Purchase of any
Receivable that is not an Eligible Receivable on the date of such Purchase, or
the characterization in any Receivables Report or other statement made by any
Seller of any Transferred Receivable as an Eligible Receivable which is not an
Eligible Receivable as of the date of such Receivables Report or statement;
(b) any representation or warranty or statement made or deemed made by
any Seller under or in connection with this Agreement, which shall have been
incorrect in any material respect when made;
(c) the failure by any Seller to comply with any applicable law, rule
or regulation with respect to any Transferred Receivable or the related
Contract; or the failure of any Transferred Receivable or the related Contract
to conform to any such applicable law, rule or regulation;
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(d) the failure to vest in the Purchaser absolute ownership of the
Receivables that are, or that purport to be, the subject of a Purchase or
contribution under this Agreement and the Related Security and Collections in
respect thereof, free and clear of any Adverse Claim;
(e) the failure of any Seller to have filed, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable law with respect to any
Receivable that is, or that purports to be, the subject of a Purchase or
contribution under this Agreement and the Related Security and Collections in
respect thereof, whether at the time of any Purchase or contribution or at any
subsequent time;
(f) any dispute, claim, offset or defense (other than discharge in
bankruptcy of the Obligor) of the Obligor to the payment of any Receivable that
is, or that purports to be, the subject of a Purchase or contribution under this
Agreement (including, without limitation, a defense based on such Receivable or
the related Contract not being a legal, valid and binding obligation of such
Obligor enforceable against it in accordance with its terms), or any other claim
resulting from the sale of the services related to such Receivable or the
furnishing or failure to furnish such services or relating to collection
activities with respect to such Receivable (if such collection activities were
performed by SAI acting as Collection Agent) except to the extent that such
dispute, claim, offset or defense results solely from actions or failures to act
of the Purchaser or its assigns;
(g) any failure of SAI, as Collection Agent, Central Station or
otherwise, to perform its duties or obligations in accordance with the
provisions hereof or to perform its duties or obligations under any Contract
related to a Transferred Receivable;
(h) any products liability or other claim arising out of or in
connection with services which are the subject of any Contract;
(i) the commingling of Collections of Transferred Receivables by any
Seller or a designee of any Seller, as Collection Agent or otherwise, at any
time with other funds of such Seller or an Affiliate thereof;
(j) any investigation, litigation or proceeding related to this
Agreement or the use of proceeds of Purchases or the ownership of Receivables,
the Related Security or Collections with respect thereto or in respect of any
Receivable, Related Security or Contract, except to the extent any such
investigation, litigation or proceeding relates to a possible matter involving
an Indemnified Party for which neither any Seller nor any of its Affiliates is
at fault;
(k) any failure of any Seller to comply with its covenants contained in
Section 5.01;
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(l) any Collection Agent Fees or other costs and expenses payable to
any replacement Collection Agent or Central Station, to the extent in excess of
the Collection Agent Fees payable to SAI hereunder;
(m) any claim brought by any Person other than an Indemnified Party
arising from any activity by any Seller or any of its Affiliates in servicing,
administering or collecting any Transferred Receivable; or
(n) any Dilution with respect to any Transferred Receivable.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require any Seller to indemnify any
Person (A) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy or financial inability to pay of the
applicable Obligor, (B) for damages, losses, claims or liabilities or related
costs or expenses resulting from such Person's gross negligence or willful
misconduct or (C) for any income taxes or franchise taxes incurred by such
Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof. No amendment or waiver of any provision of this Agreement or
consent to any departure by any Seller therefrom shall be effective unless in a
writing signed by the Purchaser and, in the case of any amendment, also signed
by each Seller, and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Purchaser to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.
SECTION 9.02. Notices, Etc. All notices and other communications
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name in the first paragraph
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hereof or at such other address as shall be designated by such party in a
written notice to the other parties hereto. Notices and communications by
facsimile shall be effective when sent (and shall be followed by hard copy sent
by regular mail), and notices and communications sent by other means shall be
effective when received.
SECTION 9.03. Binding Effect; Assignability.
(a) This Agreement shall be binding upon and inure to the benefit of
the Sellers, the Purchaser and their respective successors and assigns;
provided, however, that none of the Sellers may assign its rights or obligations
hereunder or any interest herein without the prior written consent of the
Purchaser. In connection with any sale or assignment by the Purchaser of all or
a portion of the Transferred Receivables, the buyer or assignee, as the case may
be, shall, to the extent of its purchase or assignment, have all rights of the
Purchaser under this Agreement (as if such buyer or assignee, as the case may
be, were the Purchaser hereunder) except to the extent specifically provided in
the agreement between the Purchaser and such buyer or assignee, as the case may
be.
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall remain
in full force and effect until such time, after the Facility Termination Date,
when all of the Transferred Receivables are either collected in full or become
Defaulted Receivables; provided, however, that rights and remedies with respect
to any breach of any representation and warranty made by any Seller pursuant to
Article IV and the provisions of Article VIII and Sections 9.04, 9.05 and 9.06
shall be continuing and shall survive any termination of this Agreement.
SECTION 9.04. Costs, Expenses and Taxes. In addition to the rights of
indemnification granted to the Purchaser pursuant to Article VIII, the Sellers
jointly and severally agree to pay on demand all costs and expenses, if any
(including reasonable counsel fees and expenses), in connection with the
enforcement of this Agreement and the other documents to be delivered hereunder
excluding, however, any costs of enforcement or collection of Transferred
Receivables.
SECTION 9.05. No Proceedings. Each Seller hereby agrees that it will
not institute against the Purchaser any proceeding of the type referred to in
Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (a) the Facility Termination Date and (b) the date on which
all of the Transferred Receivables are either collected in full or become
Defaulted Receivables.
SECTION 9.06. Confidentiality. Unless otherwise required by applicable
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with
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third parties and otherwise; provided that this Agreement may be disclosed to
(a) third parties to the extent such disclosure is made pursuant to a written
agreement of confidentiality in form and substance reasonably satisfactory to
the other party hereto and (b) such party's legal counsel and auditors and the
Purchaser's assignees, if they agree in each case to hold it confidential.
SECTION 9.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York (without giving
effect to the conflict of laws principles thereof), except to the extent that
the perfection of the Purchaser's ownership of or security interest in the
receivables or remedies hereunder, in respect thereof, are governed by the laws
of a jurisdiction other than the State of New York.
SECTION 9.08. Third Party Beneficiary. Each party hereto hereby
acknowledges that the Purchaser may assign all or any portion of its rights
under this Agreement and that such assignees may (except as otherwise agreed to
by such assignees) further assign their rights under this Agreement, and the
Sellers hereby consent to any such assignments. All such assignees, including
parties to the Finance Agreement in the case of assignment to such parties,
shall be third party beneficiaries of, and shall be entitled to enforce the
Purchaser's rights and remedies under, this Agreement to the same extent as if
they were parties thereto, except to the extent specifically limited under the
terms of their assignment.
SECTION 9.09. Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SELLERS: SECURITY ASSOCIATES INTERNATIONAL, INC.
By: ___________________________
Title: ____________________
SAI NORTHWEST COMMAND CENTER - SEATTLE, INC.
By: ___________________________
Title: ____________________
SAI SOUTHWEST COMMAND CENTERS, INC.,
By: ___________________________
Title: ____________________
SAI NORTH CENTRAL COMMAND CENTER, INC.,
By: ___________________________
Title: ____________________
PURCHASER: SAI FUNDING CORPORATION
By: ___________________________
Title: ____________________
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SCHEDULE A
DOING-BUSINESS-AS NAMES OF SELLERS
Seller DBA
Security Associates SAI Midwest Command Center
International, Inc. Security Associates, Inc
All Security Monitoring Services, L.L.C.
SAI Mountain Command Center
SAI Southeast Command Center, Inc.
AMJ Central Station Corporation, Inc.
SAI Northwest Command Center - Portland
SAI West Command Center
Total Electronic Alarm Monitoring, LLC
SAI Command Centers, Inc.
Emergency Response Center, Inc.
SAI North Central Te;ecommunications Associates Group, Inc.
Command Center, Inc. Emergency Response Center
ERC
ERC Network
SAI Southwestern Texas Security Central, Inc.
Command Centers, Inc. Monarch Central Dispatch
SAI Northwest Command Alarm Monitoring Services, Inc.
Center - Seattle, Inc.
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EXHIBIT A
FORM OF DEFERRED PURCHASE PRICE NOTE
$____________________ Pompano Beach, FL
____________, 200_
FOR VALUE RECEIVED, SAI FUNDING CORPORATION, a Delaware corporation
(the "Purchaser"), hereby promises to pay to {NAME OF SELLER] (the "Payee") the
principal amount of this Note, determined as described below, together with
interest thereon at a rate per annum equal at all times to 12.5% per annum in
lawful money of the United States of America. Capitalized terms used herein but
not defined herein shall have the meanings assigned to such terms in the
Purchase and Contribution Agreement, dated as of January 16, 2001, among
Security International Associates, Inc., SAI Northwest Command Center - Seattle,
Inc., SAI Southwest Command Centers, Inc., SAI North Central Command Center,
Inc. and SAI Funding Corporation (such agreement, as it may from time to time be
amended, restated or otherwise modified in accordance with its terms, the
"Purchase and Contribution Agreement"). This Note is the note referred to in the
definition of "Deferred Purchase Price" in the Purchase and Contribution
Agreement.
The aggregate principal amount of this Note at any time shall be equal
to the difference between (a) the sum of the aggregate principal amount of this
Note on the date of the issuance hereof and each addition to the principal
amount of this Note pursuant to the terms of the Purchase and Contribution
Agreement minus (b) the aggregate amount of all payments made in respect of the
principal amount of this Note, in each case, as recorded on the schedule annexed
to and constituting a part of this Note, provided that failure to so record
shall not affect the obligations of the Purchaser to the Payee.
The entire principal amount of this Note shall be due and payable on
December 31, 2007 or such later date as may be agreed in writing by the Payee
and the Purchaser. The principal amount of this Note may, at the option of the
Purchaser, be prepaid in whole at any time or in part from time to time.
Interest on this Note shall be paid in arrears at maturity and thereafter on
demand. All payments hereunder shall be made by wire transfer of immediately
available funds to such account of the Payee as the Payee may designate in
writing.
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Notwithstanding any other provisions contained in this Note, in no
event shall the rate of interest payable by the Purchaser under this Note exceed
the highest rate of interest permissible under applicable law.
The obligations of the Purchaser under this Deferred Purchase Price
Note are subordinated in right of payment to the prior payment in full of all
obligations of the Purchaser under the Finance Agreement.
Notwithstanding any provision to the contrary in this Note or
elsewhere, (a) no demand for any payment may be made hereunder, no payment shall
be due with respect hereto and the Payee shall have no claim for any payment
hereunder prior to the date when all obligations owing under the Finance
Agreement shall have been paid in full and (b) no payment shall be made in
respect of this Note at any time that an "Event of Default" or "Incipient Event
of Default" under the Finance Agreement has occurred and is continuing.
In the event that the Payee shall receive any payment or distribution
on this Note in contravention of clause (b) above, prior to payment in full of
all obligations of the Purchaser under the Finance Agreement, such payment shall
be received and held in trust by the Payee for the benefit of the entities to
whom the obligations are owed under the Finance Agreement and shall be paid over
to such entities.
The Purchaser hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever.
Neither this Note, nor any right of the Payee to receive payments
hereunder, shall, without the prior written consent of the Purchaser and (so
long as the Finance Agreement remains in effect or any amounts remain
outstanding thereunder) the Agent (as defined in the Finance Agreement), be
assigned, transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
SAI FUNDING CORP.
By ___________________________
Name:
Title:
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SCHEDULE TO DEFERRED PURCHASE PRICE NOTE
Date of Payment Amount of Payment
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EXHIBIT B
FORM OF PURCHASER LOAN NOTE
$________________ Pompano Beach, FL
_____________, 200_
FOR VALUE RECEIVED, [NAME OF SELLER] (the "Seller"), hereby promises to
pay to SAI FUNDING CORPORATION, a Delaware corporation (the "Purchaser"), on
demand, the principal sum of _________________________ Dollars (or such lesser
amount as shall equal the aggregate unpaid principal amount of the Purchaser
Loans made by the Purchaser to the Seller under the Purchase and Contribution
Agreement referred to below), and to pay on the first day of each calendar month
interest on the unpaid principal amount of the Purchaser Loans at a rate per
annum equal at all times to 12.5% per annum, in each case in lawful money of the
United States of America and in immediately available funds.
The date and amount of each Purchaser Loan made by the Purchaser to the
Seller from the date hereof until the repayment of all sums due hereunder, and
each payment made on account of the principal thereof, shall be recorded by the
Purchaser on its books and, prior to any transfer of this Note, endorsed by the
Purchaser on the schedule attached hereto or any continuation thereof.
This Note is one of the Purchaser Loan Notes referred to in the
Purchase and Contribution Agreement (as amended, restated or otherwise modified
from time to time, the "Purchase and Contribution Agreement"), dated as of
January 16, 2001, among Security International Associates, Inc., SAI Northwest
Command Center - Seattle, Inc., SAI Southwest Command Centers, Inc., SAI North
Central Command Center, Inc. and SAI Funding Corporation, and evidences
Purchaser Loans made by the Purchaser thereunder. Capitalized terms used in this
Note and not defined herein have the respective meanings assigned to them in the
Purchase and Contribution Agreement.
If any payment under this Note falls due on a day which is not a
Business Day, then such due date shall be extended to the next succeeding
Business Day and interest shall be payable on any principal so extended.
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The Seller expressly waives diligence, presentment, demand, protest and
notice of any kind whatsoever with respect to this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the Seller has caused this Note to be signed and
delivered by its duly authorized officer as of the date set forth above.
[NAME OF SELLER]
By ____________________________
Name:
Title:
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SCHEDULE TO PURCHASER LOAN NOTE
Date of Payment Amount of Payment
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