FOURTH AMENDED AND RESTATED TERM LOAN AND
ACQUISITION CREDIT AGREEMENT
by and among
ALARMGUARD, INC.,
as Borrower,
SECURITY SYSTEMS HOLDINGS, INC., ALARMGUARD HOLDINGS, INC.,
PROTECTIVE ALARMS OF CANADA, INC. AND DETECT, INC.,
as the Guarantors,
BANKBOSTON, N.A. (successor by merger to Bank of Boston Connecticut),
GENERAL ELECTRIC CAPITAL CORPORATION,
IBJ XXXXXXXX BANK & TRUST COMPANY,
CIBC INC.
AND
THE OTHER BANKS AND LENDERS WHICH MAY BECOME A PARTY TO THIS AGREEMENT,
as the Lenders,
BANKBOSTON, N.A. (successor by merger to Bank of Boston Connecticut),
as the Administrative Agent,
and
GENERAL ELECTRIC CAPITAL CORPORATION, as
the Documentation Agent.
AS OF JULY 31, 1998
FOURTH AMENDED AND RESTATED TERM LOAN AND
ACQUISITION CREDIT AGREEMENT
This FOURTH AMENDED AND RESTATED TERM LOAN AND ACQUISITION CREDIT
AGREEMENT is made as of this 31st day of July, 1998 by and among ALARMGUARD,
INC., a Delaware corporation, with its chief executive office located at 000
Xxxxxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 ("Borrower"), the Guarantors which are
or may become parties to this Agreement, the banks, financial institutions and
other lenders which are or may become parties to this Agreement (individually, a
"Lender" and collectively, the "Lenders"), BANKBOSTON, N.A. (successor by merger
to Bank of Boston Connecticut), a national banking association, with an office
located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 as the Administrative
Agent for the Lenders (in such capacity, the "Administrative Agent"), and
GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation, with an office
located at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 as the
Documentation Agent for the Lenders (in such capacity, the "Documentation
Agent").
W I T N E S S E T H:
Borrower is a direct wholly-owned subsidiary of Security Systems
Holdings, Inc., a Delaware corporation ("SSH"), SSH is a direct wholly-owned
subsidiary of Alarmguard Holdings, Inc. ("Alarmguard Holdings"), and Protective
Alarms of Canada, Inc. ("Protective Alarms") and Detect, Inc. ("Detect") are
each a direct wholly-owned subsidiary of Borrower.
Borrower, SSH, Alarmguard Holdings, Protective Alarms, BankBoston,
N.A., General Electric Capital Corporation, IBJ Xxxxxxxx Bank & Trust Company
and CIBC Inc. entered into a certain Third Amended and Restated Term Loan and
Acquisition Credit Agreement dated as of February 2, 1998 (as amended and in
effect from time to time, the "Third Restated Credit Agreement") pursuant to
which BankBoston, N.A., General Electric Capital Corporation, IBJ Xxxxxxxx Bank
& Trust Company and CIBC, Inc. agreed to make loans and advances to Borrower.
Upon the execution of this Agreement, Borrower is currently indebted to the
Lenders in the aggregate principal amount of $64,700,000.00 (the "Existing
Loans"), exclusive of accrued and unpaid interest and other amounts due and
payable under the Third Restated Credit Agreement.
Borrower has requested that the Lenders amend and restate the terms and
conditions of the Third Restated Credit Agreement, inter alia, to continue the
Existing Loans, to add Detect as a party thereto and to provide for the
extension of a term loan facility to Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, Borrower, the Guarantors, the Lenders, the
Administrative Agent and the Documentation Agent hereby agree that the Third
Restated Credit Agreement shall (subject to the satisfaction of the conditions
set forth in Section 5 hereof) be amended and restated as follows:
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SECTION 1. DEFINITIONS
All capitalized terms used in this Agreement, the Notes or the Other
Documents, or in any certificate, report or other document, instrument or
agreement executed or delivered pursuant hereto and thereto (unless otherwise
indicated therein) shall have the meanings ascribed to such terms below.
Section 1.1. "ACQUISITION" means any acquisition of the assets or
Capital Stock of a Person made by Borrower or a Subsidiary of Borrower as
permitted under Section 6.2. hereof.
Section 1.2. "ACQUISITION DOCUMENTS" means the documents, agreements
and instruments executed and delivered in connection with an Acquisition.
Section 1.3. "ACQUISITION INTEGRATION COSTS" means the costs associated
with each Acquisition consummated since February 2, 1998, including but not
being limited to the Detect Acquistion and the Sentry Acqusition, and which are
subject under GAAP to (i) the provisions of the Consensus Positions of the
Emerging Issues Task Force under EITF 95-3: Recognition of Liabilities in
Connection with a Purchase Business Combination, dated as of January 19, 1995,
March 23, 1995, May18/19, 1995, and July20/21, 1995 and (ii) other
pronouncements relating to the subject matter therof by other applicable ruling
bodies.
Section 1.4. "ACQUISITION LOAN" means each Revolving Loan obtained by
Borrower to finance the purchase price for, and the reasonable fees, expenses
and costs, including integration costs, incurred by Borrower in connection with,
an Acquisition.
Section 1.5. "ADJUSTED EURODOLLAR RATE" means, as applied to any
Interest Period for a Eurodollar Loan, a rate per annum determined by the
Administrative Agent pursuant to the following formula:
AER = [ IOR ] *
--------
[1.00 - RP]
AER = Adjusted Eurodollar Rate
IOR = Interbank Offered Rate
RP = Reserve Percentage
* The amount in brackets shall be rounded upwards, if
necessary to the next higher 1/100 of 1%.
Where:
"Interbank Offered Rate" applicable to any Eurodollar Loan for
any Interest Period means the rate of interest determined by the Administrative
Agent to be the prevailing rate
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per annum at which deposits in U.S. dollars are offered to the Administrative
Agent by first-class banks in the interbank Eurodollar market in which it
regularly participates on or about 10:00 a.m. (Boston, Massachusetts time) two
(2) Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Eurodollar Loan to which such
Interest Period is to apply for a period of time approximately equal to such
Interest Period.
"Reserve Percentage" applicable to any Interest Period means
the rate (expressed as a decimal) applicable to any member bank of the Federal
Reserve System during such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System for determining the
maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency or marginal reserve requirement) of such member bank
with respect to "Eurocurrency liabilities" as that terms is defined under such
regulations.
Section 1.6. "ADMINISTRATIVE AGENT" shall have the meaning set forth in
the Preamble hereof and shall include any successor to the Administrative Agent
appointed pursuant to Section 10.10. hereof.
Section 1.7. "ADMINISTRATIVE QUESTIONNAIRE" shall have the meaning set
forth in Section 10.17. hereof.
Section 1.8. "AFFILIATE" means any Person (i) which directly or
indirectly controls, or is controlled by, or is under common control with,
Borrower or any Subsidiary of Borrower; (ii) which directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock of Borrower or any Subsidiary of Borrower or ten percent (10%) or more of
the voting stock of which is directly or indirectly beneficially owned or held
by Borrower or any Subsidiary of Borrower; or (iii) which is an officer,
director, joint venturer or partner of any Person referred to in clause (i) or
(ii) above. The term "control" (and its correlative meanings "controlled by" and
"under common control with") as used in this Section 1.8. means the possession,
directly or indirectly, of the power to direct, or cause the direction of, the
management and policies of a Person, whether through ownership of voting stock,
by contract or otherwise. Notwithstanding any provision of this Section 1.8. to
the contrary, the Administrative Agent, the Documentation Agent and the Lenders
shall not be considered an Affiliate of any Credit Party for purposes of this
Agreement.
Section 1.9. "AFFILIATE SUBORDINATION AGREEMENT" means each
subordination agreement executed by an Affiliate of Borrower in favor of the
Administrative Agent and the Lenders with respect to any Indebtedness due by
Borrower to such Affiliate in substantially the form of EXHIBIT G-1 attached
hereto, as any such Affiliate Subordination Agreement may be amended,
supplemented, modified or confirmed from time to time.
Section 1.10. "AGREEMENT" means this Fourth Amended and Restated Term
Loan and Acquisition Credit Agreement, including all schedules and exhibits
attached hereto, and any and all amendments, modifications and supplements
hereto.
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Section 1.11. "ALARMGUARD HOLDINGS" shall have the meaning set forth in
the Preamble hereof.
Section 1.12. "ALARMGUARD HOLDINGS GUARANTEE" means the Guarantee
Agreement executed by Alarmguard Holdings in favor of the Administrative Agent
for the ratable benefit of the Lenders, as such Alarmguard Holdings Guarantee
may be amended, supplemented, modified or confirmed from time to time .
Section 1.13. "ALARMGUARD HOLDINGS PLEDGE" means the Pledge Agreement
executed by Alarmguard Holdings in favor of the Administrative Agent for the
ratable benefit of the Lenders , as such Alarmguard Holdings Pledge may be
amended, supplemented, modified or confirmed from time to time.
Section 1.14. "APPLICABLE LENDING OFFICE" means, for each Lender and
for each type of Loan, the lending office of such Lender designated for such
type of Loan as set forth on SCHEDULE 1.14. attached hereto, as said SCHEDULE
1.14. is amended, supplemented or modified from time to time, as the office by
which its Loans of such type are to be made and maintained.
Section 1.15. "APPROVED ACQUISITION INTEGRATION COSTS" means, as of any
date as of which the amount thereof shall be determined, an amount equal to the
sum of:
(i) the aggregate Acquisition Integration Costs incurred in connection
with Acquisitions for which the consent of the Lenders is not required
under Section 6.2. hereof but which do not exceed in the aggregate for
any individual Acquisition an amount equal to two (2) times the RMR
acquired in connection with such Acquisition, PLUS
(ii) the aggregate Acquisition Integration Costs which shall be
approved after the Closing Date by the Lenders with respect to each of
the Detect Acquisition and the Sentry Acquisition, PLUS
(iii) the aggregate Acquisition Integration Costs which relate to any
other Acquisition which requires the consent of the Lenders under
Section 6.2. hereof and which were approved by the Administrative
Agent, the Documentation Agent and the Lenders in accordance with such
Section 6.2. hereof,
but excluding from such amount any Acquisition Integration Costs which relate to
an Acquisition which was consummated more than one (1) year prior to such date
of determination.
Section 1.16 "ASSET SALE" means any sale, transfer or other disposition
by Borrower or any of its Subsidiaries to any Person (other than to Borrower or
a Subsidiary) of any asset (including, without limitation, any Capital Stock of
another Person, but excluding the sale by such Person of its own Capital Stock)
of Borrower or such Subsidiary.
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Section 1.17. "ASSIGNMENT AND ACCEPTANCE" shall have the meaning set
forth in Section 13.1. hereof.
Section 1.18. "BANKRUPTCY CODE" means Title 11 of the United States
Code, entitled "Bankruptcy", as amended from time to time, and all rules and
regulations promulgated thereunder.
Section 1.19. "BASE RATE" means the greater of (i) the rate of interest
announced from time to time by BankBoston, N.A. at its head office located at
000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 as its "Base Rate", or (ii) the
Federal Funds Effective Rate plus 1/2 of 1% per annum (rounded upwards, if
necessary, to the next 1/16 of 1%).
Section 1.20. "BASE RATE LOAN" means any Loan bearing interest at a
rate determined by reference to the Base Rate.
Section 1.21. "BASE RATE MARGIN" means a percentage per annum
determined as set forth in Section 2.4.5. hereof.
Section 1.22. "BORROWER" shall have the meaning set forth in the
Preamble hereof.
Section 1.23. "BORROWER PLEDGE AGREEMENT" means the Pledge Agreement
executed by Borrower in favor of the Administrative Agent for the ratable
benefit of the Lenders, as such Borrower Pledge Agreement may be amended,
supplemented, modified or confirmed on the Closing Date and from time to time
thereafter.
Section 1.24. "BORROWER SECURITY AGREEMENT" means the Amended and
Restated Security Agreement executed by Borrower in favor of the Administrative
Agent for the ratable benefit of the Lenders, as such Borrower Security
Agreement may be amended, supplemented, modified or confirmed on the Closing
Date and from time to time thereafter.
Section 1.25. "BORROWING BASE" means, as of any date as of which the
amount thereof shall be determined, an amount which is equal to RMR as of such
date multiplied by 22.5.
Section 1.26. "BUSINESS DAY" means, in the case of a Eurodollar Loan,
any day in which dealings in foreign currencies and exchange between lenders may
be carried on in the place where the Eurodollar Office is located and in Boston,
Massachusetts and Hartford, Connecticut and, in all other cases, any day other
than a Saturday, Sunday, legal holiday or other day on which lenders in the
State of Connecticut or the Commonwealth of Massachusetts are required or
permitted by law to close.
Section 1.27. "CAPITAL EXPENDITURES" means, without duplication, for
any period, the aggregate of all expenditures made by Borrower and its
Subsidiaries that, in conformity with GAAP, are required to be included in the
"additions to property, plant, equipment" or similar
6
fixed asset account reflected within the consolidated Financial Statements of
Borrower and its Subsidiaries.
Section 1.28. "CAPITAL LEASE" means any lease of any property (whether
real, personal or mixed) that, in conformity with GAAP, should be accounted for
as a capital lease.
Section 1.29. "CAPITAL STOCK" means any and all shares, interests,
participations or other equivalents, however designated, of the capital stock of
a corporation, any and all equivalent ownership interests in a Person (other
than a corporation) and any and all warrants or options to purchase any of the
foregoing.
Section 1.30. "CASH PROCEEDS" means, with respect to any Asset Sale,
the aggregate cash payments (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset Sale,
other than the portion of such deferred payment constituting interest, but only
as and when so received) received by Borrower and/or any of its Subsidiaries
from such Asset Sale.
Section 1.31. "CHANGE IN CONTROL EVENT" means any event which results
in (i) Alarmguard Holdings ceasing to own directly 100% on a fully diluted basis
of the Capital Stock of SSH (other than as a result of the consolidation of
Alarmguard Holdings with SSH), (ii) SSH or Alarmguard Holdings ceasing to own
directly 100% on a fully diluted basis of the Capital Stock of the Borrower, or
(iii) any Person (other than a Continuing Shareholder) or "group" (within the
meaning of Rules 13d-3 and 13d-5 under the Exchange Act) (other than a group of
the Continuing Shareholders) directly or indirectly having directly or
indirectly acquired beneficial or record ownership of more than 20% of the
aggregate ordinary voting power represented by the issued and outstanding shares
of the Capital Stock of Alarmguard Holdings (including, but not being limited
to, the acquisition of such beneficial or record ownership by way of proxy,
voting trust, voting agreement or stock pledge) or (iv) the board of directors
of Alarmguard Holdings ceasing to consist of a majority of Continuing Directors.
Section 1.31.A. "CLASS" means with respect to any Loan such Loan's
classification as either a Revolving Loan or a Term Loan.
Section 1.32. "CLOSING DATE" means the date hereof or, if later, the
date on which all conditions precedent to the amendment and restatement of the
Third Restated Credit Agreement and the making of the initial Extension of
Credit hereunder are satisfied or waived.
Section 1.33. "CODE" means the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, collectively, as the same may from
time to time be supplemented or amended and remain in effect.
Section 1.34. "COLLATERAL" means all collateral received or delivered
as security for the Obligations pursuant to the Security Documents, and any
properties and interests provided in addition to or in substitution for any of
the foregoing.
7
Section 1.35. "COLLATERAL DISCLOSURE LIST" means each list completed by
Borrower for the purpose of disclosing certain information with respect to the
Collateral in substantially the form attached hereto as EXHIBIT G-2, as any such
Collateral Disclosure List may be amended, supplemented or modified from time to
time.
Section 1.36. "COMMITMENT" means, with respect to any Lender, at any
time, such Lender's Revolving Loan Commitment and/or Term Loan Commitment,
individually or collectively, as the case may be.
Section 1.37. "COMMITMENT PERCENTAGE" means, with respect to each
Lender, at any time, such Lender's Revolving Loan Commitment Percentage and/or
Term Loan Commitment Percentage, as the case may be.
Section 1.38. "CONSOLIDATED CURRENT ASSETS" means, as of any date as of
which the amount thereof shall be determined, all amounts that should, in
accordance with GAAP, be included as current assets on a consolidated balance
sheet of Borrower and its Subsidiaries prepared as of such date; provided,
however, that such amounts shall not include (a) cash or cash equivalents, (b)
any amounts for any Indebtedness owing by an Affiliate of Borrower, unless such
Indebtedness arose in connection with the sale of goods or other property in the
ordinary course of business and would otherwise constitute current assets in
conformity with GAAP, (c) any Capital Stock issued by an Affiliate of Borrower,
(d) the cash surrender value of any life insurance policy or (e) any
Consolidated Intangibles.
Section 1.39. "CONSOLIDATED CURRENT LIABILITIES" means, as of any date
as of which the amount thereof shall be determined, all amounts that should, in
accordance with GAAP, be included as current liabilities (inclusive of deferred
revenue) on the consolidated balance sheet of Borrower and its Subsidiaries
prepared as of such date, plus, to the extent not already included therein, (a)
all Indebtedness of any such Person that is payable upon demand or within one
(1) year from such date of determination unless such Indebtedness is renewable
or extendable at the option of Borrower or any Subsidiary to a date more than
one (1) year from such date of determination and (b) all reserves in respect of
liabilities or Indebtedness payable on demand or, at the option of the Person to
whom such Indebtedness is owed, within one (1) year from such date of
determination, the validity of which is contested at such date, but excluding
any payments in respect of any Indebtedness of any such Person (whether
installment, serial maturity or sinking fund payments or otherwise) having an
original term of more than one (1) year required to be made not more than one
(1) year after such date of determination.
Section 1.40. "CONSOLIDATED EBITDA" means, in respect of Borrower and
its consolidated Subsidiaries, for any period, the sum for such period of (a)
Consolidated Net Income, (b) the sum of provisions for taxes, interest expense
and depreciation and amortization expense used in determining such Consolidated
Net Income and (c), without duplication of any amounts set forth in subsection
(b) hereof, the Direct Marketing Program Net Loss for such
8
period but excluding from the calculation thereof Approved Acquisition
Integration Costs actually incurred during such period.
Section 1.41. "CONSOLIDATED INTANGIBLES" means, as of any date as of
which the amount thereof shall be determined, all assets of Borrower and its
Subsidiaries, determined on a consolidated basis as of such date, that would be
classified as intangible assets in accordance with GAAP, but in any event
including, without limitation, items such as (a) unamortized debt discount and
expense, (b) unamortized organization and reorganization expense, (c) costs in
excess of the net asset value of acquired companies, (d) patents, trade and
service marks and names, copyrights, (e) research and development expenses
except prepaid expenses, (f) all reserves not already deducted from assets; (g)
any write-up in the book value of assets resulting from any reevaluation thereof
(other than revaluations arising out of foreign currency valuations in
accordance with GAAP) subsequent to the date of the Financial Statements
referred to in Section 4.7 hereof, and (h) the value of any minority interests
in any Person.
Section 1.42. "CONSOLIDATED NET INCOME" means, for any period, the
consolidated net income (or deficit) of Borrower and its consolidated
Subsidiaries for such period, determined in accordance with GAAP but excluding
(a) the income (or deficit) of any Person accrued prior to the date on which it
becomes a Subsidiary or is merged into or consolidated with Borrower or any
Subsidiary, (b) the income (or deficit) of any Person (other than a Subsidiary)
in which Borrower or any Subsidiary has an ownership interest, except to the
extent that any such income has been actually received by Borrower or such
Subsidiary in the form of dividends or similar distributions, (c) the
undistributed earnings of any Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by such Subsidiary is not at the
time permitted by the terms of any Contractual Obligation or Requirement of Law
applicable to such Subsidiary, (d) any restoration to income of any contingency
reserve, except to the extent that provision for such reserve was made out of
income accrued during such period, (e) any aggregate net gain (but not aggregate
net loss) during such period arising from the sale, exchange or other
disposition of capital assets (such term to include all fixed assets, whether
tangible or intangible, all inventory sold in conjunction with the disposition
of fixed assets and all securities), (f) any write-up of any asset, (g) any net
gain from the collection of the proceeds of life insurance policies, (h) any
gain arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of Borrower or any Subsidiary, (i) in the case
of a successor to Borrower by merger or consolidation or as a transferee of its
assets, any earnings of the successor corporation prior to such merger,
consolidation or transfer of assets, (j) any deferred credit representing the
excess of equity in any Subsidiary at the date of acquisition over the cost of
the investment in such Subsidiary and (k) any extraordinary gains or losses
other than those described in (a) through (j) above.
Section 1.43. "CONSOLIDATED SENIOR DEBT" means, as of any date or for
any period as of which the amount thereof shall be determined, the aggregate
amount of Revolving Loans as of such date or during such period determined on a
consolidated basis.
9
Section 1.44. "CONSOLIDATED TOTAL DEBT SERVICE" means, for any period,
the sum of (a) the amounts deducted for Consolidated Total Interest in
determining Consolidated Net Income for such period and (b) the amounts of
scheduled payments of principal of Indebtedness of Borrower and its consolidated
Subsidiaries during such period.
Section 1.45. "CONSOLIDATED TOTAL DEBT" means, as of any date or for
any period as of which the amount thereof shall be determined, the aggregate
Indebtedness of any Person and its Subsidiaries as of such date or during such
period determined on a consolidated basis.
Section 1.46. "CONSOLIDATED TOTAL INTEREST" means, for any period, the
amount of interest which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" or similar caption (including without limitation,
imputed interest included in payment under Capital Leases) on a consolidated
income statement of Borrower and its consolidated Subsidiaries for such period,
less the amount of any interest earned during such period.
Section 1.47. "CONTINGENT OBLIGATION" means, as applied to any Credit
Party or any of its Subsidiaries, any guarantee, endorsement or other contingent
or surety obligation with respect to obligations of any other Person, whether or
not reflected on the consolidated balance sheet of such Credit Party and its
Subsidiaries, including any obligation to furnish funds, directly or indirectly
(whether by virtue of partnership arrangements, by agreement to keep-well or
otherwise), through the purchase of goods, supplies or services, or by way of
stock purchase, capital contribution, advance or loan, or to enter into a
contract for any of the foregoing, for the purpose of payment of obligations of
any other Person.
Section 1.48. "CONTINUING DIRECTORS" means the directors of Alarmguard
Holdings on the Closing Date as set forth on SCHEDULE 1.48. attached hereto and
each other director elected or appointed after the Closing Date if such
director's nomination or appointment to the board of directors is recommended by
a majority of the then Continuing Directors.
Section 1.49. "CONTINUING SHAREHOLDERS" means the Persons possessing
shares of the Capital Stock of Alarmguard Holdings as of the Closing Date and
listed on SCHEDULE 1.49. attached hereto.
Section 1.50. "CONTRACTUAL OBLIGATION" means, as applied to any Person,
any indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.
Section 1.51. "CONTROL" means the possession, directly or indirectly,
of the power to direct, or cause the direction of, the management and policies
of a Person, whether through ownership of voting stock, by contract or
otherwise. "Controlling" and "Controlled" shall have meanings correlative
thereto.
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Section 1.52. "CONTROLLED GROUP" means all trades or businesses
(whether or not incorporated) under common control that together with Borrower
or any Subsidiary, are treated as a single employer under Section 413(b) or
413(c) of the Code or Section 4001 of ERISA.
Section 1.53. "CREDIT PARTIES" means Borrower, each of its
Subsidiaries, SSH and Alarmguard Holdings, collectively.
Section 1.54. "CREDIT PARTY" means Borrower, each of its Subsidiaries,
SSH or Alarmguard Holdings, individually.
Section 1.55. "CUSTOMER CONTRACTS" means contracts and agreements (x)
which have been duly executed by and between Borrower and its customers, or any
Subsidiary of Borrower and its customers, for regular and ongoing electrical
protection, monitoring, closed circuit television and access control services
and maintenance, fire and sprinkler inspection and testing and other related
services and (y) which (i) have not been canceled by Borrower or any Subsidiary
of Borrower in accordance with Borrower's cancellation policies and procedures
in effect on April 15, 1997 as set forth in the Price Waterhouse Report, (ii)
are not subject to cancellation in accordance with such policies and procedures
or (iii) have not otherwise been canceled or terminated by Borrower or a
customer.
Section 1.56. "DEALER PROGRAM" means an internal marketing program
conducted by Borrower, the costs and expenses of which are separately identified
and segregated for accounting purposes in a manner satisfactory to the
Administrative Agent and the Lenders, for the purpose of generating new Customer
Contracts through authorized dealers and independent sales agents.
Section 1.57. "DEALER PROGRAM COSTS" means, as of any date as of which
the amount thereof shall be determined, the aggregate amount of all Program
Capital Expenditures which relate to the Dealer Program as of such date plus the
Dealer Program Net Loss as of such date.
Section 1.58. "DEALER PROGRAM NET LOSS" means, for any period, the
difference between (i) the revenue derived from the Dealer Program during such
period less (ii) all expenses (excluding depreciation and amortization for such
period relating to the Dealer Program) incurred by Borrower in connection with
the Dealer Program during such period, all of the foregoing being calculated in
accordance with GAAP.
Section 1.59. "DEFAULT" means an event or condition that, but for the
lapse of time, the giving of notice, or both, would constitute an Event of
Default if that event or condition was not cured or removed within any
applicable grace or cure period.
Section 1.60. "DEFAULT RATE" means the rate of interest determined by
increasing the rate of interest otherwise chargeable under this Agreement to a
rate which shall be the lower of (i) the highest rate allowed by law or (ii) two
percentage points (2.0%) above the rate of interest which would otherwise be in
effect under this Agreement.
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Section 1.61. "DEFAULTING LENDER" shall have the meaning set forth in
Section 2.7.2. hereof.
Section 1.62. "DEFERRED PURCHASE PRICE OBLIGATIONS" means any and all
obligations of any Credit Party other than Borrower or a Subsidiary of Borrower
incurred as permitted under Section 8.1.(g) hereof for amounts deferred or
withheld in respect of the purchase price for any Acquisition, including amounts
withheld as potential set-offs against Customer Contract terminations, purchase
price adjustments or otherwise.
Section 1.62.A. "DETECT" shall have the meaning set forth in the
Preamble hereof.
Section 1.62.B. "DETECT ACQUISITION" means the Acquisition by Borrower
of Detect as of February 3, 1998.
Section 1.63. "DIRECT MARKETING PROGRAM" means an internal marketing
program conducted by Borrower, the costs and expenses of which are separately
identified and segregated for accounting purposes in a manner satisfactory to
the Administrative Agent and the Lenders for the purpose of generating new
Customer Contracts through telemarketing or other marketing techniques by making
an investment in the initial installation of a residential or small commercial
security alarm monitoring system.
Section 1.64. "DIRECT MARKETING PROGRAM COSTS" means, as of any date as
of which the amount thereof shall be determined, the aggregate amount of all
Program Capital Expenditures which relate to the Direct Marketing Program as of
such date plus the Direct Marketing Program Net Loss as of such date.
Section 1.65. "DIRECT MARKETING PROGRAM NET LOSS" means, for any
period, the difference between (i) the revenue derived from the Direct Marketing
Program during such period less (ii) all expenses (excluding depreciation and
amortization for such period relating to the Direct Marketing Program) incurred
by Borrower in connection with the Direct Marketing Program during such period,
all of the foregoing being calculated in accordance with GAAP.
Section 1.66. "DIVIDEND" or "DIVIDENDS" means the payment of any
dividend or other distribution in respect of the Capital Stock of a Person in
cash or other property (excepting distribution in the form of such Capital
Stock) or the redemption or acquisition of any Capital Stock or security of a
Person.
Section 1.67. "DOCUMENTATION AGENT" shall have the meaning set forth in
the Preamble hereof.
Section 1.68. "DOLLARS" and "$" means dollars in the lawful currency of
the United States of America.
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Section 1.69. "ENCUMBRANCE or "ENCUMBRANCES" means any security
interest, mortgage, pledge, lien, claim, charge, encumbrance, title retention
agreement, lessor's interest under a financing lease or any analogous
arrangements in any Credit Party's properties or assets, intended as, or having
the effect of, security.
Section 1.70. "ENVIRONMENTAL CERTIFICATE" shall have the meaning set
forth in Section 5.2.11. hereof.
Section 1.71. "ENVIRONMENTAL LAWS" means any and all applicable laws,
statutes, ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to the environment, including without
limitation, the Clean Water Act, the Clean Air Act, as amended, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("XXXX"),
and as may be further amended (all together herein called "CERCLA"), the Federal
Water Pollution Control Amendments, the Resource Conservation and Recovery Act
of 1976, as amended ("RCRA"), the Hazardous Materials Transportation Act of
1975, as amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, and any comparable or similar applicable environmental
laws of the State of Connecticut and any other state in which Borrower maintains
business premises. Likewise, the terms "hazardous substance," "release," and
"threatened release" herein referenced in connection with Environmental Laws
shall have the meanings specified in CERCLA and the terms "solid waste" and
"dispose" (or "disposed") shall have the meanings specified in RCRA; PROVIDED,
HOWEVER, in the event either CERCLA or RCRA is amended so as to broaden the
meaning of any term defined therein, such broader meaning shall apply subsequent
to the effective date of such amendment, and PROVIDED FURTHER that, to the
extent the laws of any state which establish a meaning for "hazardous
substance," "release," "solid waste" or "disposal" which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply to business
operations conducted in that particular state.
Section 1.72. "ERISA" means the Employee Retirement Income Security Act
of 1974 and the rules and regulations promulgated thereunder; collectively, as
the same may from time to time be supplemented or amended and remain in effect.
Section 1.72.A. "ESCROW AGREEMENT" means that certain Escrow Agreement
executed and delivered by Detect, the Administrative Agent and the
Administrative Agent's legal counsel as of February 2, 1998, as such Escrow
Agreement may be amended, supplemented, modified or confirmed on the Closing
Date and from time to time thereafter.
Section 1.73. "EURODOLLAR LOAN" means any Loan which is bearing
interest at a rate determined by reference to the Adjusted Eurodollar Rate.
Section 1.74. "EURODOLLAR MARGIN" means a per annum percentage
determined in the manner set forth in Section 2.4.5. hereof.
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Section 1.75. "EURODOLLAR TRANCHE" means all Eurodollar Loans with
respect to which the Interest Periods applicable thereto begin on the same date
and end on the same later date (whether or not such Loans were originally made
on the same day).
Section 1.76. "EVENT OF DEFAULT" shall have the meaning set forth in
Section 11.1. hereof.
Section 1.77. "EXCESS CASH FLOW" means, for any Fiscal Year, all
amounts which would be included in Consolidated Net Income of Borrower and its
Subsidiaries during such Fiscal Year,
plus, (a) the sum of (i) to the extent that such amounts have been
deducted in determining Consolidated Net Income for such fiscal period,
all amounts attributable to depreciation and/or amortization and other
non-cash charges to Consolidated Net Income and (ii) the decrease, if any,
in the amount of the excess of Consolidated Current Assets over
Consolidated Current Liabilities at the end of such Fiscal Year compared
to the amount of the excess of Consolidated Current Assets over
Consolidated Current Liabilities at the end of the immediately preceding
Fiscal Year,
minus, (b) the sum of (i) the amount of all regularly scheduled payments
of principal of the Loans actually made during such Fiscal Year and the
amount of any voluntary prepayment of principal of the Loans made during
such Fiscal Year, (ii) the amount of Capital Expenditures permitted by
Section 8.9. actually made during such Fiscal Year, (iii) the amount of
payments made in respect of Capital Leases actually made during such
Fiscal Year and (iv) the increase, if any, in the amount of the excess of
Current Consolidated Assets over Consolidated Current Liabilities at the
end of such Fiscal Year compared to the amount of the excess of
Consolidated Current Assets over Current Consolidated Liabilities at the
end of the immediately preceding Fiscal Year.
Section 1.78. "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
Section 1.79. "EXISTING LOANS" shall have the meaning set forth in the
Preamble hereof.
Section 1.80. "EXTENSION OF CREDIT" means any Loan or other extension
of credit made by the Lenders to Borrower under this Agreement.
Section 1.81. "FACILITY FEE" shall have the meaning set forth in
Section 2.5.1. hereof.
Section 1.82. "FEDERAL FUNDS EFFECTIVE RATE" means for any day a
fluctuating interest rate per annum equal to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average of the quotations for such day on such
transactions received by the Administrative Agent from three (3) Federal funds
brokers of recognized standing selected by the Administrative Agent.
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Section 1.83. "FEES" means the Facility Fee and any other fees payable
under this Agreement to the Lenders, including, but not being limited to, any
fees payable under Section 2.4.7. and Section 2.6.2., but excluding any fees
payable to the Administrative Agent for its own account.
Section 1.84. "FINANCIAL STATEMENT" or "FINANCIAL STATEMENTS" means, as
of any date, or with respect to any period, as applicable, a financial report or
reports consisting of (i) a balance sheet; (ii) an income statement; (iii) a
statement of cash flow; and (iv) a statement of changes in stockholders' equity.
Section 1.85. "FISCAL QUARTER" means each fiscal period of Borrower and
its Subsidiaries ending on each March 31, June 30, September 30 and December 31
in each Fiscal Year.
Section 1.86. "FISCAL YEAR" means each fiscal period of Borrower and
its Subsidiaries commencing on January 1 in each calendar year and ending on
December 31 in such year.
Section 1.87. "FORECASTS" shall have the meaning set forth in Section
4.8. hereof.
Section 1.88. "GAAP" means generally accepted accounting principles in
the United States of America as in effect on the Closing Date, consistently
applied but subject to adjustment in accordance with Section 14.20. hereof.
Section 1.89. "GOVERNING DOCUMENTS" means, as to any Person, the
articles or certificate of incorporation and by-laws or other organic
organizational or governing documents of such Person.
Section 1.90. "GOVERNMENTAL AUTHORITY" means any Federal, state, local
or foreign court, commission or tribunal, or governmental, administrative or
regulatory agency, department, authority, instrumentality or other body
exercising executive, legislative, judicial, regulatory or administrative
functions of, or pertaining to, government.
Section 1.91. "GOVERNMENT OBLIGATIONS" means securities which are
general obligations of the United States of America or which are unconditionally
guaranteed by the United States of America as to timely payment of principal and
interest.
Section 1.92. "GUARANTEE" means the Alarmguard Holdings Guarantee, the
SSH Guarantee or any Subsidiary Guarantee, individually.
Section 1.93. "GUARANTEES" means the Alarmguard Holdings Guarantee, the
SSH Guarantee and each Subsidiary Guarantee, collectively.
Section 1.94. "GUARANTOR" means Alarmguard Holdings, SSH or any
Subsidiary of Borrower, individually.
15
Section 1.95. "GUARANTORS" means Alarmguard Holdings, SSH and the
Subsidiaries of Borrower, collectively.
Section 1.96. "HAZARDOUS MATERIALS" means (i) any chemical, compound,
material, mixture or substance that is now or hereafter defined as or included
in the definition of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous waste", or "toxic
substances" or terms of similar import under any applicable Federal, state or
local law or under the regulations adopted or promulgated pursuant thereto,
including, without limitation, Environmental Laws; (ii) any oil, petroleum or
petroleum derived substance, any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude oil,
any flammable substances or explosives, any radioactive materials, any hazardous
wastes or substances, any toxic wastes or substances or any other materials or
pollutants which (a) could pose a hazard to any properties or assets of Borrower
or its Subsidiaries or (b) could cause any of such properties or assets to be in
violation of any Environmental Laws; (iii) asbestos in any form, urea
formaldehyde foam insulation, electrical equipment which contains any oil or
dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty (50) parts per million; and (iv) any other chemical, material or
substance, exposure to, or disposal of, which is now or hereafter prohibited,
limited or regulated by any Federal, state or local governmental body,
instrumentality or agency.
Section 1.97. "INDEBTEDNESS" means, as of any date as applied to any
Person, without duplication: (a) all indebtedness for borrowed money (whether by
loan or the issuance and sale of debt securities); (b) that portion of
obligations with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP; (c) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money; (d) any obligation owed for all or any part of
the deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is
evidenced by a note or similar written instrument; (e) obligations of such
Person under interest rate swaps, caps, collars and similar arrangements and (f)
all indebtedness secured by any Encumbrance on any property or asset owned or
held by that Person regardless of whether the indebtedness secured thereby shall
have been assumed by that Person or is nonrecourse to the credit of that Person
but Indebtedness shall not include Deferred Purchase Price Obligations or
amounts payable by Alarmguard Holdings to the Internal Revenue Service in an
aggregate amount not to exceed NINE HUNDRED SEVENTY-SEVEN THOUSAND AND N0/100
DOLLARS ($977,000.00) minus any amortization thereof since April 15, 1997.
Section 1.98. "INTEREST PERIOD" means,
(a) with respect to each Eurodollar Loan, the period
commencing on the date of the making or continuation of, or conversion to, such
Eurodollar Loan and ending one (1), two (2), three (3) or six (6) months
thereafter, as Borrower may elect in the applicable Notice; and
16
(b) with respect to each Base Rate Loan, the period commencing
on the date of the making or continuation of, or conversion to, such Base Rate
Loan and ending on the Maturity Date or such earlier date as the Borrower may
elect in the applicable Notice;
PROVIDED, HOWEVER, that:
(i) any Interest Period (other than an Interest
Period determined pursuant to clause (iii)
below) that would otherwise end on a day
that is not a Business Day shall be extended
to the next succeeding Business Day unless,
in the case of Eurodollar Loans, such
Business Day falls in the next calendar
month, in which case such Interest Period
shall end on the immediately preceding
Business Day;
(ii) any Interest Period applicable to a
Eurodollar Loan that begins on the last
Business Day of a calendar month (or on a
day for which there is no numerically
corresponding day in the calendar month at
the end of such Interest Period) shall,
subject to clause (iii) below, end on the
last Business Day of a calendar month;
(iii) any Interest Period that would otherwise end
after the Maturity Date shall end on the
Maturity Date;
(iv) notwithstanding clause (iii) above, no
Interest Period applicable to a Eurodollar
Loan shall have a duration of less than one
(1) month and if any Interest Period
applicable to such Loan would be for a
shorter Interest Period, such Interest
Period shall not be available hereunder; and
(v) notwithstanding any provision of this
Agreement to the contrary, no Interest
Period applicable to a Eurodollar Loan which
is a Term Loan shall have a duration in
excess of one (1) month.
Section 1.99. "INTEREST PROTECTION ARRANGEMENT" means any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar interest rate protection
agreement or arrangement.
Section 1.100. "INVESTMENT" means, as applied to any Credit Party and
its Subsidiaries, (i) the purchase or acquisition of (x) any share of Capital
Stock, indebtedness or other equity security of any other Person, or (y) all or
any material portion of the properties and assets of any Person, (ii) any loan,
advance or extension of credit to, or contribution to the capital of, any other
Person, (iii) any real estate held for sale or investment, (iv) any commodities
futures contracts held other than in connection with bona fide hedging
transactions permitted under this Agreement, (v) any
17
other investment in any other Person, and (vi) the making of any commitment or
acquisition of any option to make an Investment.
Section 1.101. "LEASE ASSIGNMENT" means each Collateral Assignment of
Lease executed by Borrower in favor of the Administrative Agent for the ratable
benefit of the Lenders, substantially in the form of EXHIBIT G-3 attached
hereto, as any such Lease Assignment may be amended, supplemented, modified or
confirmed from time to time.
Section 1.102. "LEASE OBLIGATIONS" means, for any period, the aggregate
rental obligation of Borrower and its Subsidiaries payable during such period in
respect of real and/or personal property (net of income from subleases thereof,
but including taxes, insurance, maintenance and similar expenses which the
lessee is obligated to pay under the terms of such leases), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet of Borrower and its Subsidiaries or in the notes thereto but
excluding obligations under Capital Leases.
Section 1.103. "LEASEHOLD MORTGAGE" means each leasehold mortgage or
deed of trust executed or amended and confirmed by Borrower in favor of the
Administrative Agent for the ratable benefit of the Lenders, substantially in
the form of EXHIBIT G-4 attached hereto, individually or collectively, as the
case may be, as any such Leasehold Mortgage may be amended, supplemented,
modified or confirmed from time to time.
Section 1.104. "LENDER" shall have the meaning set forth in the
Preamble hereof, and shall specifically refer to any Existing Lender.
Section 1.105. "LENDERS" shall have the meaning set forth in the
Preamble hereof.
Section 1.106. "LENDER AFFILIATE" or "LENDER AFFILIATES" means any
affiliate of the Administrative Agent, the Documentation Agent, the Lenders or
their parent holding companies.
Section 1.107. "LENDER AGENTS" means the Administrative Agent, the
Documentation Agent, any Lender and any Lender Affiliate, and any of their
directors, officers, employees, counsel, accountants, consultants and agents.
Section 1.108. "LEVERAGE RATIO" means, for any period with respect to
Borrower and its Subsidiaries, the ratio of Consolidated Total Debt as of the
last day of such period to Consolidated EBITDA for such period.
Section 1.109. "LINE OF CREDIT" shall have the meaning set forth in
Section 2.1.1. hereof.
Section 1.110. "LOAN" means each Existing Loan, each Revolving Loan,
each Term Loan, and each Swingline Loan.
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Section 1.111. "LOAN ACCOUNT" means the account established by Borrower
with the Administrative Agent for purposes of administering the Loans.
Section 1.112. "MANDATORY BORROWING" shall have the meaning set forth
in Section 2.2.4. hereof.
Section 1.113. "MARGIN CHANGE" shall have the meaning set forth in
Section 2.4.5. hereof.
Section 1.114. "MATERIAL ADVERSE EFFECT" means a material adverse
effect upon the (i) business, operations, assets or financial condition or
prospects of any Credit Party and its Subsidiaries, taken as a whole, or (ii)
the enforceability of this Agreement, the Notes or the Other Documents or the
rights or remedies of the Administrative Agent, the Documentation Agent or any
Lender hereunder or thereunder or (iii) the ability of the Administrative Agent,
the Documentation Agent or any Lender to enforce or collect any of the
Obligations including the obligations of any Guarantor to perform, or of the
Administrative Agent, the Documentation Agent or any Lender to enforce, any
Guarantee. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such an effect, a Material Adverse Effect shall be deemed to have occurred if
the cumulative effect of such event and all other then existing events would
result in a Material Adverse Effect.
Section 1.115. "MATURITY DATE" means January 31, 2005.
Section 1.115.A. "NEGATIVE PLEDGE AGREEMENT" means that certain
Negative Pledge Agreement executed and delivered by Detect as of February 2,
1998, as such Negative Pledge Agreement may be amended, supplemented, modified
or confirmed on the Closing Date and from time to time thereafter.
Section 1.116. "NET PROCEEDS" means the excess of (i) Cash Proceeds
received by Borrower or any Subsidiary in connection with any Asset Sale over
(ii) the out-of-pocket expenses incurred by Borrower or such Subsidiary (other
than any expenses paid to any Affiliate of Borrower or such Subsidiary) in
connection with such Asset Sale and the amounts of any taxes incurred in
connection with such Asset Sale, in each case as certified by a Responsible
Officer to the Administrative Agent at the time of such Asset Sale.
Section 1.117. "NON-DEFAULTING LENDER" means each Lender which is not a
Defaulting Lender.
Section 1.118. "NOTE" means any Revolving Credit Note, any Term Note,
or the Swingline Note.
Section 1.119. "NOTES" means the Revolving Credit Notes, the Term Notes
and the Swingline Note.
19
Section 1.120. "NOTICE" means a Notice of Borrowing, a Notice of
Continuation or Conversion or a Swingline Notice.
Section 1.121. "NOTICE OF BORROWING" shall have the meaning set forth
in Section 2.1.3. hereof.
Section 1.122. "NOTICE OF CONTINUATION OR CONVERSION" shall have the
meaning set forth in Section 2.4.2. hereof.
Section 1.123. "NOTICE OFFICE" means the office of the Administrative
Agent located at 000 Xxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 or such other
office as the Administrative Agent may designate for such purpose to Borrower
and the Lenders from time to time.
Section 1.124. "OBLIGATIONS" means any and all loans, advances,
indebtedness, liabilities, obligations, covenants or duties of any Credit Party
to the Administrative Agent, the Documentation Agent or the Lenders of any kind
or nature, including obligations to pay money and to perform acts or refrain
from taking action, arising under or pursuant to this Agreement, the Notes or
the Other Documents, and any and all extensions and renewals thereof, and
modifications and amendments thereto, whether in whole or in part, whether
created directly or acquired by assignment, purchase, discount or otherwise,
whether any of the foregoing are direct or indirect, joint or several, absolute
or contingent under, due or to become due, now existing or hereafter arising,
and whether or not evidenced by a writing and specifically including but not
being limited to (i) the unpaid principal amount outstanding at any time under
the Notes, plus all accrued and unpaid interest thereon, together with all fees,
expenses, including attorneys' fees, penalties, and other amounts owing by or
chargeable to any Credit Party under this Agreement, the Notes or the Other
Documents and (ii) interest which accrues after the commencement of any case or
proceeding in bankruptcy after the insolvency of, or for the reorganization of,
any Credit Party, whether or not allowed in such case or proceeding.
Section 1.125. "OTHER DOCUMENTS" means the Collateral Disclosure List,
the Guarantees, the Security Documents, the Affiliate Subordination Agreement
and any other document, agreement or instrument executed by any Credit Party in
connection with any Extension of Credit and any and all amendments,
modifications and supplements thereto.
Section 1.126. "OUTSTANDING AMOUNT" means, as of any date as of which
the amount thereof shall be determined, the outstanding principal amount of all
Revolving Loans as of the date of determination.
Section 1.127. "PBGC" means the Pension Benefit Guaranty Corporation or
any entity succeeding to all or part of its functions under ERISA.
Section 1.128. "PERMITTED ACQUISITION" means any Acquisition as to
which all of the applicable conditions precedent set forth in Section 6.2.
hereof have been satisfied.
20
Section 1.129. "PERMITTED ENCUMBRANCE" shall have the meaning set forth
in Section 8.5. hereof.
Section 1.130. "PERMITTED INDEBTEDNESS" shall have the meaning set
forth in Section 8.1. hereof.
Section 1.131. "PERMITTED SSH ACTIVITIES" means holding the Capital
Stock of Borrower, guaranteeing the Loans and granting security therefor under
the Security Documents, serving as the maker of any Indebtedness permitted to be
incurred under Section 8.1. hereof, and employing corporate staff.
Section 1.132. "PERSON" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or other entity of whatever nature,
whether public or private.
Section 1.133. "PLAN" means, at any time, an employee pension or other
benefit plan that is subject to Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code and is either (i) maintained by
Borrower or any member of the Controlled Group for employees of Borrower or any
member of the Controlled Group or (ii) if such plan is established, maintained
pursuant to a collective bargaining agreement or any other arrangement under
which more than one (1) employer makes contributions and to which Borrower or
any member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
Section 1.134. "POST CLOSING MATTERS" shall have the meaning set forth
on Section 11.1. hereof.
Section 1.135. "PREFERRED STOCK OFFERING" means the offering of Series
A Convertible Preferred Stock and Series B Convertible Preferred Stock by
Alarmguard Holdings concluded on February 2, 1998 pursuant to and in accordance
with the Transaction Documents.
Section 1.136. "PRICE WATERHOUSE REPORT" means that certain Limited
Collateral Analysis report dated November 8, 1996 delivered by Price Waterhouse
LLP to the Administrative Agent with respect to the procedures performed by
Price Waterhouse LLP related to the Customer Contracts and management
information system environment of the Borrower and supplemented by that certain
letter dated as of April 15, 1997.
Section 1.137. "PROGRAM CAPITAL EXPENDITURES" means, without
duplication, for any period, the aggregate of all Capital Expenditures made by
Borrower in connection with the Direct Marketing Program and the Dealer Program.
Section 1.138. "PROHIBITED TRANSACTION" shall have the definition set
forth in Section 406 of ERISA and Section 4975 of the Code, other than those
transactions in which an exemption
21
from the prohibited transaction rules apply under Section 408 of ERISA and
Section 4975(d) of the Code and applicable regulations thereunder, including
prohibited transaction class exemptions.
Section 1.139. "QUALIFICATION" means, with respect to any report of
independent public accountants covering any Financial Statements of Borrower and
its Subsidiaries, a qualification to such report (such as a "subject to" or
"except for" statement therein) (i) resulting from a limitation on the scope of
examination of the Financial Statements or the underlying data; (ii) as to the
capability of the Person whose Financial Statements are certified to continue
operations as a going concern; or (iii) which could be eliminated by changes in
the Financial Statements or notes thereto covered by such report (such as, by
the creation of or increase in a reserve or a decrease in the carrying value of
assets) and which if so eliminated by the making of any such change and after
giving effect thereto would constitute an Event of Default; provided that the
following shall not constitute a Qualification: a consistency exception relating
to a change in accounting principles with which the independent public
accountants for the Person whose Financial Statements are being examined have
concurred.
Section 1.140. "QUALIFIED INVESTMENTS" means, as applied to Borrower
and its Subsidiaries, investments in (i) Governmental Obligations; (ii)
certificates of deposit or other deposit instruments or accounts of Lenders or
trust companies organized under the laws of the United States or any state
thereof that have capital and surplus of at least FIVE HUNDRED MILLION AND
NO/100 DOLLARS ($500,000,000.00) having maturities of not more than ninety (90)
days from the date of acquisition; (iii) commercial paper that is rated not less
than prime-one or A-1 or their equivalents by Xxxxx'x Investors Service, Inc. or
Standard & Poor's Corporation, respectively, or their successors having
maturities of not more than ninety (90) days from the date of acquisition; and
(iv) any repurchase agreement secured by any one (1) or more of the foregoing
with a term of not more than seven (7) days.
Section 1.141. "RECURRING MONTHLY REVENUE" or "RMR" means, for any
calendar month, the aggregate recurring regular monthly amount billed under
Customer Contracts for a one-month period (regardless of whether billed monthly
or less frequently with xxxxxxxx made other than on a monthly basis being
adjusted to the equivalent monthly amount) for electrical protection,
monitoring, maintenance, closed circuit television and access control service
charges, fire and police panel charges, equipment lease rental charges relating
to Customer Contracts derived from the Direct Marketing Program, the Dealer
Program and fire and sprinkler inspection and testing charges (but excluding
revenues from any Customer Contracts relating to any non-recurring, special or
other one-time charges) as such RMR is calculated by Borrower in accordance with
the practices, policies and procedures followed by Borrower therefor on April
15, 1997 as set forth in the Price Waterhouse Report and reflected in the RMR
Report.
Section 1.142. "REGISTER" shall have the meaning set forth in Section
13.2. hereof.
Section 1.143. "RELEASE" means any release, emission, disposal,
leaching, or migration into the environment (including, without limitation, the
abandonment or disposal of any barrels,
22
containers, or other closed receptacles containing any Hazardous Materials), or
into or out of any property owned, occupied or used by Borrower.
Section 1.144. "REPLACEMENT LENDER" shall have the meaning set forth in
Section 2.6.6. hereof.
Section 1.145. "REPORTABLE EVENT" means any of the events described in
Section 4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under applicable regulations issued by PBGC.
Section 1.146. "REQUIRED LENDERS" means collectively (and not
individually) Non-Defaulting Lenders the sum of whose (i) outstanding Loans of
each Class plus (ii), if there are no Revolving Loans outstanding, aggregate
Revolving Loan Commitments, constitute at least 66.66% of the sum of the
aggregate principal amount of outstanding Loans of each Class plus, if
applicable, aggregate Revolving Loan Commitments less the sum of the aggregate
principal amount of outstanding Loans of Defaulting Lenders and, if applicable,
aggregate Revolving Loan Commitments of Defaulting Lenders.
Section 1.147. "REQUIREMENT OF LAW" means any laws, ordinances, rules
regulations and orders of any Governmental Authority applicable to any Credit
Party or its Subsidiaries or their business, properties and assets.
Section 1.148. "RESPONSIBLE OFFICER" means Xxxxx Xxxxxxxxx, Xxxx Xxxxxx
or any other senior officer of Borrower or any other Credit Party, as the case
may be, designated as such by written notice to the Administrative Agent and
acceptable to the Administrative Agent in its sole and absolute discretion.
Section 1.149. "REVOLVING CREDIT NOTE" or "REVOLVING CREDIT NOTES"
shall have the meaning set forth in Section 2.1.9. hereof.
Section 1.150. "REVOLVING CREDIT PERIOD" means the period beginning on
the Closing Date and extending through and including the Revolving Credit
Termination Date or such earlier date on which the obligation of the Lenders to
make Revolving Loans is terminated or the Commitment Amount is reduced to zero
(0) in accordance with the terms hereof.
Section 1.151. "REVOLVING CREDIT TERMINATION DATE" means January 31,
2000.
Section 1.152. "REVOLVING LOANS" shall have the meaning set forth in
Section 2.1.1. hereof, and shall in any event include any loan(s) or advance(s)
deemed made pursuant to said Section 2.1.1.
Section 1.153. "REVOLVING LOAN COMMITMENT" means, with respect to each
Lender, the amount set forth next to its name on SCHEDULE 1.153. attached
hereto, as such SCHEDULE 1.153.
23
may be amended, modified and/or substituted from time to time by the
Administrative Agent in accordance with Section 13.2 hereby.
Section 1.154. "REVOLVING LOAN COMMITMENT PERCENTAGE" means, with
respect to each Lender, the percentage set forth opposite such Lender's name on
SCHEDULE 1.153. attached hereto, as the same may be amended, modified and/or
substituted from time to time by the Administrative Agent in accordance with
Section 13.2. hereof.
Section 1.155. "RMR REPORT" shall have the meaning set forth in Section
7.2.3. hereof.
Section 1.156. "SECURITY DOCUMENTS" means the Borrower Pledge
Agreement, the Borrower Security Agreement, each Lease Assignment, each
Leasehold Mortgage, the Alarmguard Holdings Pledge Agreement, the SSH Pledge
Agreement, each Subsidiary Pledge Agreement, each Subsidiary Security Agreement,
the Escrow Agreement and the Negative Pledge Agreement.
Section 1.156.A. "SENTRY ACQUISITION" means the Acquisition by Borrower
of Security Systems, Inc. d/b/a Sentry as of March 17, 1998.
Section 1.157. "SOLVENT" means, when used with respect to any Person,
that as of the date as to which the Person's solvency is to be determined:
(a) the fair value of such Person's properties and assets is
in excess of the total amount of the liabilities (including contingent
liabilities) of such Person;
(b) the fair salable value of the properties and assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured;
(c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction,
and is not about to engage in a business or transaction, for which such Person's
properties and assets would constitute an unreasonably small capital.
The amount of contingent liabilities (such as litigation, Guarantees and pension
plan liabilities) at any time shall be computed as the amount which, in light of
all the facts and circumstances existing at the time, represents an amount which
can be reasonably expected to become an actual or matured liability.
Section 1.158. "SSH" shall have the meaning set forth in the Preamble
hereof.
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Section 1.159. "SSH GUARANTEE" means the Amended and Restated Guarantee
Agreement executed by SSH in favor of the Administrative Agent for the ratable
benefit of the Lenders, as such SSH Guarantee may be amended, supplemented,
modified or confirmed as of the Closing Date and from time to time thereafter.
Section 1.160. "SSH PLEDGE" means the Amended and Restated Pledge
Agreement executed by SSH in favor of the Administrative Agent for the ratable
benefit of the Lenders, as such SSH Pledge may be amended, supplemented,
modified or confirmed on the Closing Date and from time to time thereafter.
Section 1.161. INTENTIONALLY OMITTED
Section 1.162. "SUBORDINATED INDEBTEDNESS" means Indebtedness, whether
now existing or hereafter arising, with respect to which the payment of the
principal of and interest on is expressly subordinated and junior in right of
payment on terms approved by the Administrative Agent and the Lenders in writing
to the prior indefeasible payment in full of the Obligations and which is not
subject to terms, conditions, rights or remedies, including but not limited to,
events of default, affirmative and negative covenants and otherwise, which are
either (i) more restrictive upon any Credit Party than those set forth in this
Agreement or (ii) more favorable to the holders of any such Subordinate
Indebtedness than those possessed by the Lenders under this Agreement.
Notwithstanding any provision of this Section 1.162. to the contrary, no
Subordinated Indebtedness shall contain or be subject to any covenant with
respect to which the compliance by any Credit Party therewith is determined by
reference to the financial performance or financial condition of such Credit
Party.
Section 1.163. "SUBSIDIARY" means any Person of which more than fifty
percent (50%) or more of the ordinary voting power for the election of a
majority of the members of the board of directors or other governing body of
such Person is held or Controlled by Borrower or a Subsidiary of Borrower; or
any other such organization the management of which is Controlled by Borrower or
a Subsidiary of Borrower; or any joint venture, whether incorporated or not, in
which Borrower has more than fifty percent (50%) ownership interest.
Section 1.164. "SUBSIDIARY GUARANTEE" means each Guarantee Agreement
executed by a Subsidiary of Borrower in favor of the Administrative Agent for
the ratable benefit of the Lenders, substantially in the form of EXHIBIT G-5
attached hereto, as any such Subsidiary Guarantee may be amended, supplemented,
modified or confirmed on the Closing Date and from time to time thereafter.
Section 1.165. "SUBSIDIARY PLEDGE AGREEMENT" means each Pledge
Agreement executed by a Subsidiary of Borrower in favor of the Administrative
Agent for the ratable benefit of the Lenders, substantially in the form of
EXHIBIT G-6 attached hereto, as any such Subsidiary Pledge Agreement may be
amended, supplemented, modified or confirmed on the Closing Date and from time
to time thereafter.
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Section 1.166. "SUBSIDIARY SECURITY AGREEMENT" means each Security
Agreement executed by a Subsidiary of Borrower in favor of the Administrative
Agent for the ratable benefit of the Lenders, substantially in the form of
EXHIBIT G-7 attached hereto, as any such Subsidiary Security Agreement may be
amended, supplemented, modified or confirmed on the Closing Date and from time
to time thereafter.
Section 1.167. "SWINGLINE" shall have the meaning set forth in Section
2.2.1. hereof.
Section 1.168. "SWINGLINE COMMITMENT" means the amount of TWO MILLION
AND NO/100 DOLLARS ($2,000,000.00).
Section 1.169. "SWINGLINE LOANS" means each loan and advance made by
the Administrative Agent to Borrower under the Swingline.
Section 1.170. "SWINGLINE NOTE" shall have the meaning set forth in
Section 2.2.3. hereof.
Section 1.171. "SWINGLINE NOTICE" shall have the meaning set forth in
Section 2.2.2. hereof.
Section 1.172. "TERM LOAN" or "TERM LOANS" shall have the meaning set
forth in Section 2.4.1. hereof.
Section 1.173. "TERM LOAN COMMITMENT" means for any Lender, the amount
set forth opposite such Lender's name on SCHEDULE 1.153. attached hereto, as
such SCHEDULE 1.153. may be amended, modified and/or substituted from time to
time by the Administrative Agent in accordance with Section 13.2. hereof.
Section 1.174. "TERM LOAN COMMITMENT PERCENTAGE" means, with respect to
each percentage set forth opposite such Lender's name of SCHEDULE 1.153.
attached hereto, as such SCHEDULE 1.153. may be amended, modified and/or
substituted from time to time by the Administrative Agent in accordance with
Section 13.2 hereof.
Section 1.175. INTENTIONALLY OMITTED
Section 1.176. "TERM NOTE" or "TERM NOTES" shall have the meaning set
forth in Section 2.4.1. hereof.
Section 1.177. "THIRD RESTATED CREDIT AGREEMENT" shall have the meaning
set forth in the Preamble hereof.
Section 1.178. "TOTAL REVOLVING LOAN COMMITMENT AMOUNT" means, as of
any date as of which the amount thereof shall be determined, (a) if such date is
prior to the Revolving Credit Termination Date, the amount of NINETY MILLION AND
NO/100 DOLLARS ($90,000,000.00) or any lesser amount, including zero (0),
resulting from a termination or
26
reduction of such amount in accordance with Section 2.1.12. or Section 12.1.
hereof and (b) if such date is on or after the Revolving Credit Termination
Date, the outstanding principal amount of the Loans as of such date.
Section 1.179. "TOTAL TERM LOAN COMMITMENT AMOUNT" means an amount of
THREE MILLION NINE HUNDRED THOUSAND AND NO/100 DOLLARS ($3,900,000.00).
Section 1.180. "TRANSACTION DOCUMENTS" means any and all documents,
agreements, certificates and instruments executed and/or delivered by any Credit
Party in connection with the Preferred Stock Offering or any transactions
associated therewith, including, without limitation, the documents and
agreements listed and described on SCHEDULE 1.180. attached hereto.
Section 1.181. "TYPE" means, as to any Loan, such Loan's
characterization as either a Base Rate Loan or a Eurodollar Loan.
Section 1.182. "UNUSED REVOLVING LOAN COMMITMENT" means, in the case of
each Lender, as of the date as of which the amount thereof shall be determined,
the positive difference, if any, between (i) the amount of such Lender's
Revolving Loan Commitment as of such date and (ii) such Lender's Revolving Loan
Commitment Percentage of the Outstanding Amount as of such date.
Section 1.183. "UNUSED TOTAL REVOLVING LOAN COMMITMENT AMOUNT" means,
as of any date as of which the amount thereof shall be determined, the positive
difference, if any, between (i) the Total Revolving Loan Commitment Amount as of
such date and (ii) the Outstanding Amount as of such date.
Section 1.184. "UNUSED TERM LOAN COMMITMENT" means, in the case of each
Lender, as of the date as of which the amount thereof shall be determined, the
positive difference, if any, between (i) the amount of such Lender's Term Loan
Commitment as of such date and (ii) such Lender's Term Loan Commitment
Percentage of the Total Term Loan Commitment Amount as of such date.
Section 2. THE CREDIT FACILITIES
Section 2.1. THE LINE OF CREDIT.
Section 2.1.1. REVOLVING LOANS. Upon the execution of this Agreement,
the Lenders with a Revolving Loan Commitment agree to extend to Borrower a line
of credit, so that as long as no Default or Event of Default has occurred and is
continuing and all conditions precedent to the making of any Extension of Credit
have been satisfied, such Lenders agree to continue the Existing Loans and each
such Lender severally agrees to make revolving credit loans ("Revolving Loans")
from time to time during the Revolving Credit Period in an aggregate principal
amount at any one time not to exceed the lesser of (i) such Lender's Unused
Revolving Loan Commitment, and (ii) such Lender's Revolving Loan Commitment
Percentage of the Borrowing Base then in
27
effect; provided, that in no event shall any Revolving Loan be made if, after
giving effect to such Revolving Loan, the sum of the Unused Total Revolving Loan
Commitment Amount and the aggregate amount of Swingline Loans then outstanding
would exceed the Total Revolving Loan Commitment Amount (the "Line of Credit").
During the Revolving Credit Period, the Borrower may use the Revolving Loan
Commitments by borrowing, prepaying Existing Loans and Revolving Loans in whole
or in part, and reborrowing, all in accordance with the terms and conditions
hereof.
Section 2.1.2. REQUIREMENTS FOR REVOLVING LOANS. Except as otherwise
provided in this Agreement or permitted by the Lenders having Revolving Loan
Commitments, Revolving Loans shall be (i) designated in U.S. Dollars, (ii) in an
amount which is at least, in the case of Base Rate Loans, THREE HUNDRED THOUSAND
AND NO/100 DOLLARS ($300,000.00) and, in the case of Eurodollar Loans, ONE
MILLION AND NO/100 DOLLARS ($1,000,000.00), (iii) in an amount which is an
integral multiple of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00), (iv)
at the option of Borrower, obtained and maintained as, or continued or converted
into, Base Rate Loans or Eurodollar Loans, and (v) limited, in the case of
Eurodollar Loans, to no more than five (5) Eurodollar Tranches.
Section 2.1.3. NOTICE OF BORROWING. Except as provided in Section
2.4.6. hereof, whenever Borrower desires to obtain a Revolving Loan (excluding
Revolving Loans incurred pursuant to a Mandatory Borrowing ), Borrower shall
provide the Administrative Agent with written notice (or telephonic notice
promptly confirmed in writing) received at its Notice Office no later than 12:00
noon (Boston, Massachusetts time) on the date one (1) Business Day before the
day on which the requested Revolving Loan is to be made as a Base Rate Loan, and
received no later than 12:00 noon (Boston, Massachusetts time) on the date three
(3) Business Days before the day on which the requested Revolving Loan is to be
made as a Eurodollar Loan. Each such notice (a "Notice of Borrowing") shall,
except as provided in Section 2.4.6. hereof, be irrevocable, be in the form of
EXHIBIT A attached hereto and be appropriately completed to specify: (i) the
amount of the requested Revolving Loan; (ii) the effective date of such
Revolving Loan, (iii) the Type of Loan to be applicable thereto; (iv) whether
such Revolving Loan is to be an Acquisition Loan and (v) the duration of the
Interest Period, if any (subject to the provisions of the definition of Interest
Period). The Administrative Agent shall, except as provided in Section 2.2.4.
hereof, promptly (and in no event later than 1:00 p.m. (Boston, Massachusetts
time)) give each Lender with a Revolving Loan Commitment written notice (or
telephonic notice promptly confirmed in writing) of each requested Revolving
Loan, such Lender's proportionate share thereof and such other matters covered
by the Notice of Borrowing. Borrower hereby acknowledges and agrees that the
Administrative Agent may, prior to the receipt of written confirmation, act
without liability upon the basis of any telephonic notice provided under this
Section 2.1.3., believed by the Administrative Agent, in good faith, to be from
a Responsible Officer of Borrower and Borrower hereby waives the right to
dispute the Administrative Agent's record of the terms of such telephonic
notice. Revolving Loans which relate to Mandatory Borrowings shall be made upon
the delivery of the notice specified in Section 2.2.4. hereof with Borrower
hereby irrevocably agreeing, by its incurrence of any Swingline Loan to the
making of Mandatory Borrowings as set forth in such Section 2.2.4. hereof.
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Section 2.1.4. FUNDING OF LOANS. Except as set forth in Section 2.2.
hereof, not later than 2:00 p.m. (Boston, Massachusetts time) on the date of the
making of each Revolving Loan, each Lender with a Revolving Loan Commitment
shall make available to the Administrative Agent, at the office designated by
the Administrative Agent for payment on the Administrative Questionnaire, in
U.S. Dollars and in immediately available funds, such Lender's pro rata share of
the requested Revolving Loan. The Administrative Agent will promptly make such
amounts available to Borrower by depositing to the Loan Account the aggregate of
such amounts so made available to the Administrative Agent in the type of funds
received.
Section 2.1.5. RELATIONSHIP OF REVOLVING LOANS TO TOTAL REVOLVING LOAN
COMMITMENT AMOUNT. Each Revolving Loan shall consist of either an Existing Loan
continued by or a Revolving Loan made by each Lender with a Revolving Loan
Commitment in respect of its Revolving Loan Commitment, which Revolving Loan
shall be continued or made by each Lender in the proportion that such Lender's
Revolving Loan Commitment bears to the Total Revolving Loan Commitment Amount;
PROVIDED, HOWEVER, that, except as provided in Section 2.2. hereof, if at any
time, for any reason, the proportion that any such Lender's Unused Revolving
Loan Commitment bears to the Unused Total Revolving Loan Commitment Amount is
not equal to the proportion that the Revolving Loan Commitment of such Lender
bears to the Total Revolving Loan Commitment Amount, then, each such Lender
shall promptly purchase or sell, as may be necessary, participations in the
Revolving Loans held by the other Lenders in such amounts as will (but only if
and to the extent that the purchase of such participations would not cause any
Lender to have outstanding Revolving Loans in an amount in excess of its
Revolving Loan Commitment and would not cause any Lender to exceed its lending
limit or to violate any other legal requirement to which it is subject), and
make such other adjustments from time to time as shall be necessary to, cause
the proportion that such Lender's Unused Revolving Loan Commitment bears to the
Unused Total Revolving Loan Commitment Amount to be equal to the proportion that
such Lender's Revolving Loan Commitment bears to the Total Revolving Loan
Commitment Amount.
Section 2.1.6. LOAN ACCOUNT. Each Revolving Loan shall be recorded in
the Loan Account in accordance with Section 2.6.9.
Section 2.1.7. SEVERAL OBLIGATIONS. The failure of any Lender with a
Revolving Loan Commitment to make available its proportionate share of any
Revolving Loan on the date specified therefor shall not relieve any other Lender
with a Revolving Loan Commitment of its obligation to make available its
proportionate share of such Revolving Loans on such date, but no Lender shall be
responsible for the failure of any other Lender to make available such other
Lender's proportionate share of the Revolving Loan.
Section 2.1.8. CALCULATION OF BORROWING BASE. The Borrowing Base as of
any time shall be calculated by reference to the most recent RMR Report and
other financial reports delivered by Borrower under Sections 6.1.2. or 7.2.3.
hereof and such other information as may be available to the Administrative
Agent, the Documentation Agent or the Lenders from time to time.
29
Section 2.1.9. REVOLVING CREDIT NOTES. On the Closing Date, Borrower
shall issue to each of the Lenders with a Revolving Loan Commitment a promissory
note executed by Borrower in substantially the form attached hereto as EXHIBIT B
with all blanks appropriately completed in conformity with this Agreement (each
a "Revolving Credit Note" and, collectively, the "Revolving Credit Notes"), with
all blanks therein appropriately completed. The Revolving Credit Notes shall
evidence the obligation of Borrower to repay to the Lender to which it is issued
all Loans continued or made by such Lender to Borrower on account of such
Lender's Revolving Loan Commitment . Each Revolving Credit Note shall (i) be
payable to the Lender to which it is issued or its registered assigns, (ii) be
dated as of the Closing Date, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Lender, (iv) be payable in the principal
amount of such Lender's pro rata percentage of the Loans evidenced thereby, (v)
mature on the Maturity Date, (vi) bear interest as provided in Section 2.4.4.
hereof, (vii) be subject to voluntary prepayments as provided in Section 2.6.7.
hereof and mandatory prepayments as provided in Section 2.6.8. hereof and (viii)
be entitled to the benefit of this Agreement and the Other Documents, and all
security granted or provided to the Administrative Agent for the ratable benefit
of the Lenders thereunder. Each Lender shall prior to any transfer or assignment
of its Revolving Credit Note endorse on the reverse side thereof the outstanding
principal amounts of the Loans evidenced thereby; provided, however, that such
Lender's failure to make any such record or endorsement shall not affect
Borrower's obligations in respect thereof. In addition, following the
effectiveness of this Agreement, and, if possible, on the Closing Date, each of
the Lenders shall deliver to the Administrative Agent the notes or promptly
thereafter an affidavit of lost note then held by such Lender evidencing loans
and advances under the Third Restated Credit Agreement for delivery to and
cancellation by the Borrower.
Section 2.1.10. PAYMENT OF PRINCIPAL. The aggregate unpaid principal
amount of all Revolving Loans, together with accrued and unpaid interest
thereon, as evidenced by the Revolving Credit Notes, shall, unless sooner
accelerated by the Lenders following the occurrence of an Event of Default, be
repaid by Borrower in twenty (20) consecutive quarterly installments in an
amount equal to the following percentages of the outstanding principal amount of
the Revolving Loans on the Revolving Credit Termination Date commencing on April
30, 2000 and continuing on the last day of each succeeding calendar quarter
thereafter as follows:
DATE OF PAYMENT PERCENTAGE OF OUTSTANDING
PRINCIPAL AMOUNT
April 30, 2000 3.75%
July 31, 2000 3.75%
October 31, 2000 3.75%
January 31, 2001 3.75%
April 30, 2001 5%
July 31, 2001 5%
October 31, 2001 5%
January 31, 2002 5%
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April 30, 2002 5%
July 31, 2002 5%
October 31, 2002 5%
January 31, 2003 5%
April 30, 2003 5%
July 31, 2003 5%
October 31, 2003 5%
January 31, 2004 5%
April 30, 2004 6.25%
July 31, 2004 6.25%
October 31, 2004 6.25%
January 31, 2005 6.25%
Section 2.1.11. USE OF PROCEEDS. Revolving Loans shall be used solely
for the working capital needs and general corporate purposes of Borrower, for
Permitted Acquisitions, for Direct Marketing Program Costs, for Dealer Program
Costs, to refinance the existing Indebtedness of Borrower set forth on SCHEDULE
2.1.11. attached hereto and to pay expenses associated with the consummation of
the transactions contemplated by this Agreement.
Section 2.1.12. REDUCTION OF TOTAL REVOLVING LOAN COMMITMENT AMOUNT.
Borrower may from time to time, by written notice delivered to the
Administrative Agent at least five (5) Business Days prior to the date of the
requested reduction, reduce the Unused Total Revolving Loan Commitment Amount by
integral multiples of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00). No
reduction of the Total Revolving Loan Commitment Amount shall be subject to
reinstatement.
Section 2.2. SWINGLINE LOANS.
Section 2.2.1. THE SWINGLINE. Upon the execution of this Agreement, the
Administrative Agent in its individual capacity hereby agrees to extend to
Borrower a line of credit, so that as long as no Default or Event of Default has
occurred and is continuing, the Administrative Agent agrees to lend to Borrower,
and Borrower may borrow, repay and reborrow, on a revolving basis, in one (1) or
more Swingline Loans from time to time during the period commencing on the
Closing Date and continuing through the close of business on the Revolving
Credit Termination Date, amounts which do not exceed at any one time outstanding
the Swingline Commitment (the "Swingline"). All Swingline Loans shall constitute
usage of the Administrative Agent's Revolving Loan Commitment under this
Agreement. Notwithstanding any provision of this Agreement to the contrary,
Swingline Loans (i) shall be made and maintained as Base Rate Loans, (ii) shall
be denominated in U.S. Dollars, (iii) may be repaid and reborrowed in accordance
with the provisions of this Agreement, (iv) shall not exceed in the aggregate at
any one time outstanding the Swingline Commitment and (v) shall not, together
with all Revolving Loans, exceed in the aggregate at any one time outstanding
the lesser of the Borrowing Base or the Total Revolving Loan Commitment Amount.
31
Section 2.2.2. NOTICE FOR SWINGLINE LOANS. Except as provided in
Section 2.2.4. hereof, whenever Borrower desires to obtain a Swingline Loan,
Borrower shall provide the Administrative Agent with written notice (or
telephonic notice promptly confirmed in writing) received at its Notice Office
no later than 12:00 noon (Boston, Massachusetts time) on the day on which the
requested Swingline Loan is to be made. Each such notice (a "Swingline Notice")
shall be irrevocable, be in substantially the form of EXHIBIT C attached hereto
and be appropriately completed to specify: (i) the amount of the requested
Swingline Loan and (ii) the effective date of such Swingline Loan. Borrower
hereby acknowledges and agrees that the Administrative Agent may, prior to the
receipt of written confirmation act without liability upon the basis of any
telephonic notice provided under this Section 2.2.2., believed by the
Administrative Agent, in good faith, to be from a Responsible Officer of
Borrower and Borrower hereby waives the right to dispute the Administrative
Agent's record of the terms of such telephonic notice. Notwithstanding the
foregoing, the Administrative Agent shall not make any Swingline Loans if the
Administrative Agent has received prior to the making of the requested Swingline
Loan a certificate or notice from Borrower or any Lender stating the existence
of Default or Event of Default or that any conditions to the making of such
Swingline Loan have not been satisfied.
Section 2.2.3. SWINGLINE NOTE. On the Closing Date, Borrower shall
issue to the Administrative Agent a promissory note executed by Borrower in
substantially the form attached hereto as EXHIBIT D with all blanks
appropriately completed in conformity with this Agreement (the "Swingline
Note"). The Swingline Note shall evidence the obligation of Borrower to repay to
the Administrative Agent all Swingline Loans by the Administrative Agent to
Borrower. The Swingline Note shall (i) be payable to the Administrative Agent or
its registered assigns, (ii) be dated as of the Closing Date, (iii) be in a
stated principal amount equal to the Swingline Commitment, (iv) be payable in
the principal amount of the Swingline Loans evidenced thereby, (v) mature on the
Revolving Credit Termination Date, (vi) bear interest as provided in Section
2.4.4. hereof, (vii) be subject to voluntary prepayments as provided in Section
2.6.7. hereof and mandatory prepayments as provided in Section 2.6.8. hereof and
(viii) be entitled to the benefit of this Agreement and the Other Documents, and
all security granted or provided to the Administrative Agent for the ratable
benefit of the Lenders thereunder. The Administrative Agent shall record on its
internal records the amount of each Swingline Loan made by it and each payment
received by it in respect thereof and will prior to any transfer or assignment
of the Swingline Note endorse on the reverse side thereof the outstanding
principal amount of the Swingline Loan evidenced thereby; provided, however,
that the Administrative Agent's failure to make any such record or endorsement
shall not affect Borrower's obligations in respect thereof.
Section 2.2.4. MANDATORY BORROWINGS. On any Business Day, the
Administrative Agent may, in its sole discretion, and, in any event, upon the
day which is seven (7) days after the borrowing of a Swingline Loan (or if such
day is not a Business Day, the next succeeding Business Day) shall provide
notice (which notice shall be deemed to have been automatically provided upon
the occurrence of a Default or Event of Default under Section 11.1.(g) or
11.1.(h)) to the Lenders having Revolving Loan Commitments that all outstanding
Swingline Loans shall be repaid pursuant to Revolving Loans to be made by such
Lenders as Base Rate Loans on the immediately succeeding Business Day (such
Revolving Loans, a "Mandatory Borrowing") pro
32
rata based upon each such Lender's Revolving Loan Commitment Percentage, and the
proceeds of such Revolving Loans shall be applied directly to repay the
Administrative Agent for such outstanding Swingline Loans. Each Lender with a
Revolving Loan Commitment hereby irrevocably agrees to make Base Rate Loans upon
one (1) Business Day's notice pursuant to each Mandatory Borrowing in the amount
and in the manner provided in the foregoing sentence and on the date specified
by the Administrative Agent notwithstanding (i) that the amount of the Mandatory
Borrowing may not comply with the minimum borrowing amount otherwise required
under this Agreement, (ii) whether any of the conditions precedent in Section 6
of this Agreement shall have been satisfied, (iii) whether a Default or Event of
Default shall have occurred and be continuing, (iv) the date of such Mandatory
Borrowing and (v) any reduction in the Total Revolving Loan Commitment Amount
after such Swingline Loans were made. In the event that any Mandatory Borrowing
cannot be made as set forth above for any reason, including, without limitation,
the commencement of a proceeding under the Bankruptcy Code with respect to
Borrower), each Lender with a Revolving Loan Commitment (other than the
Administrative Agent) hereby agrees that it shall forthwith purchase from the
Administrative Agent (without recourse or warranty) an assignment of such
outstanding Swingline Loans as shall be necessary to cause such Lenders to share
in such Swingline Loans ratably based upon their respective Revolving Loan
Commitment Percentages; provided, however, that all interest payable on the
Swingline Loans shall be for the account of the Administrative Agent until the
effective date of the purchase of each respective assignment and, to the extent
attributable to the purchased assignment, shall be payable to the Lender
purchasing the same from and after such effective date.
Section 2.3. THE TERM LOANS.
Section 2.3.1. THE LOANS. Upon the execution of this Agreement, and so
long as no Default or Event of Default has occurred and is continuing, or would
occur as a result thereof, and all conditions precedent to the making of any
Extension of Credit have been satisfied, each Lender with a Term Loan Commitment
severally agrees to make a term loan (each a "Term Loan" and, collectively, the
"Term Loans") to Borrower on the Closing Date. The Term Loan of each such Lender
shall be made in dollars and be in that amount which is equal to such Lender's
Term Loan Commitment on the Closing Date. The Term Loans made under this
Agreement may not be reborrowed if repaid.
Section 2.3.2. TERM NOTE. On the Closing Date, Borrower shall issue to
each of the Lenders with a Term Loan Commitment a promissory note executed by
Borrower in substantially the form attached hereto as EXHIBIT E with all blanks
appropriately completed in conformity with this Agreement (each a "Term Note"
and, collectively, the "Term Notes"). The Term Notes shall evidence the
obligation of Borrower to repay to the Lender to which it is issued the Term
Loan made by such Lender to Borrower on account of such Lender's Term Loan
Commitment. Each Term Note shall (i) be payable to the Lender to which it is
issued or its registered assigns, (ii) be dated as of the Closing Date, (iii) be
in a stated principal amount equal to the Term Loan Commitment of such Lender,
(iv) be payable in Dollars in the outstanding principal amount of the Term Loans
evidenced thereby, (v) mature on the Maturity Date, (vi) bear interest as
provided in Section 2.4.4. hereof, (vii) be subject to voluntary prepayments as
provided in Section 2.6.7.
33
hereof and mandatory prepayments as provided in Section 2.6.8. hereof and (viii)
be entitled to the benefit of this Agreement and the Other Documents, and all
security granted or provided to the Agent for the ratable benefit of the Lenders
thereunder. The Adminisitrative Agent shall record each Term Loan in the Loan
Account and each Lender shall record on its internal records the amount of the
Term Loan made by it and each payment received by it in respect thereof and will
prior to any transfer thereof endorse on the reverse side thereof the
outstanding principal amount of the Term Loan evidenced thereby; PROVIDED,
however, that such Lender's failure to make any such record or endorsement shall
not affect Borrower's obligations in respect thereof.
Section 2.3.3. PAYMENT OF PRINCIPAL. The outstanding principal amount
of the Term Loans shall be paid in full on the Maturity Date.
Section 2.3.4. USE OF PROCEEDS. The proceeds of the Term Loans shall be
used solely to provide liquidity to Borrower to effect a dividend or other
distribution to SSH, which dividend or other distribution shall be used solely
to indefeasibly retire in full certain subordinated indebtedness of SSH existing
under that certain Note Purchase Agreement dated as of April 15, 1997 by and
among SSH and and the noteholders specified therein.
Section 2.4. INTEREST ON THE LOANS.
Section 2.4.1. BASE RATE. Each adjustment in the Base Rate shall result
immediately, without notice or demand of any kind, in a new rate of interest
effective with respect to periods on and after the date of such adjustment. The
Base Rate is a base interest rate for loans making reference thereto and is not
necessarily the lowest rate at which any Lender may lend money. The Base Rate is
neither tied to any external rate of interest nor is it a rate charged by any
Lender to any particular class or category of customer. If the Base Rate shall
be discontinued or for any other reason not be available for determining the
rate of interest chargeable under this Agreement, then the Administrative Agent
(with the consent of the Required Lenders) shall select a substitute method of
determining the rate of interest chargeable under this Agreement and shall
notify Borrower of such selection, which method shall, in the Administrative
Agent's estimation, yield a rate of return to each Lender substantially
equivalent to the rate of return that such Lender would have expected to receive
if the Base Rate remained available for that purpose.
Section 2.4.2. CONTINUATION OR CONVERSION OF LOANS. As long as no
Default or Event of Default shall have occurred and be continuing, Borrower may
continue or convert all or any part (in integral multiples of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000.00)) of any outstanding Loan as a Loan of
the same Type or into a Loan of any other Type provided for in this Agreement.
If Borrower wishes to continue or convert a Loan as aforesaid, Borrower shall
provide the Administrative Agent with written notice (or telephonic notice
promptly confirmed in writing) received at its Notice Office no later than 10:00
a.m. (Boston, Massachusetts time) on the date one (1) Business Day before the
day on which the requested Loan is to be continued as or converted to a Base
Rate Loan, and received no later than 10:00 a.m. (Boston, Massachusetts time) on
the date three (3) Business Days before the day on which the requested Loan is
to be continued as or converted to a Eurodollar Loan. Each such
34
notice (a "Notice of Continuation or Conversion") shall, except as provided in
Section 2.4.6. hereof, be irrevocable, be in the form of EXHIBIT F attached
hereto and be appropriately completed to specify: (i) the amount of the Loan to
be continued or converted, (ii) the effective date of such continuation or
conversion which shall, in the case of a Eurodollar Loan, be the last day of the
Interest Period applicable thereto, (iii) the Type or Types of Loans to be
applicable thereto; and (iv) the duration of the Interest Period, if any
(subject to the provisions of the definition of Interest Period). The
Administrative Agent shall promptly give each Lender written notice (or
telephonic notice promptly confirmed in writing) of each requested continuation
or conversion of a Loan, such Lender's proportionate share thereof and such
other matters covered by the Notice of Conversion or Continuation. Borrower
hereby acknowledges and agrees that the Administrative Agent may, prior to the
receipt of written confirmation act without liability upon the basis of any
telephonic notice provided under this Section 2.4.2. believed by the
Administrative Agent, in good faith, to be from a Responsible Officer of
Borrower and Borrower hereby waives the right to dispute the Administrative
Agent's record of the terms of such telephonic notice.
Section 2.4.3. DURATION OF INTEREST PERIODS.
(a) Subject to the provisions of the definition of Interest
Period, the duration of each Interest Period applicable to a Loan shall be as
specified in the applicable Notice; provided, however, that in the case of Term
Loans, the Interest Period for a Eurodollar Loan shall be one (1) month.
(b) If the Administrative Agent does not receive a Notice for
a Eurodollar Loan pursuant to subsection (a) above within the applicable time
limits specified therein, or if, when such notice must be given, a Default or
Event of Default shall have occurred and be continuing, Borrower shall be deemed
to have elected to convert such Loan in whole into a Base Rate Loan on the last
day of the then current Interest Period with respect thereto.
(c) Notwithstanding the foregoing, Borrower may not select an
Interest Period that would end, but for the provisions of the definition of
Interest Period, after the Maturity Date.
Section 2.4.4. INTEREST RATES AND PAYMENTS OF INTEREST.
(a) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof at a rate per annum equal to the Base Rate in effect
from time to time plus the Base Rate Margin applicable thereto. Interest
accruing in respect of each Base Rate Loan shall be payable on the last day of
each month commencing August 31, 1998 and continuing until such Base Rate Loan
is due (whether at maturity, by reason of acceleration, prepayment or
otherwise). Interest accrued but unpaid under the Third Restated Credit
Agreement in respect of Base Rate Loans shall be paid on the Closing Date.
35
(b) Each Eurodollar Loan, including any Existing Loan which is
a Eurodollar Loan, shall bear interest on the outstanding principal amount
thereof, for each Interest Period applicable thereto, at a rate per annum equal
to the Adjusted Eurodollar Rate plus the Eurodollar Margin applicable thereto,
which interest shall be payable on the last day of each Interest Period (but, in
the case of Interest Periods having a duration of six (6) months or greater, if
available, at least quarterly) and when such Eurodollar Loan is due (whether at
maturity, by reason of acceleration or otherwise).
(c) Interest shall be computed daily on the basis of a year of
three hundred sixty (360) days and paid for the actual number of days elapsed
during each Interest Period. If the due date for any payment of principal is
extended by operation of law, interest shall be payable for such extended time.
If any payment required by this Agreement becomes due on a day that is not a
Business Day such payment may be made on the next succeeding Business Day
(subject to clause (i) of the definition of Interest Period), and such extension
shall be included in computing interest in connection with such payment.
Section 2.4.5. INTEREST RATE MARGINS. The Base Rate Margin applicable
to Term Loans shall be 2.50% and the Eurodollar Margin applicable to Term Loans
shall be 4.10%. As of the Closing Date, the Base Rate Margin applicable to
Revolving Loans shall be 1.50% and the Eurodollar Margin applicable to Revolving
Loans shall be 2.75%. Commencing with the end of the first Fiscal Quarter
following the Closing Date and continuing on the last day of each succeeding
Fiscal Quarter, and as long as no Default or Event of Default shall have
occurred and be continuing, the Base Rate Margin and the Eurodollar Margin
applicable, in each case, to Revolving Loans shall be subject to change (each
such change, a "Margin Change") by reference to Borrower's Leverage Ratio as of
the last day of any such Fiscal Quarter as follows:
LEVERAGE RATIO BASE RATE MARGIN EURODOLLAR MARGIN
APPLICABLE TO APPLICABLE TO
REVOLVING LOANS REVOLVING LOANS
Equal to or greater than 1.50% 2.75%
3.75 to 1.0 (or if a Default or
Event of Default
shall exist)
Equal to or greater than 1.25% 2.50%
3.50 to 1.0 but less than 3.75 to
1.0
Equal to or greater than 1.00% 2.25%
3.00 to 1.0 but less than 3.50 to
1.0
Less than 3.0 to 1.0 .75% 2.00%
36
The calculation of the Leverage Ratio for purposes of a Margin Change shall be
reviewed and verified by the Administrative Agent, in its sole and absolute
discretion, by reference to the Financial Statements to be provided by Borrower
under Section 7.1. hereof. In making such calculation, and for purposes of the
determination of any Margin Change only, Consolidated EBITDA shall be calculated
on an annualized basis by reference to the most recent Fiscal Quarter then
ending multiplied by four (4). Each Margin Change shall be effective, including
with respect to Loans which are then outstanding, as of the date on which the
Financial Statements referred to in Section 7.1. hereof are provided to the
Administrative Agent (notwithstanding the fact that the calculation of the
Leverage Ratio associated with such Margin Change is reviewed and verified by
the Administrative Agent at a later date). The Administrative Agent shall review
and verify the Borrower's calculation of the Leverage Ratio no later than three
(3) Business Days after its receipt of such Financial Statements. The
Administrative Agent shall, as soon as practicable, promptly notify each Lender
of the occurrence of any Margin Change.
Section 2.4.6. CHANGED CIRCUMSTANCES. In the event that (x) in the case
of clause (i) below, the Administrative Agent or (y) in the case of clause (ii)
below, any Lender, shall have determined in a commercially reasonable manner
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto):
(i) on any date on which the Eurodollar Rate would otherwise
be set the Administrative Agent shall have determined in good faith
(which determination shall be final and conclusive) that adequate and
fair means do not exist for ascertaining the Interbank Offered Rate, or
(ii) at any time such Lender shall have determined in good
faith that:
(A) the making or continuation of or conversion of
any Loan to a Eurodollar Loan has been made impracticable or unlawful
by (1) the occurrence of a contingency that materially and adversely
affect the interbank Eurodollar market or (2) compliance by such Lender
in good faith with any Requirement of Law enacted after the date hereof
or interpretation or change thereof after the date hereof by any
Governmental Authority charged with the interpretation or
administration thereof or with any request or directive of any such
Governmental Authority (whether or not having the force of law); or
(B) the Adjusted Eurodollar Rate shall, after the
date hereof, no longer represent the effective cost to such Lender for
U.S. dollar deposits in the interbank Eurodollar market for deposits in
which it regularly participates;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) within five (5) Business Days after any such
event and (y) within five (5) Business Days of the date on which such event no
longer exists give notice (in writing or by telephone confirmed in writing) to
Borrower and (except in the case of clause (i) above) to the Administrative
Agent of such determination (which notice the Administrative Agent shall
37
promptly transmit to the other Lenders). Thereafter, (x) in the case of clause
(i) above, Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies Borrower and the Lenders that the circumstances
giving rise to such notice by the Administrative Agent no longer apply, and any
Notice given by Borrower with respect to Eurodollar Loans which have not yet
been incurred shall be deemed rescinded by Borrower and (y) in the case of
clause (ii) above, Borrower shall, as applicable, either (a) pay to such Lender,
upon written demand therefor (accompanied by the written notice referred to
below), any such additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender may
determine in its sole discretion) as shall be required to compensate such Lender
for any increased costs or reductions in amounts received or receivable under
this Agreement (a written notice as to the additional amounts owed to such
Lender showing the basis for the calculation thereof, submitted to Borrower by
such Lender, shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) or (b), as promptly as possible, and, in any event,
with the time period required by law, either (A), if any affected Eurodollar
Loan has not yet been made, continued or converted, cancel any such Notice by
giving the Administrative Agent a telephonic notice (confirmed promptly in
writing) thereof on the same date that Borrower was notified by a Lender as
aforesaid or (B), if any affected Eurodollar Loan has been made, continued or
converted, upon at least three (3) Business Days' notice to the Administrative
Agent, require the affected Lender (and any other similarly affected Lender) to
convert each such affected Eurodollar Loan into a Base Rate Loan (which
conversion shall occur no later than the last day of the Interest Period then
applicable to such Eurodollar Loan (or such earlier date if required by any
Requirement of Law).
Section 2.4.7. COMPENSATION. Borrower shall compensate each Lender,
promptly upon its written request (which request shall be accompanied by a
notice setting forth the basis for such compensation), for all reasonable
losses, expenses and liabilities (including, without limitation, any such loss,
expense or liability incurred by reason of the liquidation or reemployment of
deposits or other funds required by such Lender to fund its Eurodollar Loans but
excluding loss of anticipated profit with respect to any Eurodollar Loans) which
such Lender may sustain: (i) if for any reason (other than a default by the
Administrative Agent or such Lender) a Eurodollar Loan is not made, continued or
converted on the date specified therefor in a Notice (whether or not withdrawn
by Borrower or deemed withdrawn under Section 2.4.6. hereof), (ii) if any
repayment (including any voluntary or mandatory repayment under Sections 2.6.7.
and 2.6.8. hereof or as the result of the acceleration of the Loans) or
conversion of Eurodollar Loan occurs on a date which is not the last day of the
Interest Period applicable thereto, (iii) if any prepayment of any Eurodollar
Loans is not made on any date specified in a notice of prepayment given by
Borrower, (iv) as a consequence of (x) any other failure or default by Borrower
to repay Eurodollar Loans when required by this Agreement or (y) any election by
Borrower under Section 2.4.6. hereof. The calculation of all amounts payable to
a Lender under this Section 2.4.7. shall be made as though that Lender has
actually funded its relevant Eurodollar Loan through the purchase of a
Eurodollar deposit bearing interest at the Adjusted Eurodollar Rate in an amount
equal to the amount of such Eurodollar Loan, having a maturity comparable to the
relevant Interest Period and through the transfer of such Eurodollar deposit
from an offshore office of such Lender to a domestic office of such Lender;
provided, however, that each Lender may fund each of its Eurodollar Loans in any
38
manner which it elects in its sole and absolute discretion. It is further
understood and agreed by Borrower that if any repayment of Eurodollar Loans
pursuant to Sections 2.6.7. or 2.6.8. or any conversion of Eurodollar Loans
shall occur on a day which is not the last day of an Interest Period applicable
thereto, such repayment or conversion shall be accompanied by any amounts owing
to any Lender under this Section 2.4.7.
Section 2.5. FEES APPLICABLE TO THIS AGREEMENT AND EXTENSIONS OF
CREDIT.
Section 2.5.1. FACILITY FEE. Borrower shall pay to the Administrative
Agent for the account of the Lenders having a Revolving Loan Commitment during
the Revolving Credit Period a facility fee (the "Facility Fee") computed at the
rate of .375% per annum on the average daily amount of the Unused Total
Revolving Loan Commitment Amount in effect during the period for which payment
is made. The Facility Fee shall be payable quarterly in arrears commencing
October 31, 1998 and continuing on the last day of each quarter thereafter
during the Revolving Credit Period and on the Revolving Credit Termination Date.
The Facility Fee accrued but unpaid under the Third Restated Credit Agreement
shall be paid on the Closing Date.
Section 2.5.2. AGENCY FEE. Borrower shall pay to the Administrative
Agent for its own account an agency fee in the amount of FIFTY THOUSAND AND
NO/100 DOLLARS ($50,000.00) for each year or portion thereof in which the
Obligations remain outstanding in consideration of its service as the
Administrative Agent for the Lenders under this Agreement (the "Agency Fee").
The Agency Fee shall be payable in advance on February 2, 1999 (the
Administrative Agent hereby acknowledges the receipt of the Agency Fee for the
period February 2, 1998 through February 1, 1999 paid in connection with the
Third RestatedCredit Agreement.
Section 2.5.3. CALCULATION OF FEES. Any Fees due and payable under
Section 2.5.1. hereof to the Administrative Agent for the account of the Lenders
shall be calculated on the basis of a year of 360 days and according to the
actual number of days elapsed in each accrual period.
Section 2.5.4. TERM LOAN FEE. On the Closing Date, the Borrower shall
pay or cause to be paid to the Administrative Agent for the ratable benefit of
the Lenders having a Term Loan Commitment a closing fee in an amount equal to
one percent (1%) of the principal amount of the Term Loan, to wit, THIRTY NINE
THOUSAND AND NO/100 DOLLARS ($39,000.00).
Section 2.6. GENERAL TERMS APPLICABLE TO ANY EXTENSION OF CREDIT
Section 2.6.1. INCREASED COSTS AND CAPITAL ADEQUACY.
(a) If the Administrative Agent, the Documentation Agent or
any Lender determines that any change in any law or regulation or directive or
bulletin or in the interpretation thereof after the Closing Date by any court or
administrative or governmental authority charged with the administration thereof
shall either (i) impose, modify or deem applicable any reserve, special deposit
or similar requirement against any credit extended by the Administrative Agent,
the Documentation Agent or any Lender under this Agreement, or (ii) impose on
the
39
Administrative Agent, the Documentation Agent, any Lender or their parent
holding company any other condition regarding this Agreement and the result of
any event referred to in the preceding clause (i) or (ii) above shall be to
increase the cost to the Administrative Agent, the Documentation Agent, any
Lender or such holding company of issuing, funding or maintaining any Extension
of Credit (which increase in cost shall be determined by the Administrative
Agent's, the Documentation Agent's or such Lender's reasonable allocation of the
aggregate of such cost increases resulting from such event), then, upon written
demand by the Administrative Agent, the Documentation Agent or any such Lender,
Borrower shall pay to the Administrative Agent, the Documentation Agent or such
Lender from time to time as specified by the Administrative Agent, the
Documentation Agent or any such Lender, additional amounts which shall be
sufficient to compensate the Administrative Agent, the Documentation Agent or
any such Lender for such increased cost from the date of such change. A
certificate as to such increased cost incurred by the Administrative Agent, the
Documentation Agent or any Lender as a result of any event mentioned in clause
(i) or (ii) above prepared in reasonable detail (which shall include the method
employed by the Administrative Agent, the Documentation Agent or any such Lender
in determining the allocation of such costs to Borrower) and otherwise in
accordance with this subsection (a), submitted by the Administrative Agent, the
Documentation Agent or any such Lender to Borrower, shall be conclusive
evidence, absent manifest error, as to the amount thereof.
(b) If the Administrative Agent, the Documentation Agent or
any Lender shall determine that the adoption after the Closing Date of any
applicable law, rule or regulation pursuant to or arising out of the July 1988
report of the Basle Committee on Banking Regulations and Supervisory Practices
entitled "International Convergence of Capital Measurement and Capital
Standards", or the adoption after the date hereof of any other law, rule, or
regulation regarding capital adequacy, or any change therein, or any change
after the date hereof in the interpretation or administration thereof, or
compliance by the Administrative Agent, the Documentation Agent, any Lender or
their parent holding company with any requirement or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, except any such adoption or change or any such
compliance with a request or directive which applies or has been applied solely
to the Administrative Agent, the Documentation Agent, any such Lender or such
parent holding company by reason of events or conditions relating solely to the
Administrative Agent, the Documentation Agent or any such Lender, has the effect
of reducing the rate of return on the Administrative Agent's, the Documentation
Agent's, any Lender's or their parent holding company's capital as a consequence
of its commitment hereunder or to a level below that which the Administrative
Agent, the Documentation Agent, any such Lender or such holding company could
have achieved but for such adoption, change or compliance by an amount deemed by
the Administrative Agent, the Documentation Agent or any such Lender to be
material (for which reduction of the rate of return shall be determined by the
Administrative Agent's, the Documentation Agent's, any such Lender's or such
holding company's reasonable allocation of such reduction of the rate of return
resulting from such event) then, upon written demand by the Administrative
Agent, the Documentation Agent or any such Lender, Borrower shall pay to the
Administrative Agent, the Documentation Agent or such Lender, from time to time
as specified by the Administrative Agent, the Documentation Agent or any such
Lender, such additional
40
amount or amounts which shall be sufficient to compensate the Administrative
Agent, the Documentation Agent or any such Lender for such reduction. A
certificate as to such increased cost incurred by the Administrative Agent, the
Documentation Agent or any such Lender as a result of any event mentioned in
this subsection (b), prepared in reasonable detail (which shall include the
method employed by the Administrative Agent, the Documentation Agent or any such
Lender in determining the allocation of such costs to Borrower) and otherwise in
accordance with this subsection (b) submitted by the Administrative Agent, the
Documentation Agent or any such Lender to Borrower, shall be conclusive
evidence, absent manifest error, as to the amount thereof.
(c) Amounts payable by Borrower pursuant to this Section
2.6.1. shall be payable within ten (10) Business Days of receipt by Borrower of
a certificate described in subsection (a) or (b) of this Section 2.6.1.
Section 2.6.2. METHOD OF PAYMENT. All payments and prepayments of
principal and all payments of Fees and interest shall be made by Borrower to the
Administrative Agent for the ratable account of the Lenders at the head office
of the Administrative Agent (or such other place specified by the Administrative
Agent for such purpose) in immediately available funds and in U.S. Dollars, on
or before 12:00 noon (Boston, Massachusetts time) on the due date thereof, free
and clear of, and without any deduction or withholding for, any taxes or other
payments. Any payments which are made later than 12:00 noon (Boston,
Massachusetts time) shall be deemed to have been made on the next Business Day.
Whenever any payment to be made hereunder shall be stated to be due on a day
which is not a Business Day (unless otherwise provided herein), the due date
thereof shall be extended to the next succeeding Business Day and, with respect
to payments of principal, interest shall be payable during such extension as the
applicable rate in effect immediately prior to such extension of time.
Section 2.6.3. TAXES. All payments by Borrower under this Agreement
shall be made without set-off, counterclaim or other claim or defense. Except as
otherwise provided herein, all payments by or on behalf of Borrower hereunder
shall be made free and clear of, and without deduction or withholding for, any
and all current or future taxes, levies, imposts, duties, fees, assessments or
other charges of any kind or nature now or hereinafter imposed by a Governmental
Authority with respect to any such payment but excluding, except as provided
below, (i) any tax imposed on or measured by the net income or net profits of
any Lender or transferee or assignee thereof (a "Transferee") pursuant to any
Requirement of Law, or (ii) or franchise taxes imposed on net income or in lieu
thereof on any Lender or Transferee or (iii) any tax imposed by reason of any
connection between the jurisdiction imposing such tax and any Lender or
Transferee (other than a connection arising solely by virtue of the making of
any Extension of Credit under this Agreement) and all interest, penalties or
similar liabilities (all such non-excluded taxes, levies, imposts, duties, fees,
assessments or other charges being referred to as "Taxes"). If any Taxes are
required to be withheld or deducted from any payment under this Agreement,
Borrower agrees to pay the full amount of such Taxes deducted to the relevant
Government Authority in accordance with applicable law, and the payments under
this Agreement shall be increased by such additional amounts as may be necessary
so that every payment under this Agreement, after required withholding or
deduction on account of any Taxes, will not be less
41
than the amount otherwise required to be paid under this Agreement. Borrower
shall furnish to the Administrative Agent within thirty (30) days after the date
the payment of any Taxes is due certified copies of any tax receipts evidencing
such payment by Borrower. Borrower agrees to indemnify and hold harmless the
Administrative Agent, the Documentation Agent and each Lender, and reimburse the
Administrative Agent, the Documentation Agent and each Lender upon its written
request, for the amount of any Taxes specified in this Section 2.6.3. as are
paid by such Lender, the Administrative Agent or the Documentation Agent. A
certificate as to the amount of any such indemnification prepared by such
Lender, the Administrative Agent or the Documentation Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
Section 2.6.4. WITHHOLDING TAX EXEMPTION. Each Lender which is not a
United States person (as such term is defined in Section 7701(a)(30) of the
Code) agrees to deliver to Borrower and the Administrative Agent on or prior to
the Closing Date (i) two complete executed copies of Internal Revenue Service
Form 4224 or Form 1001 (or successor forms thereto) certifying such Lender's
entitlement to an exemption from United States withholding tax with respect to
payment to be made under this Agreement or (ii) if the Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Form 4224 or Form 1001, a certificate in a form approved by the Administrative
Agent and two complete executed copies of Internal Revenue Service Form W-8 (or
successor form thereto) certifying such Lender's entitlement to exemption from
such withholding. In addition, each Lender agrees to deliver to Borrower and the
Administrative Agent updates or replacements to the foregoing forms and
certificates from time to time when due to the lapse of time, the change in
circumstances or otherwise, any such form or certificate previously provided
under this Section 2.6.4. shall become obsolete or inaccurate. Each Lender
agrees to immediately notify Borrower and the Administrative Agent in the event
that it is unable to certify that it is entitled to an exemption from
withholding as aforesaid. Notwithstanding any provision of Section 2.6.3 or this
Section 2.6.4. to the contrary, Borrower shall be entitled, to the extent
required by any Requirement of Law, to deduct and withhold income or similar
taxes imposed by the United States (or any other Governmental Authority) from
interest, fees or other amounts payable hereunder for the account of any Lender
which is not a United States person (as defined above) for U.S. Federal income
tax purposes to the extent that such Lender has not provided to Borrower forms
establishing an exemption therefrom as aforesaid and Borrower shall not be
obligated to pay any amounts under this Section 2.6.4. hereof in respect of
income or withholding taxes imposed by the United States if any Lender has not
provided the forms required to be provided pursuant to this Section 2.6.4.
hereof or, in the case of a payment, other than interest, to a Lender to the
extent that any such forms do not establish a complete exemption from
withholding of such taxes.
Section 2.6.5. LENDING OFFICES. Loans of each Type made by any Lender
shall be made and maintained at such Lender's Applicable Lending Office for
Loans of such Type. Each Lender agrees that, upon the occurrence of any event
giving rise to the operation of Section 2.4.6., 2.6.1. or 2.6.3. hereof with
respect to such Lender, it will, if requested by Borrower, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate
another lending office for any Extension of Credit affected by such event;
provided that in the sole judgment of
42
such Lender, such Lender and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequences of the
event giving rise to the operation of any of the foregoing Sections. Nothing in
this Section 2.6.5. shall affect or postpone any of the obligations of Borrower
or the rights of any Lender under said Sections 2.4.6., 2.6.1. or 2.6.3.
Section 2.6.6. REPLACEMENT OF LENDERS. (x) If any Lender becomes a
Defaulting Lender, (y) upon the occurrence of any event giving rise to the
operation of Sections 2.4.6., 2.6.1. or 2.6.3. with respect to any Lender which
results in such Lender charging to Borrower increased costs in excess of those
being generally charged by the other Lenders or (z) in the case of a refusal by
a Lender to consent to a proposed change, waiver, discharge or termination with
respect to this Agreement which has been approved by the Required Lenders as
provided in Section 10.14. hereof Borrower shall have the right, if no Default
or Event of Default then exists or, in the case of clause (z) above, would exist
after giving effect to such replacement, to replace such Lender (the "Replaced
Lender") with one or more other lenders, none of whom shall constitute a
Defaulting Lender at the time of such replacement (collectively, the
"Replacement Lender") and each of whom shall be acceptable to the Administrative
Agent; provided that (i) at the time of any replacement pursuant to this Section
2.6.6., the Replacement Lender shall enter into an Assignment and Acceptance
pursuant to Section 13.1. (and with all fees payable pursuant to said Section
13.1 to be paid by the Replacement Lender) pursuant to which the Replacement
Lender shall acquire the Revolving Loan Commitment and/or Term Loan Commitment,
as applicable, and the Revolving Loans and/or Term Loan, as applicable, of the
Replaced Lender and, in connection therewith, shall pay to (x) the Replaced
Lender in respect thereof an amount equal to the sum of (A) an amount equal to
the principal of, and all accrued interest on, all outstanding Loans of the
Replaced Lender and (B) an amount equal to all accrued, but theretofore unpaid,
Fees owing to the Replaced Lender and (y) the Administrative Agent an amount
equal to such Replaced Lender's pro rata share of any Mandatory Borrowing to the
extent such amount was not theretofore funded by such Replaced Lender, and (ii)
all obligations of Borrower then owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid, but including all
amounts, if any, owing under Section 2.4.6.) shall be paid in full to such
Replaced Lender concurrently with such replacement. Upon the execution of the
respective Assignment and Acceptance, the payment of amounts referred to in
clauses (i) and (ii) above, recordation of the assignment on the Register by the
Administrative Agent pursuant to Section 13.2. and, if so requested by the
Replacement Lender of the appropriate Note or Notes executed by Borrower, the
Replacement Lender shall become a Lender hereunder and the Replaced Lender shall
cease to constitute a Lender hereunder, except with respect to indemnification
provisions under this Agreement, which shall survive as to such Replaced Lender.
Section 2.6.7. VOLUNTARY PREPAYMENTS. Borrower shall have the right to
prepay the Loans, in whole or in part, without penalty or premium except as
otherwise provided in this Agreement from time to time on the following terms
and conditions: (i) Borrower shall provide written notice to the Administrative
Agent at its Notice Office (or telephonic notice promptly confirmed in writing)
of its intent to prepay the Loans, the amount of such prepayment, whether
43
such prepayment is being made in respect of Revolving Loans or Term Loans, and,
in the case of Eurodollar Loans, the specific Loans to which such prepayment is
to be made, which notice shall be provided prior to 12:00 noon (Boston,
Massachusetts time) (x) at least one (1) Business Day prior to the date of such
prepayment in the case of Base Rate Loans, (y) on the date of such prepayment in
the case of Swingline Loans and (z) at least three (3) Business Days prior to
the date of such prepayment in the case of Eurodollar Loans and (ii) each
prepayment shall be in an aggregate principal amount of at least ONE MILLION AND
NO/100 DOLLARS ($1,000,000.00) or, if the then outstanding principal amount of
the Loans of the Class being prepaid are less than ONE MILLION AND NO/100
DOLLARS ($1,000,000.00), such remaining principal amount; provided, that no
partial prepayment of any Eurodollar Loan shall reduce the remaining aggregate
outstanding principal amount of such Eurodollar Loan to an amount which is less
than the minimum borrowing amount applicable under this Agreement for Eurodollar
Loans. The Administrative Agent shall promptly notify each Lender of any such
intended prepayment. Upon receipt by the Administrative Agent, any such
prepayment shall be applied pro rata among the Loans of each of the Lenders
being prepaid; provided, however, that such prepayment shall not be applied to
any Loans of a Defaulting Lender, until such time as the proportion that such
Lender's Unused Revolving Loan Commitment or Unused Term Loan Commitment bears
to the Total Revolving Loan Commitment Amount or Total Term Loan Commitment, as
applicable, is equal to the proportion that such Lender's Revolving Loan
Commitment or Term Loan Commitment bears to the Total Revolving Loan Commitment
Amount or Total Term Loan Commitment Amount, as applicable.
Section 2.6.8. MANDATORY PREPAYMENTS.
(a) If, at any time, the Outstanding Amount, together with the
amount of the Swingline Loans, shall exceed the Borrowing Base in effect from
time to time then any such excess amount shall be immediately due and payable
without notice or demand by the Administrative Agent or the Lenders. Any
payments made by Borrower under this subsection (a) shall be applied first to
any outstanding Swingline Loans and then to outstanding Revolving Loans.
(b) Borrower shall prepay the Loans in an amount equal to the
Net Proceeds from any Asset Sale in excess of ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00). Any amounts payable under this subsection (b) shall be
payable concurrently with Borrower's receipt of any such Net Proceeds.
(c) Borrower shall prepay the Loans in an amount equal to
fifty percent (50%) of Excess Cash Flow for each Fiscal Year commencing with the
Fiscal Year ending December 31, 2000, together with interest on the amount being
prepaid. Any amounts payable under this subsection (c) shall be payable on or
before the earlier of (i) the date on which the Financial Statements required to
be delivered under Section 7.1.1. hereof in respect of such Fiscal Year are
required to be delivered or (ii) the date on which such Financial Statements are
actually delivered.
44
(d) Any amounts payable under this Section 2.6.8. shall be
applied prior to the Revolving Credit Termination Date first to Swingline Loans,
then to outstanding Revolving Loans and finally to outstanding Term Loans in
inverse order of maturity and following the Revolving Credit Termination Date to
outstanding Revolving Loans in inverse order of maturity and then to outstanding
Term Loans in inverse order of maturity.
Section 2.6.9. LOAN ACCOUNT. All Loans shall be recorded in the Loan
Account. There shall also be recorded in the Loan Account all prepayments and
payments made by Borrower in respect of the Loans and other appropriate debits
and credits as herein provided. The Administrative Agent shall from time to
time, but at least monthly, and upon Borrower's reasonable request, render and
send to Borrower a statement of the Loan Account showing the respective
outstanding principal balance of the Loans of each Class, together with interest
and other appropriate debits and credits as of the date of the statement. The
statement of the Loan Account shall be considered correct in all respects and
accepted by and be conclusively binding upon Borrower absent manifest error
unless Borrower makes specific written objection thereto within sixty (60) days
after the date the statement of the Loan Account is sent.
Section 2.7. PAYMENTS AMONG THE ADMINISTRATIVE AGENT AND THE LENDERS.
Section 2.7.1. PRO RATA TREATMENT. Except as otherwise provided herein:
(A) each borrowing from the Lenders pursuant to Section 2.1.1., in the case of
Revolving Loans, or Section 2.3.1., in the case of Term Loans, will be made from
the Lenders PRO RATA in accordance with the amounts of their respective
Revolving Loan Commitment Percentages or Term Loan Commitment Percentages, (B)
payments and prepayments of principal or interest will be made to the
Administrative Agent for the account of the Lenders with Revolving Loan
Commitments PRO RATA in accordance with the unpaid principal amount of the Line
of Credit and for Lenders with Term Loan Commitments PRO RATA in accordance with
the unpaid principal amount of the Term Loans, (C) any reduction in the Total
Revolving Loan Commitment Amount shall reduce each Lender's Revolving Loan
Commitment Percentage PRO RATA based upon their then respective Revolving Loan
Commitment Percentages and (D) all payments of Fees made to the Administrative
Agent for the account of the Lenders shall be made PRO RATA based upon their
then respective Revolving Loan Commitment Percentages or Term Loan Commitment
Percentages, as applicable.
Section 2.7.2. NON-RECEIPT OF FUNDS BY THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent shall have received notice
from a Lender prior to the date on which such Lender is to provide funds to the
Administrative Agent for a Loan under such Lender's Revolving Loan Commitment or
Term Loan Commitment, as the case may be, that such Lender will not make
available to the Administrative Agent such funds, the Administrative Agent may
assume that such Lender has made such funds available to the Administrative
Agent on such date, and the Administrative Agent, in its sole discretion, may,
but shall not be obligated to, in reliance upon such assumption, make available
to Borrower on such date a corresponding amount. If and to the extent such
Lender shall not have so made such funds
45
available to the Administrative Agent, such Lender (a "Defaulting Lender")
agrees to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to Borrower until the date such amount is repaid
to the Administrative Agent, at the Federal Funds Effective Rate. If such Lender
shall repay to the Administrative Agent such corresponding amount, such amount
so repaid shall constitute such Lender's Loan under its Revolving Loan
Commitment or Term Loan Commitment, as the case may be, for purposes of this
Agreement. If such Lender does not pay such corresponding amount forthwith upon
the Administrative Agent's demand therefor, the Administrative Agent shall be
entitled to all interest earned thereon or Fees earned in respect thereof
through the date of the payment of any such amount by such Lender. A Defaulting
Lender (regardless of whether such Lender serves as the Administrative Agent)
shall be deemed to have assigned to the extent of the delinquency any and all
payments due to it from Borrower in respect of such Lender's Revolving Loan
Commitment or Term Loan Commitment, as the case may be, whether on account of
outstanding Loans, interest, fees or otherwise, to the remaining Non-Defaulting
Lenders for application to, and reduction of, their respective PRO RATA shares
of all outstanding Loans of the Class at issue. The Defaulting Lender hereby
authorizes the Administrative Agent to distribute such payments to the
Non-Defaulting Lenders of the Class at issue in proportion to their respective
PRO RATA shares of all outstanding Loans of such Class. A Defaulting Lender
shall be deemed to have satisfied in full a delinquency when and if, as a result
of application of the assigned payments to all outstanding Loans of the
Non-Defaulting Lenders of the Class at issue, the Lenders' respective PRO RATA
shares of all outstanding Loans of such Class have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
(b) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date, and the Administrative Agent in its
sole discretion may, but shall not be obligated to, in reliance upon such
assumption, cause to be distributed to each Lender on such due date an amount
equal to the amount then due such Lender. If and to the extent that the Borrower
shall not have so made such payment in full to the Administrative Agent, each
Lender shall repay to the Administrative Agent forthwith on demand, which shall
be made promptly after discovery thereof, such amount distributed to such Lender
together with interest thereon, for each day from the date such amount is
distributed to such Lender until the date such Lender repays such amount to the
Administrative Agent, at the Federal Funds Effective Rate.
(c) Nothing contained in this Section 2.7.2. shall be
construed to relieve any Lender of its obligation to make funds available to the
Administrative Agent under this Agreement except as otherwise expressly provided
herein, nor to relieve the Borrower of its obligations to make any payment when
due.
(d) The Administrative Agent shall have no obligation to remit
to the Lenders any amounts under this Agreement not actually collected from the
Borrower. In addition, in the
46
event that any payment received by the Administrative Agent is rescinded or must
otherwise be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the Borrower
or any substantial part of its properties or assets, or otherwise, and if the
Administrative Agent paid any Lender its pro rata share of such payment, then
such Lender shall, on demand from the Administrative Agent, immediately pay to
the Administrative Agent an amount equal to such Lender's pro rata share of any
such payment which must be rescinded, restored or returned by the Administrative
Agent. Any such amount shall be paid no later than 3:00 p.m. (Boston,
Massachusetts time) on the Business Day following the date of demand for payment
by the Administrative Agent and shall bear interest at the rate and in the
manner set forth in Section 2.7.2.(b) hereof.
Section 2.7.3. SHARING OF PAYMENTS, ETC. Borrower hereby agrees that,
in addition to (and without limitation of) any right of set-off, banker's lien
or counterclaim a Lender may have hereunder or otherwise, each Lender and Lender
Affiliate shall be entitled at its option, but subject to Section 12.3. hereof,
to offset balances held by it at any of its offices against any principal of or
interest on any Loans, or any fee or expense payable to the Administrative
Agent, the Documentation Agent or the Lenders that is not paid when due
(regardless of whether such balances are then due to Borrower), in which case it
shall promptly notify Borrower and the Administrative Agent thereof; PROVIDED,
that its failure to give such notice shall not affect the validity thereof. If a
Lender shall effect payment of any principal, interest, fee or expense under
this Agreement through the exercise of any right of set-off, banker's lien,
counterclaim or similar right, it shall, subject to Section 12.3. hereof, be
deemed to have purchased from each of the other Lenders participations in the
Loans of the Class to which any such payment shall have been effected made by
the other Lenders of such Class in such amounts, and make such other adjustments
from time to time as shall be equitable, to the end that the Lenders of such
Class shall share the benefit of such payment PRO RATA in accordance with the
respective amounts of unpaid principal of and interest on the Loans of such
Class made by each of them. To such end, the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if such payment is rescinded or must otherwise be restored. Borrower agrees that
any Lender so purchasing a participation in the Loans made by the other Lenders
may exercise all rights of set-off, banker's lien, counterclaim or similar
rights with respect to such participation as fully as if such Lender were a
direct holder of the such Loans in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness or obligation
of Borrower to such Lender.
SECTION 3. SECURITY FOR THE OBLIGATIONS
Section 3.1. COLLATERAL DISCLOSURE LIST. Borrower shall deliver to the
Administrative Agent and the Documentation Agent on or prior to the Closing Date
a completed Collateral Disclosure List certified by a Responsible Officer.
Section 3.2. SECURITY. The Obligations shall be secured by:
47
Section 3.2.1. All properties and assets of Borrower, including goods,
accounts receivable, inventory, contract rights, accounts, documents,
instruments and chattel paper, business and financial records and general
intangible assets of Borrower (including all Capital Stock of each Subsidiary of
Borrower), and all proceeds thereof, as more particularly defined in and
pursuant to the Borrower Pledge Agreement and the Borrower Security Agreement.
Section 3.2.2. The guarantee of Alarmguard Holdings and SSH pursuant to
the Alarmguard Holdings Guarantee and the SSH Guarantee, respectively.
Section 3.2.3. A pledge of all of SSH's right, title and interest in
and to all shares of Capital Stock of Borrower pursuant to the SSH Pledge
Agreement.
Section 3.2.4. A pledge of all of Alarmguard Holding's right, title and
interest in and to all shares of Capital Stock of SSH pursuant to the Alarmguard
Holdings Pledge Agreement.
Section 3.2.5. A leasehold mortgage, deed of trust or collateral
assignment with respect to all of Borrower's right, title and interest, as
lessee, in, to and under leases for the premises listed and described on
SCHEDULE 3.2.5. attached hereto pursuant to a Leasehold Mortgage or a Lease
Assignment, respectively.
Section 3.2.6. The guarantee of each Subsidiary of Borrower, including,
specifically Detect and Protective, pursuant to a Subsidiary Guarantee.
Section 3.2.7. All properties and assets of each Subsidiary of Borrower
which has executed a Subsidiary Guarantee, including goods, accounts receivable,
inventory, contract rights, accounts, documents, instruments and chattel paper,
business and financial records and general intangible assets of each such
Subsidiary (including all Capital Stock of any Subsidiaries of any such
Subsidiary), and all proceeds thereof, as more particularly defined in or
pursuant to a Subsidiary Pledge Agreement and a Subsidiary Security Agreement;
provided, however, that the Security Documents executed and delivered by Detect
(other than the Escrow Agreement and the Negative Pledge Agreement) shall be
held in escrow by the Administrative Agent's legal counsel pursuant to the
Escrow Agreement and Detect shall continue to be bound by the terms and
conditions of the Negative Pledge Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES
In order to induce the Administrative Agent, the Documentation Agent
and the Lenders to enter into this Agreement and to make any Extension of
Credit, each Credit Party, as applicable, makes the following representations
and warranties to the Administrative Agent, the Documentation Agent and the
Lenders, which shall be deemed made both before and after giving effect to the
Extensions of Credit made as of the date hereof and, except as otherwise
provided in this Section 4., on the date of each Extension of Credit. Any
knowledge acquired by the
48
Administrative Agent, the Documentation Agent or the Lenders shall not diminish
their rights to rely upon such representations and warranties.
Section 4.1. CORPORATE EXISTENCE. Each Credit Party is a corporation
duly incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and is duly qualified in all other
jurisdictions in which the properties and assets owned, leased or operated by
it, or the nature of the business conducted by it, make such qualification
necessary and where failure to so qualify could reasonably be expected to have a
Material Adverse Effect.
Section 4.2. CORPORATE AUTHORITY. The execution, delivery and
performance of this Agreement, the Notes, the Other Documents and the
Transaction Documents, the consummation of the transactions herein and therein
contemplated, the fulfillment of and compliance with the terms and provisions
hereof and thereof have been duly authorized by all necessary corporate action
of each Credit Party and are within its corporate power and will not result in a
violation of its Governing Documents.
Section 4.3. BINDING OBLIGATIONS. This Agreement, the Notes, the Other
Documents and the Transaction Documents constitute the legal, valid and binding
obligations of each Credit Party which is a party thereto, enforceable against
it in accordance with their respective terms.
Section 4.4. NONCONTRAVENTION. The execution, delivery and performance
by each Credit Party of this Agreement, the Notes, the Other Documents and the
Transaction Documents will not violate any existing law, ordinance, rule,
regulation or order of any Governmental Authority or result in a breach of any
of the terms of, or constitute a default under, any Contractual Obligation to
which any such Credit Party is a party or by which it or any of its properties
or assets are bound or result in or require the imposition of any Encumbrance on
any of such Credit Party's properties or assets except to the extent that such
violation or breach could not reasonably be expected to have a Material Adverse
Effect.
Section 4.5. PERMITS. Each Credit Party possesses all material permits,
authorizations, licenses, approvals, waivers and consents, without unusual
restrictions or limitations, the failure of which to possess could not
reasonably be expected to have a Material Adverse Effect, all of which are in
full force and effect.
Section 4.6. NO CONSENTS. The execution, delivery and performance of
this Agreement, the Notes, the Other Documents and the Transaction Documents
does not require any approval, consent or waiver under any Contractual
Obligation except where the absence thereof could not reasonably be expected to
have a Material Adverse Effect. No approval, authorization, consent, waiver or
order of, or registration, application or filing with, any Governmental
Authority is required in connection with the transactions contemplated by this
Agreement, the Notes, the Other Documents and the Transaction Documents except
where the absence thereof could not reasonably be expected to have a Material
Adverse Effect.
49
Section 4.7. FINANCIAL STATEMENTS. Borrower has provided to the
Administrative Agent and the Documentation Agent the consolidated Financial
Statements of SSH dated as of December 31, 1997, and related footnotes, audited
and certified by Ernst & Young, LLP. Borrower has also provided to the
Administrative Agent and the Documentation Agent the internally prepared
consolidated Financial Statements of (i) Borrower and its Subsidiaries and (ii)
the Direct Marketing Program, each dated as of May 31, 1998, certified by a
Responsible Officer but subject, however, to normal, recurring year-end
adjustments that shall not in the aggregate be material in amount. All Financial
Statements of any Credit Party heretofore provided to the Administrative Agent
and the Documentation Agent present fairly the financial condition and results
of business operations of the Persons covered thereby for the periods indicated
in accordance with GAAP. Neither Alarmguard Holdings, Borrower nor any of their
Subsidiaries has any material direct or contingent liabilities, liabilities for
taxes, unusual commitments or unrealized or unanticipated losses not disclosed
in such Financial Statements. Since the date of the latest dated consolidated
balance sheet included in the Financial Statements specified in this Section
4.7., there has been no development or event which could reasonably be expected
to have a Material Adverse Effect and no Dividends have been declared or made to
stockholders, nor has any of its Capital Stock been purchased or acquired by any
Person in any manner nor has Alarmguard Holdings, SSH, Borrower or any of their
Subsidiaries made any Investment except as set forth on SCHEDULE 4.7 attached
hereto.
Section 4.8. FINANCIAL FORECASTS. Borrower has provided to the
Administrative Agent and the Documentation Agent forecasted Financial Statements
together with appropriate supporting details and a statement of the underlying
assumptions, covering the five (5) year period commencing on January 1, 1998
(the "Forecasts"). The Forecasts have been prepared in good faith and have a
reasonable basis.
Section 4.9. FINANCIAL INFORMATION. All written data, reports and
information which any Credit Party has supplied to the Administrative Agent, the
Documentation Agent or the Lenders or caused to be so supplied by a third party
on its behalf in connection with this Agreement, was, at the time so supplied,
when taken as a whole, true and accurate in all material respects on the date as
of which such information is dated or certified and not incomplete by omitting
to state any material fact necessary to make such information at such time in
light of the circumstances under which such information was provided.
Section 4.10. BUSINESS RELATIONSHIPS. There exists no actual or, to any
Credit Party's knowledge threatened, termination, cancellation or limitation of,
or any modification or change in, the business relationship of any Credit Party
with any customer or group of customers, or with any supplier (other than in the
ordinary course of business where one supplier is replaced by another offering
terms which are no less favorable to such Credit Party) which could reasonably
be expected to have a Material Adverse Effect.
Section 4.11. BROKERS. No broker or finder has brought about the
obtaining, making or closing of, and no broker's or finder's fees or commissions
will be payable by any Credit Party or its Affiliates to any Person in
connection with, the transactions contemplated by this Agreement.
50
Section 4.12. USE OF PROCEEDS. Borrower is not an "investment company,"
or a company "controlled by" an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended (14 U.S.C. ss.ss.80(a)(1) ET
SEQ.). No Extension of Credit, the application of the proceeds and repayment
thereof by Borrower or the performance of the transactions contemplated by this
Agreement will violate any provision of said Act, or any rule, regulation or
order issued by the Securities and Exchange Commission thereunder. The proceeds
of each Extension of Credit will be used only for the purposes set forth in this
Agreement. None of the proceeds of any Extension of Credit will be used, or have
been used, directly or indirectly, for the purpose of purchasing or carrying any
"margin stock" or for the purpose of reducing or retiring any Indebtedness which
was originally incurred to purchase or carry any "margin stock" or for any other
purpose which might constitute such Extension of Credit a "purpose credit"
within the meaning of said Regulation U or Regulation X of the Federal Reserve
Board. Borrower will not take, or permit any Person acting on its behalf to
take, any action which might cause this Agreement or any document or instrument
delivered pursuant hereto to violate any regulation of the Federal Reserve
Board.
Section 4.13. STATUTORY COMPLIANCE. Each Credit Party is in compliance
with all material laws, ordinances, rules, regulations and orders of any
Governmental Authority applicable to it, its properties or assets or the
business conducted by it (excepting ERISA and Environmental Laws which are the
subject of other provisions of this Agreement), except where non-compliance
could not reasonably be expected to have a Material Adverse Effect.
Section 4.14. COMMITMENTS. No Credit Party has any fixed, contingent or
other obligations to issue any of its Capital Stock except as set forth on
SCHEDULE 4.14. attached hereto.
Section 4.15. EVENTS OF DEFAULT. No Default or Event of Default has
occurred and is continuing.
Section 4.16. OTHER DEFAULTS. No Credit Party is in default in the
performance, observance or fulfillment of any Contractual Obligation which could
reasonably be expected to have a Material Adverse Effect.
Section 4.17. TAXES. Each Credit Party has filed all tax returns and
reports required to be filed by it with any Governmental Authority and has paid
in full, or made adequate provisions or established adequate reserves in
accordance with GAAP for, the payment of all taxes, interest, penalties,
assessments or deficiencies shown to be due or claimed to be due on or in
respect to such tax returns and reports.
Section 4.18. OWNERSHIP OF BORROWER. SSH is the holder of all of the
issued and outstanding shares of capital stock of Borrower, and no other Person
has any rights and/or claim to any issued or unissued shares of such capital
stock.
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Section 4.19. SOLVENCY. Both before and after giving effect to (a) any
Extension of Credit to be made on the Closing Date or such other date on which
any Extension of Credit requested hereunder is made, (b) the disbursement of the
proceeds of any such Extension of Credit pursuant to the instructions of
Borrower, (c) the other transactions contemplated by this Agreement and the
Other Documents and (d) the payment and accrual of costs and expenses incurred
in connection with the foregoing, each Credit Party is Solvent. No Credit Party
is contemplating either the filing of a petition by it under Bankruptcy Code or
any state bankruptcy or insolvency law or the liquidating of all or a major
portion of its properties and assets, and no Credit Party has any knowledge of
any Person contemplating the filing of any such petition against it. If the
proceeds of the Term Loans are to be used to pay a Dividend to SSH by Borrower,
then Borrower is legallyable to pay such a Dividend under applicable law.
Section 4.20. BUSINESS NAME. Each of Borrower and its Subsidiaries
conducts its business solely through the names set forth on SCHEDULE 11 of the
Collateral Disclosure List, without the use of any trade name, or the
intervention of or through any other Person. Neither Borrower nor any of its
Subsidiaries has, except as set forth in the Collateral Disclosure List, during
the preceding five (5) years, conducted its business through any other name or
trade name or been the surviving corporation in a merger or consolidation or
acquired all or substantially all of the assets of any other Person.
Section 4.21. AFFILIATE CONTRACTS. Except as otherwise provided in this
Agreement or as set forth on Schedule 4.21. hereof, all contracts and
transactions between any Credit Party and any Affiliate or Subsidiary of such
Credit Party have been executed or will be executed on such terms as would be
contained in an agreement executed at arms' length with an unrelated third
party.
Section 4.22. CAPITALIZATION. The outstanding shares of Capital Stock
of each Credit Party which have been pledged to the Administrative Agent for the
ratable benefit of the Lenders under the Security Documents have been duly
issued and are fully paid and non-assessable.
Section 4.23. LITIGATION. Except as set forth on SCHEDULE 4.23.
attached hereto, there are no actions, suits or proceedings by or before any
Governmental Authority or any arbitration or alternate dispute resolution
proceeding, pending or, to the knowledge of any Credit Party or any of its
officers, threatened, against any Credit Party or its properties and assets,
which if adversely determined, could reasonably be expected to have a Material
Adverse Effect.
Section 4.24. TITLE TO PROPERTIES. Each of Borrower and its
Subsidiaries has good and marketable title to all of its properties and assets
as are reflected in the Financial Statements referred to in Section 4.7. (except
such properties, assets or rights as have been disposed of in the ordinary
course of business since the date thereof), free from all Encumbrances except
Permitted Encumbrances or those Encumbrances disclosed in SCHEDULE 4.24.
attached hereto, and, free from all defects of title that could reasonably be
expected to have a Material Adverse Effect. The properties, assets and rights of
Borrower and its Subsidiaries are sufficient to permit Borrower and such
Subsidiaries to conduct the business in which it is presently engaged. Borrower
and its
52
Subsidiaries possess all trademarks, service marks, trade names, trade service
styles, copyrights and patents that may be necessary to own their properties and
assets, and to conduct their business as it is presently conducted or as
intended to be conducted hereafter, without any infringement or conflict with
the rights of any other Person or any violation of law which could reasonably be
expected to have a Material Adverse Effect.
Section 4.25. LABOR RELATIONS. No Credit Party is a party to any
collective bargaining or other agreement with any union and there are no
material grievances, disputes or controversies with any union or other
organization of such Credit Party's employees, or threats of strikes, work
stoppages or demands by any union or such other organization.
Section 4.26. CONTINGENT OBLIGATIONS. No Credit Party is a party to any
Guarantee or other similar type of agreement, and it has not offered its
endorsement to any Person which would in any way create a contingent liability
(except by endorsement of negotiable instruments payable at sight for deposit or
collection or similar banking transactions in the ordinary course of business).
Section 4.27. SUBSIDIARIES. As of the date of this Agreement, all of
the Subsidiaries and Affiliates of Borrower are set forth on SCHEDULE 13 of the
Collateral Disclosure List. Borrower or a Subsidiary of Borrower is the owner
free and clear of all Encumbrances, of all of the issued and outstanding Capital
Stock of each Subsidiary. Neither Borrower nor any of its Subsidiaries is
engaged in any joint venture, partnership or other business arrangement with any
other Person except as described on said SCHEDULE 13.
Section 4.28. ERISA. Each Credit Party and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in substantial
compliance in all material respects with the applicable provisions of ERISA and
the Code, and have not incurred any liability to the PBGC or a Plan under Title
IV of ERISA except where non-compliance or liability could not reasonably be
expected to have a Material Adverse Effect; and no Prohibited Transaction or
Reportable Event has occurred with respect to any Plan.
Section 4.29. ENVIRONMENTAL PROTECTION. Except as set forth on SCHEDULE
4.29. attached hereto:
(a) The business operations of each of Borrower and its
Subsidiaries comply in all material respects with all Environmental Laws except
where non-compliance could not reasonably be expected to have a Material Adverse
Effect.
(b) Neither Borrower nor any of its Subsidiaries has received
(i) any notice or claim to the effect that it is or may be liable to any Person
as a result of the Release or threatened Release of any Hazardous Materials or
(ii) any letter or request for information under CERCLA or any other
Environmental Laws, and, to the best of Borrower's or any such Subsidiaries'
actual knowledge, based upon reasonable investigation, the business operations
of Borrower and such
53
Subsidiaries are not the subject of any investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to a
Release or threatened Release of any Hazardous Material or claim, or threatened
lawsuit or claim arising under or related to any Environmental Law except, in
each case, where non-compliance could not reasonably be expected to have a
Material Adverse Effect.
(c) Borrower, its Subsidiaries and their properties, assets
and operations are not subject to any outstanding written order or agreement
with any Governmental Authority or private party respecting any Environmental
Laws except for any such written order or agreement which could not reasonably
be expected to have a Material Adverse Effect.
(d) Neither Borrower nor any of its Subsidiaries has filed any
notice under any Environmental Law indicating past or present treatment or
disposal of Hazardous Materials, and none of the operations of Borrower or any
such Subsidiaries involve the generation, transportation, treatment, storage or
disposal of Hazardous Materials except where such activity could not reasonably
be expected to have a Material Adverse Effect.
(e) To the best of Borrower's and its Subsidiaries' actual
knowledge, based upon reasonable investigation, no Hazardous Material exists on,
under or about any of the properties or assets of Borrower or any such
Subsidiaries, real or personal, in a manner that is likely to give rise to any
claim or suit against Borrower or any such Subsidiaries, and neither Borrower
nor any Subsidiary of Borrower has filed any notice or report of a Release of
any Hazardous Materials that could give rise to any such claim or suit against
Borrower except, in each case, where such claim or suit or filing could not
reasonably be expected to have a Material Adverse Effect.
Section 4.30. INVESTMENTS. Except as set forth on SCHEDULE 4.30.,
attached hereto no Credit Party has an Investment in any Person other than
existing Investments in Subsidiaries and Qualified Investments.
Section 4.31. SECURITY DOCUMENTS.
(a) The provisions of each Security Document are effective to
create in favor of the Administrative Agent for the ratable benefit of the
Lenders, a legal, valid and enforceable lien or security interest in all right,
title and interest of the Credit Party which is a party thereto in the
Collateral described therein.
(b) (i) When UCC financing statements, assignment and/or
amendments have been filed in the offices in the jurisdictions listed in
SCHEDULE 3 of the Collateral Disclosure List, the Borrower Security Agreement
and each Subsidiary Security Agreement, as applicable, shall constitute a fully
perfected first lien on, and security interest in, all right, title and interest
of the applicable Credit Party in the Collateral described therein, which can be
perfected by such filing.
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(ii) When certificates representing the Pledged Stock
(as such term is defined in the Borrower Pledge Agreement) are delivered to the
Administrative Agent, together with stock powers endorsed in blank by a duly
authorized officer of Borrower, the Borrower Pledge Agreement shall constitute a
fully perfected first lien on, and security interest in, all right, title and
interest of Borrower in the Collateral described therein.
(iii) When certificates representing the Pledged
Stock (as such term is defined in the SSH Pledge Agreement) are delivered to the
Administrative Agent, together with stock powers endorsed in blank by a duly
authorized officer of SSH, the SSH Pledge Agreement shall constitute a fully
perfected first lien on, and security interest in, all right, title and interest
of SSH in the Collateral described therein.
(iv) When certificates representing the Pledged Stock
(as such term is defined in the Alarmguard Holdings Pledge Agreement) are
delivered to the Administrative Agent, together with stock powers endorsed in
blank by a duly authorized officer of Alarmguard Holdings, the Alarmguard
Holdings Pledge Agreement shall constitute a fully perfected first lien on, and
security interest in, all right, title and interest of Alarmguard Holdings in
the Collateral described therein.
(v) When the Leasehold Mortgage, or assignments and
amendments thereto, have been filed in the offices and jurisdictions listed in
SCHEDULE 2 of the Collateral Disclosure List, each Leasehold Mortgage shall
constitute a fully perfected first lien on all right, title and interest of
Borrower in the Collateral described therein.
(c) Borrower does not own any properties or assets, or have
any interest in any properties or assets, that is not subject to a fully
perfected first priority lien on, or security interest in, such properties or
assets in favor of the Administrative Agent, other than properties or assets
having an aggregate fair market value at any one time not exceeding $50,000.00.
Section 4.32. INSURANCE. Each of Borrower and its Subsidiaries
maintains its properties and assets insured against fire and other hazards (so
called "All Risk Coverage") in amounts and with companies set forth on SCHEDULE
4.32. attached hereto covering such risks as is customary in such Credit Party's
line of business. Borrower and each of its Subsidiaries also maintain public
liability coverage against claims for personal injuries or death, errors and
omissions, directors and officers coverage, business interruption, worker's
compensation, employment or similar insurance with coverages and in amounts as
set forth on SCHEDULE 4.32.
SECTION 5. CONDITIONS TO OBLIGATION OF THE LENDERS
The Administrative Agent, the Documentation Agent and the Lenders shall
have no obligation under this Agreement to amend and restate the Third Restated
Credit Agreement or to continue or make any Extension of Credit unless and until
they are satisfied, in their sole and absolute discretion, that all of the
following conditions shall have been satisfied prior to or on the Closing Date:
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Section 5.1. REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties contained in Section 4 are true and correct, and each Credit
Party, by a Responsible Officer, shall have so certified to the Administrative
Agent, the Documentation Agent and the Lenders.
Section 5.2. DELIVERY OF DOCUMENTS. Each Credit Party shall have duly
executed and delivered to the Administrative Agent, the Documentation Agent and
the Lenders, in form and substance satisfactory to the Administrative Agent, the
Documentation Agent, the Lenders and their legal counsel, this Agreement, the
Notes, the Other Documents and all further documents as the Administrative
Agent, the Documentation Agent and the Lenders may request to evidence the
Obligations or to create, perfect or continue any security interest or lien
contemplated by this Agreement and the Other Documents. In addition, the
Administrative Agent, the Documentation Agent and the Lenders shall have
received or agreed in writing to waive or delay the receipt of:
Section 5.2.1. Copies of all corporate action taken by each Credit
Party to authorize the execution and delivery of this Agreement, the Notes, the
Other Documents and the Transaction Documents, together with a certificate of
the corporate secretary of such Credit Party certifying that the same are true,
correct and complete as of the Closing Date.
Section 5.2.2. Copies of each Credit Party's Governing Documents,
together with a certificate of the corporate secretary of such Credit Party
certifying that the same are true, correct and complete as of the Closing Date.
Section 5.2.3. A certificate issued by the office of the Secretary of
State of the state of each Credit Party's incorporation to the effect that each
such Credit Party is legally existing and in good standing under the laws of
such states.
Section 5.2.4 A certificate issued by the office of the Secretary of
State of each state in which each Credit Party is qualified as a foreign
corporation to the effect that each such Credit Party is duly qualified and in
good standing as a foreign corporation under the laws of such states.
Section 5.2.5. A certificate of the corporate secretary of each Credit
Party certifying to the incumbency and signatures of all officers of such Credit
Party who are authorized to execute this Agreement, the Notes, the Other
Documents and the Transaction Documents.
Section 5.2.6. An ALTA title insurance policy or endorsement with
respect to the Leasehold Mortgages satisfactory in form and substance to the
Administrative Agent, the Documentation Agent, the Lenders and their legal
counsel.
Section 5.2.7. UCC and land record searches conducted by a Person
satisfactory to the Administrative Agent and the Documentation Agent for each
Credit Party under each name set forth on the Collateral Disclosure List listing
the filings against each such Credit Party as debtor under such names at each
filing office in each jurisdiction in which any Collateral or Credit Party is
located.
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Section 5.2.8. Objective evidence satisfactory to the Administrative
Agent, the Documentation Agent, the Lenders and their legal counsel that the
Indebtedness (other than Indebtedness under this Agreement) of each Credit Party
to any Person in excess of $600,000 as of the Closing Date constitutes
Subordinated Indebtedness.
Section 5.2.9. Such UCC financing statements, assignments and
amendments as the Administrative Agent, the Documentation Agent and the Lenders
deem necessary to perfect any security interests contemplated by this Agreement
or the Other Documents.
Section 5.2.10. Insurance policies and certificates evidencing adequate
insurance coverage in amounts satisfactory to the Administrative Agent and the
Documentation Agent on the Credit Parties' properties and assets which insurance
policies shall name the Administrative Agent as an additional insured/loss
payee.
Section 5.2.11. A confirmation of the environmental certificate and
indemnity agreement executed by Borrower on April 15, 1997, satisfactory in form
and substance to the Administrative Agent, the Documentation Agent, the Lenders
and their legal counsel (as confirmed, the "Environmental Certificate").
Section 5.2.12. Such further documents, instruments and agreements as
the Administrative Agent, the Documentation Agent and the Lenders shall
reasonably request, all satisfactory in form and substance satisfactory to the
Administrative Agent, the Documentation Agent, the Lenders and their legal
counsel.
Section 5.3. VALIDITY OF LIENS. All Encumbrances in the Collateral
shall have been created or maintained in favor of the Administrative Agent for
the benefit of the Lenders, which Encumbrances shall constitute legal, valid and
enforceable and, unless otherwise consented to by the Administrative Agent, the
Documentation Agent and the Lenders, first security interests in and liens upon
the Collateral. All filings, recordings, deliveries of instruments and other
actions necessary or desirable in the sole and absolute discretion of the
Administrative Agent, the Documentation Agent, the Lenders and their legal
counsel to create said Encumbrances shall have been made, taken and/or effected.
Section 5.4. OPINIONS OF COUNSEL. The Administrative Agent, the
Documentation Agent and the Lenders shall have received from legal counsel for
the Credit Parties a written opinion, in substantially the form of EXHIBIT H
attached hereto, satisfactory in form and substance to the Administrative Agent,
the Documentation Agent, the Lenders and their legal counsel.
Section 5.5. PAYMENT OF FEES. Borrower shall have paid any applicable
fees and expenses due to the Administrative Agent, the Documentation Agent and
the Lenders at closing, including the fees and expenses of their legal counsel.
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Section 5.6. LEGAL MATTERS. All legal matters incident to the
transactions hereby contemplated shall be satisfactory to the Administrative
Agent, the Documentation Agent, the Lenders and their legal counsel.
Section 5.7. RMR. The Administrative Agent, the Documentation Agent and
the Lenders shall have received a certificate of a Responsible Officer of
Borrower, satisfactory in form and substance to the Administrative Agent and the
Documentation Agent, certifying that RMR as of the Closing Date is at least
$2,945,043.00.
SECTION 6. CONDITIONS TO EXTENSION OF CREDIT
The Administrative Agent, the Documentation Agent and the Lenders shall
have no obligation to make any Extension of Credit, including the initial
Extension of Credit, unless and until, they are satisfied, in their sole and
absolute discretion, that all of the following conditions shall have been
fulfilled prior to or contemporaneously with the making of such Extension of
Credit.
Section 6.1. IN GENERAL.
Section 6.1.1. NOTICE OF BORROWING. The Administrative Agent shall have
received, in a timely manner, a Notice of Borrowing for Revolving Loans in a
form satisfactory to the Administrative Agent.
Section 6.1.2. RMR REPORT. The Administrative Agent and the
Documentation Agent shall have received, in the case of Revolving Loans, a RMR
Report, in a timely manner, as required under Section 7.2.3. hereof,
satisfactory in form and substance to the Administrative Agent and the
Documentation Agent showing that the Borrowing Base is sufficient to permit the
Lenders to make the requested Revolving Loan.
Section 6.1.3. TRUTH OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties set forth in Section 4 of this Agreement (with
the exception of representations and warranties which, by their terms, are
limited to an earlier date) are true and correct as of the date on which the
requested Extension of Credit is made.
Section 6.1.4. NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing or shall occur as a result of the requested Extension
of Credit or the application of the proceeds of such Extension of Credit.
Section 6.1.5. PAYMENT OF FEES. Borrower shall have paid any applicable
fees and expenses due to the Administrative Agent, the Documentation Agent and
the Lenders including any fees and expenses of their legal counsel.
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Section 6.1.6. CORPORATE ACTION. The corporate action of each Credit
Party referred to in Section 5.2.1. continues to be in full force and effect and
the incumbency of officers continues to be as stated in the certificates of
incumbency delivered pursuant to Section 5.2.5. or as subsequently reflected in
a new certificate of incumbency delivered to the Administrative Agent in
connection with the requested Extension of Credit.
Section 6.1.7. LEGAL MATTERS. All legal matters incident to the
transactions contemplated by the requested Extension of Credit shall be
satisfactory to the Administrative Agent, the Documentation Agent and their
legal counsel and no change shall have occurred in any law or regulation or
interpretation thereof, which, in the opinion of either the Administrative Agent
or, the Documentation Agent and their respective legal counsel, would make it
illegal or against the policy of any Governmental Authority for the Lenders to
make the requested Extension of Credit.
Section 6.2. SUBSEQUENT ACQUISITION LOANS. In addition to the
satisfaction of the conditions set forth in Section 6.1. hereof, the obligation
of the Lenders to make any Acquisition Loan is subject to the satisfaction of
the following conditions precedent:
Section 6.2.1. CONSENT OF LENDERS. The Administrative Agent, the
Documentation Agent and the Lenders shall have consented to the proposed
Acquisition and the projected Acquisition Integration Costs reported under
Section 7.2.9.(a) hereof in writing; provided, however, that the consent of the
Administrative Agent, the Documentation Agent and the Lenders as aforesaid shall
not be required if:
(i) the proposed Acquisition involves a purchase price
(including any Deferred Purchase Price Obligations) which does not exceed (x)
$5,000,000.00 or (y) $10,000,000.00 if $5,000,000.00 or more of the purchase
price paid in connection with such Acquisition consists of the capital stock of
Alarmguard Holdings; and
(ii) the purchase price (including any Deferred Purchase Price
Obligations) for the proposed Acquisition, when aggregated with the purchase
price (including Deferred Purchase Price Obligations) of all other Acquisitions
completed by Borrower since February 2, 1998 other than the Detect Acquisition
and the Sentry Acquisition, does not exceed $15,000,000; and
(iii) the proposed Acquisition consists solely of, and is
structured as, the acquisition by Borrower of assets which consist of, Customer
Contracts (and, in each case, inventory and vehicles not to exceed $100,000 of
the purchase price thereof) and will not result in the creation of a new
Subsidiary of Borrower; and
(iv) the proposed Acquisition will not result in an expansion
of Borrower's business outside of the geographic areas set forth on SCHEDULE
6.2. attached hereto.
Section 6.2.2. LIABILITIES. Neither Borrower nor any Subsidiary of
Borrower shall incur or assume any Indebtedness, Contractual Obligations,
Contingent Liabilities or other liabilities in
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connection with the proposed Acquisition except for Acquisition Loans necessary
to pay all or a portion of the purchase price relating thereto.
Section 6.2.3. SUBORDINATION OF DEFERRED PURCHASE PRICE OBLIGATIONS.
Any Deferred Purchase Price Obligations shall comply with the terms of Section
8.1.(g) hereof.
Section 6.2.4. COLLATERAL. Borrower and each other Credit Party shall
promptly take such actions, and execute and deliver such documents, agreements
and instruments as the Administrative Agent and the Documentation Agent and
their respective legal counsel shall require to insure that the Administrative
Agent obtains a first priority perfected lien on any of the properties and
assets acquired by Borrower or such other Credit Party in connection with the
proposed Acquisition, including but not being limited to uniform commercial code
financing statements and termination statements, all of the foregoing to be
acceptable to the Administrative Agent, the Documentation Agent, the Lenders and
their respective legal counsel.
Section 6.2.5. SUBSIDIARIES. If the proposed Acquisition will be
effected by Borrower through the establishment of a new Subsidiary or the
acquisition of the Capital Stock of a Person with the effect of establishing
such Person as a new Subsidiary of Borrower, such Subsidiary shall become a
party to this Agreement by executing a joinder agreement in a form satisfactory
to the Administrative Agent and its legal counsel, shall guarantee the
Obligations pursuant to a Subsidiary Guarantee, shall xxxxx x xxxx and security
interest in all of its properties and assets to the Administrative Agent for the
ratable benefit of the Lenders pursuant to a Subsidiary Security Agreement
and/or Subsidiary Pledge Agreement and Borrower shall pledge all of the Capital
Stock of such Subsidiary to the Administrative Agent for the ratable benefit of
the Lenders, all in a manner satisfactory to the Administrative Agent, the
Documentation Agent, the Lenders and their respective legal counsel.
Section 6.2.6. NO DEFAULT. Borrower shall have certified by a
Responsible Officer that no Default or Event of Default exists as of the date of
the requested Acquisition Loan, or would result as a result of the making of
such Acquisition Loan, the consummation of the proposed Acquisition or the
application of the proceeds of such Acquisition Loan.
Section 6.2.7. HOSTILE ACQUISITIONS. The proposed Acquisition shall not
be considered by the Administrative Agent, the Documentation Agent and the
Lenders, in their sole and absolute discretion, to be a so-called "hostile
acquisition."
Section 6.2.8. RMR FROM PERMITTED ACQUISITIONS. Borrower shall not
include any RMR resulting from an Acquisition which does not require the consent
of the Lenders under Section 6.2.1. hereof within the Borrowing Base unless and
until Borrower has delivered to the Administrative Agent a Notice of Borrowing
with respect to the proposed Acquisition, accompanied by a true and correct copy
of the proposed draft purchase and sale agreement relating to the Acquisition.
Borrower shall not include any RMR resulting from any Acquisition requiring the
consent of the Lenders unless and until Borrower has satisfied (i) any and all
terms and conditions imposed by the Lenders in connection with the provision of
such consent and (ii)
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all of the legal matters associated with such Acquisition have been satisfied to
the satisfaction of the Administrative Agent and its legal counsel, including,
but not being limited to, the confirmation of the filing of any and all
documents, agreements and instruments required under Section 6.2.4. hereof and
the receipt of opinions from legal counsel to Borrower as to certain matters
relating to the proposed Acquisition satisfactory in form and substance to the
Administrative Agent, the Lenders and their legal counsel.
Section 6.2.9. CERTIFICATE AS TO THE PROPOSED ACQUISITION. Within three
(3) Business Days following the consummation of any Permitted Acquisition,
Borrower shall deliver a certificate to the Administrative Agent, the
Documentation Agent and the Lenders stating that (i) the proposed Acquisition
shall have been consummated in accordance with (x) the terms and conditions of
the Acquisition Documents relating thereto and (y), in the case of Acquisitions
requiring the prior consent of the Lenders, the terms and conditions approved by
the Lenders without material amendment, modification or revision, (ii) none of
the parties to the proposed Acquisition shall have failed to perform any
material agreement, obligation or covenant or make any representation or
warranty required to be performed or made by such party, as applicable, in
connection therewith and (iii) the Administration Agent has a first priority
Encumbrance in the Collateral acquired. If Borrower fails to deliver such
certificate within such three (3) Business Day period, then any RMR purchased in
connection with such Acquisition shall be immediately deleted from the Borrowing
Base and Borrower shall, if necessary comply with the requirements of Section
2.6.8.(a) hereof and no Acquisition Integration Costs relating thereto shall be
considered to be Approved Acquisition Integration Costs.
SECTION 7. AFFIRMATIVE COVENANTS
Borrower and each of the other Credit Parties, as applicable, covenant
and agree that from the date hereof until the payment and performance in full of
the Obligations and the termination of the Commitments:
Section 7.1. FINANCIAL STATEMENTS AND REPORTING REQUIREMENTS. Borrower
shall furnish to the Administrative Agent, the Documentation Agent and the
Lenders:
Section 7.1.1. ANNUAL REPORTS. As soon as available, but in no event
later than ninety (90) days after the end of each Fiscal Year of Borrower,
consolidated Financial Statements for such Fiscal Year of (i) Alarmguard
Holdings and its Subsidiaries and (ii) Borrower and its Subsidiaries, in each
case audited and certified by Ernst & Young (or other independent certified
public accountants of nationally recognized standing) and consisting of a
consolidated balance sheet as of the end of such Fiscal Year and the related
statements of income and statements of cash flows for such Fiscal Year, setting
forth in each case in comparative form the figures for the previous Fiscal Year,
and reported on without a Qualification.
Section 7.1.2. MONTHLY REPORTS. As soon as available, but in no event
later than thirty (30) days after the end of each calendar month (forty-five
(45) days if the end of such calendar quarter coincides with the end of a Fiscal
Quarter), an unaudited, internally prepared consolidated
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and consolidating balance sheet of Borrower, the Direct Marketing Program, the
Dealer Program and the consolidated Subsidiaries of Borrower as of the end of
such calendar month, and the related unaudited, internally prepared consolidated
and, if applicable, consolidating statements of income and statements of cash
flows for such calendar month and the portion of the Fiscal Year through such
calendar month, all in form and substance satisfactory to the Administrative
Agent, the Documentation Agent and the Required Lenders and setting forth in
each case in comparative form the figures for the previous Fiscal Year and the
Forecasts, certified by a Responsible Officer as being fairly stated in all
material respects when considered in relation to the consolidated Financial
Statements of Borrower and its consolidated Subsidiaries but subject, however,
to normal, recurring year-end adjustments that shall not in the aggregate be
material in amount and the absence of footnotes.
Section 7.1.3. GAAP COMPLIANCE. All Financial Statements provided under
this Section 7.1. shall fairly present the financial conditions and results of
business operations for the periods indicated in accordance with GAAP (but
subject, in the case of monthly or other interim Financial Statements, to the
absence of footnotes and year-end adjustments).
Section 7.2. CERTIFICATES AND OTHER INFORMATION. Borrower shall furnish
to the Administrative Agent, the Documentation Agent and the Lenders:
Section 7.2.1. DEFAULT CERTIFICATE. Concurrently with the delivery of
the Financial Statements referred to in Section 7.1.1. above, a certificate of
Ernst & Young, LLP (or such other independent certified public accountant)
reporting on such Financial Statements stating that in making the examination
necessary therefor no knowledge was obtained of the existence of any Default or
Event of Default as a result of non-compliance by any Credit Party with any of
the financial covenants set forth in Section 9 hereof except as set forth in
such certificate.
Section 7.2.2. OFFICER'S CERTIFICATE. Concurrently with the delivery of
the Financial Statements referred to in Section 7.1.1. and 7.1.2. above, a
certificate of a Responsible Officer substantially in the form of EXHIBIT I
attached hereto, (i) stating that, to the best of such officer's knowledge,
Borrower and each other Credit Party, as applicable, during the period covered
by any such Financial Statements has observed or performed all of its covenants,
obligations and other agreements, and satisfied the terms and conditions,
contained in this Agreement to be observed, performed or satisfied by Borrower
or such Credit Party, and that such Responsible Officer has obtained no
knowledge of the occurrence or continuance of any Default or Event of Default
except as set forth in such certificate, (ii) showing in detail the breakdown
and calculation of Borrower's compliance with the financial covenants set forth
in Section 9 of this Agreement and (iii) showing, on a per Acquisition basis,
Acquisition Integration Costs and Approved Acquisition Integration Costs for the
period covered by such Financial Statements.
Section 7.2.3. RMR REPORT. Concurrently with the delivery of the
Financial Statements referred to in Section 7.1.2. above, a report setting forth
RMR for the month covered by such Financial Statements and such other
information in respect of RMR, any component thereof and the calculation thereof
as the Administrative Agent or the Documentation Agent may require, and
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being accompanied by an internally prepared report reconciling said report and
the information set forth thereon to such Financial Statements, all of the
foregoing being in substantially the form of EXHIBIT J attached hereto, and
being certified as being true, correct, complete, and calculated in accordance
with the requirements of Section 1.141. hereof by a Responsible Officer (the
"RMR Report").
Section 7.2.4. FORECASTS. As soon as available, but in no event later
than thirty (30) days after the end of each Fiscal Year, forecasts as to the
operating budget and cash flow of Borrower and its Subsidiaries for the next
succeeding Fiscal Year, and including a forecasted consolidated balance sheet
and the related statement of income and statement of cash flow, and accompanied
by a certificate of a Responsible Officer to the effect that such forecasts have
been prepared in accordance with the standards set forth in Section 4.8. hereof
and that such officer has no reason to believe that the same are false or
misleading in any material respect.
Section 7.2.5. MANAGEMENT AND OTHER REPORTS. Within five (5) days
following the receipt thereof, copies of any and all reports or similar
documents submitted to any Credit Party by Ernst & Young, including, without
limitation, any formally issued management letter commenting upon any Credit
Party's internal controls, submitted by such accountants to management in
connection with their annual audit report or relative to Acquisition Integration
Costs.
Section 7.2.6. SHAREHOLDER AND SEC REPORTS. Within ten (10) days after
the same are sent, copies of all financial statements and financial and other
reports which any Credit Party sends to its shareholders or which any such
Credit Party makes or files with any securities exchange or the United States
Securities and Exchange Commission (or any successor or analogous Governmental
Authority), and promptly upon the availability of the same, copies of all other
notices and proxy statements sent or made available and all final registration
and prospectuses, if any, filed by any such Credit Party with any such
securities exchange or Governmental Authority.
Section 7.2.7. INSURANCE. During the month of September in each
calendar year, a report of a reputable insurance broker with respect to the
insurance maintained by Borrower and its Subsidiaries in accordance with the
provisions of this Agreement and the Security Documents and such other
supplemental reports relating thereto as the Administrative Agent and the
Documentation Agent may reasonably request from time to time.
Section 7.2.8. ACQUISITION INFORMATION. As soon as available, but in no
event later than thirty (30) days following the consummation thereof, the
following documents, agreements, reports and other information with respect to
each Acquisition:
(a) True and correct copies of any and all documents,
agreements and instruments executed and delivered in connection with the
Acquisition, together with all schedules and exhibits thereto, certified as
true, correct and complete by a Responsible Officer of Borrower;
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(b) An updated Collateral Disclosure List reflecting the
consummation of the Acquisition if the proposed Acquisition requires the consent
of the Lenders under Section 6.3.1. hereof;
(c) A pro forma consolidated balance sheet for Borrower
reflecting the consummation of the Acquisition if the purchase price for the
proposed Acquisition is greater than FIVE MILLION AND N0/100 DOLLARS
($5,000,000.00); and
(d) Such other information as the Administrative Agent, the
Documentation Agent or the Lenders may reasonably request relating to any such
Acquisition.
Section 7.2.9. ACQUISITION INTEGRATION COSTS.
(a) As soon as available, but in no event later than fifteen
(15) days prior to the closing of any Permitted Acquisition which requires the
consent of the Lenders under Section 6.2. hereof, a pro forma report as to the
Acquisition Integration Costs which Borrower expects to incur in connection with
such Acquistion in form and substance acceptable to the Administrative Agent,
the Documentation Agent and the Lenders.
(b) As soon as available, but in no event later than thirty
(30) days after the end of each calendar month (forty-five (45) days if the end
of such calendar month coincides with the end of a Fiscal Quarter), a report as
to Approved Acquisition Integration Costs and Acquisition Integration Costs for
such calendar month on a per Acquisition basis as a part of the certificate
provided under Section 7.2.2. hereof.
Section 7.2.10. OTHER INFORMATION. Promptly following any request
therefor, such additional financial and other operating information in respect
of the Credit Parties which the Administrative Agent, the Documentation Agent or
any Lender may reasonably request from time to time.
Section 7.3. FIRE AND HAZARD INSURANCE. Each of Borrower and its
Subsidiaries shall keep its properties and assets insured against fire and other
hazards (so called "All Risk Coverage") in amounts and with companies reasonably
satisfactory to the Administrative Agent and the Documentation Agent to the same
extent and covering such risks as is customary in such Credit Party's line of
business (but in no event shall such insurance fail to cover such risks or be in
amounts less than the insurance coverages in effect on the Closing Date as set
forth on SCHEDULE 4.32. attached hereto) which policies shall name the
Administrative Agent as first loss payee for the ratable benefit of the Lenders
as its interest may appear. Borrower and each of its Subsidiaries shall also
maintain public liability coverage against claims for personal injuries or
death, errors and omissions, business interruption, worker's compensation,
employment or similar insurance with coverage and in amounts satisfactory to the
Administrative Agent and the Documentation Agent and as may be required by
applicable law (but in no event shall such insurance fail to cover such risks or
be in amounts less than the insurance coverages in effect on the Closing Date as
set forth on SCHEDULE 4.32. attached hereto). Such all risk policy shall name
64
the Administrative Agent as an additional insured and provide for a minimum of
thirty (30) days' written cancellation or material change notice to the
Administrative Agent. Borrower agrees to deliver full information as to all of
the aforesaid insurance policies to the Administrative Agent, the Documentation
Agent and the Lenders upon request therefor. In the event of any loss or damage
to the Collateral, Borrower shall give immediate written notice to the
Administrative Agent and to its insurers of such loss or damage and shall
promptly file proof of loss with its insurers. Borrower also agrees to review
the foregoing insurance in connection with each Acquisition and increase the
amount of coverage thereunder as a result of any such Acquisition if requested
by the Required Lenders.
Section 7.4. MAINTENANCE OF EXISTENCE. Except as otherwise permitted
under Section 8 of this Agreement, each Credit Party shall preserve and maintain
its corporate existence and its material rights, franchises and privileges,
including its corporate name, in the jurisdiction of its incorporation, and
qualify and remain qualified as a foreign corporation in each jurisdiction in
which such qualification is necessary or desirable.
Section 7.5. PRESERVATION OF COLLATERAL. Each Credit Party shall
preserve and maintain the Collateral in good repair, working order and operating
condition (ordinary wear and tear excepted) and shall promptly notify the
Administrative Agent of any event causing material loss in the value of the
Collateral.
Section 7.6. TAXES AND OTHER ASSESSMENTS. Each Credit Party shall pay
and discharge, and maintain adequate reserves for the payment and discharge of,
all taxes, assessments, government charges or levies, or claims for labor,
supplies, rent or other obligations made against it or its properties and assets
which, if unpaid, might become an Encumbrance against such Credit Party or its
properties and assets, except liabilities which are being contested in good
faith in appropriate proceedings. Each Credit Party shall file all Federal,
state and local tax returns and other reports that it is required by law to file
and shall promptly notify or cause notice to be given to the Administrative
Agent of any pending or future audits of its income tax returns by the Internal
Revenue Service or by any state in which any such Credit Party conducts business
operations and the results of each such audit.
Section 7.7. BOOKS AND RECORDS; INSPECTION RIGHTS. Each Credit Party
will, and will cause each of its Subsidiaries to, keep proper books of record
and account, in which full, true and complete entries are made of all dealings
and transactions in all material respects in relation to its business and
activities. Each Credit Party will, and will cause each of its Subsidiaries to,
permit any representatives designated by the Administrative Agent or the
Documentation Agent (upon prior notice to the Administrative Agent), and as long
as no Default or Event of Default shall have occurred, upon reasonable prior
notice to Borrower, to visit and inspect its properties, to examine and make
abstracts of its books and records, and to discuss its affairs, finances and
condition with its officers and, subject to a representative of any such Credit
Party being provided the opportunity to be present, independent accountants, all
at such reasonable times and as often as reasonably requested. In handling any
information obtained in connection with any of the foregoing, the Administrative
Agent, the Documentation Agent, the Lenders or their respective
65
designees shall exercise the same degree of care that it exercises with respect
to its own proprietary information of the same types, to maintain the
confidentiality of any non-public information thereby received or received
pursuant to Section 7.1. or Section 7.2. hereof except that disclosure of such
information may be made (i) to Lender Affiliates in connection with their
present or prospective business relations with Borrower; (ii) to prospective
transferees or purchasers of an interest in the Obligations; (iii) as, in the
opinion of Lender's legal counsel, required by law, regulation, rule or order,
subpoena, judicial order or similar order; (iv) as may be requested or required
in connection with the examination, audit or similar investigation of any
Lender, (v) to any legal counsel or other professional advisors of the
Administrative Agent, the Documentation Agent or any Lender, (vi) in connection
with the exercise of any rights and remedies under this Agreement, the Notes or
the Other Documents or any other litigation or proceeding to which the
Administrative Agent, the Documentation Agent or any Lender is a party or (vii)
to the extent that any such information ceases to be confidential through no
fault of the Administrative Agent, the Documentation Agent or the Lenders.
Section 7.8. NOTICES. Borrower shall promptly upon becoming aware of
the occurrence of a Default or Event of Default notify the Administrative Agent
and the Lenders thereof in writing. Borrower shall also advise the
Administrative Agent and the Lenders as soon as practicable:
(a) of any action, suit, or proceeding by or before any
Government Authority or arbitration or alternate dispute resolution proceeding,
which could reasonably be expected to have a Material Adverse Effect;
(b) of any change in Borrower's independent certified public
accountants from Ernst & Young;
(c) of the occurrence of an "Event of Noncompliance" as
defined in the Transaction Documents;
(d) of any material change in the Borrower's accounting
practices or procedures relating to, or material restatement of, Acquisition
Integration Costs for any reason, including as a result of any review thereof
undertaken under Section 7.20. hereof; or
(e) of any other matter which could be reasonably expected to
have a Material Adverse Effect.
Each notice pursuant to this Section 7.8. shall be accompanied by a statement of
a Responsible Officer setting forth details relating to the matters reported
therein and the action which Borrower or any other Credit Party proposes to take
with respect thereto.
Section 7.9. MAINTENANCE OF PERMITS. Except as otherwise permitted
under this Section 7, Borrower and its Subsidiaries shall obtain and/or maintain
in full force and effect all material
66
permits, authorizations, licenses, approvals, waivers and consents which it
presently possesses or which may become necessary in the future to conduct its
business operations.
Section 7.10. USE OF PROCEEDS. Borrower will use the proceeds of any
Extension of Credit solely for the purposes set forth in Section 2.1.11. and
Section 2.3.4. hereof.
Section 7.11. INTENTIONALLY OMITTED.
Section 7.12. ADDITIONAL OFFICES. Borrower shall give the
Administrative Agent written notice of each additional facility or office of
Borrower or its Subsidiaries to be opened after the Closing Date. Except to the
extent set forth in any such notice, the chief executive office of Borrower and
all records relating to the Collateral shall be located at the locations set
forth in the Collateral Disclosure List.
Section 7.13. ACCESS TO COLLATERAL. With respect to each location at
which the Collateral is now or hereafter located, Borrower will obtain such lien
waivers, estoppel certificates or subordination agreements as the Administrative
Agent, the Documentation Agent or the Lenders may reasonably require to insure
the priority and perfection of their security interest in, and their ability to
take possession of, the Collateral situated at such locations.
Section 7.14. COMPLIANCE WITH LAWS. Each Credit Party shall comply with
all Requirements of Law applicable to it and its Subsidiaries in all material
respects except where non-compliance is being contested in good faith and in
accordance with applicable procedures therefor.
Section 7.15. ERISA. The Credit Parties shall: (i) make prompt payments
of contributions required to meet the minimum funding standards set forth under
ERISA with respect to each and every Plan and, promptly after the filing
thereof, furnish to the Administrative Agent copies of each annual report
required to be filed under ERISA in connection with each and every Plan for each
and every Plan year; (ii) notify the Administrative Agent immediately of any
fact, including, but not limited to, any Reportable Event, arising in connection
with any Plan which might constitute grounds for the termination thereof by the
PBGC or for the appointment by the appropriate United States district court of a
trustee to administer the Plan; (iii) promptly after the issuance thereof,
furnish to the Administrative Agent a copy of any notice of any Reportable Event
given to the PBGC with respect to any Plan; (iv) promptly after receipt thereof,
furnish to the Administrative Agent a copy of any notice received from the PBGC
relating to the intention of the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan; and (v) furnish to the Administrative Agent,
promptly upon its request therefor, such additional information concerning each
and every Plan as may be reasonably requested.
Section 7.16. COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Borrower shall, from time to time, if requested by the
Administrative Agent or the Required Lenders, upon reasonable cause, retain, at
Borrower's expense, an independent
67
professional consultant to prepare a report relating to Hazardous Materials at
any or all of the properties and assets of Borrower or any of its Subsidiaries
and to conduct an investigation of any or all of the properties and assets of
Borrower or any of its Subsidiaries. Borrower agrees also that the
Administrative Agent (or its agents) may, from time to time retain, an
independent professional consultant to advise the Administrative Agent as to any
such report relating to Hazardous Materials and Borrower shall be responsible
for the reasonable fees and expenses of such consultant. Borrower hereby grants
to the Administrative Agent, its Administrative Agents, employees, consultants
and contractors the right to enter into or onto Borrower's or its Subsidiaries'
business premises to view the premises as is reasonably necessary to provide
such advice, provided, however, that the Administrative Agent shall provide
reasonable prior notice of such visit and not unreasonably interfere with
operations at such premises.
(b) Borrower shall promptly advise the Administrative Agent
and the Lenders in writing and in reasonable detail of any of the following to
the extent that the occurrence thereof could reasonably be expected to have a
Material Adverse Effect: (i) any Release of any Hazardous Material required to
be reported to any Governmental Authority under any applicable Environmental
Laws; (ii) any and all written communications with respect to claims or suits
under such laws or any Release of Hazardous Materials required to be reported to
any Governmental Authority; (iii) any remedial action taken by Borrower, any of
its Subsidiaries or any other Person in response to (A) any Hazardous Materials
on, under or about the properties or assets of Borrower or any of its
Subsidiaries or (B) any claim or suit arising under Environmental Laws; (iv)
Borrower's discovery of any occurrence or condition on any real property
adjoining or in the vicinity of Borrower's or any of its Subsidiaries' business
premises that could reasonably be expected to cause such premises or any part
thereof to be classified as "border-zone property" or to be otherwise subject to
any restrictions on the ownership, occupancy, transferability or use thereof
under any Environmental Laws; and (v) any request for information from any
Governmental Authority that indicates such authority, instrumentality or agency
is investigating whether Borrower or any of its Subsidiaries may be potentially
responsible for a Release of Hazardous Materials.
(c) Borrower shall, at its own expense, provide copies of such
documents or information as the Administrative Agent, the Documentation Agent or
any Lender may reasonably request in relation to any matters disclosed pursuant
to this Section 7.16.
(d) Borrower and its Subsidiaries shall comply with all
Environmental Laws in all material respects. Borrower and its Subsidiaries shall
promptly take any and all necessary remedial action in connection with the
presence, storage, use, disposal, transportation or Release of any Hazardous
Materials on, under or about its business premises. If Borrower or any of its
Subsidiaries undertakes any remedial action with respect to any Hazardous
Materials on, under or about its business premises, Borrower or such Subsidiary
shall conduct and complete such remedial action in compliance with the policies,
orders and directives of any Governmental Authority except when and only to the
extent that Borrower's or such Subsidiary's liability for such presence,
storage, use, disposal, transportation or discharge of any Hazardous Material,
or
68
such policies, orders or directives, are being contested in good faith by
Borrower or such Subsidiary.
Section 7.17. INTEREST RATE PROTECTION. Borrower shall maintain at all
times an Interest Protection Arrangement in respect of a minimum of thirty
percent (30%) of the Total Commitment Amount, the terms and conditions of said
Interest Protection Arrangement to be satisfactory to the Required Lenders.
Section 7.18. USE OF PROCEEDS FOR DIRECT MARKETING PROGRAM AND DEALER
PROGRAM. The proceeds of any Revolving Loan requested with respect to the Direct
Marketing Program or the Dealer Program shall be used solely to finance Direct
Marketing Program Costs and Dealer Program Costs, as applicable.
Section 7.19. YEAR 2000 COMPATIBILITY. On or before December 31, 1998,
Borrower shall take all action necessary to ensure that Borrower's and its
Subsidiaries' computer-based systems are able to operate and effectively process
data including dates on or after January 1, 2000, and that none of the products
and services sold, licensed, rendered, or otherwise provided by Borrower or its
Subsidiaries will malfunction or will cease to function as a result of the Year
2000. At the request of the Administrative Agent, the Borrower and its
Subsidiaries shall provide the Administrative Agent reasonable assurance of such
"Year 2000 Compatibility."
Section 7.20. ACQUISITION INTEGRATION COSTS. Borrower shall meet with
Ernst & Young (or other independent certified public accountants of nationally
recognized standing) no later than forty-five (45) days after the end of each
Fiscal Quarter to review Acquisition Integration Costs, and Borrower's
accounting therefor, for such Fiscal Quarter.
SECTION 8. NEGATIVE COVENANTS
Borrower and each other Credit Party, as applicable, covenants and
agrees that from the date hereof until the payment and performance in full of
the Obligations and the termination of the Commitments:
Section 8.1. LIMITATION ON INDEBTEDNESS. Neither any Credit Party nor
any of its Subsidiaries shall create, incur, assume, guarantee or be or remain
liable with respect to any Indebtedness other than the following ("Permitted
Indebtedness"):
(a) Indebtedness of Borrower or any of its Subsidiaries
incurred in respect of any Extension of Credit under this Agreement;
(b) Indebtedness existing as of the date of this Agreement and
disclosed on SCHEDULE 8.1. attached hereto or in the Financial Statements
referred to in Section 4.7. hereof and any refinancings or refundings of such
Indebtedness which will not increase the principal amount of such Indebtedness
being refinanced or refunded or change the amortization thereof (other than to
extend the same) and otherwise be on terms and conditions no less favorable to
any Credit
69
Party or the Lenders, as determined by the Required Lenders, than the
Indebtedness being refinanced or refunded;
(c) Indebtedness consisting of Capital Leases and motor
vehicle and office equipment and furnishings installment sales contracts
permitted under Section 8.9. hereof;
(d) Subordinated Indebtedness due to SSH, Alarmguard Holdings
or any other Affiliate of Borrower covered by the Affiliate Subordination
Agreement or otherwise incurred with the prior consent of the Required Lenders;
(e) Subordinated Indebtedness due to any Person other than an
Affiliate of Borrower and not incurred in connection with an Acquisition
existing on the date hereof or otherwise incurred with the prior consent of the
Required Lenders;
(f) Indebtedness consisting of an Interest Rate Protection
Arrangement having terms acceptable to the Required Lenders and entered into
solely in respect of all or a portion of the Loans and other Extensions of
Credit under this Agreement as required by Section 7.17. hereof and as such
Interest Rate Protection Arrangement may be amended, modified or supplemented
from time to time with the prior consent of the Required Lenders;
(g) Indebtedness constituting Deferred Purchase Price
Obligations; provided, that (A) the aggregate unpaid principal amount of all
such Indebtedness shall not exceed TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) at any time and (B) such Indebtedness shall be unsecured; and
(h) other Indebtedness of Borrower and its Subsidiaries in an
aggregate outstanding principal amount not exceeding FIVE HUNDRED THOUSAND AND
NO/100 DOLLARS ($500,000.00) in the aggregate at any time.
Section 8.2. CONTINGENT LIABILITIES. Neither any Credit Party nor any
of its Subsidiaries shall create, incur, assume, guarantee or remain liable with
respect to any Contingent Obligations other than the following:
(a) The Guarantees;
(b) Contingent Obligations existing on the date of this
Agreement and disclosed on SCHEDULE 8.2. attached hereto;
(c) Contingent Obligations resulting from the endorsement of
negotiable instruments for collection in the ordinary course of business;
(d) Contingent Obligations with respect to surety, appeal
performance and return-of-money and other similar obligations incurred in the
ordinary course of business
70
(exclusive of obligations for the payment of borrowed money) not exceeding FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) in the aggregate at any time;
(e) Contingent Obligations of normal trade debt relating to
the acquisition of goods and supplies; and
(f) Contingent Obligations which consist of normal and
customary buyer indemnification obligations incurred by SSH or Alarmguard
Holdings in connection with Permitted Acquisitions.
Section 8.3. LEASES. No Credit Party shall during any Fiscal Year enter
into any agreement in respect of, or become liable for, Lease Obligations except
that any Credit Party or its Subsidiaries may enter into any such agreement in
respect of, or become liable for, Lease Obligations which do not increase the
aggregate amount of Lease Obligations of such Credit Party and its Subsidiaries
in excess of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) in any
Fiscal Year.
Section 8.4. SALE AND LEASEBACK. Neither any Credit Party nor any of
its Subsidiaries shall enter into any arrangement, directly or indirectly,
whereby it shall sell or transfer any property owned by it in order to lease
such property or lease other property that any such Credit Party or Subsidiary
intends to use for substantially the same purpose as the property being sold or
transferred.
Section 8.5. ENCUMBRANCES. Neither any Credit Party nor any of its
Subsidiaries shall create, incur, assume or suffer to exist any Encumbrance upon
any of its properties and assets, or assign or otherwise convey any right to
receive income, with or without recourse, except the following ("Permitted
Encumbrances"):
(a) Encumbrances in favor of the Administrative Agent under
the Security Documents for the ratable benefit of the Lenders;
(b) Encumbrances existing as of the date of this Agreement,
consented to by the Required Lenders and disclosed in SCHEDULE 4.24. attached
hereto;
(c) liens for taxes, fees, assessments and other governmental
charges to the extent that payment of the same may be postponed, is being
contested and is otherwise not required to be paid in accordance with the
provisions of Section 7.6. hereof;
(d) landlords' and lessors' liens in respect of rent not in
default or liens in respect of pledges or deposits under worker's compensation,
unemployment insurance, social security laws, or similar legislation (other than
ERISA) or in connection with appeal and similar bonds incidental to litigation;
mechanics', laborers' and materialmen's and similar liens, if the obligations
secured by such liens are not then delinquent; liens securing the performance of
bids, tenders, contracts (other than for the payment of money); and statutory
obligations incidental to
71
the conduct of its business and that do not in the aggregate materially detract
from the value of its property or materially impair the use thereof in the
operation of its business;
(e) attachments, garnishments and judgment liens not
constituting an Event of Default;
(f) liens in favor of lessors under Capital Leases and sellers
under motor vehicles installment sales contracts permitted under Section 8.9.
hereof as long as the collateral subject thereto is limited solely to the
property that is the subject of such Capital Leases or sales contracts and
secures only the amounts owing in respect of such leases and contracts;
(g) easements, rights of way, restrictions and other similar
charges or Encumbrances relating to real property and not interfering in a
material way with the ordinary conduct of its business;
(h) Encumbrances on property or assets created in connection
with the refinancing or refunding of Indebtedness referred to in Section 8.1.(b)
hereof; PROVIDED, HOWEVER, that the amount of Indebtedness secured by any such
Encumbrance shall not be increased as a result of such refinancing or refunding
and no such Encumbrance shall extend to property and assets of any such Credit
Party or Subsidiary not encumbered prior to any such refinancing or refunding;
and
(i) Encumbrances securing Indebtedness for Capital
Expenditures to the extent such Indebtedness is permitted under Section 8.1
hereof, provided, that (i) each such Encumbrance is given solely to secure the
purchase price of such property, does not extend to any other property and is
given at the time of acquisition of the property, and (ii) the Indebtedness
secured thereby does not exceed the lesser of the cost of such property or its
fair market value at the time of acquisition.
Section 8.6. SALE OR LEASE OF ASSETS; MERGER; CONSOLIDATION. Neither
Borrower nor any of its Subsidiaries shall sell, lease or otherwise dispose of
properties or assets (valued at the lower of cost or market); provided, however,
that subject to the requirements of Section 2.6.8. hereof, Borrower may effect
(a) the sale of any asset for cash, for aggregate consideration not exceeding
FIFTY THOUSAND AND NO/100 DOLLARS ($50,000.00) in any calendar year, the Net
Proceeds of which are intended to be invested in the acquisition of new RMR or
applied to repay the Loans in accordance with Section 2.6.8. hereof, (b) the
sale of any obsolete or worn out tangible asset for cash the Net Proceeds of
which are to be reinvested in replacement tangible assets; provided, however,
that if such Net Proceeds are not reinvested in the acquisition of tangible
assets replacing the obsolete or worn out assets being sold by Borrower within
three (3) months following the date of sale, such Net Proceeds shall be
automatically applied to repay the Loans under Section 2.6.8. hereof and (c) the
leasing of commercial or residential systems to customers, for aggregate
consideration not exceeding ONE MILLION AND NO/100 DOLLARS ($1,000,000.00) in
any calendar year, in connection with the provision of monitoring services under
Customer Contracts. Neither Borrower nor any Subsidiary of Borrower may merge or
72
consolidate into or with any other Person; PROVIDED, HOWEVER, that any
Subsidiary of Borrower may merge or consolidate into or with (i) Borrower if no
Default or Event of Default has occurred and is continuing or would result from
such merger and if Borrower is the surviving company, or (ii) any other
wholly-owned Subsidiary of Borrower.
Section 8.7. ADDITIONAL STOCK ISSUANCE. Borrower shall not permit any
of its Subsidiaries to issue any additional shares of its Capital Stock or any
securities convertible thereto other than to Borrower. Neither Borrower nor any
of its Subsidiaries shall sell, transfer or otherwise dispose of any of the
Capital Stock of a Subsidiary, except (i) to Borrower or any of its wholly-owned
Subsidiaries, or (ii) in connection with a transaction permitted by Section 8.6.
Section 8.8. DIVIDENDS. Borrower shall not pay any Dividends on any
class of its Capital Stock or make any other distribution or payment on account
of or in redemption, retirement or purchase of such Capital Stock. This Section
8.8 shall not apply to (i) the issuance, delivery or distribution by Borrower of
shares of its Capital Stock pro rata to its existing shareholders, (ii) the
purchase or redemption by Borrower of its Capital Stock solely with the proceeds
of the issuance of additional shares of Capital Stock or (iii) payments
permitted under Section 8.14.(d) hereof. Alarmguard Holdings shall not redeem
any shares of the Capital Stock issued pursuant to the Preferred Stock Offering
except in accordance with the Transaction Documents.
Section 8.9. CAPITAL EXPENDITURES. Neither Borrower nor any of its
Subsidiaries shall make or commit to make any Capital Expenditures (excluding
Program Capital Expenditures and normal replacements and maintenance which are
properly charged to current operations and excluding replacements of obsolete or
used equipment involving expenditures in an amount in any Fiscal Year not
exceeding the lesser of (i) the Net Proceeds of the sale of any obsolete or used
equipment and (ii) ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00)) except
for Capital Expenditures in the ordinary course of business not exceeding, in
the aggregate, during any Fiscal Year, the following amounts:
Fiscal Year Ending Amount
December 31, 1998 $1,200,000.00
December 31, 1999 and thereafter $1,500,000.00
If during any Fiscal Year the amount of Capital Expenditures permitted during
such Fiscal Year (exclusive of any carryover from a preceding Fiscal Year) is
not so utilized, such unutilized amount may be carried over and made in the
immediately following Fiscal Year (but not in any subsequent Fiscal Year). In
addition, during the Fiscal Year ending December 31, 1998, Borrower may make
Capital Expenditures (which may not be carried over as set forth in the
preceding sentence) in an amount not to exceed ONE MILLION AND NO/100 DOLLARS
($1,000,000.00) in connection with the renovation and upgrade of its central
station located in Orange, Connecticut and its Cos Cob, Connecticut office.
73
Section 8.10. INVESTMENTS. Neither Borrower nor any of its Subsidiaries
shall make or maintain any Investments other than (i) existing Investments in
Subsidiaries, (ii) Permitted Acquisitions, (iii) extensions of trade credit in
the ordinary course of business in accordance with Borrower's historic business
practices; (iv) advances to employees in accordance with Borrower's historic
practices thereof in an amount not to exceed ONE HUNDRED THOUSAND AND NO/100
DOLLARS ($100,000.00) in the aggregate at any time or (v) Qualified Investments.
Section 8.11. ERISA. Neither Borrower nor any member of the Controlled
Group shall permit any Plan maintained by it to (i) engage in any Prohibited
Transaction; (ii) incur any "accumulated funding deficiency" (as defined in
Section 302 of ERISA) whether or not waived which could reasonably be expected
to have a Material Adverse Effect; or (iii) terminate any Plan in a manner that
could result in the imposition of an Encumbrance on the property and assets of
Borrower or any of its Subsidiaries pursuant to Section 4068 of ERISA.
Section 8.12. CHANGE IN TERMS AND PREPAYMENT OF SUBORDINATED
INDEBTEDNESS. Borrower shall not, except as provided in Section 8.1.(b) hereof
and with respect to the use of the proceeds of the Term Loans as set forth in
Section 0.0.0.:
(a) effect or permit any change in or amendment to (i) the
terms by which any Subordinated Indebtedness purports to be subordinated to the
payment and performance of the Obligations, (ii) the terms relating to the
repayment (other than extensions of the time during which payment is due) of any
Subordinated Indebtedness or (iii) increase the rate of interest applicable
thereto; or
(b) directly or indirectly, make any payment of any principal
of or in redemption, retirement or repurchase of Subordinated Indebtedness
except payments required by the instruments evidencing such Indebtedness.
Section 8.13. CHANGE NAME OR LOCATION. Neither Borrower nor any of its
Subsidiaries shall change its corporate name or conduct its business under any
name other than those set forth in the Collateral Disclosure List or change its
chief executive office, place of business or location of the Collateral or
records relating to the Collateral from the locations set forth in the
Collateral Disclosure List unless it has given the Administrative Agent at least
thirty (30) days prior written notice.
Section 8.14. AFFILIATE TRANSACTIONS. Borrower will not, and will not
permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) on terms and conditions not less favorable to Borrower or
such Subsidiary than could be obtained on an arm's length basis from unrelated
third parties, (b) transactions between or among Borrower and/or its wholly
owned Subsidiaries not involving any other Affiliate, (c) the transactions
listed and described on SCHEDULE 8.14. attached hereto and (d) following the end
of each Fiscal Quarter (i) for which Borrower shall have delivered the monthly
Financial Statements required by Section 7.1.2. hereof which coincide with the
end of such Fiscal
74
Quarter and (ii) during or in respect of which no Default or Event of Default
shall have occurred and be continuing (or result from the payment of any amount
permitted under this subsection (d)), Borrower may pay to SSH a management fee
in an amount not to exceed the amount of FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00) in any Fiscal Year to reimburse SSH and Alarmguard
Holdings for amounts actually expended by SSH in respect of normal and customary
fees, expenses, franchise tax and similar obligations and filing fees. Any
management fee permitted to be paid by Borrower under this subsection (d) shall
be payable as of the end of each Fiscal Quarter only following payment by
Borrower of any principal, interest, Fees and other amounts due under this
Agreement and for amounts actually paid during such Fiscal Quarter (or
previously due but not paid by Borrower) and the submission to the
Administrative Agent of a certificate setting forth the fees, expenses or
obligations for which reimbursement is sought and demonstrating the making of
any such payment shall not result in the occurrence of a Default or Event of
Default. With respect to any Fiscal Quarter during or in respect of which a
Default or Event of Default shall have occurred, such management fee shall
accrue (without interest thereon) but may not be paid; provided, however, that
if (i) such Default or Event of Default shall have been cured by Borrower, and
for so long as no other Default or Event of Default shall have occurred and be
continuing, any such accrued management fees may be paid by Borrower to SSH or
Alarmguard Holdings in quarterly installments not to exceed ONE HUNDRED THOUSAND
AND NO/100 DOLLARS ($100,000.00), commencing with the end of the Fiscal Quarter
next following the calendar month in which such Event of Default shall have been
cured and (ii) if such Default or Event of Default shall have been waived by the
requisite percentage of Lenders, such accrued and unpaid management fees may not
be paid by Borrower to SSH unless and until the Required Lenders shall consent
to such payment.
Section 8.15. LINES OF BUSINESS. No Credit Party shall make a material
change in or discontinue its existing lines of business nor enter into any new
line or lines of business except for the possible discontinuance of the Direct
Marketing Program, the Dealer Program or the Borrower's integrated systems,
i.e., "Sonitrol", business. In addition, Borrower shall not materially alter or
change the role and purpose of Protective Alarms of Canada, Inc. from that in
effect on the Closing Date, i.e., as a adjunct to Borrower's national accounts
business.
Section 8.16. FISCAL YEAR. Borrower shall not change the end of its
Fiscal Year from December 31.
Section 8.17. GOVERNING DOCUMENTS . Borrower shall not amend its
Governing Documents in any manner which could be reasonably expected to have a
Material Adverse Effect; provided, however, that in no event may any such
amendment establish or authorize a new series or other issue of its Capital
Stock or change the rights, powers or preferences of an existing series or other
issue of its Capital Stock. Alarmguard Holdings shall not amend its Governing
Documents in any manner which could be reasonably expected to have a Material
Adverse Effect; provided, however, that in no event may any such amendment
establish or authorize a new series or other issue of its Capital Stock or
change the rights, powers or preferences of an existing series or other issue of
its Capital Stock.
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Section 8.18. RMR POLICIES AND PROCEDURES. Borrower shall not change,
amend, revise or otherwise modify the practices, policies and procedures
followed by Borrower for the calculation of RMR or any component thereof from
those practices, policies and procedures in effect on April 15, 1997. In
addition, Borrower shall not change, amend, revise or otherwise modify
Borrower's policies and procedures for the cancellation of Customer Contracts
from those in effect on April 15, 1997.
Section 8.19. ACQUISITIONS. No Credit Party shall make an Acquisition
except for Permitted Acquisitions.
Section 8.20. SUBSIDIARIES. Borrower shall not create any Subsidiaries
except for Subsidiaries created with the prior consent of the Lenders in
connection with Permitted Acquisitions.
Section 8.21. TRANSACTION DOCUMENTS. No Credit Party shall amend the
Transaction Documents to which it is a party.
SECTION 9. FINANCIAL COVENANTS.
Borrower covenants and agrees that from the date hereof, until the
payment and performance in full of the Obligations and the termination of the
Commitments:
Section 9.1. RMR. Alarmguard Holdings shall not permit the ratio of
Consolidated Total Debt of Alarmguard Holdings to RMR to exceed 30 to 1 at any
time.
Section 9.2. ADJUSTED RMR. Borrower shall not permit the ratio of its
Consolidated Senior Debt to RMR to exceed 22.5 to 1 at any time.
Section 9.3. INTEREST COVERAGE. Borrower shall not permit the ratio of
its Consolidated EBITDA to its Consolidated Total Interest to be less than 2.0
to 1.0 as of the end of each calendar month. Borrower's compliance with this
covenant shall be determined on a rolling basis by reference to the month then
ending and the eleven (11) immediately preceding calendar months.
Section 9.4. DEBT SERVICE COVERAGE. Borrower shall not permit the ratio
of its Consolidated EBITDA to its Consolidated Total Debt Service to be less
than 1.20 to 1.0 as of the end of each calendar month. Borrower's compliance
with this covenant shall be determined on a rolling basis by reference to the
month then ending and the eleven (11) immediately preceding calendar months.
Section 9.5. LEVERAGE RATIO. Borrower shall not permit the ratio of its
Consolidated Senior Debt to its Consolidated EBITDA to exceed the following
amount as of the end of each of the following calendar months.
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LEVERAGE RATIO CALENDAR MONTH ENDING
6.0 to 1.0 January 31, 1998 through July 31, 1998
5.0 to 1.0 August 31, 1998 and thereafter
For purposes of this covenant, Consolidated EBITDA shall be calculated by
multiplying Consolidated EBITDA for the calendar month then ending and the two
(2) immediately preceding calendar months by 4.
Section 9.6. ADJUSTED LEVERAGE RATIO. Borrower shall not permit the
ratio of its Consolidated Senior Debt to its Consolidated EBITDA to exceed the
following amount as of the end of each of the following calendar months.
ADJUSTED LEVERAGE RATIO CALENDAR MONTH ENDING
4.75 to 1.0 June 30, 1998 through December 31, 1998
4.5 to 1.0 January 31, 1999 and thereafter
For purposes of this covenant, (i) Consolidated EBITDA shall be calculated by
multiplying Consolidated EBITDA for the calendar month then ending and the two
(2) immediately preceding calendar months by 4 and (ii) any Loans used in
connection with the Direct Marketing Program and the Dealer Program and
Acquisition Loans made to Borrower during the calendar month then ending and the
two (2) immediately preceding calendar months shall be excluded from the
calculation of Consolidated Senior Debt.
Section 9.7. PROGRAM CREATION MULTIPLES. Borrower shall not permit (a)
the multiple resulting from dividing (x) the aggregate amount of Direct
Marketing Program Costs by (y) the amount of RMR created thereby to exceed 35 or
(b) the multiple resulting from dividing (x) the aggregate amount of Dealer
Program Costs by (y) the amount of RMR created thereby to exceed 35. Borrower's
compliance with this covenant shall be determined as of the end of each calendar
month and be calculated in the manner set forth in EXHIBIT J attached hereto.
Section 9.8. PROGRAM COSTS. Borrower shall not permit (i) the aggregate
amount of Direct Marketing Program Costs to exceed the amount of EIGHT MILLION
AND NO/100 DOLLARS ($8,000,000.00) or (ii) the aggregate amount of Dealer
Program Costs to exceed the amount of TWELVE MILLION AND NO/100 DOLLARS
($12,000,000.00). Borrower's compliance with this covenant shall be calculated
as of the end of each calendar month on a cumulative basis dating from the end
of the calendar month immediately preceding April 15, 1997.
SECTION 10. THE AGENTS
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Section 10.1. APPOINTMENT, POWERS AND IMMUNITIES. Each Lender and each
subsequent holder of the Notes hereby irrevocably appoints and authorizes
BankBoston, N.A. to act as its Administrative Agent and General Electric Capital
Corporation to act as its Documentation Agent under this Agreement and the Other
Documents with such powers as are specifically delegated to the Administrative
Agent and the Documentation Agent by the terms of this Agreement and the Other
Documents together with such other powers as are reasonably incidental thereto.
The Administrative Agent and the Documentation Agent shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
Other Documents and shall not be a trustee for any Lender. The Administrative
Agent and the Documentation Agent shall not be responsible to the Lenders for
any recitals, statements, representations or warranties contained in this
Agreement or the Other Documents or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or the Other Documents, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement, the Other Documents or any
other document referred to or provided for herein or therein or for the
collectibility of the Loans or for any failure by the Borrower or any other
Person to perform any of its obligations under this Agreement, the Notes or the
Other Documents. The Administrative Agent and the Documentation Agent may employ
agents and attorneys-in-fact and shall not be answerable, except as to money or
securities received by it or its authorized agents, for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care. Neither the Administrative Agent, the Documentation Agent nor
any of its directors, officers, employees or agents shall be liable or
responsible for any action taken or omitted to be taken by it or them under this
Agreement, or under the Other Documents or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct.
Section 10.2. RELIANCE. The Administrative Agent and the Documentation
Agent shall be entitled to rely upon any certification, notice or other
communication (including any thereof by telephone, telex, telegram or cable)
believed by the Administrative Agent and the Documentation Agent to be genuine
and correct and to have been signed or sent by or on behalf of the proper Person
or Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by the Administrative Agent and the
Documentation Agent. As to any matters not expressly provided for by this
Agreement or the Other Documents, the Administrative Agent and the Documentation
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or the Other Documents in accordance with
instructions signed by the Required Lenders, and such instructions of the
Required Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders. The Administrative Agent and the Documentation
Agent shall be entitled to take, and to rely on, advice of counsel concerning
all matters pertaining to its rights and duties under this Agreement and the
Other Documents. The Administrative Agent and the Documentation Agent may
utilize the services of such Persons as the Administrative Agent or the
Documentation Agent in its sole discretion may reasonably determine, and all
reasonable fees and expenses of any such Persons shall be paid by Borrower.
Section 10.3. PAYMENTS.
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(a) A payment by the Borrower to the Administrative Agent and
the Documentation Agent under this Agreement, the Notes or any of the Other
Documents for the account of any Lender shall constitute a payment to such
Lender. Except as otherwise provided in this Agreement, the Administrative Agent
and the Documentation Agent, as applicable, agree promptly to distribute to each
Lender such Lender's PRO RATA share of payments received by the Administrative
Agent or the Documentation Agent for the account of the Lenders.
(b) If in the opinion of the Administrative Agent or the
Documentation Agent, the distribution of any amount received by the
Administrative Agent or the Documentation Agent in such capacity hereunder,
under this Agreement, the Notes or any of the Other Documents could reasonably
be expected to involve the Administrative Agent or the Documentation Agent in
liability, the Administrative Agent or the Documentation Agent may refrain from
making distribution until the Administrative Agent's or the Documentation
Agent's right to make distribution shall have been adjudicated by a court of
competent jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and distributed by the Administrative Agent or the
Documentation Agent is to be repaid, each Person to whom any such distribution
shall have been made shall either repay to the Administrative Agent or the
Documentation Agent, as applicable, its proportionate share of the amount so
adjudged to be repaid or shall pay over the same in such manner and to such
Persons as shall be determined by such court.
Section 10.4. HOLDERS OF NOTES. The Administrative Agent and the
Documentation Agent may deem and treat the payee of any Note as the absolute
owner for all purposes hereof until the Administrative Agent or the
Documentation Agent, as applicable, shall have been furnished in writing by the
Lender with a different name by such payee or be a subsequent holder, assignee
or transferee.
Section 10.5. EVENTS OF DEFAULT. Neither the Administrative Agent or
the Documentation Agent shall be deemed to have knowledge of the occurrence of
an Event of Default or the occurrence of an event that, with the giving of
notice, the lapse of time or both, would constitute an Event of Default (other
than the nonpayment of principal of or interest on the Loans) unless the
Administrative Agent and the Documentation Agent has received notice from a
Lender or the Borrower specifying such Event of Default or Default and stating
that such notice is a "Notice of Default." In the event that the Administrative
Agent or the Documentation Agent receives such a "Notice of Default" or in the
event of any nonpayment of principal or interest on the Loans, the
Administrative Agent and the Documentation Agent, as applicable, shall give
notice thereof to the Lenders and the Administrative Agent shall take such
action with respect to such Event of Default or Default as shall be directed by
such Lenders as required under Section 10.14. hereof.
Section 10.6. RIGHTS AS A LENDER. With respect to its Commitments and
the Loans made by it, each of the Administrative Agent and the Documentation
Agent in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as the Administrative Agent or the Documentation Agent,
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and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Administrative Agent and the Documentation Agent, as
applicable, in its individual capacity. The Administrative Agent, the
Documentation Agent and their Lender Affiliates may (without having to account
therefor to any Lender) accept deposits from, lend money to and generally engage
in any kind of banking, trust or other business with any Credit Party, as if it
were not acting as the Administrative Agent or the Documentation Agent, and the
Administrative Agent and the Documentation Agent may accept fees and other
consideration from any Credit Party Borrower for services in connection with
this Agreement or any of the Other Documents or otherwise without having to
account for the same to the Lenders.
Section 10.7. INDEMNIFICATION. The Lenders shall indemnify the
Administrative Agent (to the extent not reimbursed by Borrower under Section
13.4. hereof), ratably in accordance with the ratio that their respective
Commitments bear to the aggregate principal amount of the outstanding
Obligations, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind and nature whatsoever which may be imposed on, incurred by or asserted
against the Administrative Agent in its capacity as the Administrative Agent, as
applicable, under this Agreement in any way relating to or arising out of this
Agreement or any of the Other Documents or any other document contemplated
hereby or thereby or referred to herein or therein (including, without
limitation, the costs and expenses which Borrower is obligated to pay under
Section 14.5. hereof, but excluding, unless an Event of Default has occurred and
is continuing, normal administrative costs and expenses incident to the
performance of its agency duties hereunder) or the enforcement of any of the
terms of this Agreement, the Other Documents or of any such other documents;
PROVIDED, HOWEVER, that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of the
Person to be indemnified.
Section 10.8. NON-RELIANCE ON THE ADMINISTRATIVE AGENT, THE
DOCUMENTATION AGENT AND OTHER LENDERS. Each Lender agrees that it has,
independently and without reliance on the Administrative Agent, the
Documentation Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own credit analysis of
Borrower and each other Credit Party and of its decision to enter into this
Agreement and that it will, independently and without reliance upon the
Administrative Agent, the Documentation Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or the Other Documents. Neither the Administrative Agent or
the Documentation Agent shall be required to keep itself informed as to the
performance or observance by any Credit Party of this Agreement or the Other
Documents or any other document referred to or provided for herein or therein or
to inspect the properties or books of any Credit Party. Except for notices,
reports and other documents and written information delivered by any Credit
Party to the Administrative Agent or the Documentation Agent hereunder or under
the Other Documents, neither the Administrative Agent nor the Documentation
Agent shall have any duty or responsibility to provide any Lender with any
credit or other information concerning the financial condition or business of
any Credit Party, which may come into the possession of the Administrative
Agent, the Documentation Agent or any of their Lender Affiliates.
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Section 10.9. FAILURE TO ACT. Except for action expressly required of
the Administrative Agent or the Documentation Agent hereunder or under the Other
Documents, the Administrative Agent and the Documentation Agent shall in all
cases be fully justified in failing or refusing to act hereunder or thereunder
unless it shall be indemnified to its satisfaction by the Lenders against any
and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.
Section 10.10. RESIGNATION. The Administrative Agent or the
Documentation Agent may resign at any time by giving sixty (60) days prior
written notice thereof to the Lenders and Borrower; PROVIDED, HOWEVER, that such
resignation shall not be effective in the case of the Administrative Agent until
the appointment of a successor Administrative Agent as provided for herein. Upon
any such resignation, the Lenders shall have the right, upon consultation with
Borrower, to appoint a successor Administrative Agent or successor Documentation
Agent. Unless a Default or Event of Default shall have occurred and be
continuing, such successor Administrative Agent or successor Documentation Agent
shall be reasonably acceptable to Borrower. If no successor Administrative Agent
shall have been so appointed by the Lenders and shall have accepted such
appointment within thirty (30) days after the Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a Lender
or financial institution having total assets in excess of FIVE HUNDRED MILLION
AND NO/100 DOLLARS ($500,000,000.00). In addition, the Administrative Agent or
the Documentation Agent may be removed by the Required Lenders at any time on
not less than thirty (30) days prior written notice to the Administrative Agent,
the Documentation Agent and the Lenders, as applicable. Upon the acceptance of
any appointment as the Administrative Agent or the Documentation Agent hereunder
by a successor Administrative Agent or successor Documentation Agent, such
successor Administrative Agent or successor Documentation Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent or retiring Documentation Agent, and the
retiring Administrative Agent or retiring Documentation Agent shall be
discharged from its duties and obligations hereunder. After any retiring
Administrative Agent's or retiring Documentation Agent's resignation, the
provisions of this Agreement and the Other Documents shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by the
Administrative Agent or the Documentation Agent while it was acting as the
Administrative Agent or the Documentation Agent.
Section 10.11. COOPERATION OF LENDERS. The Administrative Agent and the
Documentation Agent shall provide the other Lenders with such information and
documentation as such other Lender shall reasonably request relating to the
performance of its duties hereunder, including all information relative to the
outstanding balance of principal, interest and other sums owed to such other
Lenders by Borrower; and cooperate with the other Lenders with respect to any
and all collections and/or foreclosure procedures at any time commenced against
Borrower or otherwise in respect of the Collateral on behalf of the Lenders.
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Section 10.12. ACTIONS BY ADMINISTRATIVE AGENT. In case one or more
Events of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Administrative Agent
shall, if (a) so requested by the Required Lenders and (b) the Required Lenders
have provided to the Administrative Agent such additional indemnities and
assurances against expenses and liabilities as the Administrative Agent may
reasonably request, proceed to enforce the provisions of any of the Other
Documents authorizing the sale or other disposition of all or any part of the
Collateral and exercise all or any such other legal and equitable and other
rights or remedies as it may have in respect of such Collateral. The Required
Lenders may direct the Administrative Agent in writing as to the method and the
extent of any such sale or other disposition and exercise of such other rights
or remedies as it may have in respect of such Collateral, the Lenders hereby
agreeing to indemnify and hold the Administrative Agent, harmless from all
liabilities incurred in respect of all actions taken or omitted in accordance
with such directions; PROVIDED, HOWEVER, that the Administrative Agent need not
comply with any such direction to the extent that the Administrative Agent
reasonably believes the Administrative Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction. In any
event, the Lenders agree, as among themselves, that the Administrative Agent
shall not, without the consent or approval of the Required Lenders and subject
to Section 10.14. hereof, (i) make any sale or disposition of the Collateral,
(ii) release or subordinate the security interest of the Lenders in any of the
Collateral or release or discharge any Person which is a party to this Agreement
or the Other Documents, (iii) consent or agree to any amendment or waiver of any
material provision of this Agreement or the Other Documents, (iv) declare any
Default, (v) exercise any right or remedy with respect to the acceleration or
collection of the Obligations or (vi) take any other action which requires the
consent or approval of the Lenders under this Agreement or the Other Documents.
Section 10.13. SECURITY.
(a) The Administrative Agent acknowledges to the other Lenders
that it is acting in an agency capacity hereunder and that the liens and
security interests in the Collateral secures the Obligations of Borrower owing
to all of the Lenders. In the event of any Default, the Administrative Agent
will apply and/or pay over to the Lenders any net proceeds derived from the
Collateral in the manner set forth in Section 10.3. hereof.
(b) Notwithstanding anything to the contrary set forth herein,
each of the parties hereto acknowledges and agrees that the respective rights,
benefits and privileges of the Administrative Agent, the Documentation Agent and
the Lenders under each of the Other Documents and all other instruments,
documents and agreements providing the benefit of any collateral security or
guarantees for the prompt payment and performance of the Obligations are for the
ratable benefit of the Lenders, and each of the rights, benefits and privileges
thereunder shall be exercised (or not exercised) solely by the Administrative
Agent but only at the direction and with the consent and approval of such
Lenders as are required by Section 10.14. hereof.
Section 10.14. REQUIRED APPROVAL. Any action which requires the consent
or approval of the Lenders under this Agreement may be taken upon the
affirmative consent or approval of the
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Required Lenders to be effective; PROVIDED, HOWEVER, that the following action
shall require the unanimous affirmative approval of all of the Lenders:
(a) any increase or decrease in the amount of the Total
Revolving Loan Commitment Amount, the Total Term Loan Commitment Amount, or the
Swingline Commitment which can be issued or created hereunder;
(b) any amendment of the Borrowing Base which would have the
effect of increasing credit availability thereunder;
(c) any extension of the Revolving Credit Termination Date or
the Maturity Date;
(d) any increase or decrease in any Lender's Commitment or
Commitment Percentage, other than in connection with assignments under Section
13 hereof or in any provision of this Agreement providing for pro rata payments
among the Lenders, the sharing of payments of principal, interest, fees and any
other amounts due and payable under this Agreement and the sharing of any
amounts obtained by any Lender by set-off or otherwise;
(e) any decrease in the rate of interest applicable to the
Loans (other than as a result of fluctuations in the Base Rate) or in any Fees
(other than fees assessed for the account of the Administrative Agent);
(f) the release of any Collateral (except for Collateral
having a de minimis value or as otherwise expressly provided in this Agreement
or in the Security Documents);
(g) any amendment of this Section 10.14. and Sections 10.15.,
13., 14.11. or 14.12. of this Agreement and any provision of this Agreement
providing for the reimbursement of the Lenders for any fees, costs or expenses
or the indemnification of any Lender;
(h) the release of any Credit Party under any Guarantee;
(i) the amendment or modification of the definition of the
term "Required Lenders";
(j) any amendment or waiver of the provisions of Section 5 or
6 of this Agreement, including, but not being limited to, the provision of any
consent of the Lenders in respect of Permitted Acquisitions required under
Section 6.2.1. hereof;
(k) any deferral or postponement in the payment or accrual of
interest or Fees; or
(l) any amendment to the amortization schedule for the Loans.
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Section 10.15. REPLACEMENT OF NON-CONSENTING LENDERS. If, in connection
with any proposed change, waiver, discharge or termination to any of the
provisions of this Agreement as contemplated by Section 10.14. hereof, the
consent of the Required Lenders is obtained but the consent of one or more other
Lenders whose consent is required is not obtained, then Borrower shall have the
right, so long as all non-consenting Lenders whose individual consent is
required are treated as described in either clause (A) or (B) below, to either
(A) replace each such non-consenting Lender or Lenders with one or more
Replacement Lenders pursuant to Section 2.6.6. so long as at the time of such
replacement, each Replacement Lender consents to the proposed change, waiver,
discharge or termination or (B) terminate such non-consenting Lender's
Commitment and repay in full such Lender's outstanding Loans; but only if, in
each such case, such Replacement Lender and such action is acceptable to the
Administrative Agent and the Documentation Agent provided that, unless the
Commitment which is terminated and Loans which are repaid pursuant to the
preceding clause (B) are immediately replaced in full at such time through the
addition of new Lenders or the increase of the Commitments and/or outstanding
Loans of existing Lenders (who in each case must specifically consent thereto),
then in the case of any action pursuant to preceding clause (B) the Required
Lenders (determined before giving effect to the proposed action) shall
specifically consent thereto.
Section 10.16. AMENDMENT. Borrower hereby agrees that the foregoing
provisions of this Section 10 constitute an agreement among, and solely for the
benefit of, the Lenders, the Administrative Agent and the Documentation Agent,
and the Lenders acknowledge that no Credit Party is a party to or bound by such
foregoing provisions and that any and all of the provisions of this Section 10
may be amended at any time by the Lenders, with the consent of the
Administrative Agent and the Documentation Agent, without the consent or
approval of, or notice to, any Credit Party (other than the requirement of
notice to the Borrower of the resignation of the Administrative Agent or the
Documentation Agent).
Section 10.17. QUESTIONNAIRE. In order to assist the Administrative
Agent and the Documentation Agent in the administration and performance of their
duties under this Agreement, each of the Lenders hereby agrees to complete and
deliver to the Administrative Agent and the Documentation Agent a questionnaire
in substantially the form of EXHIBIT K attached hereto (an "Administrative
Questionnaire").
SECTION 11. DEFAULT
Section 11.1. The occurrence of any of the following events shall
constitute a default under this Agreement, the Notes and the Other Documents (an
"Event of Default"):
(a) Borrower shall fail to pay (i) any outstanding principal
amount of the Loans when due, (ii) any accrued and unpaid interest on the Loans
within three (3) days of the due date therefor or (iii) any fees or expenses
payable under this Agreement, the Notes or the Other Documents within five (5)
days of the due date therefor; or
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(b) Any Credit Party shall fail to perform any term, covenant
or agreement contained in Sections 7.1., 7.2., 7.3., 7.4., 7.5., 7.6., 7.7.,
7.8., 7.12., 7.15., 7.17., 7.18., 7.20. and 8.1. through 8.21. of this
Agreement; provided, however, that no Event of Default shall occur under this
subsection (b) by virtue of Borrower's failure to timely deliver any financial
statement or report required to be delivered under any of the foregoing sections
until the lapse of a ten (10) day grace period; or
(c) Any Credit Party shall fail to perform any other term,
covenant or agreement (other than in respect of terms, covenants and agreements
which are the subject of Sections 11.1.(a) or 11.1.(b) and Section 11.1.(k)
hereof) contained in this Agreement and such default shall continue for thirty
(30) days after notice thereof has been sent to Borrower by the Administrative
Agent; or
(d) any default or event of default shall occur under the
Other Documents which could have a Material Adverse Effect; or
(e) any representation or warranty of any Credit Party made in
this Agreement, the Notes, the Other Documents or the Transaction Documents or
in any certificate or report delivered hereunder or thereunder shall prove to
have been false in any material respect upon the date when made or deemed to
have been made; or
(f) Borrower or any of its Subsidiaries shall (i) default in
any payment of principal of or interest of any Indebtedness (other than the
Loans) or in the payment of any Contingent Obligation or any Lease Obligation,
beyond any period of grace (not to exceed thirty (30) days), if any, provided in
the instrument or agreement under which such Indebtedness, Contingent Obligation
or Lease Obligation was created, if the aggregate amount of the Indebtedness,
Contingent Obligations or Lease Obligations in respect of which such default or
defaults shall have occurred is at least FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00) or (ii) default in the observance or performance of any
other agreement or condition relating to any such Indebtedness, Contingent
Obligation or Lease Obligation or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
permit the holder or holders of such Indebtedness, Contingent Obligation or
Lease Obligations to cause, with the giving of notice if required, the same to
become due prior to its stated maturity, to become payable or to terminate
Borrower's or any Subsidiary's use thereof prior to the specified term therefor;
or
(g) Any Credit Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee,
liquidator or similar official of itself or of all or a substantial part of its
properties and assets; (ii) be generally not paying its debts as such debts
become due; (iii) make a general assignment for the benefit of its creditors;
(iv) commence a voluntary case under the Bankruptcy Code; (v) take any action or
commence any case or proceeding under any law relating to bankruptcy,
insolvency, reorganization, winding-up or composition or adjustment of debts, or
any other law providing for the relief of debtors; (vi) fail
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to contest in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code or
other law; (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing; or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or
(h) a proceeding or case shall be commenced, without the
application or consent of any Credit Party in any court of competent
jurisdiction, seeking (i) the liquidation, reorganization, dissolution, winding
up, or composition or readjustment of its debts; (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of it or of all or any
substantial part of its properties and assets; or (iii) similar relief in
respect of it, under any law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts or any other law providing for
the relief of debtors, or an order for relief shall be entered in an involuntary
case under the Bankruptcy Code, against any such Credit Party; or action under
the laws of the jurisdiction of incorporation or organization of any such Person
similar to any of the foregoing shall be taken with respect to any such Credit
Party; or
(i) an uninsured or self-insured judgment or order for the
payment of money shall be entered against any Credit Party by any court, or a
warrant of attachment or execution or similar process shall be issued or levied
against property of any Credit Party, that in the aggregate exceeds TWO HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) in value and such judgment,
order, warrant or process shall continue undischarged or unstayed for sixty (60)
days; or
(j) Any Credit Party or any member of the Controlled Group
shall fail to pay when due an amount or amounts aggregating in excess of TWO
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($250,000.00) that it shall have
become liable to pay to the PBGC or to a plan under Title IV of ERISA; intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by any Credit
Party, any member of the Controlled Group, any plan administrator or any
combination of the foregoing, other than in the case of a "statutory
termination" as defined in Title IV of ERISA, when the amount of such liability
to any Credit Party could reasonably be expected to have a Material Adverse
Effect; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against any Credit Party and such proceedings shall not have been
dismissed within thirty (30) days thereafter where the liability to any Credit
Party could have a Material Adverse Effect; or a condition shall exist by reason
of which the PBGC would be entitled to obtain a decree adjudicating that any
such Plan or Plans must be terminated where the liability to any Credit Party
could have a Material Adverse Effect; or
(k) Borrower shall fail to meet any financial covenant set
forth in Section 9. hereof; or
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(l) The failure of any Credit Party to execute, deliver or
address, or cause to be executed, delivered and addressed, the matters set forth
on SCHEDULE 11.1. attached hereto within the time periods set forth on said
SCHEDULE 11.1. (the "Post Closing Matters"); or
(m) Any Governmental Authority shall condemn, seize or
otherwise appropriate, or take custody or control of, or file a lien, levy or
assessment in respect of, all or any substantial portion of the properties or
assets of any Credit Party or any of its Subsidiaries; or
(n) Any Governmental Authority or other Person shall garnish,
seize or levy or execute upon any monies of Borrower or any of its Subsidiaries
on deposit with or otherwise in the custody of the Administrative Agent, the
Documentation Agent, the Lenders or any Lender Affiliate; or
(o) This Agreement, the Notes or the Other Documents shall
cease to be in full force and effect in any material respect, or any Credit
Party shall so assert, or, except to the extent resulting from the negligent or
willful acts or omissions of the Administrative Agent, the Encumbrances created
by the Security Documents shall cease to be fully perfected enforceable first
priority security interest on the Collateral as provided herein and therein; or
(p) Any Guarantee shall cease to be in full force and effect,
or any Guarantor shall so assert; or
(q) SSH shall engage in any activity other than Permitted SSH
Activities; or
(r) a Change in Control Event shall have occurred; or
(s) an "Event of Noncompliance" (as defined in the Transaction
Documents) shall have occurred in connection with the redemption of, or which
otherwise requires the redemption of, the Capital Stock issued under the
Transaction Documents.
SECTION 12. REMEDIES
Section 12.1. REMEDIES. Upon the occurrence of an Event of Default, and
at any time thereafter while such Event of Default is continuing, immediately
and automatically in the case of an Event of Default specified in Section
11.1(g) or 11.1.(h), and in all other cases, upon the Administrative Agent's
declaration at the request or consent of the Required Lenders:
(a) The Administrative Agent's and the Lenders' obligation to
make any Extension of Credit shall terminate;
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(b) the unpaid principal amount of the Loans, together with
accrued interest thereon, and all other Obligations shall become immediately due
and payable without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived;
(c) The Administrative Agent, the Documentation Agent, the
Lenders and any Lender Affiliate may exercise any right of setoff granted to the
Administrative Agent, the Documentation Agent, the Lenders and any Lender
Affiliate pursuant to Section 14.2.4. hereof; and
(d) The Administrative Agent, the Documentation Agent and the
Lenders may exercise any and all other rights and remedies they have under this
Agreement, the Notes or the Other Documents or at law or in equity, and proceed
to protect and enforce their rights by any action at law, in equity or other
appropriate proceeding.
Section 12.2. DEFAULT INTEREST RATE. Immediately upon the occurrence of
an Event of Default specified in Section 11.1.(a) hereof, and in all other cases
at the option of the Required Lenders, which may be exercised following the
occurrence of any other Event of Default, and whether or not the Lenders
exercise any other right or remedy, the Obligations (including, to the extent
permitted by law, overdue interest and fees) shall bear interest thereafter
until paid in full at the Default Rate.
Section 12.3. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that,
following the occurrence or during the continuance of any Default or Event of
Default, the Adminisitrative Agent, the Documentation Agent or any Lender, as
the case may be, receives any monies in connection with the enforcement of this
Agreement or any of the Other Documents, or otherwise with respect to the
realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of Swingline Loans in the following
order: (i) fees, expenses and penalties applicable to Swingline Loans, (ii)
accrued and unpaid interest and (iii) principal.
(c) Second, to the payment of Revolving Loans in the following
order: (i) fees, expenses and penalties applicable to Revolving Loans, (ii)
accrued and unpaid interest and (iii) principal, in each case pro rata with each
Lender's Revolving Loan Commitment Percentage.
(d) Third, to the payment of the Term Loans in the following
order: (i) fees, expenses and penalties applicable to the Term Loans, (ii)
accrued and unpaid interest and (iii) principal, in each case pro rata with each
Lender's Term Loan Commitment Percentage.
(e) Fourth, to the payment of any other Obligations due to the
Administrative Agent, the Documentation Agent or the Lenders under this
Agreement, the Notes or the Other Documents.
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(f) Fifth, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Lenders and the Agents of all
of the Obligations, to the payment of any obligations required to be paid
pursuant to Section 9-504(1)(c) of the Uniform Commercial Code of the State of
Connecticut.
(g) Finally, the excess, if any, shall be distributed to
Borrower or such other Persons as are entitled thereto.
SECTION 13. ASSIGNMENT
Section 13.1. ASSIGNMENT.
(a) Each Lender may assign to one or more Persons all or a
portion of its interests, rights and obligations under this Agreement (including
all or a portion of its Revolving Loan Commitment and the same portion of the
Revolving Loans at the time owing to it and the Revolving Note held by it and/or
its Term Loan Commitment, and the same portion of the Term Loan at the time
owing to it and the Term Note held by it); PROVIDED, HOWEVER, that (i) except in
the case of an assignment to a Lender or a Lender Affiliate, the Administrative
Agent and, as long as no Default or Event of Default shall have occurred or be
continuing, the Borrower must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed); (ii)
each such assignment shall be of a constant, and not a varying, percentage of
all the assigning Lender's interests, rights and obligations under this
Agreement; (iii) the amount of the Commitments and the Loans of the assigning
Lender subject to each such assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than FIVE MILLION AND NO/100 DOLLARS
($5,000,000.00) in the case of Revolving Loans, FIVE HUNDRED THOUSAND AND NO/100
DOLLARS ($500,000.00) in the case of Term Loans or, if less, the entire
remaining Revolving Loan Commitment or Term Loan Commitment and all of the Loans
of the Class being assigned at the time owing to such assigning Lender; (iv) the
parties to each such assignment shall execute and deliver to the Administrative
Agent an assignment and acceptance in the form of EXHIBIT L attached hereto (the
"Assignment and Acceptance"), together with the Note or Notes subject to such
assignment and a processing and recordation fee of TWO THOUSAND FIVE HUNDRED AND
NO/100 DOLLARS ($2,500.00); (v) the assignee shall be a Lender or financial
institution having total assets in excess of FIVE HUNDRED MILLION AND NO/100
DOLLARS ($500,000,000.00); (vi) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative Questionnaire; (vii) as
long as no Default or Event of Default shall have occurred or be continuing,
such assignment shall not result in increased costs to any Credit Party by
virtue of such assignment; and (viii), in the case of BankBoston, N.A., no such
assignment shall result, unless otherwise agreed by Borrower, in a reduction of
the amount of the Revolving Loan Commitment of BankBoston, N.A. to less than
TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00). Upon such execution,
delivery, acceptance and recording pursuant to Section 13.2. hereof from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the
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execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement; and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's interests, rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of any indemnity, waiver, release or limitation of
liability contained herein, as well as to any Fees accrued for its account and
not yet paid).
(b) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Commitment or Commitments and the outstanding balances of its Loans being
assigned, in each case without giving effect to assignments thereof which have
not become effective, are as set forth in such Assignment and Acceptance; (ii)
except as set forth in subsection (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the Notes, the Other Documents or any
other agreement, document or instrument furnished pursuant hereto or thereto;
(iii) such assignee represents and warrants that it is legally authorized to
enter into such Assignment and Acceptance; (iv) such assignee confirms that it
has received a copy of this Agreement, together with copies of the most recent
Financial Statements delivered pursuant to Section 7.1. hereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative Agent
or the Documentation Agent, such assigning Lender or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes the Administrative
Agent and the Documentation Agent to take such action as agent on its behalf and
to exercise such powers under this Agreement as are delegated to the
Administrative Agent and the Documentation Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender.
Section 13.2. MAINTENANCE OF A REGISTER. The Administrative Agent shall
maintain at one of its principal offices a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of the names and
addresses of the Lenders, the Revolving Loan Commitment, the Revolving Loan
Commitment Percentage, the Term Loan Commitment, the Term Loan Commitment
Percentage, and principal amount of the Loans owing to, each Lender pursuant to
the terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive in the absence of manifest error and Borrower, the
Administrative Agent, the
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Documentation Agent and the Lenders may treat each person whose name is recorded
in the Register pursuant to the terms hereof as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
Borrower and any Lender, at any reasonable time and from time to time upon
reasonable prior notice. The Administrative Agent shall also be authorized to
amend, modify and substitute SCHEDULE 1.153. attached hereto from time to time
to properly reflect the Commitments and the Commitment Percentages of the
Lenders under this Agreement.
Section 13.3. QUESTIONNAIRE. Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an assignee
together with the Note subject to such assignment, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section 13.1. above and, if required, the written consent of the
Administrative Agent and/or Borrower to such assignment, the Administrative
Agent shall (i) accept such Assignment and Acceptance; (ii) record the
information contained therein in the Register; and (iii) give prompt notice
thereof to the Lenders. Within five (5) Business Days after receipt of notice,
Borrower, at its own expense, shall execute and deliver to the Administrative
Agent, in exchange for the surrendered Note or Notes, a new Note or Notes to the
order of such assignee in a principal amount equal to the applicable Revolving
Loan Commitment or Term Loan Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Revolving
Loan Commitment or Term Loan Commitment, a new Note or Notes to the order of
such assigning Lender in a principal amount equal to the applicable Commitment
retained by it. Such new Notes shall be in an aggregate principal amount equal
to the aggregate principal amount of the surrendered Note which they replace;
shall be dated the date of the surrendered Notes which they replace and shall
otherwise be in substantially the form of EXHIBIT B or EXHIBIT D attached
hereto, as applicable. Canceled Notes shall be returned to the Borrower.
Section 13.4. SALE OF PARTICIPATIONS. Each Lender may without the
consent of the Borrower or the Administrative Agent sell participations to one
or more Lenders, financial institutions or other entities in all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Revolving Loan Commitment and the same portion of the Revolving Loans owing
to Lender and the Revolving Note held by it and/or its Term Loan Commitment, and
the same portion of the Term Loan at the time owing to it and the Term Note held
by it); PROVIDED, HOWEVER, that (i) such Lender's obligations under this
Agreement shall remain unchanged; (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations;
(iii) the participating Lenders, financial institutions or other entities shall
be entitled to the benefit of the cost protection provisions contained in this
Agreement only to the extent the Lender or Lenders selling a participation to
them are entitled thereto; (iv) Borrower, the Administrative Agent, the
Documentation Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights, interests and
obligations under this Agreement, and such Lender shall retain the sole right to
enforce the obligations of Borrower relating to the Loans and to approve any
amendment, modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any Fees payable hereunder or
the amount of principal of or
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the rate at which interest is payable on the Loans, extending any scheduled
principal payment date or date fixed for the payment of interest or other
amounts on the Loans or changing or extending the Commitments or Section 2.6.
hereof) and (v) such participation shall not result in increased costs to any
Credit Party by virtue of the sale of such participation.
Section 13.5. DISCLOSURE OF INFORMATION. Any Lender or participant may,
in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 13, disclose to the assignee or
participant or proposed assignee or participant any information relating to
Borrower furnished to such Lender by or on behalf of Borrower; PROVIDED,
HOWEVER, that, prior to any such disclosure of information designated by
Borrower as confidential, each such assignee or participant or proposed assignee
or participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the confidentiality of
such confidential information in accordance with Section 7.7. hereof.
Section 13.6. ASSIGNEE OR PARTICIPANT AFFILIATED WITH BORROWER. If any
assignee Lender is an Affiliate of Borrower, then any such assignee Lender shall
have no right to vote as a Lender hereunder or under any of the Other Documents
for purposes of granting consents or waivers or for purposes of agreeing to
amendments or other modifications to this Agreement or any of the Other
Documents or for purposes of making requests to the Administrative Agent
pursuant to Section 10 hereof, and the determination of the Lenders shall for
all purposes of this Agreement and the Other Documents be made without regard to
such assignee Lender's interest in any of the Loans. If any Lender sells a
participating interest in any of the Loans to a participant, and such
participant is Borrower or an Affiliate of the Borrower, then such transferor
Lender shall promptly notify the Administrative Agent of the sale of such
participation. A transferor Lender shall have no right to vote as a Lender under
this Agreement or any of the Other Documents for purposes of granting consents
or waivers or for purposes of agreeing to amendments or modifications to this
Agreement or any of the Other Documents or for purposes of making requests to
the Administrative Agent pursuant to Section 10 hereof to the extent that such
participation is beneficially owned by Borrower or any Affiliate of Borrower,
and the determination of the Lender shall for all purposes of this Agreement and
the Other Documents be made without regard to the interest of such transferor
Lender in the Loans to the extent of such participation.
Section 13.7. MISCELLANEOUS ASSIGNMENT PROVISIONS. If any assignee
Lender is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable under this Agreement or any of the Other Documents for its account,
deliver to Borrower and the Administrative Agent certification as to its
exemption from deduction or withholding of any United States federal income
taxes. Anything contained in this Section 13 to the contrary notwithstanding,
any Lender may at any time pledge all or any portion of its interest and rights
under this Agreement (including all or any portion of its Note) to any of the
twelve (12) Federal Reserve Banks organized under Section 4 of the Federal
Reserve Act. No such pledge or the enforcement thereof shall release the pledgor
Lender from its obligations under this Agreement or any of the Other Documents.
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Section 13.8. NO ASSIGNMENT OR DELEGATION BY BORROWER. Borrower shall
not assign or delegate any of its rights or duties under this Agreement.
SECTION 14. MISCELLANEOUS
Section 14.1. CROSS COLLATERAL. The security interests, liens and other
rights and interests in and relative to any collateral now or hereafter granted
to the Administrative Agent, the Documentation Agent or the Lenders by Borrower
by or in any instrument or agreement, including but not limited to this
Agreement and the Other Documents, shall serve as security for any and all
obligations of Borrower or any other Credit Party to the Administrative Agent,
the Documentation Agent and the Lenders, and, for the repayment thereof, the
Administrative Agent, the Documentation Agent or the Lenders may resort to any
security held by them in such order and manner as they may elect subject to the
provisions of Section 12.3. hereof.
Section 14.2. WAIVERS.
Section 14.2.1. IN GENERAL. Borrower waives presentment, demand,
notice, protest, notice of acceptance, notice of loans made, credit extended,
collateral received or delivered or other action taken in reliance hereon and
all other demands and notices of any description. With respect both to the
Obligations and the Collateral, Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of the Collateral, to the addition or release
of any party or Person primarily or secondarily liable therefor, to the
acceptance of partial payments thereon and the settlement, compromising or
adjusting of any thereof, all in such manner and at such time or times as the
Lenders may deem advisable in their sole and absolute discretion. The
Administrative Agent, the Documentation Agent and the Lenders shall have no
duty, other than to act in a commercially reasonable manner, as to the
collection or protection of the Collateral or any income thereon, as to the
preservation of rights or remedies against prior parties, or as to the
preservation of any rights and remedies pertaining thereto. The Administrative
Agent, the Documentation Agent and the Lenders may exercise their rights and
remedies with respect to the Collateral without resorting or regard to other
collateral or sources of reimbursement for liability. The Administrative Agent,
the Documentation Agent and the Lenders shall not be deemed to have waived any
of their rights and remedies with respect to the Obligations or the Collateral
unless such waiver be in writing. No delay or omission on the part of the
Administrative Agent, the Documentation Agent or the Lenders in exercising any
right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to
any subsequent enforcement by the Administrative Agent, the Documentation Agent
or the Lenders. All rights and remedies of the Administrative Agent, the
Documentation Agent or the Lenders with respect to the Obligations or the
Collateral shall be cumulative and may be exercised singularly or concurrently.
Section 14.2.2. PREJUDGMENT REMEDY. EACH CREDIT PARTY ACKNOWLEDGES THAT
THE TRANSACTION OF WHICH THIS AGREEMENT IS A PART IS A COMMERCIAL TRANSACTION
AND HEREBY WAIVES ITS RIGHT TO
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NOTICE AND HEARING UNDER CHAPTER 903a OF THE CONNECTICUT GENERAL STATUTES OR BY
OTHER APPLICABLE LAW WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE
ADMINISTRATIVE AGENT, THE DOCUMENTATION AGENT OR THE LENDERS MAY DESIRE TO USE.
Section 14.2.3. JURY TRIAL. EACH CREDIT PARTY HEREBY WAIVES TRIAL BY
JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING OR ANY MATTER ARISING IN
CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTION OF WHICH THIS AGREEMENT
IS A PART AND/OR IN THE ENFORCEMENT BY THE ADMINISTRATIVE AGENT, THE
DOCUMENTATION AGENT OR THE LENDERS OF ANY OF THEIR RIGHTS AND REMEDIES HEREUNDER
OR UNDER APPLICABLE LAW. EACH CREDIT PARTY ACKNOWLEDGES THAT IT MAKES THIS
WAIVER KNOWINGLY, VOLUNTARILY AND ONLY AFTER CONSIDERATION OF THE RAMIFICATIONS
OF THIS WAIVER WITH ITS ATTORNEY.
Section 14.2.4. LIEN AND SETOFF. Regardless of the adequacy of any
collateral or other means of obtaining repayment of the Obligations, any
deposits (general or special, time or demand, the provisional or final),
balances or other sums credited by or due from the Administrative Agent, the
Documentation Agent, the Lenders, or any Lender Affiliate to any Credit Party
(other than payroll and payroll tax deposit accounts) may, at any time and from
time to time after the occurrence of an Event of Default, without notice to any
such Credit Party or compliance with any other condition precedent now or
hereafter imposed by statute, rule of law, or otherwise (all of which are hereby
expressly waived) be, subject to Section 12.3. hereof, setoff, appropriated, and
applied by the Administrative Agent, the Documentation Agent, the Lenders or any
Lender Affiliate against any and all obligations of the Credit Parties to the
Administrative Agent, the Documentation Agent, the Lenders or any Lender
Affiliate in such manner as the Administrative Agent, the Documentation Agent,
the Lenders or any Lender Affiliate in their sole and absolute discretion may
determine, and each Credit Party hereby grants to the Administrative Agent, the
Documentation Agent and the Lenders a continuing security interest in such
deposits, balances or other sums for the payment and performance of all such
obligations. The rights provided to the Administrative Agent, the Documentation
Agent, the Lenders and any Lender Affiliate in this Section 14.2.4. shall be in
addition to and shall not limit any common law right of setoff available to the
Administrative Agent, the Documentation Agent, the Lenders or any Lender
Affiliate.
Section 14.2.5. CLAIMS. Borrower does hereby (i) waive any claim in
tort, contract or otherwise which Borrower may have against the Administrative
Agent, the Documentation Agent, the Lenders, any Lender Affiliate or any Lender
Agents which may arise out of the relationship between Borrower and the
Administrative Agent, the Documentation Agent, the Lenders or any Lender
Affiliate prior to the Closing Date; and (ii) absolutely and unconditionally
release and discharge the Administrative Agent, the Documentation Agent, the
Lenders and any Lender Affiliate or Lender Agents from any and all claims,
causes of action, losses, damages or expenses which may arise out of any
relationship between it and the Administrative Agent, the Documentation Agent,
the Lenders or any Lender Affiliate which Borrower may have as of the
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Closing Date. Borrower acknowledges that it makes this waiver and release
knowingly, voluntarily and only after considering the ramifications of this
waiver and release with its attorney.
Section 14.3. NOTICES. All notices, requests, demands or other
communications required by this Agreement shall be made in writing, and unless
otherwise specifically provided herein, shall be deemed to have been duly given
when delivered by hand or mailed, first class mail postage prepaid, or, in the
case of telecopy or facsimile notice, when transmitted, answer back received,
addressed as follows, or to such other address as either party may designate in
writing:
If to the Administrative Agent:
BankBoston, N.A.
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx, Xx., Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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If to the Documentation Agent:
General Electric Capital Corporation
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxx, Assistant Vice President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to any Lender, at the address set forth on the Administrative Questionnaire.
If to Borrower:
Alarmguard, Inc.
000 Xxxxxxxx Xxxx
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx, Chief Financial Officer
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Section 14.4. RETENTION OF DOCUMENTS. The Administrative Agent, the
Documentation Agent and any Lender may, in accordance with the Administrative
Agent's, the Documentation Agent's or such Lender's customary practices, destroy
or otherwise dispose of all documents, schedules, invoices or other papers,
delivered by any Credit Party to the Administrative Agent, the Documentation
Agent or such Lender unless such Credit Party requests in writing the same be
returned. Upon any such request and at such Credit Party's expense, the
Administrative Agent, the Documentation Agent or such Lender shall return such
papers when the Administrative Agent's, the Documentation Agent's or such
Lender's actual or anticipated need for same has terminated.
Section 14.5. FEES AND EXPENSES; INDEMNITY.
(a) Whether or not the transactions contemplated hereby shall
be consummated, Borrower agrees to pay promptly all reasonable out-of-pocket
(unless otherwise specifically permitted below) fees, costs and expenses
incurred by the Administrative Agent, the Documentation Agent and the Lenders in
connection with any matters contemplated by or arising out of this Agreement,
the Notes or the Other Documents, and all such fees, costs and expenses shall be
part of the Obligations, payable on demand and secured by the Collateral: (a)
reasonable out-of-pocket fees, costs and expenses (including reasonable
attorneys' fees) incurred by the Administrative Agent in connection with the
examination, review, due diligence investigation, documentation and closing of
the transactions contemplated by this Agreement, the Notes and the Other
Documents; (b) reasonable fees, costs and expenses of the Administrative Agent
(including reasonable attorneys' fees, allocated costs of internal counsel and
fees and expenses of accountants retained by the Administrative Agent) incurred
in connection with the administration
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of this Agreement and the Other Documents and any amendments, modifications and
waivers relating thereto; (c) reasonable out-of-pocket fees, costs and expenses
(including reasonable attorneys' fees and allocated costs of internal counsel)
incurred by the Administrative Agent within six (6) months after the Closing
Date in connection with the syndication of the Loans; (d) reasonable
out-of-pocket fees, costs and expenses incurred in creating, perfecting and
maintaining perfection of Encumbrances in favor of the Administrative Agent on
behalf of the Lenders, including lien search fees, filing and recording fees,
taxes and expenses, title insurance policy fees, fees and expenses of attorneys
for providing such opinions as the Administrative Agent may reasonably request
and fees and expenses of attorneys to the Administrative Agent; (e) reasonable
fees, costs and expenses (including attorneys' fees and allocated costs of
internal counsel) incurred in connection with the review, documentation,
negotiation, closing and administration of any subordination or intercreditor
agreements; (f) reasonable out-of-pocket fees, costs and expenses incurred in
connection with forwarding to Borrower the proceeds of Loans including the
Administrative Agent's standard wire transfer fee; (g) reasonable out-of-pocket
fees, costs, expense and bank charges, including bank charges for returned
checks, incurred by the Administrative Agent in establishing, maintaining and
handling lock box accounts, blocked accounts or other accounts for collection of
the Collateral; and (h) reasonable out-of-pocket fees, costs and expenses of the
Administrative Agent, the Documentation Agent and the Lenders (including
attorneys' fees, allocated costs of internal counsel and fees of environmental
consultants, industry consultants, accountants and other professionals retained
by the Administrative Agent, the Documentation Agent or any Lender) incurred in
collecting upon or enforcing rights against the Collateral after the occurrence
and during the continuance of a Default or an Event of Default or incurred in
any action to enforce this Agreement or the Other Documents or to collect any
payments due from any Credit Party under this Agreement, the Notes or the Other
Documents or incurred in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement, whether in the nature of a
"workout" or in connection with any insolvency or bankruptcy proceedings or
otherwise.
(b) Each Credit Party shall, jointly and severally, indemnify
and hold the Administrative Agent, the Documentation Agent, the Lenders, any
Lender Affiliate and any Lender Agents harmless from and against any and all
losses, liabilities, claims, damages or expenses incurred by any of them as a
result of, or arising out of, or in any way related to, or by reason of, any
suit, action, investigation, litigation or other proceeding (whether or not any
such Person is a party thereto and whether or not any such suit, action,
investigation, litigation or other proceeding is between or among any such
Person, or any third Person or otherwise) related to the entering into and/or
the performance of (a) this Agreement, the Notes or the Other Documents, the use
of the proceeds of any Extension of Credit, the consummation of any other
transaction contemplated hereby and thereby or the exercise of any rights or
remedies under this Agreement, the Notes or the Other Documents, (b) the
Transaction Documents or any other transaction contemplated thereby or (c) any
Acquisition (but excluding any such losses, liabilities, claims, damages or
expenses to the extent solely incurred by reason of the gross negligence or
willful misconduct of the Person to be indemnified as finally determined by a
court of competent jurisdiction) and including, in any case, and without
limitation, the reasonable fees and expenses of legal counsel and other
professional advisors incurred in connection with any such action, suit,
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investigation, litigation or other proceeding. NO LENDER AGENT SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY TO THIS AGREEMENT, THE NOTES OR THE
OTHER DOCUMENTS, ANY SUCCESSOR, ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH
PERSON OR ANY OTHER PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A
RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR TERMINATED UNDER THIS
AGREEMENT, THE NOTES OR THE OTHER DOCUMENTS OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
Section 14.6. TERM OF AGREEMENT. This Agreement shall continue in force
and effect so long as the Lenders have any commitment to extend credit or any of
the Obligations shall be outstanding.
Section 14.7. STAMP TAX. Borrower will pay any stamp, franchise or
other recording tax which becomes payable in respect of this Agreement, the
Notes or the Other Documents.
Section 14.8. SCHEDULES AND EXHIBITS. The schedules and exhibits which
are attached hereto are and shall constitute a part of this Agreement.
Section 14.9. GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement,
the Notes and the Other Documents, and the rights and obligations of the parties
hereunder and thereunder, shall be governed by, and construed and interpreted in
accordance with, the laws of the State of Connecticut. Borrower agrees that any
suit for the enforcement of this Agreement, the Notes or the Other Documents may
be brought in the courts of the State of Connecticut or any federal court
sitting therein and consents to the non-exclusive jurisdiction of such court and
to service of process in any such suit being made upon Borrower by mail at the
address referred to in Section 14.3. hereof. Borrower hereby waives any
objection that Borrower may now or hereafter have to the venue of any such suit
or any such court or that such suit is brought in an inconvenient court.
Section 14.10. SURVIVAL OF REPRESENTATIONS. All representations,
warranties, covenants and agreements contained in this Agreement, the Notes or
the Other Documents shall survive the Closing Date and continue in full force
and effect until the payment and the performance of the Obligations in full and
the termination of the Commitments.
Section 14.11. AMENDMENTS. No modification or amendment of this
Agreement, the Notes or the Other Documents shall be effective unless the same
shall be in writing and signed by Borrower and the Required Lenders (or, if
required by Section 10.14., all of the Lenders) and, if the modification or
amendment relates to any duties, obligations or rights of the Administrative
Agent or the Documentation Agent, the Administrative Agent and the Documentation
Agent, as applicable.
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Section 14.12. BINDING EFFECT OF AGREEMENT. This Agreement shall be
binding upon and inure to the benefit of the Administrative Agent, the
Documentation Agent, the Lenders, Borrower and their respective successors and
assigns; PROVIDED, HOWEVER, that Borrower may not assign or transfer its rights
or obligations hereunder.
Section 14.13. INTEREST RATE. If the rate of interest payable by
Borrower under this Agreement, the Notes or the Other Documents shall be or
become usurious or otherwise unlawful under laws applicable thereto, the
interest rate shall be reduced to the maximum lawful rate and any amount paid by
Borrower in excess of the maximum lawful rate shall be considered a payment in
reduction of principal or, at the sole election of the Lenders, shall be
returned to Borrower.
Section 14.14. COUNTERPARTS. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures hereto and thereto
were upon one and the same instrument.
Section 14.15. NO AGENCY RELATIONSHIP. Neither the Administrative
Agent, the Documentation Agent nor any Lender is the agent, fiduciary or
representative of Borrower nor is Borrower the agent, fiduciary or
representative of the Administrative Agent, the Documentation Agent or any
Lender and this Agreement shall not make the Administrative Agent, the
Documentation Agent or any Lender liable to any third party, including but not
limited to, Borrower's shareholders, directors, officers, creditors or any other
person.
Section 14.16. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
Section 14.17. HEADINGS. All article, section and subsection headings
in this Agreement, the Notes and the Other Documents are included for
convenience of reference only and shall not constitute a part of this Agreement,
the Notes or the Other Documents for any other purpose.
Section 14.18. REINSTATEMENT. This Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by the Administrative Agent, the Documentation Agent or any Lender in
respect of the Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent, the Documentation Agent or any Lender upon
the insolvency, bankruptcy, dissolution, liquidation or reorganization of any
Credit Party or upon the appointment of any intervenor or conservator of, or
trustee or similar official for, any Credit Party or any substantial part of its
properties or assets, or otherwise, all as though such payments had not been
made.
Section 14.19. INTERPRETATION AND CONSTRUCTION. The following rules
shall apply to the interpretation and construction of this Agreement, the Notes
and the Other Documents unless the context requires otherwise: (a) the singular
includes the plural and the plural includes the singular; (b) words importing
any gender include the other gender; (c) references to statutes are to be
99
construed as including all statutory provisions consolidating, amending or
replacing the statute to which reference is made and all regulations promulgated
pursuant to such statutes; (d) references to "writing" shall include printing,
photocopy, typing, lithography and other means of reproducing words in a
tangible, visible form; (e) the words "including", "includes" and "include"
shall be deemed to be followed by the words "without limitation"; (f) references
to the introductory paragraph, preliminary statements, articles, sections (or
subdivisions of sections), exhibits or schedules are to those of this Agreement
unless otherwise indicated; (g) references to agreements and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications to such instruments, but only to the extent that such amendments
and other modifications are permitted or not prohibited by the terms of this
Agreement; (h) references to Persons include their respective permitted
successors and assigns; and (i) "or" is not exclusive.
Section 14.20. GAAP AND ACCOUNTING CHANGES. Unless otherwise
specifically provided herein, any accounting term used in the Agreement shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations thereunder shall be computed in accordance with GAAP
consistently applied. That certain items or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. If any "Accounting Changes" (as defined below) occur and such
changes result in a change in the calculation of the financial covenants,
standards or terms used in the Agreement or any of the Other Documents, then the
Credit Parties, the Administrative Agent, the Documentation Agent and the
Lenders agree to enter into negotiations in order to amend such provisions of
the Agreement so as to equitably reflect such Accounting Changes with the
desired result that the criteria for evaluating any Credit Party's and its
Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made. "Accounting Changes"
means (a) changes in 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 successor
thereto or any agency with similar functions); (b) changes in accounting
principals concurred in by any Credit Party's certified public accountants; (c)
purchase accounting adjustments under A.P.B. 16 and/or 17 and EITF 88-16, and
the application of the accounting principles set forth in FASB 109, including
the establishment of reserves pursuant thereto and any subsequent reversal (in
whole or in part) of such reserves; and (d) the reversal of any reserves
established as a result of purchase accounting adjustments. All such adjustments
resulting from expenditures made subsequent to April 15, 1997 (including
capitalization of costs and expenses or payment of pre-Closing Date liabilities)
shall, except as otherwise provided in this Agreement, be treated as expenses in
the period the expenditures are made and deducted as part of the calculation of
Consolidated EBITDA in such period. If the Credit Parties, the Administrative
Agent, the Documentation Agent and the Lenders agree upon the required
amendments, then after appropriate amendments have been executed and the
underlying Accounting Change with respect thereto has been implemented, any
reference to GAAP contained in this Agreement or in any of the Other Documents
shall, only to the extent of such Accounting Change, refer to GAAP, consistently
applied after giving effect to the implementation of such Accounting Change. If
the Credit Parties, the Administrative Agent, the Documentation Agent and the
Lenders cannot agree upon the required amendments within thirty (30) days
following the date of implementation of any
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Accounting Change, then all Financial Statements delivered and all calculations
of financial covenants and other standards and terms in accordance with this
Agreement and the Other Documents shall be prepared, delivered and made without
regard to the underlying Accounting Change.
[SIGNATURE PAGE S-1 FOLLOWS NEXT]
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IN WITNESS WHEREOF, Borrower, the Guarantors, the Lenders, the
Administrative Agent and the Documentation Agent have executed this Agreement as
of the date first above written.
THE BORROWER:
ALARMGUARD, INC.
By: ___________________________
Name:
Title:
THE GUARANTORS:
SECURITY SYSTEMS HOLDINGS, INC.
By: ___________________________
Name:
Title:
ALARMGUARD HOLDINGS, INC.
By: ___________________________
Name:
Title:
PROTECTIVE ALARMS OF CANADA, INC.
By: ____________________________
Name:
Title:
S-2
DETECT, INC.
By: ____________________________
Name:
Title:
THE LENDERS:
BANKBOSTON, N.A.
(successor by merger to Bank of Boston
Connecticut)
By:___________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: __________________________
Name:
Title:
IBJ XXXXXXXX BANK & TRUST COMPANY
By: __________________________
Name:
Title:
CIBC INC.
By: __________________________
Name:
Title:
S-3
THE ADMINISTRATIVE AGENT:
BANKBOSTON, N.A. (successor by merger to
Bank of Boston Connecticut)
By: ___________________________
Name:
Title:
THE DOCUMENTATION AGENT:
GENERAL ELECTRIC CAPITAL
CORPORATION
By: ___________________________
Name:
Title:
