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SUBORDINATED LOAN AGREEMENT
THIS SUBORDINATED LOAN AGREEMENT, effective as of November 14, 1997, is
between ALARM FUNDING CORPORATION, a Delaware corporation ( "BORROWER" OR "AFC")
and TJS PARTNERS, L.P., a New York limited partnership ("TJS" OR "LENDER") (all
other capitalized terms used herein are defined in Section 1.1 below).
R E C I T A L S:
A. On or about November 14, 1997, Lender and Borrower agreed to
the terms under which Lender would provide the initial funding
of Borrower.
B. Borrower and Lender agreed that Lender would provide up to
$1,500,000 in subordinated debt to Borrower on the terms and
conditions set forth in a definitive loan agreement.
C. Borrower and Lender also agreed that as an inducement to
Lender to supply up to $1,500,000 in subordinated debt to
Borrower, Borrower would issue to Lender an option to purchase
twenty percent (20%) of the equity of Borrower for a purchase
price of $1,000.00.
D. On December 9, 1997, Lender advanced $500,000 to Borrower
pursuant to a promissory note which was to serve as interim
documentation pending the execution of definitive
documentation.
E. Borrower and Lender have agreed to enter into this Loan
Agreement as the definitive documentation of their respective
rights and obligations in connection with the $1,500,000
subordinated debt facility.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS AND DETERMINATIONS
1.1 Definitions. As used in this Loan Agreement, unless otherwise expressly
indicated herein or therein, the following terms shall have the following
meanings:
Bankruptcy Code: the United States Bankruptcy Code and any
successor statute thereto, and the rules and regulations issued thereunder,
as in effect from time to time.
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Borrower: Alarm Funding Corporation, a Delaware corporation.
Borrower's Obligations: any and all Indebtedness due or to become the,
now existing or hereafter arising under this Loan Agreement and the Note, of
Borrower to TJS.
Business Day: any day other than a Saturday, Sunday or other day on
which banks in Chicago, Illinois or New York, New York are required to close
Capital Stock: collectively, all of the issued and outstanding capital
stock, warrants, options and other equity interests of Borrower.
Code: the Internal Revenue Code of 1986, as amended, and any successor
statute thereto, and the rules and regulations issued thereunder, as in effect
from time to time.
Dealer: any Person whose primary business is the installation or
servicing of alarm equipment and the sale of monitoring services.
Debt Service: during any period all payments of principal, interest,
premium, fees and other charges with respect to Indebtedness for Borrowed Money,
which payments are required or permitted to be made pursuant to this Loan
Agreement and are due and payable during such period.
Default Rate: a per annum rate equal to 18% per annum.
Default Rate Period: a period of time commencing on the date that an
Event of Default has occurred and ending on the date that such Event of Default
is cured or waived.
Effective Date: November 14, 1997.
Event of Default: any of the Events of Default set forth in Section
7.1.
Funding Date: the date of the disbursement of an Advance.
Future Portion: a portion of the Loan in a principal amount not to
exceed $1,500,000 less the then Principal Balance.
Future Portion Closing: the disbursement of any portion of the Future
Portion.
Future Portion Closing Date: the date of any Future Portion Closing.
GAAP: generally accepted accounting principles as in effect from time
to time, which shall include but shall not be limited to the official
interpretations thereof by the Financial Accounting Standards Board or any
successor thereto.
Good Funds: United States Dollars available in Federal funds to TJS at
or before 2:00 p.m., New York time, on a Business Day.
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Governmental Body: any foreign, federal, state, municipal or other
government or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Incipient Default: any event or condition which, with the giving of
notice or the lapse of time, or both, would become an Event of Default.
Indebtedness: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a liability on
a balance sheet or would be required to be disclosed in a financial statement,
including, without duplication: (i) Indebtedness for Borrowed Money, (ii)
obligations secured by any Lien upon Property, and (iii) guaranties, letters of
credit and other contingent obligations.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or other
like written obligation to pay money (including, without limitation, all of
Borrowers' Obligations and Senior Indebtedness), (iii) in respect of rent or
hire of Property under capitalized leases or for the deferred purchase price of
Property, (iv) in respect of obligations under conditional sales or other title
retention agreements and (v) all guaranties of any or all of the foregoing.
Initial Portion: a portion of the Loan in the amounts of $500,000.00
disbursed on December 9, 1997.
Lender: TJS.
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease or other title retention
agreement.
Loan: the loan to be made by Lender to Borrowers in the maximum
principal amount of $1,500,000, subject to the terms and conditions of this Loan
Agreement.
Loan Agreement: this Subordinated Loan Agreement.
Material Adverse Effect: (i) a material adverse effect upon the
business, operations, Property or financial condition of Borrower or (ii) a
material impairment of the ability of any Obligor to perform its obligations
under the Loan Agreement or the Note.
Note: a promissory note in form and substance satisfactory to TJS in
the principal amount of $1,500,000 executed and delivered by Borrower to TJS to
evidence the Loan.
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Options: The options issued by Borrower to TJS entitling TJS to
purchase twenty percent (20%) of the equity interests of Borrower for $1,000.00.
which expire on December 31, 1998.
Parties: collectively, TJS and the Borrower.
Person: any individual, firm, corporation, limited liability company,
business enterprise, trust, association, joint venture, partnership,
Governmental Body or other entity, whether acting in an individual, fiduciary or
other capacity.
Principal Balance: the unpaid principal balance of the Loan or any
specified portion thereof outstanding from time to time.
Property: all types of real, personal or mixed property and all types
of tangible or intangible property.
Senior Indebtedness: all of Borrower's Indebtedness for Borrowed Money
from financial institutions such as banks, finance companies, insurance
companies, pension funds or similar institutions.
TJS Partners: TJS Partners, L.P., a New York limited partnership.
ARTICLE II
LOAN AND TERMS OF PAYMENT
2.1 Initial Portion.
2.1.1 Amount and Disbursement. The Parties acknowledge that the Initial
Portion was disbursed in the amounts of $500,000.00 on December 9, 1997. The
initial portion shall henceforth be subject to this Loan Agreement. Any notes
previously issued in connection with the initial portion shall be returned to
Borrower for cancellation and the Initial Portion shall upon such cancellation
be reflected in and subject to the Note.
2.2 Future Portion.
2.2.1 Amount and Disbursement. The Future Portion shall consist of
Advances to be made by Lender to Borrower up to the maximum principal amount of
$1,500,000.00 minus the Principal Balance outstanding from time to time during
the term of this Loan Agreement, provided that all of the terms and conditions
set forth in subsection 2.2.2 have been satisfied.
2.2.2 Conditions Precedent to Advances. The obligation of Lender to
make any Advance shall be subject to the satisfaction of the following
conditions:
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(a) no Incipient Default or Event of Default exists
or would be created by the disbursement of such Advance;
(b) Lender shall have received a written request for
an advance from Borrower with respect to each such Advance no
later than 12:00 p.m., Chicago time, at least one (1) Business
Day prior to the proposed Funding Date with respect to such
Advance, which Funding Date shall be on a Business Day;
(c) on the applicable Funding Date the
representations and warranties set forth in the Loan Agreement
shall be true and correct in all material respects when made
and at and as of the time of the Funding Date, except to the
extent that such representations and warranties expressly
relate to an earlier date.
2.3 Note and Reborrowing.
2.3.1 Note. The Loan shall be evidenced by the Note.
2.3.2 Reborrowing. Borrowers shall be entitled to reborrow any portion
of the Loan which is repaid or prepaid.
2.4 Interest.
2.4.1 Interest Rate. Except during a Default Rate Period as provided
in Section 2.7, the Principal Balance outstanding from time to time shall bear
interest at the rate of twelve percent (12%) per annum, simple interest.
Interest on the Initial Portion shall accrue from December 9, 1997.
2.4.2 Interest Computation. Interest shall be computed on the basis of
a year consisting of 360 days and charged for the actual number of days during
the period for which interest is being charged. In computing interest, the
Principal Balance on the date of funding of an Advance shall include the amount
of the Advance and the Principal Balance on the date of payment of any amount
due hereunder shall exclude the amount paid.
2.5 Principal and Interest Payments.
2.5.1 Interest. Interest on the Principal Balance shall be payable
semiannually in arrears on the first Business Day of each six month period
beginning with July 1, 1998. Notwithstanding the foregoing, interest payments
due hereunder shall be deferred until such time as Borrower shall be able to
make such payments without incurring thereby a deficit in earnings before
interest taxes depreciation and interest (after payment of interest due on
Senior Indebtedness) ("EBITDA") as a result of such payment.
2.5.2 Principal. The Principal Balance shall be payable on January 2,
2003.
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2.6 Prepayments.
2.6.1 Voluntary Prepayment of Loan. Borrowers may at any time
voluntarily prepay in whole or in part the Principal Balance, without premium
or penalty. Concurrently with any prepayment of the Principal Balance pursuant
to this subsection 2.6.1, Borrowers shall pay to Lenders accrued and unpaid
interest on the portion of the Principal Balance which is being prepaid to the
date on which Lender is in receipt of Good Funds.
2.7 Default Rate Period. During a Default Rate Period, (i) Borrowers'
Obligations shall bear interest at the Default Rate and (ii) all payments
received by Lender shall be applied in accordance with Section 7.4.
2.8 Method of Payment. Borrower shall remit all amounts due hereunder to
Lender in Good Funds, on the due date of such payment, for application to
Borrower's Obligations in the following order of priority: (i) first, to the
payment of allBorrower's Obligations then due and payable other than the
Principal Balance and accrued and unpaid interest thereon, and (ii) second, to
the payment of accrued and unpaid interest then due and payable on the Principal
Balance and (iii) if applicable, towards payment of the Principal Balance. All
payments to be made pursuant to the Loan Agreement and the Note by Borrower to
Lender shall be made by wire transfer of Good Funds to the account of TJS at
Chase Manhattan Bank, ABA # 000-000-000, credit the account of Ernst & Company,
Account No. 000-000-000, further credit the account of TJS Partners, L.P.,
Account No. 560-02626 or to such other account as Lender shall have given five
Business Days prior written notice to Borrower.
2.9 Issuance of Options. Borrower shall issue the Options to Lender as
soon as practicable after the execution of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
3.1 Existence and Power. SAI, AMJBorrower is a corporation duly formed and
validly existing under the laws of the State of Delaware. Borrower is in good
standing and qualified to transact business in each jurisdiction in which the
failure so to qualify could have a Material Adverse Effect. Borrower has all
requisite power and authority to own its Property and to carry on its business
as now conducted and as proposed to be conducted following the Effective Date.
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3.2 Authority. Borrower has full power and authority to enter into, execute,
deliver and carry out the terms of this Loan Agreement and the Note and to incur
the obligations provided for therein, all of which have been duly authorized by
all proper and necessary action and are not prohibited by the organizational
instruments of Borrower.
3.3 Binding Agreements. This Loan Agreement and the Note, when executed and
delivered, will constitute the valid and legally binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect affecting the enforcement of creditors' rights generally,
and (ii) equitable principles (whether or not any action to enforce such
document is brought at law or in equity).
3.4 Litigation. There are no actions, suits, arbitration proceedings and
claims pending or, to the best knowledge of Borrower, threatened against
Borrower or maintained by Borrower at law or in equity or before any
Governmental Body
3.5 Defaults in Other Agreements; Consents; Conflicting Agreements.
Borrower is not in default under any agreement to which Borrower is a
party or by which Borrower or any of the Property of Borrower is bound, the
effect of which default could have a Material Adverse Effect. No authorization,
consent, approval or other action by, and no notice to or filing with, any
Governmental Body or any other Person which has not already been obtained,
taken or filed, as applicable, is required (i) for the due execution, delivery
or performance by Borrower of the Loan Agreement and the Note or (ii) as a
condition to the validity or enforceability of any of the foregoing or any of
the transactions contemplated thereby. No provision of any material mortgage,
indenture, contract, agreement, statute, rule, regulation, judgment, decree or
order binding on Borrower or affecting the Property of Borrower conflicts with,
or requires any consent which has not already been obtained under, or would in
any way prevent the execution, delivery or performance of the terms of any of
the Loan Agreement and the Note. The execution, delivery or performance of the
terms of the Loan Agreement and the Note will not constitute a default under,
or result in the creation or imposition of, or obligation to create, any Lien
upon the Property of the Borrower pursuant to the terms of any such material
mortgage, indenture, contract or agreement.
3.6 Compliance with Applicable Laws. Borrower is not in default in respect
of any judgment, order, writ, injunction, decree or decision of any Governmental
Body, which default would have a Material Adverse Effect. Except as otherwise
provided herein, Borrower is in compliance in all material respects with all
applicable statutes and regulations, a violation of which could have a Material
Adverse Effect.
3.7 Patents, Trademarks, Franchises, Agreements. Upon the Effective Date,
Borrower will own, possess or have the right to use all patents, trademarks,
service marks, tradenames, copyrights, franchises and rights with respect
thereto, necessary for the conduct of Borrower's business as proposed to be
conducted after the Effective Date, without any known conflict with the rights
of others and, in each case, free of any Liens.
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3.8 Other Indebtedness. On the Effective Date, Borrower had no Indebtedness
for Borrowed Money, except Borrower's Obligations.
3.9 No Misrepresentation. Neither this Loan Agreement nor any other
certificate, information or report furnished or to be furnished by or on behalf
of Borrower to Lender in connection with any of the transactions contemplated
hereby or thereby, contains or will contain a misstatement of material fact, or
omits or will omit to state a material fact required to be stated in order to
make the statements contained herein or therein, taken as a whole, not
misleading in the light of the circumstances under which such statements were
made. There is no fact, other than information known to the public generally,
known to or reasonably foreseen by Borrower after diligent inquiry, that would
be expected to have a Material Adverse Effect that has not expressly been
disclosed to Lender in writing.
ARTICLE IV
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower agrees that it and each Obligor will:
4.1 Legal Existence; Good Standing. Maintain its existence and its good
standing in the jurisdiction of its formation and its qualification in each
jurisdiction in which the failure so to qualify would have a Material Adverse
Effect, and in any event in each jurisdiction in which any portion of the
business owned or operated by Borrower is located.
4.2 Inspection. Permit representatives of Lender at Lender's expense, upon
two Business Days prior notice if no Event of Default exists, or at any
time if any Event of Default exists, to (i) visit its offices, (ii) examine its
books and records and Accountants' reports relating thereto, (iii) make copies
or extracts therefrom, (iv) discuss its affairs with its employees, (v) examine
and inspect its Property and (vi) meet and discuss its affairs with its
certified public accountants, and such accountants, as a condition to their
retention by such Borrower, are hereby irrevocably authorized by Borrower to
fully discuss and disclose all such affairs with Lender (the foregoing items
(i) through (vi) hereinafter are referred to collectively as an "Inspection") .
Notwithstanding the foregoing, if no Event of Default exists, Lender shall not
conduct an Inspection more than once a quarter.
4.3 Financial Statements and Other Information. Maintain a standard system
of accounting in accordance with GAAP and furnish to Lender, but only
upon Lender's request, those of the following items requested:
4.3.1 Monthly Statements. After the close of any month:
(a) the balance sheet of Borrower of such month,
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(b) the statements of operations and Operating Cash Flow of
Borrower for such month and for the period from the beginning of the then
current year to the end of such month, setting forth in each case in
comparative form the corresponding figures for the corresponding period in the
preceding year, and
(c) a report providing the following information as of the end
of such month: (i) the number of loans made by Borrower; (ii) the payment
history of for all loans made by Borrower; and (iii) the collateral coverage
for the loans made by Borrower.
all in reasonable detail, containing such information as Lender reasonably may
require, and certified by the President of Borrower as complete and correct,
subject to normal year-end adjustments.
4.3.2 Annual Statements. As soon as available after the close of each
year: the balance sheet of Borrower as of the end of such year and the
statements of operations, cash flows and shareholders' equity of Borrower for
such year (collectively, the "Basic Financial Statements"), and the statements
of Operating Cash Flow of Borrower for such year, setting forth in each case in
comparative form the corresponding figures for the preceding year.
4.4 Notice of Defaults: Loss. Provide Lender with prompt notice if: (i) any
Indebtedness of Borrower is declared or shall become due and payable prior to
its declared or stated maturity, or called and not paid when due, (ii) an event
has occurred that enables the holder of any note, or other evidence of such
Indebtedness, certificate or security evidencing any such Indebtedness of
Borrower to declare such Indebtedness due and payable prior to its stated
maturity, (iii) there shall occur and be continuing an Incipient Default or
Event of Default, accompanied by a statement setting forth what action Borrower
proposes to take in respect thereof, or (iv) any event shall occur which has a
Material Adverse Effect, including the amount or the estimated amount of any
loss or depreciation or adverse effect.
4.5 Notice of Suits, Adverse Events. Provide Lender with prompt notice of:
(i) any citation, summons, subpoena, order to show cause or other order naming
Borrower a party to any proceeding before any Governmental Body which might
reasonably be expected to have a Material Adverse Effect and include with such
notice a copy of such citation, summons, subpoena, order to show cause or other
order and (ii) any dispute between Borrower and any Governmental Body or any
other Person, which lapse, termination, refusal or dispute could reasonably be
expected to have a Material Adverse Effect.
4.6 Other Information.
(a) Provide Lender with prompt notice of any change in the
location of any Property of Borrower which is material to or necessary
for the continued operation of Borrower's business, any change in the
name of Borrower, any sale or purchase of Property outside the regular
course of business of Borrower, and any change in the business or
financial affairs of Borrower, which change would have a Material
Adverse Effect.
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(b) Promptly upon request therefor, such other information and
reports relating to the past, present or future financial condition,
operations, plans and projections of Borrower as Lender reasonably may
request from time to time.
4.7 Maintain in full force and effect at all times, and apply in a timely
manner for renewal of licenses, franchises, trademarks, tradenames and
agreements necessary for the operation of Borrower's business, the loss of any
of which would have a Material Adverse Effect.
4.8 Compliance with Laws. Comply with federal, state and local laws,
ordinances, requirements and regulations and all judgments, orders, injunctions
and decrees applicable to Borrower and its operations, the failure to comply
with which would have a Material Adverse Effect.
ARTICLE V
NEGATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower shall not:
5.1 Borrowing. Create, incur, assume or suffer to exist any liability for
Indebtedness for Borrowed Money except (i) Borrower's Obligations and (ii)
Senior Indebtedness.
5.2 Liens. Create, incur, assume or suffer to exist any Lien upon any of
its Property, whether now owned or hereafter acquired, except for Liens in
connection with Senior Indebtedness.
5.3 Distributions. Pay any dividends or make any distributions with
respect to, or purchase or redeem all or any portion of its capital stock.
5.4 Payments of Indebtedness for Borrowed Money. Make any voluntary or
optional prepayment of any Indebtedness for Borrowed Money other than Senior
Indebtedness and Borrower's Obligations.
5.5 Investments. Loans. At any time purchase or otherwise acquire, hold or
invest in the capital stock of, or any other interest in, any Person, or make
any loan or advance to, or enter into any arrangement for the purpose of
providing funds or credit to, or make any other investment, whether by way of
capital contribution or otherwise, in or with any Person, except (i) investments
in direct obligations of, or instruments unconditionally guaranteed by, the
United States of America or in certificates of deposit issued by a member bank
of the Federal Reserve System, (ii) investments in commercial or finance paper
which, at the time of investment, is rated either "A" or "P" by Xxxxx'x
Investors Service, Inc., or Standard & Poor's Corporation, respectively, or at
the equivalent rate by any of their respective successors, and (iii) any
interests in any money market account maintained, at the time of investment,
with a member bank of the Federal Reserve System, the investments of which, at
the time of investment, are restricted to the types specified in clause (i)
above, and (iv) loans to Dealers secured by Accounts. All investments permitted
pursuant to clauses (i), (ii) and (iii) of this Section 5.5 shall have a
maturity not exceeding one year.
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5.6 Fundamental Business Changes. Materially change the nature of its business
or engage in any business other than making loans to Dealers secured by
Accounts.
6.10 Sale or Transfer of Assets. Sell, lease, assign, transfer or otherwise
dispose of any Property (other than in the ordinary course of business) except
for the sale or disposition of (i) Property which is not material to or
necessary for the continued operation of its business and (ii) obsolete or
unusable items of equipment which promptly are replaced with new items of
equipment of like function and comparable value to the unusable items of
equipment when the same were new or not obsolete.
6.13 Issuance of Capital Stock. Issue or sell, permit to be issued or sold, or
otherwise consent to the transfer of, any additional Capital Stocks or any
interests convertible into or exercisable for Capital Stock which would have the
effect of reducing Lender's equity interest in Borrower to less than twenty
percent (20%) on a fully diluted basis after exercise of the Options.
ARTICLE VI
SUBORDINATION
6.1 Subordination. The payment of any and all of Borrower's Obligations and the
exercise of any right or remedy pursuant to the Loan Agreement and the Note are
expressly subject to any Senior Indebtedness now outstanding or hereafter
incurred.
ARTICLE VII
DEFAULT AND REMEDIES
7.1 Events of Default. The occurrence of any of the following shall constitute
an Event of Default under the Loan Agreement:
7.1.1 Default in Payment. If Borrower shall fail to pay all or any portion
of Borrower's Obligations when the same become due and payable.
7.1.2 Breach of Covenants.
(a) If Borrower shall fail to observe or perform any covenant or
agreement governing Borrower contained in Section 4.1, 4.2 or Article V;
(b) If Borrower shall fail to observe or perform any covenant or
agreement (other than those referred to in subparagraph (a) above or
specifically addressed elsewhere in this Section 7.1) made by such Person
in this Loan Agreement, and such failure shall continue for a period of 30
days after notice of such failure is given by Lender.
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7.1.3 Breach of Warranty. If any representation or warranty made by or on
behalf of Borrower in or pursuant to this Loan Agreement or in any instrument or
document furnished in compliance herewith shall prove to be false or misleading
in any material respect on the date as of which made.
7.1.4 Default Under Other Indebtedness for Borrowed Money. If (i) Borrower
at any time shall be in default (as principal or guarantor or other surety) in
the payment of any principal of or premium or interest on any Indebtedness for
Borrowed Money (other than Borrower's Obligations) beyond the grace period, if
any, applicable thereto and the aggregate amount of such payments then in
default beyond such grace period shall exceed $25,000 or (ii) any default shall
occur in respect of any issue of Indebtedness for Borrowed Money of Borrower
(other than Borrower's Obligations) outstanding in a principal amount of at
least $50,000, or in respect of any agreement or instrument relating to any such
issue of Indebtedness for Borrowed Money, and such default shall continue beyond
the grace period, if any, applicable thereto.
7.1.5 Bankruptcy.
(a) If Borrower shall (i) generally not be paying its debts as
they become due, (ii) file, or consent, by answer or otherwise, to the
filing against it of a petition for relief or reorganization or
arrangement or any other petition in bankruptcy or insolvency under the
laws of any jurisdiction, (iii) make an assignment for the benefit of
creditors, (iv) consent to the appointment of a custodian, receiver,
trustee or other officer with similar powers for Borrower, or for any
substantial part of the property of Borrower or (v) be adjudicated
insolvent.
(b) If any Governmental Body of competent jurisdiction shall
enter an order appointing, without consent of Borrower, a custodian,
receiver, trustee or other officer with similar powers with respect to
Borrower, or with respect to any substantial part of the Property
belonging to Borrower, or if an order for relief shall be entered in any
case or proceeding for liquidation or reorganization or otherwise to take
advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of Borrower or if any
petition for any such relief shall be filed against Borrower and such
petition shall not be dismissed or stayed within 60 days.
7.1.6 Judgments. If there shall exist a final judgment or award against
Borrower which shall have been outstanding for a period of 30 days or more from
the date of the entry thereof and shall not have been discharged or paid in full
or stayed pending appeal, if the aggregate amount of all such judgments and
awards exceeds $50,000.
7.2 Acceleration of Borrowers Obligations. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and (v)
of subsection 7.1.5(a) or in 7.1.5(b), all of Borrower's Obligations at that
time outstanding automatically shall mature and become due subject to the
provisions of the Subordination Agreement, and
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(b) any other Event of Default, Lender, at any time (unless such Event
of Default shall have been waived in writing or remedied), at its option,
without further notice or demand, may declare all of Borrower's Obligations due
and payable,
whereupon Borrower's Obligations immediately shall mature and become due and
payable, all without presentment, demand, protest or notice other than the
declaration referred to in clause (b) above.
7.3 Remedies on Default. If Borrower's Obligations have been accelerated
pursuant to Section 7.2, Lender, at its option, may:
7.3.1 Enforcement of Rights and Remedies. Enforce its rights and
remedies under the Loan Agreement and the Note in accordance with their
respective terms.
7.3.2 Other Remedies. Enforce any of the rights or remedies accorded to
Lender at equity or law, by virtue of statute or otherwise.
7.4 Application of Funds. Any funds received by Lender pursuant to the exercise
of any rights accorded to Lender pursuant to, or by the operation of any of the
terms of, this Loan Agreement or the Note shall be applied to Borrower's
Obligations in the following order of priority:
7.4.1 Expenses. First, to the payment of all reasonable fees and
expenses actually incurred, including, without limitation court costs and all
other costs incurred by Lender in exercising any rights accorded to Lender
pursuant to this Loan Agreement or the Note or by applicable law, including,
without limitation, reasonable attorneys' fees.
7.4.2 Borrower's Obligations. Next, to the payment of the remaining
portion of Borrower's Obligations in such order as Lender may determine.
7.4.3 Surplus. Any surplus, to the Person or Persons entitled thereto.
ARTICLE VIII
EXPENSES AND INDEMNITY
8.1 Attorneys' Fees and Other Fees and Expenses. Each of the parties shall bear
its own expenses in connection with the preparation of this Loan Agreement and
the Note and the transactions contemplated hereby and in connection with any
amendments, modifications or waivers under or in respect of any of the
foregoing.
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8.2 Indemnity. Borrower agrees to indemnify and save Lender harmless of and
from the following:
8.2.1 Fees and Expenses in Enforcement of Rights or Defense of Loan
Agreement and Note. Any reasonable expenses or other costs, including reasonable
attorneys' fees and expert witness fees, actually incurred by Lender in
connection with the enforcement or collection against Borrower of any provision
of the Loan Agreement or the Note, and in connection with or arising out of any
litigation, investigation or proceeding instituted by any Governmental Body or
any other Person with respect to any of the foregoing, whether or not suit is
instituted, including, but not limited to, such costs or expenses arising from
the enforcement or collection against Borrower of any provision of the Loan
Agreement or the Note in any state or federal bankruptcy or reorganization
proceeding.
8.2.2 General. Any loss, cost, liability, damage or expense (including
reasonable attorneys' fees and expenses) incurred by Lender in investigating,
preparing for, defending against, providing evidence, producing documents or
taking other action in respect of any commenced or threatened litigation,
administrative proceeding, suit instituted by any Person or investigation under
any law, including any federal securities law, the Bankruptcy Code, any relevant
state corporate statute or any other securities law, bankruptcy law or law
affecting creditors generally of any jurisdiction, or any regulation pertaining
to any of the foregoing, or at common law or otherwise, relating to the
transactions contemplated by or referred to in, or any other matter related to,
the Loan Agreement or the Note, whether or not Lender is a party to such
litigation, proceeding or suit, or is subject to such investigation.
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ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices and communications under this Loan Agreement shall be
in writing and shall be (i) delivered in person, (ii) sent by facsimile, or
(iii) mailed, postage prepaid, either by registered or certified mail, return
receipt requested, or by overnight express carrier, addressed in each case as
follows:
To Borrowers: Alarm Funding Corporation
C/O Security Associates International, Inc.
0000 Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxx XxxXxxxxx, President
Facsimile No.: 847/956-9360
To Lender: TJS Partners, L.P.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
or to any other address or facsimile number, as to any of the parties hereto, as
such party shall designate in a notice to the other parties hereto. All notices
sent pursuant to the terms of this Section 9.1 shall be deemed received (i) if
personally delivered, then on the Business Day of delivery, (ii) if sent by
facsimile before 2:00 p.m. New York time, on the day sent if a Business Day or
if such day is not a Business Day or if sent after 2:00 p.m. New York time, then
on the next Business Day, (iii) if sent by overnight, express carrier, on the
next Business Day immediately following the day sent, or (iv) if sent by
registered or certified mail, on the earlier of the fifth Business Day following
the day sent or when actually received. Any notice by facsimile shall be
followed by delivery on the next Business Day by overnight, express carrier or
by hand.
9.2 Survival of Loan Agreement: Indemnities. All covenants, agreements,
representations and warranties made in this Loan Agreement shall survive the
making by Lender of the Loan and the execution and delivery to Lender of the
Note, and shall continue in full force and effect so long as any of Borrower's
Obligations remain outstanding, unperformed or unpaid. Notwithstanding the
repayment of all amounts due under the Loan Agreement, the cancellation of the
Note and the release and/or cancellation of any and all of the foregoing, the
obligations of Borrower to indemnify Lender with respect to the expenses,
damages, losses, costs and liabilities described in Section 8.2 shall survive
until all applicable statute of limitations periods with respect to actions
which may be brought against Lender have run.
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9.3 Further Assurance. From time to time, Borrower shall execute and deliver to
Lender such additional documents as Lender reasonably may require to carry out
the purposes of the Loan Agreement and the Note and to protect Lender's rights
thereunder, and not take any action inconsistent with the purposes of the Loan
Agreement and the Note.
9.4 Taxes and Fees. Should any tax (other than taxes based upon the net income
of any Lender), recording or filing fees become payable in respect of the Loan
Agreement or the Note, or any amendment, modification or supplement thereof,
Borrower agrees to pay the same on demand, together with any interest or
penalties thereon attributable to any delay by Borrower in meeting any Lender's
demand, and agree to hold Lender harmless with respect thereto.
9.5 Severability. In the event that any provision of this Loan Agreement is
deemed to be invalid by reason of the operation of any law, this Loan Agreement
shall be construed as not containing such provision and the invalidity of such
provision shall not affect the validity of any other provisions hereof, and any
and all other provisions hereof which otherwise are lawful and valid shall
remain in full force and effect.
9.6 Waiver. No delay on the part of Lender in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege hereunder shall preclude other or
further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
9.7 Modification of Loan Instruments. No modification or waiver of any provision
of the Loan Agreement or the Note shall be effective unless the same shall be in
writing, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on Borrower
in any case shall entitle Borrower to any other or further notice or demand in
the same, similar or other circumstances.
9.8 Captions. The headings in this Loan Agreement are for purposes of reference
only and shall not limit or otherwise affect the meaning hereof.
9.9 Successors and Assigns. This Loan Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto.
9.10 Remedies Cumulative. All rights and remedies of Lender pursuant to this
Loan Agreement, the Note or otherwise, shall be cumulative and non-exclusive,
and may be exercised singularly or concurrently.
9.11 Entire Agreement; Conflict. This Loan Agreement and the Note executed
pursuant hereto constitute the entire agreement among the parties hereto with
respect to the transactions contemplated hereby or thereby and supersede any
prior agreements, whether written or oral, relating to the subject matter
hereof.
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9.12 APPLICABLE LAW. THE LOAN AGREEMENT AND THE NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS.
FOR PURPOSES OF THIS SECTION 9.12, THE LOAN AGREEMENT AND THE NOTE SHALL BE
DEEMED TO BE PERFORMED AND MADE IN THE STATE OF ILLINOIS.
9.13 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY SUCH BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF
THE LOAN AGREEMENT AND THE NOTE SHALL BE LITIGATED IN THE CIRCUIT COURT OF XXXX
COUNTY, OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
ILLINOIS. BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED BY LENDER IN ANY OF SUCH
COURTS, AND HEREBY AGREES THAT PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR
OTHER PROCESS OR PAPERS ISSUED THEREIN MAY BE SERVED IN THE MANNER PROVIDED FOR
NOTICES HEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO
BORROWER AT THE ADDRESS TO WHICH NOTICES ARE TO BE SENT PURSUANT TO SECTION 9.1.
EACH BORROWER WAIVES ANY CLAIM THAT XXXX COUNTY, ILLINOIS OR THE NORTHERN
DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK
OF VENUE. TO THE EXTENT PROVIDED BY LAW, SHOULD BORROWER, AFTER BEING SO SERVED,
FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT, PROCESS OR PAPERS SO SERVED
WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER THE MAILING THEREOF, SUCH
BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR JUDGMENT MAY BE ENTERED
BY THE COURT AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN SUCH SUMMONS,
COMPLAINT, PROCESS OR PAPERS. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET
FORTH IN THIS SECTION 9.13 SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY
LENDER OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE TAKING BY LENDER OF
ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION, AND
BORROWER HEREBY WAIVES THE RIGHT TO COLLATERALLY ATTACK ANY SUCH JUDGMENT OR
ACTION.
9.14 WAIVER OF RIGHT TO JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND AGREE
THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THE LOAN AGREEMENT OR THE NOTE OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
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9.15 Counterparts. This Loan Agreement may be executed by the parties hereto in
several counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
agreement.
9.16 No Fiduciary Relationship. No provision in this Loan Agreement or in the
Note, and no course of dealing among the parties hereto, shall be deemed to
create any fiduciary duty by Lender to Borrower.
9.17 No Strict Construction. The language used in this Loan Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any party
hereto.
IN WITNESS WHEREOF, this Loan Agreement has been executed and
delivered by each of the parties hereto by a duly authorized officer of each
such party on this __ day of January, 1998 effective as of the date first
written above.
ALARM FUNDING CORPORATION
By: /s/ Xxxxx XxxXxxxxx
------------------------
Xxxxx XxxXxxxxx
President
TJS PARTNERS, L.P.
By: TJS Management, L.P.
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxx
Managing General Partner
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