EXHIBIT 2.4(b)
FIRST AMENDMENT
FIRST AMENDMENT, dated as of December 21, 1995 (the "First Amendment) by
and between AUTOMATED SECURITY (HOLDINGS) PLC, a limited company incorporated
under the laws of England and Wales (herein called the "Company") and THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA (the "Noteholder") as the sole holder of
notes issued by the Company under a Note Agreement, dated as of May 27, 1994
(herein called the Company under a Note Agreement, dated as of May 27, 1994
(herein called the "Note Agreement") between the Company and the Noteholder.
Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Amended Note Agreement (as hereinafter
defined).
W I T N E S S E T H :
WHEREAS, the Noteholder holds all outstanding Notes; and
WHEREAS, the parties hereto mutually desire to amend the terms of the Note
Agreement;
NOW, THEREFORE, in consideration thereof, the Company and the Noteholder
agree as follows:
1. Amendment of Note Agreement. The Company and the Noteholder hereby
agree that effective as of the date (the "Effective Date") on which the
Noteholder shall have executed and delivered the notice attached hereto as
Exhibit A (the "Effective Date Notice"), without any other further action, the
Note Agreement shall be considered amended and restated as provided in Exhibit B
hereto. The Note Agreement as amended and restated in accordance with this
Agreement is herein referred to as the Amended Note Agreement.
2. Effective Date and Conditions Precedent. The obligation of the
Noteholder to deliver the Effective Date Notice shall be subject to the
satisfaction, on or before December 29, 1995, of the following conditions:
2A. Opinion of Noteholder's Special Counsel, The Noteholder shall have
received from White & Case, who are acting as special counsel for the Noteholder
in connection with this First Amendment, a favorable opinion satisfactory to the
Noteholder as to such matters incident to the matters herein contemplated as the
Noteholder may reasonably request. Such opinion shall also state that, based
upon such investigation and inquiry as is deemed relevant and appropriate by
such counsel, the opinion referred to in paragraph 2B is satisfactory in form
and scope to such counsel and, while such investigation and inquiry into the
matters covered by such opinion (other than to certain specified matters) were
not sufficient to enable such counsel independently to render such opinion,
nothing has come to the attention of such counsel which has caused it to
question the legal conclusions expressed in the opinion referred to in
paragraph 2B and such counsel believes that the Noteholder is justified in
relying on such opinion.
2B. Opinion of Company's Counsel. The Noteholder shall have received from
(i) O'Sullivan Graev & Karabell, LLP-special United States counsel for the
Company and (ii) Clifford Chance, special English counsel for the Company,
favorable opinions satisfactory to it and in respect of the matters described
in, respectively, Exhibits C and D attached hereto.
2C. New Notes. The Noteholder shall have received an amended and restated
Note, substantially in the form of Exhibit E attached hereto, in substitution of
its existing Note dated May 27, 1994.
2D. Representations and Warranties; No Default. The representations and
warranties contained in paragraph 8 of the Amended Note Agreement shall be true
on and as of the Effective Date; there shall exist on the Effective Date no
Event of Default or Default; and the Company shall have delivered to the
Noteholder an Officer's Certificate, dated the Effective Date, to both such
effects.
2E. Security Documents; Intercreditor Agreement. The Company and each
Subsidiary of the Company listed on Exhibit J hereto shall have executed and
delivered a Guarantee and Debenture substantially in the form of Exhibit F
hereto, each of ASC, SMC and SC shall have executed a Subsidiary Guarantee
substantially in the form of Exhibit G hereto, each of ASC and Automated Loss
Prevention Systems Limited shall have executed a Share Pledge substantially in
the form of Exhibit H hereto, and the parties to the Intercreditor Agreement
substantially in the form of Exhibit I hereto shall have executed and delivered
such agreement, and all such agreements shall be in full force and effect and
the Noteholder shall have received executed copies of each such agreement.
2F. Proceedings. All corporate and other proceedings taken or to be taken
in connection with the transactions contemplated hereby and the Security
Documents and all documents incidental thereto shall be satisfactory in
substance and form to the Noteholder, and the Noteholder shall have received all
such counterpart originals or certified or other copies of such documents as it
may reasonably request.
2G. Bank Agreements. The Noteholder shall have received certified copies
of the Bank Credit Agreement, together with evidence satisfactory to the
Noteholder that the Bank Credit Agreement shall be effective on the Effective
Date.
FIRST AMENDMENT TO
NOTE AGREEMENT
2
2H. Side Letter. The Noteholder shall have received a letter from the
Company addressed to the Noteholder, in form and substance satisfactory to the
Noteholder, regarding certain ancillary matters.
3. Success Fee. The Company shall pay to the Noteholder, a success fee in
Sterling calculated as follows:
(i) if a New Equity Raising occurs by April 30, 1996, a success fee
of (pound)43,000 shall be payable to the date the proceeds thereof are
received by the Company; or
(ii) if a New Equity Raising or a Major Disposal or a Change of
Control occurs on a date (the "Relevant Date") (but in the case of a New
Equity Raising being after April 30, 1996) in the period set out in Column
A below, a success fee equal to the percentage per annum, set out in
Column B below opposite the relative period, of the average outstanding
principal amount of the Notes for the period from the Effective Date to
the Relevant Date shall be payable on the Relevant Date:
Column A Column B
-------- --------
the Effective Date
to September 30, 1996 1.00%
October 1, 1996 to
December 31, 1996 1.50%
January 1, 1997 to
March 31, 1997 2.00%
April 1, 1997 and thereafter 3.00%; or
(iii) if no New Equity Raising, Major Disposal or Change of Control
has occurred by the Final Maturity Date, a success fee equal to 3% of the
average outstanding principal amount of the Notes from the period of the
Effective Date to the Final Maturity Date shall be payable on the Final
Maturity Date.
4. Governing Law. The first Amendment shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of New York.
5. Counterparts. This First Amendment may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this First Amendment to produce or
account for more than one such counterpart.
FIRST AMENDMENT TO
NOTE AGREEMENT
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IN WITNESS WHEREOF THE PARTIES HERETO have caused this First Amendment to
be executed as of the day and year first above written.
AUTOMATED SECURITY (HOLDINGS) PLC
By /s/ Peter Bertram
------------------------
Name: Peter Bertram
Title: Director
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By /s/ Anthony F. Torre
--------------------------
Name: Anthony F. Torre
Title: Vice President
FIRST AMENDMENT TO
NOTE AGREEMENT
4
EXHIBIT A TO FIRST AMENDMENT
December , 1995
Automated Security (Holdings) Plc
The Clock House
The Campus
Hemel Hempstead, Herts., HP2 7TL
Dear Sirs,
re Effective Date Notice
We hereby inform you, that the First Amendment dated as of December 31,
1995 is effective as of December , 1995.
Very truly yours,
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By______________________
Name:
Title:
EXHIBIT A TO FIRST AMENDMENT
EFFECTIVE DATE NOTICE
EXHIBIT B TO FIRST AMENDMENT
================================================================================
AUTOMATED SECURITY (HOLDINGS) PLC
$60,721,638.12
8.28% SENIOR NOTES
-----------------
NOTE AGREEMENT
-----------------
Dated as of May 27, 1994 and
Amended and Restated December 31, 1995
================================================================================
TABLE OF CONTENTS
Clause Page
------ ----
1. [intentionally omitted] ............................................. 1
2. [intentionally omitted] ............................................. 1
3. [intentionally omitted] ............................................. 1
4. PREPAYMENTS OF NOTES ................................................ 1
4A. Mandatory Prepayment of Notes ................................. 1
4B. Optional Prepayment of Notes With
Yield-Maintenance Amount ................................ 1
4C. Partial Payments Pro Rata ..................................... 2
4D. Retirement of Notes ........................................... 3
4E. Redemption for Taxation Reasons ............................... 3
4F. Prepayment upon a Change of Control ........................... 4
5. AFFIRMATIVE COVENANTS OF THE COMPANY ................................ 5
5A. Financial Statements .......................................... 5
5B. Inspection of Property ........................................ 7
5C. Consents ...................................................... 7
5D. Insurance ..................................................... 7
5E Maintenance of Status and Business ............................ 7
5F. Prompt Payment of Taxes ....................................... 8
5G. Maintenance of Property and Leases ............................ 8
5H. Use of Proceeds ............................................... 8
5I. Environmental Matters ......................................... 9
5J. Financial Records ............................................. 9
5K. Share Pledge .................................................. 9
6. NEGATIVE COVENANTS .................................................. 9
6A. Tangible Net Worth; Rental Income ............................. 9
6B. Interest Coverage ............................................. 9
6C. Net Borrowings ................................................ 10
6D. Borrowings .................................................... 10
6E. Merger and Consolidation; Assumption .......................... 11
6F. Negative Pledge ............................................... 12
6G. Restriction on Disposals ...................................... 13
6H. Proceeds of New Capital ....................................... 14
6I. Change of Business ............................................ 15
6J. Granting Credit ............................................... 15
6K. Dividends ..................................................... 16
6L. Indemnities ................................................... 16
6M. Jersey Debenture; Convertible Capital Bonds ................... 16
6N. Bank Indebtedness; Bank Credit Agreement ...................... 16
7. EVENTS OF DEFAULT ................................................... 17
7A. Acceleration .................................................. 17
7B. Recission of Acceleration ..................................... 19
(i)
7C. Other Remedies ................................................ 20
8. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE COMPANY ............ 20
8A. Organization .................................................. 20
8B. Powers and Authority .......................................... 20
8C. Financial Statements .......................................... 20
8D. Actions Pending ............................................... 21
8E. Defaults ...................................................... 21
8F. Conflicting Agreements and Other Matters ...................... 21
8G. Governmental Consent .......................................... 21
8H. Existing Liens ................................................ 21
8I. Disclosure .................................................... 22
8J. Title to Properties ........................................... 22
8K. Taxes ......................................................... 22
8L. Offering of the Notes ......................................... 22
8M. Regulation G, Etc ............................................. 23
8N. Pension Plans ................................................. 23
8O. Environmental Compliance ...................................... 24
8P. Legal Validity ................................................ 24
8Q. Holding Company and Investment Company ........................ 24
8R. Indebtedness .................................................. 24
9. [intentionally omitted] ............................................. 24
10. DEFINITIONS ......................................................... 24
10A. Yield-Maintenance Terms ....................................... 24
10B. Other Terms ................................................... 26
11. MISCELLANEOUS ....................................................... 37
11A. Payments ...................................................... 37
11B. Expenses ...................................................... 37
11C. Consent To Amendments ......................................... 37
11D. Form, Registration, Transfer and Exchange of Notes;
Lost Notes .............................................. 38
11E. Adjustment of Covenants ....................................... 39
11F. Persons Deemed Owners ......................................... 40
11G. Survival of Representations; Entire Agreement ................. 40
11H. Successors and Assigns ........................................ 40
11I. Disclosure to Other Persons ................................... 40
11J. Notices ....................................................... 41
11K. Descriptive Holdings .......................................... 41
11L. Satisfaction Requirement ...................................... 41
11M. Governing Law ................................................. 41
11N. Jurisdiction; Service of Process .............................. 41
11O. Gross-up ...................................................... 42
11P. Judgment Currency Indemnity ................................... 44
11Q. Severability .................................................. 44
11R. Counterparts .................................................. 44
(ii)
AUTOMATED SECURITY (HOLDINGS) PLC
THE CLOCK HOUSE
THE CAMPUS
HEMEL HEMPSTEAD HP2 7TL
May 27, 1994
as amended and restated
December 31, 1995
The Prudential Insurance Company
of America
Four Gateway Center
100 Mulberry Street
Newark, New Jersey 07102-4069
U.S.A.
Ladies and Gentlemen:
The undersigned, Automated Security (Holdings) PLC (the "Company"), hereby
agrees with you (the "Purchaser") as follows:
1. [intentionally omitted]
2. [intentionally omitted]
3. [intentionally omitted]
4. PREPAYMENTS OF NOTES.
4A. Mandatory Prepayment of Notes. The Company shall repay the outstanding
principal amount of the Notes, together with all interest accrued but unpaid
thereon, on the Final Maturity Date.
4B. Optional Prepayment of Notes With Yield-Maintenance Amount. The Notes
shall be subject to prepayment, in whole at any time or from time to time in
part (in multiples of $1,000,000 except for prepayments arising in accordance
with paragraph 6G or 6H), at the option of the Company (or as provided below in
connection with paragraphs 6G and 6H, at the option of the Noteholders, at 100%
of the principal amount so prepaid plus interest of the Noteholders), at 100% of
the principal amount so prepaid plus interest thereon to the prepayment date and
the Yield-Maintenance Amount, if any, with respect to each Note. The Company
shall give the holder of each Note irrevocable written notice of any prepayment
pursuant to this paragraph 4B not less than 30 Business Days nor more than 60
Business Days prior to the prepayment date, specifying such prepayment date and
the principal amount of the Notes, and of the Notes held by such holder, to be
prepaid on such date and
stating that such prepayment is to be made pursuant to this paragraph 4B;
provided that in the case of a prepayment arising in accordance with paragraph
6G and 6H, notice of such prepayment shall be given no less than 5 Business Days
prior to the prepayment date and the prepayment date shall occur no later than 5
Business Days after the event giving rise to the obligation to prepay the Notes
in accordance with paragraph 6G and 6H. Notice of prepayment having been given
as aforesaid, the principal amount of the Notes specified in such notice,
together with interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, shall become due and payable on such
prepayment date; provided that in the case of a prepayment arising in accordance
with paragraph 6G and 6H, the Notes held by any Noteholder shall not be prepaid
if such Noteholder shall inform the Company at least 2 Business Days prior the
prepayment date that such Noteholder elects not to have its Notes prepaid.
Promptly after the Yield-Maintenance Amount, if any, can be calculated with
respect to the Notes to be prepaid, the Company shall notify each of the
Noteholders by facsimile (with confirmation in writing by overnight courier) of
the amount thereof payable to such Noteholder, showing the Company's computation
thereof in reasonable detail.
4C. Partial Payments Pro Rata. (a) Upon any partial prepayment of the
Notes pursuant to paragraph 4B, the principal amount so prepaid shall be
allocated among the Notes (including, for the purpose of this paragraph 4C only,
all Notes purchased or otherwise acquired and held by the Company or any other
member of the Group of Affiliates) in proportion to the respective outstanding
principal amounts thereof; provided, however, in respect of any prepayment
obligation arising under paragraph 6G and 6H, if any Noteholder elects not to
accept prepayment of its Notes, then the partial prepayment shall be made pro
rata among the remaining Noteholders who have not so elected.
(b) Upon any prepayment of Notes pursuant to paragraph 6G and 6H, the
amounts distributed to Noteholders in accordance with Sharing Proportions shall
be applied by each Noteholder receiving such proceeds in the following order of
application:
(i) first, against the amount of any success fee, if any payable to
such Noteholder in accordance with paragraph 3 of the First Amendment;
(i) second, against any unpaid but accrued interest to the date of
prepayment on the principal amount of the Notes held by such Noteholder
prepaid under clause (iv) below;
(iii) third, against Yield-Maintenance Amounts, if any, due to such
Noteholder in relation to the principal amount of the Notes being prepaid
under clause (iv) below;
(iv) fourth, against the principal amount of the Notes held by such
Noteholder; and
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(v) fifth, as such Noteholder shall determine.
4D. Retirement of Notes. The Company shall not, and shall not permit any
of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than as provided in paragraph
4A or by prepayment pursuant to paragraph 4B, 4E or 4F or upon acceleration of
such final maturity pursuant to paragraph 7A), or purchase or otherwise acquire,
directly or indirectly, Notes held by any holder unless the Company or such
Subsidiary or Affiliate shall have offered to prepay or otherwise retire or
purchase or acquire, as the case may be, the same proportion of the aggregate
principal amount of the Notes held by each other holder of the Notes at the time
outstanding upon the same terms and conditions. Any Notes so prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement except as provided in paragraph 4C.
4E. Redemption for Taxation Reasons. (a) If the company would, on the
occasion of the next payment in respect of the Notes, be required to pay an
Additional Payment as a result of a Special Tax Event (as defined below) which
exceeds, in the aggregate, 10% of the aggregate amount of the interest payment
then due and payable on account of such Notes, and after using reasonable
efforts the Company is unable to avoid the circumstances which necessitates the
payment of such Additional Payment, then the Company shall be entitled to
exercise its rights under this paragraph 4E to prepay all outstanding Notes with
respect to which the Company will be required to make an Additional Payment in
accordance with paragraph 4E(b) below.
(b) The company shall give the holder of each Note with respect to which
the Company would, on the occasion of the next payment in respect of the Notes,
be required to make an Additional Payment and which it wishes to redeem pursuant
to this paragraph 4E(b) irrevocable written notice of any prepayment pursuant to
this paragraph 4E(b) not less than 30 days (nor more than 60 days) prior to the
prepayment date, specifying (i) the amount of the Notes, and the Notes held by
the Noteholder, that are to be prepaid pursuant to this paragraph 4E(b), (ii)
the circumstances that would necessitate the payment of an Additional Payment,
the amount of such Additional Payment and the steps taken by the Company to
avoid the necessity of making such payment (the Company hereby agrees to take
reasonable steps in attempting to avoid the necessity of making such prepayment)
and (iii) the required prepayment date, which shall be a Business Day. Notice of
prepayment having been given as aforesaid, the principal amount of the Notes to
be prepaid pursuant to this paragraph 4E(b), together with interest thereon to
the prepayment date and together with the Modified Yield-Maintenance Amount, if
any, shall become due and payable on such prepayment date; provided, that if no
later than 5 days prior to the required prepayment date any Noteholder who shall
have received such notice notifies the Company that such Noteholder waives any
right it has to receive Additional Payments arising out of the circumstances
described in the notice from the Company, then the Notes held by such Noteholder
shall not be
3
prepaid pursuant to this paragraph 4E(b) but shall remain outstanding. Any such
waiver from a Noteholder shall apply only to Additional Payments arising out of
the circumstances described in the notice from the Company and shall not be
treated as a waiver by such Noteholder of its right to receive Additional
Payments which arise under any other circumstances or are in any other amount,
it being understood that the Company is entitled to deliver to all applicable
Noteholders a new notice under this paragraph 4E(b) with respect to any such
other Additional Payments. Any waiver made by a Noteholder hereunder is
revocable upon at least 60 days notice; provided that prior to the expiration of
such period such Noteholder shall not be entitled to such Additional Payment
which was the subject of such waiver.
(c) For purposes of this paragraph 4E "Special Tax Event" shall mean a
Change in Tax Law which in the opinion of the Company shall require Additional
Payments. Such opinion shall be evidenced by an Officer's Certificate of the
Company and supported by a written opinion of independent tax counsel of
recognized standing in the relevant taxing jurisdiction (which counsel shall be
reasonably satisfactory to the Required Holders), each of which shall be
delivered to the relevant holders of Notes not later than 10 Business Days prior
to the date fixed for prepayment.
4F. Prepayment upon a Change of Control. (a) Within 5 Business Days
following the date a Responsible Officer obtains knowledge of any Change of
Control, the Company shall give written notice of such Change of Control (a
"Change of Control Notice") to each Noteholder, which shall (i) describe the
facts and circumstances of such Change of Control in reasonable detail, (ii)
refer to this paragraph 4F(a) and the rights of the Noteholders hereunder, (iii)
inform each Noteholder that unless they instruct the Company otherwise, the
Company shall prepay the entire unpaid principal amount of Notes held by each
Noteholder, together with any accrued and unpaid interest thereon from and
including the immediately preceding interest payment date, to but excluding the
prepayment date selected by the Company, together with Yield-Maintenance Amount,
if any, with respect to each Note (showing in such offer the amount of interest
which would be paid on such prepayment date and an estimate of the
Yield-Maintenance Amount together with the calculation of such estimated
amount), which prepayment shall be on a date specified in the Change of Control
Notice, which date shall be a Business Day not more than 20 days after the date
of such Change of Control Notice (the "Change of Control Prepayment Date") and
(iv) request each Noteholder to notify the Company in writing by a stated date,
which date is not less than 10 days after such Noteholder's receipt of the
Change of Control Notice, if such Noteholder does not wish its Notes to be so
prepaid. Promptly after the date on which the Yield-Maintenance Amount can be
calculated, the Company shall notify each Noteholder in writing which has not
rejected such prepayment of the precise amount of the Yield-Maintenance Amount,
showing the Company's computation thereof in reasonable detail.
(b) On the Change of Control Prepayment Date the entire unpaid principal
amount of the Notes held by each holder of Notes who has not notified the
Company that such Noteholder does not wish its Notes to be prepaid (in
4
accordance with paragraph 4F(a)(iv) above, together with any accrued and unpaid
interest thereon from and including the immediately preceding interest payment
date or the Date of Closing, as the case may be, to but excluding the Change of
Control Prepayment Date and together with the Yield-Maintenance Amount, if any,
with respect to each such Note, shall become due and payable.
(c) The Company will promptly provide any holder of a Note with all
information which it may reasonably request in order to enable such holder to
evaluate the effect of a Change of Control on such Noteholder's investment in
the Notes, including without limitation copies of all such documents as may have
been sent to the shareholders of the Company by or on behalf of the Company or
any Person which has made an offer which, if accepted, would give rise to a
Change of Control.
5. AFFIRMATIVE COVENANTS OF THE COMPANY. The Company covenants and agrees
that unless Majority Creditors shall otherwise agree and so long as any Note is
outstanding:
5A. Financial Statements. The Company covenants that it will deliver to
each Noteholder in duplicate (or such less number as any Noteholder shall
request):
(i) as soon as the same become available, but in any event within
150 days (in the case of the Accounts of the Company) or 210 days (in the
case of the Accounts of each Significant Subsidiary) after the end of each
of its Financial Years, as the case may be, the Accounts of itself and
each Significant Subsidiary for the relevant Financial Year together with
a copy of the management letter (if any) addressed by the Auditors to the
directors of the Company;
(ii) as soon as the same becomes available, but in any event within
90 days after the end of the first half of each of its Financial Years,
its unaudited interim accounts for such half year;
(iii) as soon as the same become available, but in any event within
50 days (or, in respect of the last 3 months in a Financial Year of the
Company, 90 days), after the end of each period of 3 months ending on a
Quarter Day, quarterly management accounts of the Group in a format
satisfactory to the Required Holder(s) (including a profit and loss
account and cashflow forecast) and attaching an information schedule (in
the agreed form) setting out EBITDA, Total Debt Costs and Recurring UK
Rental Income for such three-month period together with details of
progress on any proposed asset disposals and contracts taken on or
terminated during such period;
(iv) as soon as the same become available, but in any event within
45 days after the last day of each month, monthly management
5
accounts (other than for the month of December) of the Group for such
month including a statement of profit and loss, a cashflow statement, a
cashflow forecast for the balance of the then current Financial Year of
the Company and an update on matters referred to in the Side Letter;
(v) within a reasonable time following transmission thereof, (a) all
such financial statements, proxy material, notices and reports as it shall
send to its public shareholders or its creditors generally (or any class
thereof) and (b) all registration statements (without exhibits),
prospectuses and all reports which it files with the Securities and
Exchange Commission (or any governmental body or agency succeeding to the
functions of the Securities and Exchange Commission), The International
Stock Exchange of the United Kingdom and the Republic of Ireland Limited
or any stock exchange except where the Company shall, at the expense of
the Company, provide the Noteholders with an opinion of counsel that doing
so would cause the Company to subject itself to requirements of US Federal
or state securities laws or UK securities laws to which it would not
otherwise be subject; and
(vi) prompt notice of any litigation, arbitration or administrative
proceeding commenced against any member of the Group involving a potential
claim of (pound)100,000 or greater.
Together with each delivery of financial statements required by clause (iii)
above, the Company will deliver to each Noteholder an Officer's Certificate
demonstrating (with computations in reasonable detail) compliance by the Company
and its Subsidiaries with the provisions of paragraph 6 and stating that there
exists no Event of Default or Default, or, if any Event of Default or Default
exists, specifying the nature and period of existence thereof and what action
the Company proposes to take with respect thereto. Together with each delivery
of financial statements required by clauses (i) and (ii) above, the Company will
deliver to each Noteholder an Officer's Certificate demonstrating, with
computations in reasonable detail, compliance by the Group with the provisions
of paragraphs 6A, 6B, 6C, 6D, 6F, 6G, 6H and 6I and stating that there exists no
Event of Default or Default, or, if any Event of Default or Default exists,
specifying the nature and period of existence thereof and what action the
Company proposes to take with respect thereto. Together with each delivery of
financial statements required by clause (i) above, the Company will also deliver
to each Noteholder a certificate of the accountants referred to in that clause
stating that, in making the audit necessary to the certification of such
financial statements, they have obtained no knowledge of any Event of Default or
Default, or, if they have obtained knowledge of any Event of Default or Default,
specifying the nature and period of existence thereof. Such accountants,
however, shall not be liable to anyone by reason of their failure to obtain
knowledge of any Event of Default or Default which would not be disclosed in the
course of an audit conducted in accordance with generally accepted auditing
standards. The Company also covenants that forthwith upon a Responsible Officer
of the Company obtaining actual knowledge of an Event of Default or Default, it
will deliver to each Noteholder an Officer's Certificate specifying the
6
nature and period of existence thereof and what action the Company proposes to
take with respect thereto.
If and to the extent required by Rule 144A(d)(4)(i) under the Securities
Act in connection with a resale of the Notes exempt from the registration
requirements of the Securities Act pursuant to Rule 144A, the Company shall
provide (x) to any Noteholder, promptly, at the request of such Noteholder, such
additional information regarding the Company as is specified in Rule
144A(d)(4)(i) and (y) to a prospective transferee of any Note designated by a
Noteholder, which transferee is qualified to purchase the Note under Rule
144A(d)(l), the information described in the foregoing sub-paragraph (x).
5B. Inspection of Property. The Company covenants that it will comply with
any reasonable written request of any Noteholder to visit and inspect, at such
Noteholder's expense (except upon the occurrence of a Default or an Event of
Default), any of the properties of the Company and its Subsidiaries and to
discuss the affairs, finances and accounts of any of such corporations with the
principal officers of the Company and its independent public accountants, all at
such reasonable times and as often as such Noteholder may reasonably request. At
the request of any Noteholder wishing to have discussions with the independent
accountants of the Company in accordance with this paragraph 5B, the Company in
good faith shall instruct such accountants to hold such discussions; provided
that the Company shall not be held responsible for the failure of its
accountants to hold such discussions in accordance with such instructions. Each
Noteholder agrees that any non-public materials and information obtained by such
Noteholders as a result of any such visit, inspection or discussion shall be
treated in a confidential manner consistent with the provisions of paragraph
llI.
5C. Consents. The Company shall obtain, comply with the terms of and do all
that is necessary to maintain in full force and effect (and promptly supply to
any Noteholder at such Noteholder's request certified copies of) all
authorizations, approvals, licenses and consents required to enable it lawfully
to enter into and perform its obligations under this Agreement, the Notes, the
Security Documents or to ensure the legality, validity, binding effect or
admissability in evidence in New York of this Agreement, the Notes and the
Security Documents.
5D. Insurance. The Company shall, and shall cause each of its Subsidiaries
to, effect and maintain with financially sound and reputable insurers (including
self-insurance) such insurance over and in respect of its respective assets and
business and in such manner and to such extent as is reasonable and customary
for a business enterprise engaged in the same or a similar business and in the
same or similar location.
5E. Maintenance or Status and Business. The Company shall:
(i) do all such things as are necessary to maintain its corporate
existence, and cause each of its Subsidiaries to maintain their
7
corporate existence, except, in the case of its Subsidiaries, where the
failure to do so would not have, individually or in the aggregate, a
Material Adverse Effect and except as otherwise permitted by paragraph 6G
hereof;
(ii) ensure that it, and each of its Subsidiaries, has the right and
is duly qualified to conduct its business as it is conducted in all
applicable jurisdictions and will obtain and maintain all rights necessary
for the conduct of its business, except where the failure to do so would
not result in a Material Adverse Effect; and
(iii) at all times comply and cause each of its Subsidiaries to comply
with all laws and with all rules, regulations and orders made by any
governmental authority applicable to it or to any of its Subsidiaries or to
its Property or Property of any of its Subsidiaries, except where the
failure to do so would not result in a Material Adverse Effect.
5F. Prompt Payment of Taxes. The Company covenants that it will promptly
pay and discharge, and that it will cause each of its Subsidiaries promptly to
pay and discharge, or cause to be paid and discharged, prior to the earliest
date on which any penalty or interest is incurred or begins to accrue, all
lawful taxes, assessments and governmental charges or levies imposed upon any of
its income, profits, Property or business unless, and only to the extent that,
(x) (i) such taxes, assessments and governmental charges or levies are being
contested in good faith by appropriate proceedings, (ii) adequate reserves have
been established in accordance with U.K. GAAP, and (iii) title to or the right
to use Property of the Company is not materially adversely affected thereby or
(y) nonpayment of such taxes, assessments and governmental charges or levies
would not be expected to result in a Material Adverse Effect.
5G. Maintenance of Property and Leases. The Company will maintain, and will
cause each of its Subsidiaries to maintain, all the Property used in its or any
Subsidiary's business in good operating condition, reasonable wear and tear
excepted, except for Property the uninsured loss of which would not have a
Material Adverse Effect. The Company will comply at all times, and will cause
each of its Subsidiaries to comply at all times, with the provisions of all
material leases to which it or any Subsidiary is a party or under which it
occupies Property except where the failure so to comply would not result in a
Material Adverse Effect.
5H. Use of Proceeds. The Company does not own or have any present intention
of acquiring any "margin stock" as defined in Regulation G (12 CFR Part 207) of
the Board of Governors of the Federal Reserve System the (herein called "margin
stock"). Neither the Company nor any agent acting on its behalf will take any
action which might cause this Agreement or the Notes to violate Regulation G,
Regulation T or any other Regulation of the Board of Governors of the Federal
Reserve System or to violate the Exchange Act, in each case as the same may now
or hereafter be in effect.
8
5I. Environmental Matters. The Company: (i) shall conduct, and shall cause
each of its Subsidiaries to conduct, its business in compliance with all
Environmental Laws applicable to it, including without limitation, those
relating to the generation, handling, use, treatment, storage and disposal of
Hazardous Materials by the Company and its Subsidiaries, except where the
failure so to conduct would not individually or in the aggregate, have a
Material Adverse Effect and (ii) shall take, and shall cause each of its
Subsidiaries to take, appropriate action to respond to any non-compliance with
Environmental Laws or any environmental claim, except where the failure so to
take would not individually or in the aggregate, have a Material Adverse Effect.
5J. Financial Records. The Company will, and will cause each of its
Subsidiaries to, keep proper books of account in accordance with generally
accepted accounting principles of the applicable jurisdiction, except in respect
of any of its Subsidiaries where the failure to do so, individually or in the
aggregate, would not have a Material Adverse Effect.
5K. Share Pledge. The Company shall procure that, upon the discharge of the
Sanwa Facility, ASC shall forthwith execute a Share Pledge pledging to the
Security Trustee the remaining 90% of the shares of API which are not subject to
a Share Pledge and provide to the Security Trustee, in form and substance
satisfactory to the Required Holder(s), a legal opinion in respect thereof
unless, in any case, the Sanwa Facility is replaced by a banking facility
substantially on the same terms and conditions as the Sanwa Facility and which
includes a prohibition on the execution of such a Share Pledge or provides that
such execution would be an event of default (howsoever described).
6. NEGATIVE COVENANTS. The Company covenants and agrees that unless
Majority Creditors shall otherwise agree and so long as any Note is outstanding:
6A. Tangible Net Worth; Rental Income. Tangible Net Worth shall at all
times be at least equal to (pound)25,000,000. The Recurring UK Annual Rental
Income for each period of 12 months ending on each Quarter Day shall not be less
than (pound)50,000,000.
6B. Interest Coverage. The ratio of EBITDA minus Capital Expenditure to
Total Debt Costs for each period of 12 months ending on a date specified in
Column A below shall not be less than the ratio set out in Column B below
opposite such date:
Column A Column B
-------- --------
30 November 1995 0.67 : 1
29 February 1996 0.54 : 1
31 May 1996 0.64 : 1
31 August 1996 0.61 : 1
30 November 1996 0.71 : 1
28 February 1997 0.70 : 1
9
31 May 1997 0.73 : 1
31 August 1997 0.77 : 1
30 November 1997 0.83 : 1
6C. Net Borrowings. The ratio of Total Gross Debt to EBITDA for each period
of 12 months ending on a date specified in Column A below shall not be greater
than the ratio set out in Column B below opposite such date:
Column A Column B
-------- --------
30 November 1995 3.35 : 1
29 February 1996 3.63 : 1
31 May 1996 3.37 : 1
31 August 1996 3.40 : 1
30 November 1996 3.27 : 1
28 February 1997 3.38 : 1
31 May 1997 3.24 : 1
31 August 1997 3.21 : 1
30 November 1997 3.03 : 1
6D. Borrowings. The Company will not, and will not permit any Subsidiary
to, create, assume, guarantee, incur, permit or suffer to exist or in any manner
be or become liable in respect of any Borrowings other than Borrowings which
without duplication are:
(i) Bank Indebtedness;
(ii) the Notes;
(iii) Borrowings under the AIB Facility or a replacement committed
banking facility therefor on substantially the same terms and conditions
not exceeding the aggregate of (aa) the facility amount of the AIB Facility
at the Effective Date and (bb) 10% of the amount referred to in (aa) above;
(iv) Borrowings under the Sanwa Facility or a replacement committed
banking facility therefor on substantially the same terms and conditions
not exceeding the aggregate of (aa) the facility amount of the Sanwa
Facility at the Effective Date and (bb) 10% of the amount referred to in
(aa) above;
(v) Borrowings between members of the Group;
(vi) Borrowings under (a) Finance Leases existing at the Effective
Date (b) any Vehicle Lease, and (c) Finance Leases entered into after the
Effective Date by members of the Group as lessees where the Finance Lease
Expenditure under such Finance Leases does not exceed, in aggregate,
(pound)2,000,000;
10
(vii) Borrowings under agreements entered into, or to be entered into,
by the Company for the purpose of hedging the Company's interest rate or
other liabilities in relation to all or any part of the Term Loan Facility
(as defined in the Bank Credit Agreement) and/or the Notes;
(viii) Borrowings incurred by members of the Group under sale and
repurchase arrangements entered into in the ordinary course of trade of
members of the Group in respect of leases, or upgrades of existing leases,
in each case, entered into after the Effective Date; and
(ix) Borrowings payable on demand or within one year of the date of
incurrence and which is incurred by members of the Group incorporated
outside the United Kingdom for working capital purposes where the aggregate
principal amount of such Borrowings does not exceed (pound)1,000,000.
6E. Merger and Consolidation; Assumption. The Company covenants that:
(i) it will not consolidate with or merge with or into or transfer all
or substantially all of its assets, business or undertaking to any other
Person unless:
(a) the Company is the surviving entity, or
(b) the surviving entity or the transferee is a solvent
Subsidiary of the Company which has granted a Guarantee and Debenture,
is organized and existing under the laws of the United States or any
state thereof or of the United Kingdom and has expressly assumed, by
an instrument in form and substance reasonably satisfactory to the
Required Holders, all of the obligations of the Company hereunder and
under the Notes and each of the obligors under each of the Security
Documents have confirmed its obligations thereunder with respect to
the obligations as assumed under the Notes and this Agreement,
and, in either case, immediately prior to and after giving effect to such
consolidation, merger or transfer, there exists no Default or Event of
Default and each Noteholder shall have received, at the sole cost and
expense of the Company, an opinion of counsel, which counsel and which
opinion (as to both form and substance) shall be reasonably satisfactory to
the Required Holders; and
(ii) it shall not allow any other member of the Group to merge or
consolidate with any Person other than another member of the Group which
has granted a Guarantee and Debenture.
11
6F. Negative Pledge. So long as any of the Notes are outstanding, the
Company shall ensure that neither it nor any of its Subsidiaries shall create or
permit to subsist any Lien over all or any of its present or future revenues or
assets other than:
(a) any Liens created under the Finance Documents (as defined in the
Bank Credit Agreement);
(b) any Liens arising in the ordinary course of trading activities;
(c) any agreement for retention of title to goods or any agreement to
sell or otherwise dispose of any asset on terms whereby such
asset is or may be leased or reacquired or acquired, in each
case, arising in the ordinary course of trade;
(d) any rights of set-off arising by operation of law or as a result
of operating banking facilities entered into in the ordinary
course of trade on a net limit basis for cash management
purposes;
(e) any Lien over an asset of a company which becomes a Subsidiary of
the Company (other than by reason of its incorporation) after the
Effective Date being a Lien which is in existence at the time at
which such company becomes such a Subsidiary but only if (i) such
Lien was not created in contemplation of such company becoming
such a Subsidiary, (ii) the principal amount secured by such Lien
has not been and shall not be increased and (iii) such Lien is
discharged within 6 months of the date on which such company
becomes such a Subsidiary;
(f) any Lien over an asset acquired by a member of the Group after
the Effective Date and subject to which such asset is acquired
but only if (i) such Lien was not created in contemplation of its
acquisition by such member, (ii) the amount thereby secured has
not been increased in contemplation of, or since the date of, its
acquisition by such member, and (iii) such Lien is discharged
within 6 months of the date of its acquisition by such member;
(g) any Lien which has been disclosed to the Purchaser prior to the
Effective Date and where the amount thereby secured has not been
increased above the amount so secured as at the date of such
disclosure;
(h) any Lien created after the Effective Date over all or any of the
assets of Modern Security Systems Limited (a
12
company incorporated in Ireland) as security for a banking
facility made available to such company and which is committed
for a period of at least 364 days; and
(i) any other Liens securing Borrowings, where the aggregate value of
assets the subject of such Liens does not exceed
(pound)1,000,000.
6G. Restriction on Disposals. (a) Neither the Company nor any Subsidiary
shall make a Disposal of all or any of its Rental Income or assets from time to
time other than
(i) a Disposal on arm's length terms by the relative member of the
Group in the ordinary course of its trade;
(ii) a Disposal to a member of the Group which has granted a Debenture
and Guarantee;
(iii) a Disposal of an asset where the proceeds of such Disposal are
used to purchase an asset in direct replacement of such first-mentioned
asset;
(iv) a Disposal of damaged, obsolete or redundant assets in the
ordinary course of business;
(v) a Disposal of a lease under sale and repurchase arrangements
entered into in the ordinary course of trade of the Group in respect of
leases, or upgrades of leases, in each case, entered into after the
Effective Date;
(vi) a Disposal permitted in the Side Letter; and
(vii) a Disposal on arm's length terms of an asset at or above its
value stated in the relevant company's most recent accounts for a
consideration not exceeding (pound)50,000 where such Disposal would not
result in the aggregate consideration received for all Disposals of assets
not included in (i)-(vi) above exceeding (pound)250,000 in any Financial
Year of the Company.
(b) Subject to the other provisions of this paragraph 6G, any Disposal
Proceeds received by a member of the Group of a Disposal (not being an Excluded
Disposal) shall immediately upon receipt by the relevant member be applied as
follows:
(i) the first US$80,000,000 (on the basis of an exchange rate of
US$1.5916 to (pound)1) in aggregate of such Disposal Proceeds received by
members of the Group shall be paid in repayment of the Bank Indebtedness
and the Notes, in the Sharing Proportions;
13
(ii) after the application referred to in (i) above, the Company shall
be entitled to retain an aggregate amount of such Disposal Proceeds not
exceeding US$2,500,000 (on the basis of an exchange rate of US$l.59l6 to
(pound)1); and
(iii) after the applications referred to in (i) and (ii) above, 80% of
all Disposal Proceeds shall be used to prepay the Bank Indebtedness and the
Notes in the Sharing Proportions.
(c) The Disposal Proceeds arising from a Disposal of the issued share
capital of, or all the assets of Modern Security Systems Limited (a company
incorporated in Ireland) shall promptly upon receipt be applied as follows:
(i) first, in repayment of the AIB Facility up to a maximum principal
amount equal to the commitments of AIB thereunder as at the Effective Date
and any accrued but unpaid interest on such principal amount;
(ii) second, an amount not exceeding IR(pound)l,720,000 less any
amount repaid under (i) above shall be used to prepay Bank Indebtedness;
and
(iii) thereafter, such proceeds shall be used to prepay Bank
Indebtedness and the Notes in the Sharing Proportions.
(d) For the purposes of this paragraph 60, amounts due under the Bank
Credit Agreement and on the Notes include, for the avoidance of doubt, all
principal monies, interest, the success fee referred to in Clause 18.6 of the
Bank Credit Agreement and paragraph 3 of the First Amendment and any
Yield-Maintenance Amount.
(e) In the event that any Noteholder elects in accordance with paragraph 4C
that its Notes not be prepaid or the Banks elect in accordance with the Bank
Credit Agreement that the Bank Indebtedness not be prepaid with particular
Disposal Proceeds, then any reference in this paragraph 60 to prepayment of Bank
Indebtedness and the Notes in the Sharing Proportions shall be deemed to be
adjusted accordingly.
6H. Proceeds of New Capital. The proceeds of any new issue of share capital
of the Company or its Subsidiaries to any person not being a member of the Group
(net of all costs and expenses of issuing the same which expenses shall not
include the success fees payable pursuant to Clause 18.6 of the Bank Credit
Agreement and paragraph 3 of the First Amendment or any Yield-Maintenance
Amount) shall be applied immediately upon receipt of the same as follows:
(i) first, in repayment of the AIlS Facility up to a maximum
principal amount equal to the commitments of AIB thereunder as
at the Effective Date
14
and any accrued but unpaid interest on such principal amount; and
(ii) thereafter, such proceeds shall be used to repay the Bank
Indebtedness and the Notes in the Sharing Proportions.
For the purposes of this paragraph 6H, amounts due under the Bank Credit
Agreement and on the Notes include, for the avoidance of doubt, all principal
monies, interest, the success fee referred to in Clause 18.6 of the Bank Credit
Agreement and paragraph 3 of the First Amendment and any Yield-Maintenance
Amount. In the event that any Noteholder elects in accordance with paragraph 4C
that its Notes not be prepaid or the banks elect in accordance with the Bank
Credit Agreement that the Bank Indebtedness not be prepaid with particular
proceeds of the issue of share capital by a member of the Group, then any
reference in this paragraph 6H to prepayment of Bank Indebtedness and the Notes
in the Sharing Proportions shall be deemed to adjusted accordingly.
6I. Change of Business. The Company shall not, nor allow any Subsidiary to,
make or threaten to make any change in its business as conducted as at the
Effective Date, which would result in a substantial change in the nature of the
business carried on by the Group as a whole nor carry on any other business
which is substantial in relation to the business of the Group as at conducted as
at the Effective Date.
6J. Granting Credit. After the Effective Date, the Company shall not, nor
allow any Subsidiary to, make, or permit to remain outstanding, any loans or
grant any credit other than:
(i) amounts of credit allowed by the Company or any Subsidiary in the
ordinary course of its trading activities;
(ii) loans made to a member of the Group by another member of the
Group that has granted a Guarantee and Debenture;
(iii) loans made by one member of the Group that has not granted a
Guarantee and Debenture to another such member;
(iv) loans made by one member of the Group that has not granted a
Guarantee and Debenture to another member of the Group that has granted a
Guarantee and Debenture;
(v) loans made by one member of the Group to other members of the
Group (not falling within paragraphs (ii), (iii) and (iv) above) which
either (a) are in existence as at the Effective Date, or (b) are made after
such date where the aggregate net amount of such loans does not exceed
(pound)1,000,000;
15
(vi) a loan of up to (pound)751,000 in aggregate made by the Company
to ASH Jersey;
(vii) loans or credit of up to $2,000,000 in aggregate made available
to TVX, Inc.; and
(viii) loans made by members of the Group to their employees not
exceeding (pound)500,000 in the aggregate.
6K. Dividends. The Company shall not make or pay any dividend or other
distribution in relation to any shares forming part of its issued share capital
unless:
(i) no Default or Event of Default has occurred and is continuing; and
(ii) the ratio of Total Gross Debt to EBITDA for the period of 12
months ending on the most recent Quarter Date prior to the making or
payment of the relevant dividend or distribution is to be made is not
greater than 1.5:1 as certified to the Noteholders by the Auditors.
6L. Indemnities. After the Effective Date, the Company shall not, and shall
not allow any Subsidiary to, give any indemnity to potential purchasers of
assets in relation to the costs of their due diligence exercises in aggregate
amounts exceeding (pound)200,000.
6M. Jersey Debenture; Convertible Capital Bonds. (a) The Company shall not
make or agree to make any payment or repayment or otherwise discharge any of the
obligations or liabilities of the Company under the Jersey Debenture or
otherwise in respect of the Loan (as defined in the Jersey Debenture) except in
respect of the payment of interest.
(b) The Company shall not make any variation, amendment, modification or
supplement in respect of:
(i) the Jersey Debenture which relates to Clause 3 (Repayment), Clause
4 (Prepayment) or Clause S (Subordination) thereof; or
(ii) the subordination provisions of the guarantee issued by the
Company in favor of the holders of the Convertible Capital Bonds.
6N. Bank Indebtedness; Bank Credit Agreement. The Company shall not, save
as otherwise permitted or required by this Agreement, voluntarily prepay, repay
or redeem any of the Bank Indebtedness. The Company shall not modify any
provision of the Bank Credit Agreement without the consent of the Required
Holder(s) unless such modification is in accordance with the terms of the
Intercreditor Agreement.
16
7. EVENTS OF DEFAULT.
7A. Acceleration. If any of the following events shall occur and be
continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal of or premium
on any Note when the same shall become due, either by the terms thereof or
otherwise as herein provided and, if such default in payment is caused
solely by technical delays in the transmission of funds, such default
continues for 3 Business Days after the due date; or
(ii) the Company defaults in the payment of any interest on any Note
or any amounts payable under the terms of the First Amendment and, if such
default in payment is caused solely by technical delays in the transmission
of funds, such default continues for 3 Business Days after the due date; or
(iii) (a) the Company or any Subsidiary defaults in any payment of
principal of, or premium or interest on any other obligation for Borrowings
beyond any period of grace provided with respect thereto; or (b) the
Company or any Subsidiary fails to perform or observe any other agreement,
term or condition contained in any agreement under which any such
obligation is created (or if any other event thereunder or under any such
agreement shall occur and be continuing) and the effect of such failure or
other event is either (x) to cause, or (y) to permit the holder or holders
of such obligation (or a trustee on behalf of such holder or holders) to
cause, such obligation to become due prior to any stated maturity;
provided, with respect to both clauses (a) and (b), that the aggregate
amount of all obligations as to which such a payment default shall occur
and be continuing or such a failure or other event causing or permitting
acceleration shall occur and be continuing exceeds (pound)1,000,000 (or the
equivalent in other currency); or
(iv) any representation or warranty made by the Company herein or in
the First Amendment or in any writing furnished in connection with or
pursuant hereto or thereto or any representation made by any other member
of the Group in any Security Document to which it is party shall be false
or incorrect in any material respect on the date as of which made; or
(v) the Company fails to perform or observe any agreement contained in
the last sentence of the first paragraph of paragraph 5A or paragraphs 6A,
6B, 6C, 6E, 6G, 6I, 6M or 6N; or
(vi) the Company fails to perform or observe any other agreement, term
or condition contained herein or any member of the
17
Group fails to perform or observe any agreement, term or condition
contained in any Security Document to which it is party and, in any such
case, such failure shall not be remedied within 15 Business Days after any
Responsible Officer of the Company obtains actual knowledge thereof; or
(vii) the Company makes a general assignment for the benefit of
creditors or is generally not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of the Company or any
Significant Subsidiary is entered under any bankruptcy, reorganization,
compromise, arrangement, insolvency, readjustment of debt, dissolution or
liquidation or other similar law, whether now or hereafter in effect
(herein called the "Bankruptcy law") of any jurisdiction; or
(ix) the Company or any Significant Subsidiary petitions or applies to
any tribunal for, or consents to, the appointment of, or taking possession
by, a trustee, administrator, receiver, custodian, liquidator or similar
official of the Company or any Significant Subsidiary, or of any
substantial part of the assets of the Company or any Significant
Subsidiary, or the Company or any Significant Subsidiary commences a
voluntary case under the Bankruptcy Law of the United States or any
proceedings relating to the Company or any Significant Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such proceedings
are commenced, against the Company or any Significant Subsidiary and the
Company or such Significant Subsidiary by any act or omission clearly
indicates its approval thereof, consent thereto or acquiescence therein, or
an encumbrancer takes possession thereof, or an order, judgment or decree
is entered appointing any such trustee, administrator, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, or a distress or execution is levied upon or sued out against
any substantial part of the assets of the Company or of any Significant
Subsidiary and such order, judgment, decree or proceeding remains unstayed
and in effect for more than 21 days; or
(xi) an effective resolution is adopted by or other equivalent action
is taken by, or any order, judgment or decree is entered in any proceedings
against, the Company or any Significant Subsidiary decreeing the
dissolution of the Company or any Significant Subsidiary, (other than in
connection with a winding-up for the purpose of a reconstruction or
amalgamation the terms of which have previously been approved in writing by
the holders of 66 2/3% of the Notes, or, in the case of a Subsidiary, a
voluntary solvent winding-up in connection with the transfer of all or the
major part of the business, undertakings and assets of such Subsidiary to
the Company or a Significant Subsidiary),
18
and such resolution, action, order, judgment or decree remains unstayed and
in effect for more than 21 days; or
(xii) a final judgment for the payment of money in an amount in excess
of (pound)1,000,000 (or the equivalent in other currency) net of insurance
proceeds received, is rendered against the Company or any Significant
Subsidiary and, within 14 days after entry thereof, such judgment is not
discharged or dismissed or execution thereof stayed pending appeal, or
within 14 days after the expiration of any such stay, such judgment is not
discharged; or
(xiii) any of the Security Documents ceases to be in full force and
effect; or
(xiv) at any time there occurs a change in the financial condition or
business condition of any of the members of the Group which (in the
reasonable opinion of the Required Holder(s)) has, or could reasonably be
expected to have, a Material Adverse Effect; or
(xv) without the prior consent of the Required Holder(s), the Company
makes any redemption of, or purchases, any of its share capital or the
Convertible Capital Bonds or otherwise reduces its share capital;
then (a) if such event is an Event of Default specified in clause (i) or (ii) of
this paragraph 7A and such event is continuing, any holder of a Note may, by
notice in writing to the Company, declare all of the Notes held by such holder
to be, or Required Holder(s) may, by notice in writing to the Company, declare
all Notes to be, and each such Note and the outstanding principal thereof shall
thereupon be and become, immediately due and payable together with interest
accrued thereon and together with the Yield-Maintenance Amount, if any, with
respect to each such Note, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company and (b) if such event
is not an Event of Default specified as such in clause (i) or (ii) of this
paragraph 7A and such event is continuing, the Required Holder(s) with the
consent of the Majority Creditors may at its or their option, by notice in
writing to the Company, declare all of the Notes to be, and all of the Notes
shall thereupon be and become, immediately due and payable together with
interest accrued thereon and together with the Yield-Maintenance Amount, if any,
with respect to each Note, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Company.
7B. Rescission of Acceleration. The provisions of paragraph 7A are subject
to the condition that if the principal of, and accrued interest on, and
Yield-Maintenance Amount payable with respect to, all or any outstanding Notes
have been declared immediately due and payable (i) in accordance with paragraph
7A(b), the holder or holders of such Notes may, or (ii) in accordance with
paragraph 7A(b) the holder or holders of at least 66 2/3% in aggregate principal
amount of the Notes then outstanding may, by written instrument filed
19
with the Company, rescind and annul such declaration and the consequences
thereof, provided that at any time such declaration is annulled and rescinded:
(a) no judgment or decree has been entered for the payment of any
monies due pursuant to the Notes or this Agreement;
(b) all arrears of interest upon all the Notes and all other sums
payable under the Notes and under this Agreement (except any principal,
interest or Yield-Maintenance Amount on the Notes which has become due and
payable solely by reason of such declaration under paragraph 7A(___) shall
have been duly paid; and
(c) each and every other Default and Event of Default shall have been
made good, cured or waived pursuant to paragraph 11C;
and provided further, that no such rescission and annulment shall extend to or
affect any subsequent Default or Event of Default or impair any right consequent
thereon.
7C. Other Remedies. No remedy conferred in this Agreement upon the holder
of any Note is intended to be exclusive of any other remedy, and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
conferred herein or now or hereafter existing at law or in equity or by statute
or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE COMPANY. The Company
represents, covenants and warrants:
8A. Organization. The Company is a limited company duly incorporated and
validly existing under the laws of England and Wales, each of its Significant
Subsidiaries is duly incorporated and validly existing under the laws of the
jurisdiction in which it is incorporated, and the Company and each of its
Significant Subsidiaries has the corporate power to own its property and to
carry on its business as now being conducted.
8B. Powers and Authority. The Company has the corporate power and authority
to enter into and perform, and has taken all necessary action to authorize The
entry into, performance and delivery of, the First Amendment, the Security
Documents to which it is party and the transactions contemplated thereby.
8C. Financial Statements. The Company has furnished the Purchaser with the
following financial statements, identified by a principal financial officer of
the Company: Report and Accounts for the Company for the year ended November 30,
1994. Such financial statements (including any related schedules and/or notes)
are true and correct in all material respects, have been prepared in accordance
with generally accepted accounting principles in the United Kingdom consistently
followed throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its Subsidiaries
20
required to be shown in accordance with such principles. The balance sheets
present a true and fair view of the condition of the Company and its
Subsidiaries as at the dates thereof, and the statements of income and
statements of changes in financial position present a true and fair view of the
results of the operations of the Company and its Subsidiaries for the periods
indicated. There has been no Material Adverse Effect since November 30, 1994.
8D. Actions Pending. There is no action, suit, investigation or proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any properties or rights of the Company or any of its
Subsidiaries by or before any court, arbitrator or administrative or
governmental body which is expected to result in a Material Adverse Effect.
8E. Defaults. No default has occurred and is continuing, and no event has
occurred which constitutes a default (or would so constitute but for a waiver),
under (or which with the passage of time or notice would constitute a default
under) any agreement evidencing Borrowings of the Company or any of its
Significant Subsidiaries (including this Agreement).
8F. Conflicting Agreements and Other Matters. The execution, delivery and
performance by the company of the Note Agreement and the Notes will not cause
the Company or any Significant Subsidiary to be unable to pay its debts and will
not contravene or constitute a default (whether or not waived), or result in the
creation of any Lien in respect of any Property of the Company or any of its
Subsidiaries, under (1) the Memorandum and Articles of Association of the
Company or any such Subsidiary; (2) any obligation under any indenture,
mortgage, deed of trust, bank loan or credit agreement or other agreement or
instrument to which the Company or any such Subsidiary is a party or by which
the Company or any such Subsidiary or any of their respective Properties is
bound except to the extent that such contravention, default or creation of a
Lien would not have, individually or in the aggregate, a Material Adverse
Effect; (3) any law, statute, rule or regulation of any governmental body
applicable to either the Company or any such Subsidiary; or (4) any order of any
court, arbitrator or governmental body applicable to either the Company or any
such Subsidiary.
8G. Governmental Consent. Neither the nature of the Company nor any of its
businesses or properties, nor any relationship between the Company and any other
Person, nor any circumstance in connection with this Agreement, the Security
Documents or the Notes, is such as to require any authorization, consent,
approval, exemption or other action by or notice to or filing with any court or
administrative or governmental body (other than routine filings after the
Closing Date with the Securities and Exchange Commission and/or state Blue Sky
authorities) in connection with the execution and delivery of the First
Amendment or the Security Documents or fulfillment of or compliance with the
terms and provisions thereof.
8H. Existing Liens. Liens on the assets of the Company and its Significant
Subsidiaries (other than Liens arising under the Security Documents
21
or as disclosed under paragraph 6F(g)) do not secure Borrowings in excess of
(pound)1,000,000 (or the equivalent in other currency).
8I. Disclosure. Neither this Agreement, the First Amendment nor any other
document, certificate or written statement furnished to you by or on behalf of
the Company in connection herewith or therewith contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements contained herein and therein, in the light of the circumstances under
which they were made, not misleading. There is no fact peculiar to the Company
or any of its Subsidiaries which has or in the future may (so far as the Company
can now foresee) have a Material Adverse Effect and which has not been set forth
in this Agreement, the First Amendment or in the other documents, certificates
and written statements furnished to the Purchaser prior to the Effective Date in
connection with the transactions contemplated hereby.
8J. Title to Properties. The Company has good and indefeasible title to its
real properties (other than properties which it leases) and good title to all of
its other properties and assets, including the properties and assets reflected
in the balance sheet as at November 30, 1994 referred to in paragraph 8C (other
than properties and assets disposed of in the ordinary course of business),
subject to no Lien of any kind except Liens permitted by paragraph 6F. All
leases necessary for the conduct of the business of the Company are valid and
subsisting and are in full force and effect except where the absence of which
would not result in a Material Adverse Effect.
8K. Taxes. The Company has filed all relevant tax returns and has complied
in all material respects with its obligation to pay all taxes as shown on such
returns and on all assessments received by it to the extent that such taxes have
become due, except (i) such taxes as are being contested in good faith by
appropriate proceedings for which adequate reserves have been established in
accordance with U.K. GAAP or (ii) any taxes with respect to which U.K. GAAP does
not require the Company to set aside on its books reserves (or the Company has
set aside such reserves) and where the failure to pay such taxes could not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.
8L. Offering of the Notes. Neither the Company nor any agent acting on its
behalf has, directly or indirectly, offered the Notes or any similar security of
the Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with respect
thereto with, any Person other than institutional investors, and neither the
Company nor any agent acting on its behalf has taken or will take any action
which would require the registration of the Notes under the provisions of
section 5 of the Securities Act or under the provisions of any securities or
Blue Sky law of any applicable jurisdiction. The Notes are not of the same class
as securities of the Company listed on a national securities exchange registered
under Section 6 of the Exchange Act or quoted in a US automated inter-dealer
quotation system.
22
8M. Regulation G, Etc. The Company does not own or have any present
intention of acquiring any "margin stock" as defined in Regulation G (12 CFR
Part 207) of the Board of Governors of the Federal Reserve System herein called
"margin stock"). Neither the Company nor any agent acting on its behalf has
taken or will take any action which might cause this Agreement or the Notes to
violate Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the Exchange Act in such
case as in effect now or as the same may hereafter be in effect.
8N. Pension Plans. Each Plan is in substantial compliance with ERISA and
the Code except to the extent that any failure to substantially comply does not
cause the Company or its Subsidiaries to incur a material liability; as of the
Effective Date, no Plan is a single employer plan or multiemployer plan, as
defined by ERISA Section 4001, which is subject to Title IV of ERISA; no Plan is
insolvent or in reorganization; all contributions required to be made with
respect to all Plans and Foreign Pension Plans have been timely made; neither
the Company nor its Subsidiaries nor any ERISA Affiliate has incurred any
material liability to or on account of a Plan, including a plan maintained or
contributed to by an ERISA Affiliate, pursuant to Section 409, 502(i), 502(1),
4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section 401(a) (29) of
the Code: neither the Company nor its Subsidiaries has incurred any material
liability to or on account of a Plan pursuant to Section 4971, 4975 or 4980 of
the Code and neither the Company nor its Subsidiaries, nor any ERISA Affiliate,
where applicable, expects to incur any liability (including any indirect,
contingent, or secondary liability) under any of the foregoing Sections with
respect to any Plan, including a plan maintained by an ERISA Affiliate except
with respect to Code Sections 4971, 4975 or 4980; no proceedings have been
instituted to terminate or appoint a trustee to administer any Plan; no
condition exists which presents a material risk to the Company or any of its
Subsidiaries or any ERISA Affiliate, where applicable, of incurring a liability
to or on account of a Plan pursuant to the foregoing provisions of ERISA and the
Code; no Lien imposed under the Code or ERISA on the assets of the Company or
any of its Subsidiaries or any ERISA Affiliate exists or is likely to arise on
account of any Plan, including a plan maintained or contributed to by an ERISA
Affiliate; and the Company and its Subsidiaries may cease contributions to or
terminate any employee benefit plan maintained by any of them without incurring
any material liability in an amount that would affect the ability of the Company
or its Subsidiaries to meet it obligations under this Agreement. Each Foreign
Pension Plan has been maintained in substantial compliance with its terms and
with the requirements of any and all applicable laws, statutes, rules,
regulations and orders, except to the extent that any failure to substantially
comply does not cause the Company or its Subsidiaries to incur a material
liability. Neither the Company nor any of its Subsidiaries has incurred any
obligation in connection with the termination of or withdrawal from any Foreign
Pension Plan. The present value of the accrued benefit liabilities (whether or
not vested) under each Foreign Pension Plan, determined as of the end of the
Company's most recently ended Financial Year on the basis of actuarial
assumptions, each of which is reasonable, did not exceed the current value of
the assets
23
of such Foreign Pension Plan allocable to such benefit liabilities by an amount
that would significantly affect the financial condition of the Company and its
Subsidiaries, taken as a whole, or the Company's ability to perform its
obligations under this Agreement.
8O. Environmental Compliance. The Company and its Subsidiaries and their
respective properties and facilities have complied with all laws, including
Environmental Laws, regulations and orders relating to the protection of the
environment except where failure so to comply would not have a Material Adverse
Effect.
8P. Legal Validity. This Agreement, each Note and the First Amendment
constitutes, and each of the Security Documents will (when executed by the other
parties thereto) constitute, the legal, valid and binding obligation of the
Company or the Subsidiary party thereto, as the case may be, enforceable in
accordance with its respective terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
8Q. Holding Company and Investment Company. The Company is not, and is not
directly or indirectly controlled by any person which is, required to register
as an "investment company" within the meaning of the Investment Company Act of
1940. The Company is not a "holding company" or a "subsidiary" or an "affiliate"
of a "holding company" or a "public utility" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
8R. Indebtedness. As of the Effective Date, the Subsidiaries of the Company
have no Borrowings other than Borrowings described in clauses (i) through (ix),
inclusive, of paragraph 6D.
9. [intentionally omitted]
10. DEFINITIONS. For the purpose of this Agreement, the terms defined in
paragraphs 1 and 2 shall have the respective meanings specified therein, and the
following terms shall have the meanings specified with respect thereto below:
10A. Yield-Maintenance Terms.
"Called Principal" shall mean, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to paragraph 4B, 4E or 4F or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Discounted Value" shall mean, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled
24
Payments with respect to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on
a semiannual basis) equal to the Reinvestment Yield with respect to such Called
Principal.
"Modified Yield-Maintenance Amount" shall mean the Yield Maintenance Amount
computed using a Reinvestment Yield in which a spread of 0.75% (75 basis points)
is added to the implied yield to maturity for actively traded US Treasury
securities determined as set forth in the definition of "Reinvestment Yield".
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City time) on the Business Day next preceding the Settlement Date
with respect to such Called Principal, on the display designated as "Page 678"
on the Telerate Service (or such other display as may replace Page 678 on the
Telerate Service) for actively traded U.S. Treasury securities having a maturity
equal to the Remaining Average Life of such Called Principal as of such
Settlement Date, or (ii) if such yields shall not be reported as of such time or
the yields reported as of such time shall not be ascertainable, the Treasury
Constant Maturity Series yields reported, for the latest day for which such
yields shall have been so reported as of the Business Day next preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H. 15 (519) (or any comparable successor publication) for
actively traded U.S. Treasury securities having a constant maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement Date. Such
implied yield shall be determined, if necessary, by (a) converting U.S Treasury
bill quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between reported yields.
"Remaining Average Life" shall mean, with respect to the Called Principal
of any Note, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) each Remaining Scheduled Payment of such Called
Principal (but not of interest thereon) by (b) the number of years (calculated
to the nearest one-twelfth year) which will elapse between the Settlement Date
with respect to such Called Principal and the scheduled due date of such
Remaining Scheduled Payment.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
25
paragraph 4B, 4E or 4F or is declared to be immediately due and payable pursuant
to paragraph 7A, as the context requires.
"Yield-Maintenance Amount" shall mean, with respect to any Note, a premium
equal to the excess, if any, of the Discounted Value of the Called Principal of
such Note over the sum of (i) such Called Principal plus (ii) interest accrued
thereon as of (including interest due on). The Settlement Date with respect to
such Called Principal. The Yield-Maintenance Amount shall in no event be less
than zero.
l0B. Other Terms.
"Accounts" shall mean
(i) in relation to the Company, the audited consolidated accounts
(including all additional information and notes thereto) of the Company and
its Subsidiaries together with the relative directors' report and auditors'
report; and
(ii) in relation to each Significant Subsidiary from time to time,
accounts (including all additional information and notes thereto) to the
extent required by applicable laws audited together with the directors'
report and auditors' report.
"Additional Payment" shall have the meaning specified in paragraph llO.
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, a corporation,
except a Subsidiary. A Person shall be deemed to control a corporation if such
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of such corporation, whether through
the ownership of voting securities, by contract or otherwise.
"AIB" shall mean Allied Irish Banks plc.
"AIB Facility" shall mean the facility made available under the facility
letter dated 27th March 1995 between AIB and Modern Security Systems Limited (a
company incorporated in Ireland) (as amended from time to time).
"API" shall mean API Security Inc., a company incorporated under the laws
of the State of California, having its principal office at 8550 Higuera Street,
Culver City, California 90232.
"ASC" shall mean Automated Security Corporation, a company incorporated
under the laws of the State of Delaware, having its principal office at 8550
Higuera Street, Culver City, California 90232.
26
"Auditors" shall mean, in relation to each member of the Group, Binder
Hamlyn or, as the case may be, Arthur Andersen, or such other firm of chartered
accountants of international standing as shall have been duly appointed as
auditors of the relative company.
"Bank Credit Agreement" shall mean the Credit Agreement as defined in the
Guarantee and Debenture.
"Bank Indebtedness" shall mean Borrowings arising under the Bank Credit
Agreement.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Borrowings" shall mean, in relation to any Person, its obligation
(whether present or future, actual or contingent and whether incurred as
principal or surety) for the payment or repayment of money (whether in respect
of interest, principal or otherwise) incurred in respect of any of:
(i) monies borrowed or raised;
(ii) any bond, note, loan stock, debenture or similar instrument;
(iii) acceptance credit, bill discounting, note purchase, factoring
facilities or documentary credit facilities;
(iv) payment obligations under Finance Leases;
(v) guarantees, bonds, stand-by letters of credit or other similar
instruments issued in connection with the performance of contracts;
(vi) interest rate or currency swap agreements or any other hedging
instrument in respect of interest rates or currencies;
(vii) any arrangement entered into primarily as a method of raising
finance pursuant to which any asset disposal of by a member of the Group is
to be or may be re-acquired or acquired by a member of the Group (whether
following the exercise of an option or otherwise); and
(viii) counter-indemnities, guarantees or other assurances against
financial loss in respect of the liability or obligation of any Person
falling within any of paragraphs (i) to (vii) above.
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which commercial banks in New York City and London are required or authorized
to be closed.
27
"Capital Expenditure" has the meaning attributed to it by generally
accepted accounting principles and, for the avoidance of doubt, shall not
include Vehicle Leases.
"Change of Control" shall mean a change in the ownership of the issued
share capital of the Company, where any Person (whether alone or together with
any associated person or persons) becomes the beneficial owner of shares in the
issued share capital of the Company carrying the right to exercise more than 50%
of the votes exercisable at a general meeting of the Company (for the purposes
of this definition, "associated person" means, in relation to any Person, a
Person who is either (a) acting in concert (as defined in the City Code on
Take-Overs and Mergers) with such aforesaid Person or (b) a "connected person"
as defined in Section 839 of the U.K. Income and Corporation Taxes Act 1988 of
such aforesaid person).
"Change in Tax Law" means any change in law, treaty, rule or regulation, or
in the interpretation of any thereof, as any such law, treaty, rule, regulation
or interpretation is in effect on the Effective Date, relating to the
withholding or deduction of tax imposed by the United Kingdom on payments of the
type made under this Agreement or on the Notes.
"Closing Date" shall mean May 27, 1994.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to the Code are to the Code as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Convertible Capital Bonds" shall mean any amount outstanding in respect of
the (pound)60 million 9 1/2% Convertible Capital Bonds due 2006 issued by ASH
Capital Finance (3ersey) Limited and guaranteed on a subordinated basis by the
Company.
"Depreciation" shall have the meaning attributed to it by generally
accepted accounting principles and, for the avoidance of doubt, includes losses
on canceled contracts.
"Disposal" shall mean a sale, transfer, or other disposal (including by way
of lease or otherwise) after the Effective Date of all or any part of the assets
or property of any member of the Group whether by one transaction or a series of
transactions.
"Disposal Proceeds" shall mean, in respect of a Disposal, the gross
consideration receivable by such company for such Disposal less all costs and
expenses including Tax directly incurred in respect of such Disposal (which
shall not include the success fees referred to in Clause 18.6 of the Bank Credit
Agreement or in paragraph 3 of the First Amendment or any Yield-Maintenance
Amount).
28
"Dollar" or "$" shall each mean the lawful currency of the United States of
America.
"EBITDA" shall mean, for any period, the consolidated profit on ordinary
trading activities of the Group for that period before Taxation and Total Debt
Costs
PLUS:
(i) the amount of Depreciation charged by the Group in such period;
(ii) the amount of intangible assets amortised or written off through
the Company's consolidated profit and loss account during such period; and
(iii) to the extent not taken account of in (ii) above, the amount of
the most recent book value of an asset written off through the said profit
and loss account during such period on a Disposal of such asset where the
Disposal Proceeds in respect of such Disposal are applied in accordance
with the terms of this Agreement;
LESS:
(i) profit attributable to minority interests; and
(ii) profit made on the Disposal (other than a Disposal permitted
under clauses (i) to (iii) of paragraph 6G(a)) of an asset in such period
by a member of the Group,
and for the avoidance of doubt, taking no account of
(a) extraordinary items; and
(b) interest receivable and similar income.
"Effective Date" shall have the meaning provided in the First Amendment.
"Event of Default" shall mean any of the events specified in paragraph 7A,
provided that there has been satisfied any requirement in connection with such
event for the giving of notice, or the lapse of time, or the happening of any
further condition, event or act, and "Default" shall mean any of such events,
whether or not any such requirement has been satisfied.
"Environmental Laws" shall mean all international, European Union,
national, federal, state, provincial, county, borough or local statutes, laws,
regulations, orders, consents, decrees, directives, judgements, licenses, codes,
ordinances or other requirements relating to public health, Hazardous Materials,
29
or the environment including, without limitation, conservation, waste
management, removal and remedial cost recovery, and pollution including without
limitation, regulation of discharges, releases, and emissions of Hazardous
Material to the air, land, water and groundwater) applicable to the Group's
business, operations and facilities (whether or not now or previously owned by
any member of the Group).
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder. Section references to ERISA are to ERISA as in effect at the date of
this Agreement and any subsequent provisions of ERISA, amendatory thereof,
supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of
ERISA) which together with the Company or any of its Subsidiaries would be
deemed to be a "single employer" (1) within the meaning of Section 414 (b), (c),
(m) or (o) of the Code or (ii) as a result of the Company or a Subsidiary being
or having been a general partner of such person.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Disposal" shall mean a Disposal referred to in any of clauses (i)
to (v) inclusive of paragraph 6G(a).
"Final Maturity Date" means, save as set out in the Side Letter, January 2,
1998, provided that if by January 2, 1998 either:
(i) the Company (and/or other members of the Group) has received the
Sterling Equivalent (calculated as at the date of receipt) of
US$100,000,000 in respect of the subscription for a new issue of share
capital (a "New Equity Raising") and applied the same in the Sharing
Proportions, in repayment of the Bank Indebtedness and the Notes; or
(ii) a member of the Group makes a Disposal which raises Disposal
Proceeds of at least US$50,000,000 (or its equivalent) ("Major Disposal")
and such Disposal Proceeds are applied in accordance with paragraph 6G(b);
then the Final Maturity Date shall be April 2, 1998.
"Finance Lease" shall mean any lease, hire agreement, credit sale
agreement, purchase agreement, conditional sale agreement or instalment sale and
purchase agreement which should be treated in accordance with SSAP 21 or FASB 13
as appropriate (or any successor thereto) as a finance lease or in the same way
as a finance lease.
"Finance Lease Expenditure" shall mean the capital value of any assets the
subject of a Finance Lease to which a company within the Group is a party.
30
"Financial Year" in relation to any company shall have the meaning ascribed
to such term by section 223 of the U.K. Companies Act 1985, as amended.
"First Amendment" shall mean the First Amendment Agreement, dated December
21, 1995 between the Noteholder and the Company.
"Foreign Pension Plan" shall mean any plan, fund (including without
limitation, any superannuation fund) or other similar program established or
maintained outside the United States of America by the Company or any one or
more of its Subsidiaries primarily for the benefit of employees of the Company
or such Subsidiaries residing outside the United States of America, which plan,
fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA or the Code.
"Group" shall mean Automated Security (Holdings) PLC and all of its
Subsidiaries from time to time.
"Guarantee and Debenture" shall mean a Guarantee and Debenture
substantially in the form of Exhibit F to the First Amendment executed and
delivered by a member of the Group.
"Hazardous Materials" shall mean (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; (b)
any waste which would be characterized as hazardous under Directive 91/689/EEC
or the annexes thereto; and (c) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any Environmental Law.
"Intercreditor Agreement" shall mean the intercreditor agreement
substantially in the form of Exhibit I to the First Amendment.
"Jersey Debenture" shall mean the debenture dated 23rd August 1991 between
the Company and ASH Capital Finance (Jersey) Limited setting out the terms and
conditions of the loan of (pound)58,250,000 made by ASH Capital Finance (Jersey)
Limited to the Company.
"Lien" shall mean any mortgage, charge, assignment for the purpose of
security, pledge, lien, rights of set-off, arrangements for retention of title
to goods, or hypothecation or trust arrangement for the purpose of, or which has
the effect of, granting security or other security interest of any kind
whatsoever or any agreement, whether expressed to be conditional or otherwise,
to create any of the same or any agreement having a commercial effect
substantially similar to any of the foregoing or any agreement to sell or
otherwise dispose of any asset on terms where such asset is or may be leased to
or re-acquired or acquired by any member of the Group.
31
"Major Disposal" shall have the meaning provided in the definition of Final
Maturity Date.
"Majority Creditors" shall mean a majority in number (on the basis that an
institution can be counted only once) of the Banks (as defined in the Bank
Credit Agreement), the Working Capital Bank (as defined in the Bank Credit
Agreement) and the Noteho1ders whom are owed not less than 51% of the aggregate
indebtedness under the Bank Credit Agreement and the Notes.
"Material Adverse Effect" shall mean a material adverse change effecting
(i) the financial or business condition of the Group taken as a whole or (ii)
the ability of the Company or any Subsidiary to perform its respective
obligations under the Note Agreement or the Notes and the Security Documents.
"New Equity Raising" shall have the meaning provided to such term in the
definition of Final Maturity Date.
"Notes" shall mean the $60,721,638.12 aggregate principal amount of senior
notes of the Company, issued in accordance with the terms of this Agreement on
May 27, 1994 dated the date of issue thereof, originally maturing on May 27,
1999, and amended by the terms of the First Amendment to mature on the Final
Maturity Date, bearing interest on the unpaid principal balance thereof from the
date thereof until the principal thereof shall become due and payable at the
rate of 8.28% per annum and to bear interest on overdue principal, premium and
interest at the rate specified therein, and otherwise to be substantially in the
form attached to the First Amendment as Exhibit E. The term "Notes" as used
herein shall include each Note delivered pursuant to any provision of this
Agreement and each Note delivered in substitution or exchange for any such Note
pursuant to any such provision. The term "Note" shall mean any one of the Notes.
"Noteholder" shall mean at any time, any Person then registered as the
bolder of any Note.
"Officer's Certificate" shall mean a certificate signed in the name of the
Company by a Responsible Officer.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a government
or any department or agency thereof.
"Plan" shall mean an employee pension benefit plan, as defined by Section
3(2) of ERISA, subject to Title IV of ERISA, which is maintained or contributed
to by (or to which there is an obligation to contribute of) the Company or any
of its Subsidiaries on behalf of participants who are or were employed by any of
them in the United States and each such plan for the five year period
immediately following the latest date on which the Company, or such Subsidiary,
maintained, contributed to or had an obligation to contribute to such plan.
32
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"Quarter Day" shall mean each of February 28, May 31, August 31 and
November 30.
"Recurring UK Annual Rental Income" shall mean, in respect of a period, the
UK annual rental income as stated in the Accounts of the Company for such period
which, for the avoidance of doubt, includes line revenue.
"Rental Income" shall mean that portion of the Group's turnover in respect
of rental, maintenance and monitoring income for current or future periods.
"Required Holder(s)" shall mean the holder or holders of at least 66% of
the aggregate principal amount of the Notes from time to time outstanding.
"Responsible Officer" shall mean the Chief Executive Officer, any executive
director, the Finance Director or the Company Secretary of the Company.
"Sanwa Facility" shall mean the facilities made available under the
facility agreement dated 27th September 1994 and 21 August 1995 between Sanwa
Bank California and API, each as amended from time to time.
"SC" shall mean Sonitrol Corporation, a company incorporated under the laws
of the State of Delaware, having its principal office at 1800 Diagonal Road
Suite, 180 Alexandria VA 22314.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Documents" shall mean
(i) each Guarantee and Debenture executed by a member of the Group;
(ii) each Subsidiary Guarantee executed by ASC, SMC and SC;
(iii) each Share Pledge executed by ASC and Automated Loss Prevention
Systems Limited; and
(iv) any guarantees and documents creating security executed and
delivered after the Effective Date as security for any of the obligations
and liabilities of the Company under the Notes or the Note Agreement.
33
"Security Trustee" shall mean Lloyds Bank Plc in its capacity as such as
appointed under the Intercreditor Agreement and any successor appointed pursuant
to Clause 3.11 of the Intercreditor Agreement.
"Share Pledge" shall mean a pledge of shares substantially in the form of
Exhibit H to the First Amendment, executed, or to be executed by each of ASC
(under which it pledges to the Security Trustee 10% of the shares of API and the
shares of SC and SMC) and Automated Loss Prevention Systems Limited (under which
it pledges to the Security Trustee the shares of ASC).
"Sharing Proportions" shall have meaning provided to such term in the
Intercreditor Agreement.
"Side Letter" shall mean the letter delivered to the Noteholder pursuant to
paragraph 21 of the First Amendment.
"Significant Subsidiary" shall mean any member of the Group whose gross
assets or turnover is greater than (pound)50,000 and the book value of the
assets of which exceeds ten percent of the book value of the assets of the Group
or the net profits of which exceed ten percent of the net profits of the Group
or the turnover of which exceeds ten percent of the turnover of the Group;
provided that, if in the aggregate Significant Subsidiaries and the Company do
not account for at least 80% of the aggregate book value of the assets of the
Group and at least 80% of the aggregate net profits of the Group and at least
80% of the aggregate turnover of the Group, then the 10% requirement referred to
above shall be deemed to decrease in 1% increments to the extent necessary in
order that such 80% levels are satisfied by the Significant Subsidiaries and the
Company (the said book value, net profits and turnover to be determined at any
relevant time by reference to such Subsidiary's most recent annual audited
financial statements and the Group's then most recent audited annual Accounts
delivered to the Noteholders under paragraph 5A).
"SMC" means Sonitrol Management Corporation, a company incorporated under
the laws of the State of Delaware, having its principal office at 8 Campus
Circle Suite 150 Westlake TX 76262.
"SSAP" together with a number means the statement of standard accounting
practice issued by the Accounting Standards Board and identified by reference to
such number.
"Sterling" or "(pound)" shall mean pounds sterling, the lawful currency of
the United Kingdom.
"Sterling Equivalent" means, in relation to an amount in a currency other
than Sterling (an "Alternative Currency") on the day on which the calculation
falls to be made, the amount of Sterling which could be purchased with such
amount of such Alternative Currency on the basis of the spot buying rate for
Sterling quoted by Lloyds Bank plc with such Alternative Currency at
34
or about 11.00 a.m. in London on the second Business Day immediately prior
to that date.
"Subsidiary" shall mean a subsidiary within the meaning of Section 736 of
the Companies Act 1985 of the United Kingdom and "Subsidiaries" shall be
construed accordingly.
"Subsidiary Guarantee" shall mean a Subsidiary Guarantee substantially in
the form of Exhibit G to the First Amendment.
"Tangible Net Worth" shall mean the aggregate amount of the paid up share
capital of the Company including amounts standing to the credit of the share
premium account and any capital redemption reserves plus or minus the aggregate
amount standing in the Group's capital and revenue reserves (on a consolidated
basis):
(a) adjusted as may be appropriate to take account of any variation in
such share capital account and share premium account since the date to
which such accounts shall have been made up;
(b) deducting any amounts attributable to any intangible asset
included as an asset in the consolidated balance sheet including amounts
attributable to goodwill;
(c) excluding any capital accounts or reserves derived from any
writing up of book value of any assets of a member of the Group above
historic cost less accumulated Depreciation at any time after November 30,
1994;
(d) adding or deducting, as the case may be, any credit or debit
balance (but not to the extent that the same arises as a result of any
extraordinary items) on the Company's consolidated profit and loss account
attributable to the period in relation to which the calculation falls to be
made;
(e) deducting any profit made on a Disposal (other than a Disposal
permitted under clauses (i) to (iii) of paragraph 6G(a)) of any asset by a
member of the Group; and
(f) adding the amount written off the most recent book value of an
asset on the Disposal of such asset where the Disposal Proceeds in respect
of such Disposal are applied in accordance with the terms of this
Agreement.
"Total Debt Costs" shall mean, in relation to a period of time the
aggregate of:
(i) all interest, fees, commissions and other periodic financing
charges accrued due in relation to Borrowings due by any member
35
of the Group during such period excluding (a) the fees and commissions
payable pursuant to Clause 18 of the Bank Credit Agreement and paragraph 3
of the First Amendment, (b) all bank charges and transmission costs
incurred in connection with the Overdraft Facility (as defined in the Bank
Credit Agreement) and any overdraft provided under the Existing Facilities
(as defined in the Bank Credit Agreement), and (c) any professional fees
incurred in connection with the Bank Credit Agreement and this Agreement;
(ii) all amounts accrued due by members of the Group during such
period under interest rate protection agreements (1ess any amounts accrued
due to members of the Group during such period under interest rate
protections agreements); and
(iii) the interest element of all rentals or, as the case may be,
other payments accrued due in such period under any Finance Lease (not
being Vehicle Leases) to which any member of the Group is a party;
less,
all interest and other similar income accrued to members of the Group
during such period.
"Total Gross Debt" shall mean the aggregate of:
(i) the aggregate principal amount of Bank Indebtedness;
(ii) the amount of the Notes as shown in the balance sheet of the
Company;
(iii) Borrowings of members of the Group relating to the payment or
repayment of principal in respect of paragraphs (i) to (iii) inclusive in
the definition of Borrowings but not including the items referred to at (i)
and (ii) above;
(vi) the amount of the Convertible Capital Bonds as shown in the
Company's balance sheet; and
(vii) the capital element of all rentals or, as the case may be, other
payments payable under all Finance Leases (not being Vehicle Leases) to
which any member of the Group is a party,
PROVIDED THAT any amount standing to the credit of an Application Account (as
defined in the Bank Credit Agreement) and the Disposal Proceeds of the Disposals
of Modern Vitalcall Limited and Modern Integrated Services shall be assumed to
have been applied against the Bank Indebtedness and the Notes as required by the
terms of this Agreement.
36
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by you under this Agreement.
"Vehicle Leases" shall mean all types of leases of vehicles accounted for
in the Company's Accounts as at the Effective Date as not being Finance Leases
whether or not such accounting treatment continues after such date.
11. MISCELLANEOUS
11A. Payments. The Company agrees that, so long as you shall hold any
Note, it will make payments on the Notes which comply with the terms of this
Agreement by wire transfer of immediately available funds for credit to your
account or accounts as specified in the Purchaser Schedule attached hereto, or
such other account or accounts in the United States as you may designate in
writing. Each Noteholder agrees that, before disposing of any Note, it will make
a notation thereon (or on a schedule attached thereto) of the date to which
interest thereon has been paid; provided, that the failure to make such a
notation shall not affect the validity of any purported transfer of a Note. The
Company agrees to afford the benefits of this paragraph 11A to any Transferee of
the Notes.
11B. Expenses. The Company agrees to pay, and save you and any Noteholder
harmless against liability for the payment of, all out-of-pocket expenses
arising in connection herewith, including (i) all document production and
duplication charges and the fees and expenses of any special counsel engaged by
you or any Noteholder in connection with this Agreement, the First Amendment,
the Security Documents and the transactions contemplated hereby or thereby and
any subsequent proposed modification of, or proposed consent under, this
Agreement, the Notes or the Security Documents, whether or not such proposed
modification shall be effected or proposed consent granted, and (ii) the costs
and expenses, including reasonable attorneys' fees, incurred by you or any
Noteholder in enforcing any rights under this Agreement or the Security
Documents or in responding to any subpoena or other legal process issued in
connection with this Agreement or the transactions contemplated hereby or by
reason of your or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case.
11C. Consent To Amendments. This Agreement may be amended, and the Company
may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) except
that, without the written consent of the holder or holders of all Notes at the
time outstanding, no amendment to this Agreement shall change the maturity of
any Note, or change the principal of, or the rate or time of payment of interest
or any premium payable with respect to any Note, or affect the time, amount or
allocation of any required prepayments, or reduce the proportion of the
principal amount of the Notes required with respect to any consent. The Company
will not, nor will it allow any Subsidiary to, directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
37
additional interest, fee or otherwise, to any Noteholder or to any Person due
Indebtedness under the Bank Credit Agreement as consideration for or as an
inducement to the entering into any waiver or amendment of any of the terms and
provisions hereof or of the Bank Credit Agreement or the Security Documents
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such Noteholder did not consent to such waiver or amendment. Each
Noteholder at any time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 11C, whether or not such Note shall have been
marked to indicate such consent, but any Notes issued thereafter may bear a
notation referring to any such consent. No course of dealing between the Company
and the holder of any Note nor any delay in exercising any rights hereunder or
under the Notes shall operate as a waiver of any rights of any holder of such
Note. As used herein and in the Notes, the term "this Agreement" and references
thereto shall mean this Agreement as it may from time to time be amended or
supplemented.
11D. Form, Registration, Transfer and Exchange of Notes; Lost Notes. The
Notes are issuable as registered notes without coupons in denominations of at
least $1,000,000 and any integral multiple of $100,000. The Company shall keep
at its principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. Upon surrender for registration
of transfer of any Note at the principal office of the Company, the Company
shall, at its expense, execute and deliver one or more new Notes of like tenor
and of a like aggregate principal amount, registered in the name of such
transferee or transferees. Upon the transfer of any Notes, the transferee or
transferees shall succeed to the rights and obligations of the transferor
hereunder and under the Notes and under the Intercreditor Agreement upon
execution and delivery to the Security Trustee (as defined in the Intercreditor
Agreement) of an Agreement of Accession in the form of Exhibit J hereto. At the
option of the holder of any Note, such Note may be exchanged for other Notes of
like tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making the
exchange is entitled to receive. Every Note surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note of such
holder's attorney duly authorized in writing. Any Note or Notes issued in
exchange for any Note or upon transfer thereof shall carry the rights to unpaid
interest and interest to accrue which were carried by the Note so exchanged or
transferred, so that neither gain nor loss of interest shall result from any
such transfer or exchange. Upon receipt of written notice from the holder of any
Note of the loss, theft, destruction or mutilation of any such Note and, in the
case of any such loss, theft or destruction, upon receipt of such holder's
unsecured indemnity agreement, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver a new
Note of like tenor in lieu of the lost, stolen, destroyed or mutilated Note. Any
transfer of any Note must be effected in accordance with
38
Rule 144, Rule 144A, Regulation S or any other applicable exemption from the
registration requirements of the Securities Act.
11E. Adjustment of Covenants. (a) If the directors of any of the companies
in the Group determine at any time to change the accounting reference date of
any member of the Group of if any of the accounting principles applied in the
preparation of any Accounts shall be different from the accounting principles
applied in respect of the same as at the date of this Agreement or if as a
result of the introduction or implementation of any SSAP, FRS, FASB or UITF or
any change in any of them or in the applicable law such accounting principles
are required to be changed or, adjustments are required because of a change in
the accounting treatment of the capitalization of equipment on contract hire,
the Company or Required Holder(s) shall promptly give written notice to the
Noteholders or the Company, as the case may be, of such change, determination or
requirement, as the case may be. Thereafter, if Required Holder(s) believe that
any of the financial covenants set out in paragraph 6 need to be amended, the
Company and the Noteholders will negotiate in good faith to replace the existing
financial covenants with financial covenants which provide the Noteholders with
substantially the same protections as the financial covenants set out in
paragraph 6 (but which are not materially more onerous). If the Company and the
Noteholders cannot agree such amended covenants within 30 days then the Company
and the Noteholders shall jointly nominate a firm of chartered accountants to
settle the amended financial covenants, or in default of such nomination any
Noteholder may request the President for the time being of the Institute of
Chartered Accountants in England and Wales to nominate a firm of chartered
accountants. Such accountants shall act as experts and not arbitrators and their
decision shall be final and binding on the Company and the Noteholders. The
costs of such experts shall be paid by the Company.
(b) The calculation of ratios and other amounts under paragraph 6 shall be
made by reference to the latest Accounts, interim accounts, management accounts
and other financial information of the members of the Group but adjusted to
reflect any movement from the assumed interest rates and exchange rates set out
in clause (c) of this paragraph 11E.
(c) For the purpose of clause (c) of this paragraph 11E:
(i) the assumed interest rates for each of the Financial years of
the Company ending November 30, 1996 and November 30, 1997 are as follows:
(x) in respect of Indebtedness denominated in Sterling, 6.75%
plus a margin of 1.5% per annum;
(y) in respect of Indebtedness denominated in Dollars, 6% plus
a margin of 1.5% per annum; and
(z) in respect of Dollar deposits, 5% per annum.
39
(ii) the assumed $/(pound) exchange rate for the Financial Year of
the Company ending November 30, 1996 is $1.60 to (pound)1; and
(iii) the assumed $/(pound) exchange rate for the Financial Year
ending November 30, 1997 is $1.55 to (pound)1.
(d) On the occurrence of a New Equity Raising or a Major Disposal the
company agrees that the financial undertakings set out in paragraph 6 shall be
recalculated as a result of such occurrence after consultation between the
Company and the Noteholders and be reset to reflect the change in the Company's
financial position as a result thereof but on the basis that while reflecting
such change, the reset financial covenants will provide the Noteholders with
substantially the same protection as the financial covenants set out in
paragraph 6.
11F. Persons Deemed Owners. Prior to due presentment for registration of
transfer, the Company may treat the Person in whose name any Note is registered
as the owner and holder of such Note for the purpose of receiving payments of
principal of and premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the Company
shall not be affected by notice to the contrary. Subject to the preceding
sentence, the holder of any Note may from time to time grant participation in
such Note to any Person on such terms and conditions as may be determined by
such Noteholder in its sole and absolute discretion, provided that any such
participation shall be in a principal amount of at least $1,000,000.
11G. Survival of Representations; Entire Agreement. All representations
and warranties contained herein or made in writing by or on behalf of the
Company in connection herewith shall survive the execution and delivery f this
Agreement the transfer by you of any Note or portion thereof or interest therein
and the payment of any Note, and may be relied upon by any Transferee,
regardless of any investigation made at any time by or on behalf of you or any
Transferee. Subject to the preceding sentence, this Agreement (and the Officer's
Certificate delivered pursuant to paragraph 3C hereof) embody the entire
agreement and understanding between the Purchaser and the Company and supersede
all prior agreements and understandings relating to the subject matter hereof.
11H. Successors and Assigns. All covenants and other agreements in this
Agreement contained by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any Transferee).
11I. Disclosure to Other Persons. The Company acknowledges that the holder
of any Note may deliver copies of any financial statements and other documents
delivered to such holder, and disclose any other information disclosed to such
holder, by or on behalf of the Company in connection with or pursuant to this
Agreement, to (i) such holder's directors, officers, employees,
40
agents and professional consultants, (ii) any other holder of any Note, (iii)
any Person to which such holder offers to sell such Note or any part thereof,
(iv) any Person to which such holder sells or offers to sell a participation in
all or any part of a Note, (v) any federal or state regulatory authority having
jurisdiction over such holder, (vi) the National Association of Insurance
Commissioners or any similar organization or (vii) any other Person to which
such delivery or disclosure may be necessary or appropriate (a) in compliance
with any law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process or (c) in connection with any
litigation to which such holder is a party.
11J. Notices. All written communications provided for hereunder shall be
sent by first class mail or nationwide overnight delivery service (with charges
prepaid) and (i) if to a Purchaser, addressed to such Purchaser at the address
specified for such communications in the Purchaser Schedule attached hereto, or
at such other address as such Purchaser shall have specified to the Company in
writing, (ii) if to any other holder of any Note, addressed to such other holder
at such address as such other holder shall have specified to the Company in
writing or, if any such other holder shall not have no specified an address to
the Company, then addressed to such other holder in care of the last holder of
such Note which shall have so specified an address to the Company, (iii) if to
the Company, addressed to it at The Clock House, The Campus, Hemel Hempstead
HP27TL, Attention: Adrian Thompson/Peter Bertram, or at such other address as
the Company shall have specified to the holder of each Note in writing;
provided, however, that any such communication to the Company may also, at the
option of the holder of any Note, be delivered by any other means either to the
Company at its address specified above or to any officer of such Person.
11K. Descriptive Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
11L. Satisfaction Requirement. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the terms of this Agreement
required to be satisfactory to a Purchaser, or to the Required Holder(s), the
determination of such satisfaction shall be made by such Purchaser, or the
Required Holder(s), as the case may be, in the sole and exclusive judgment
(exercised in good faith) of the Person or Persons making such determination.
11M. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the law of
the State of New York.
11N. Jurisdiction; Service of Process. The Company hereby irrevocably and
unconditionally agrees that any suit, action or proceeding with respect to this
Agreement or any Note, or any action or proceeding to execute or otherwise
enforce any judgment in respect of any breach thereof, brought by any holder of
a Note against the Company or any of their respective Property,
41
may be brought by such holder of a Note in the United States District Court for
the Southern District of New York or any New York State Court siting in New York
City as such holder of a Note may in its sole discretion elect, and, by the
execution and delivery of this Agreement, irrevocably submits to the
jurisdiction of each such court; and agrees that process served either
personally or by registered mail shall, to the extent permitted by law,
constitute adequate service of process in any such suit. Without limiting the
foregoing, the Company hereby appoints, in the case of any such action or
proceeding brought in the courts of or in the State of New York, CT Corporation
System, with offices on the Effective Date at 1633 Broadway, New York, New York
10019, to receive, for it and on its behalf, service of process in the State of
New York with respect thereto, provided any of the Company may appoint any other
Person, reasonably acceptable to the Required Holder(s), with offices in the
State of New York to replace such agent for service of process upon delivery to
the Noteholders of a reasonably acceptable agreement of such new agent agreeing
so to act. In addition, the Company hereby irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of venue in any suit, action or proceeding arising out of or relating to
this Agreement or any Note, brought in the said courts, and hereby irrevocably
waives any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum. Nothing herein shall in any way
be deemed to limit the ability of any holder of a Note to serve any such writs,
process or summonses, in any manner permitted by applicable law or to obtain
jurisdiction over the Company, in such other jurisdiction, and in such manner,
as may be permitted by applicable law.
11O. Gross-up. All payments whatsoever by the Company under this Agreement
or the Notes shall be made by the Company from either the United Kingdom, the
United States or the jurisdiction in which the Company is organized in the
lawful currency of the United States of America free and clear of, and without
reduction or liability for or on account of, tax unless any withholding or
deduction for or on account of tax is required by law.
If the Company shall be obligated by law to make any such withholding or
deduction for any tax (excluding any taxes imposed by the United States of
America or a political subdivision or taxing authority thereof or therein)
imposed by the United Kingdom or the jurisdiction in which the Company is
organized, then the Company will promptly (i) notify the affected holder of a
Note of such requirement, (ii) pay over to the government or taxing authority
imposing such tax the full amount required to be deducted, withheld or otherwise
paid by the Company (including the full amount required to be deducted or
withheld from or otherwise paid by the Company in respect of any Additional
payment (as defined below) required to be made pursuant to clause (iv) hereof),
(iii) furnish such holder with the original receipt of such payment from such
government or taxing authority (or such other evidence sufficient under Treasury
Regulations 1.904-2(a)(2) under the Internal Revenue Code of 1986, as amended
(or any successor or subsequent provisions)), and (iv) save as provided below,
pay to each Person entitled under this Agreement or the Notes to receive the
payment from which the amount referred to in clause (ii) has been so deducted,
withheld
42
or otherwise paid such additional amount as is necessary in order that the
amount received by such Person after such required deduction or withholding
(including any required deduction or withholding on or with respect to such
additional amount), shall equal the amount such Person would have received had
no such deduction or withholding been made (the "Additional Payment"), provided
that no Additional Payment shall be payable with respect to any amount payable
under this Agreement or the Notes to any Person if:
(1) so long as no Change in Tax Law has occurred which changes the ability
or right of such holder to file such form or changes the substance of such
form, such holder fails to file a validly completed and executed Form FD13
with the United States Internal Revenue Service prior to the relevant
interest payment date in sufficient time such that the company shall
actually have received a direction to pay gross from the United Kingdom
Inspector of Foreign Dividends,
(2) such holder fails to be a resident of the United States of America
within the meaning of the income tax treaty between the United States of
America and the United Kingdom (but only to the extent the amount of such
deduction or withholding exceeds that which would have been required had
such Person been resident in the United States of America), or
(3) such tax would not have been imposed but for the existence of any
present or former connection between such holder and the United Kingdom,
other than the mere ownership of, or receipt of payments under the Notes.
The provisions of clause (1) above shall not be applicable to a holder of a Note
which is a Purchaser so long as such holder files within 30 days after the
Closing Date a validly completed and duly executed Inland Revenue Form FD13 with
the Internal Revenue Service as required to establish their entitlement to an
exemption from U.K. withholding tax under the income tax treaty currently in
force between the United States and the United Kingdom. If the Company fails to
pay any withheld or deducted taxes imposed by the United Kingdom or the
jurisdiction in which the Company is organized in accordance with clause (ii) of
this paragraph 11O in accordance with applicable law, then the Company will
indemnify and hold harmless the affected Person and reimburse such Person on an
after-tax-basis for the amount of such taxes, penalties, interest and additions
to tax imposed on and paid by such Person.
Each holder of a Note agrees that, upon the written request of the Company
and to the extent it is legally entitled to do so, it will file any forms,
certificates, documents, applications or returns, or other reasonably required
evidence as specified in such request (collectively, "Forms"), which are
required to be filed by such holder to avoid or to reduce any taxes
indemnifiable by the Company under this paragraph 11O, provided that the filing
of any such Form does not require the holder to reveal any confidential or
proprietary tax return
43
or other information and does not require the holder to incur any unreasonable
expense.
If the Company is required to pay an Additional Payment with respect to
any taxes pursuant to this paragraph 11O to or on behalf of a holder of a Note
and such holder subsequently receives a refund of such taxes, then such holder
shall reimburse the Company the amount of such refund net of any taxes payable
by the holder in respect of the receipt thereof; provided, however, that no such
amount shall be payable (x) while a Default or Event of Default shall have
occurred and be continuing and (y) to the extent such amount exceeds the amount
of the taxes to which such refund relates.
The obligations of the Company and the Noteholders under this paragraph
11O shall survive the payment of the Notes.
11P. Judgment Currency Indemnity. Any payment on account of any amount
that is payable hereunder in Dollars which is made to or of the account of any
Noteholder in the lawful currency of any other jurisdiction ("currency"),
whether as a result of any judgment or order or the enforcement thereof or the
realization of any security or the liquidation of the Person obligated to make
such payment shall constitute a discharge of the such Person's obligation under
this Agreement or the Notes only to the extent of the amount of dollars which
such Noteholder could purchase in the London foreign exchange markets with the
amount of other Currency in accordance with normal banking procedures at the
rate of exchange prevailing on the first day (other than a Saturday) on which
banks in London are generally open for business following receipt of the payment
first referred to above. If the amount of Dollars that could be so purchased is
less than the amount of Dollars originally due to such Noteholder, the Person
obligated hereunder to make such payment shall indemnify and save harmless such
Noteholder from and against all loss or damage arising out of or as a result of
such deficiency. This indemnity shall constitute an obligation separate and
independent from the other obligations contained in this Agreement or the Notes,
shall give rise to a separate and independent cause of action, shall apply
irrespective of any indulgence granted by such Noteholder from time to time and
shall continue in full force and effect notwithstanding any judgment or order
for a liquidated sum in respect of an amount due hereunder or under any judgment
or order.
11Q. 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, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11R. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
44
PURCHASER SCHEDULE
Note Denominations
Principal and Registered
Purchaser Amount Numbers
--------- ------ -------
THE PRUDENTIAL INSURANCE $60,721,638.12 $60,721,638.12(R-1)
COMPANY OF AMERICA
(1) All payments on account of the above Note numbered R-1 (and any replacement
or substitute Notes therefor) shall be made by wire transfer of immediately
available funds for credit to:
Account No. 050-54-526
Morgan Guaranty Trust Company of New York
23 Wall Street
New York, NY 10015 U.S.A.
ABA No. 021000238
Each such wire transfer shall set forth payment with respect to Automated
Security (Holdings) PLC Senior Notes due 1998 referencing "Security Number " and
the due date and application (as among principal, Yield-Maintenance Amount and
interest) of the payment being made and a notice setting forth the above details
shall be contemporaneously delivered to:
The Prudential Insurance Company
of America
c/o Investment Operations Group
Three Gateway Center
100 Mullberry Street
Newark, New Jersey 07102-4069
Attn: Manager
Fax: (201) 802-7551
Address for all other communications and notices:
The Prudential Insurance Company
of America
c/o Private Placement Service
Management
Four Gateway Center, 6th Floor
100 Mullberry Street
Newark, New Jersey 07102-4069
Attn: Investment Information & Accounting
Tel: (201) 802-3685
Fax: (201) 802-7452
with a copy to:
White & Case
7-11 Moorgate
London EC2R 6HH
England
Attn: Senior Partner
Tel (44) 71 726 6361
Fax: (44) 71 726 4314
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 22-1211670
EXHIBIT J TO NOTE AGREEMENT
AGREEMENT OF ACCESSION
To the Parties to the
Intercreditor Agreement
(as defined below)
This Agreement of Accession relates to an Inter-Creditor Agreement dated
December 31, 1995 amount Automated Security (Holdings) plc ("ASH"), Lloyds Bank
Plc, as Security Trustee and Agent and certain financial institutions named
therein (the "Intercreditor Agreement").
[Name of transferee of Note] (the "Transferee") has assumed all right
title and interest of [name of transferor] in a Note in Principal amount equal
to $________ (the "Transferred Note") issued by ASH under the terms of a Note
Agreement, dated as of May 27, 1994 and amended and restated December 21, 1995
(the "Note Agreement").
The Transferee hereby conforms that it has received a copy of the
Intercreditor Agreement and the Note Agreement. The Transferee undertakes with
each of the parties to the Intercreditor Agreement that it has accepted the
Transferred Note subject to the terms of the Note Agreement and the
Intercreditor Agreement and that it hereby accedes to and accepts all the rights
and obligations of a Noteholder under the terms of the Intercreditor Agreement
and the Note Agreement.
IN WITNESS WHEREOF, this Agreement of Accession has been executed as a
deed this __ day of __________, 199_.
[Transferee]
By___________________
By___________________
EXHIBIT J
FORM OF DEED OF ACCESSION
EXHIBIT C TO FIRST AMENDMENT
OPINION OF US COUNSEL TO
THE COMPANY
The opinion shall be addressed to the Noteholder, and may contain such
customary assumptions and indicate such investigations as are deemed necessary
and appropriate by the Company's special US counsel and are acceptable to the
Noteholder.
The opinion shall express a favorable opinion as to:
(1) Each of ASC, SMC and SC has been duly incorporated, is an existing
corporation in good standing under the laws of the State of Delaware and has
corporate power and authority to enter into the Security Documents to which it
is party and to perform its obligations thereunder.
(2) Each of the First Amendment and the Note Agreement as amended by the
First Amendment constitutes valid and legally binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(3) Each of the Security Documents which by its terms is governed by New
York law constitutes a valid and legally binding obligation of the Subsidiaries
party thereto, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, reorganization and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
(4) All regulatory consents, authorizations, approvals and filings
required to be obtained or made by the Company or any Subsidiary under the
Federal laws of the United States, the laws of the State of New York and the
General Corporation Law of the State of Delaware for the execution, delivery and
performance of the First Amendment and the Security Documents have been obtained
or made.
EXHIBIT C
FORM OF OPINION OF
US COUNSEL FOR THE COMPANY
EXHIBIT D TO FIRST AMENDMENT
OPINION OF ENGLISH COUNSEL
TO THE COMPANY
The opinion shall be addressed to the Noteholder, and may contain such
customary assumptions and indicate such investigations as are deemed necessary
and appropriate by the Company's special English counsel and are acceptable to
the Noteholder.
The opinion shall express a favorable opinion as to:
(1) The Company is a public limited company incorporated and validly
existing under the law of England and has power under its Memorandum of
Association to enter into the First Amendment and the Security Documents to
which it is party and to perform thereunder and under the Note Agreement as
amended by the First Amendment.
(2) Each Subsidiary which is executing a Debenture and Guarantee (each an
"English Subsidiary") is a limited company incorporated and validly existing
under the law of England and has power under its Memorandum of Association to
enter into the Security Documents to which it is party and to perform
thereunder.
(3) The execution by the Company of the First Amendment and the Security
Documents to which it is party and the performance by it of its obligations
thereunder has been duly authorized by the Company and each such agreement has
been duly executed and delivered by the Company.
(4) The execution by each English Subsidiary of the Security Documents to
which it is party and the performance by it of its obligations thereunder has
been duly authorized by such English Subsidiary and each such agreement has been
duly executed and delivered by the English Subsidiary party thereto.
(5) The execution by the Company of the First Amendment and the Security
Documents to which it is party and the performance by it of its obligations
thereunder does not conflict with, nor result in any breach of, nor constitute a
default under, nor result in the creation of any Lien upon any of the properties
or assets of the Company pursuant to (a) any provision of its Memorandum or
Articles of Association, (b) any statute, law, rule or regulation of England,
(c) any judgment, decree, writ, injunction, order or award of any English
arbitrator, court or governmental authority binding upon the Company or any of
its assets or (d) any material agreement or other instrument to which the
Company is a party or by which the Company may be bound.
(6) The execution by each English Subsidiary of the Security Documents to
which it is party and the performance by it of its obligations thereunder does
not conflict with, nor result in any breach of, nor constitute a default under,
nor result in the creation of any Lien upon any of the properties or assets of
such English Subsidiary pursuant to (a)
EXHIBIT D
FORM OF OPINION OF ENGLISH
COUNSEL FOR THE COMPANY
any provision of its Memorandum or Articles of Association, (b) any statute,
law, rule or regulation of England, (c) any judgment, decree, writ, injunction,
order or award of any English arbitrator, court or governmental authority
binding upon the Company or any of its assets or (d) any material agreement or
other instrument to which such English Subsidiary is a party or by which such
English Subsidiary may be bound.
(7) Each of the Security Documents which by its terms is governed by
English law constitutes a valid and legally binding obligation of the Company or
the Subsidiary party thereto, enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles.
(8) No approval or consent of, or filing or registration with, any
governmental body in England and Wales is necessary to connection with (i) the
execution and delivery by the Company of the First Amendment (ii) the execution
and delivery of the Security Documents other than ___________.
(9) There is no reason why the choice of New York law as the governing law
of the first Amendment should not be recognized and given effect by the courts
of England.
(9) The courts of England will enforce a judgment obtained in a court of
the State of New York or a court of the United States of America located in New
York.
(10) No United Kingdom stamp duty, stamp duty reserve tax or other similar
tax is payable in connection with the execution, delivery or performance of the
First Amendment or the Security Documents.
EXHIBIT D
FORM OF OPINION OF ENGLISH
COUNSEL FOR THE COMPANY
EXHIBIT E TO FIRST AMENDMENT
AUTOMATED SECURITY (HOLDINGS) PLC
8.28% SENIOR NOTES
No. R- December __, 1995
PPN GO528# AA 0
FOR VALUE RECEIVED, the undersigned, AUTOMATED SECURITY (HOLDINGS) PLC
(herein called the "Company"), a corporation organized and existing under the
laws of England and Wales, hereby promises to pay to
----------------------
or its registered assigned, the principal sum of
[amount in words]
($--------------)
on the Final Maturity Date (as defined in the Agreement referred to below) (or
such lesser principal amount of this note as is outstanding on that date) with
interest computed on the basis of a 360-day year of twelve 30 day months (a) on
the unpaid balance thereof at the rate of 8.28% per annum from November 27,
1995, payable semiannually on the 27th day of May and November in each year,
commencing with May 27, 1996 until the principal hereof shall have become due
and payable, and (b) on any overdue payment (including any overdue repayment or
prepayment) of principal, any overdue payment of Yield-Maintenance Amount and,
to the extent permitted by applicable law, any overdue payment of interest,
payable semiannually as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the greater
of (i) 10.28% or (ii) 2% over the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York City as its
Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest are
to be made at the office of Morgan Guaranty Trust Company of New York, 23 Wall
Street, New York, New York 10015 or such other place as the holder hereof shall
designate to the Company in writing, in lawful money of the United States of
America.
This Note is one of a series of senior notes of the Company (herein called
the "Notes") issued pursuant to a Note Agreement, dated as of May 27, 1994 as
amended and restated on December __, 1995 (herein called the
"Agreement" between the Company and the original Purchasers of the Notes named
in the Purchaser Schedule attached thereto and is entitled to the benefits
thereof. This Note is subject to optional prepayment, in whole or from time to
time in part, with a Yield-Maintenance Amount, all as more fully set forth in
the Agreement.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer, duly executed, by the
registered holder hereof or such holder's attorney duly authorized in writing, a
new Note for a like principal amount will be issued to, and registered in the
name of, the transferee. Prior to due presentment for registration of transfer,
the Company may treat the person in whose name this Note is registered as the
owner hereof for the purpose of receiving payment and for all other purposes,
and the Company shall not be affected by any notice to the contrary.
If an Event of Default, as defined in the Agreement, shall occur and be
continuing, the principal of this Note may be declared or otherwise become due
and payable in the manner and with the effect provided in the Agreement.
This Note has the benefit of the Security Documents, as defined in the
Agreement.
This Note shall be governed by the laws of the State of New York.
AUTOMATED SECURITY (HOLDINGS) PLC
By _____________________
Name:
Title:
2