EXHIBIT 10.34
LOGO BANK OF BOSTON
==============
CONNECTICUT
July 22, 1996
George V. Flagg
President
Holmes Protection Group, Inc.
440 Ninth Avenue
New York, NY 10001
Re: $10,000,000 Credit Facility Participation
Dear Mr. Flagg:
We are pleased to advise you that, subject to the terms and conditions
set forth herein, Bank of Boston Connecticut (the "Bank") has committed to
participate in the $25,000,000 credit facility (the "Credit Facility") to be
provided by Merita Bank acting through its New York branch ("Merita") to Holmes
Protection Group, Inc. (the "Borrower"). This letter sets forth the terms and
conditions on which the Bank is willing to participate in the Credit Facility.
1. STRUCTURE. The Bank shall participate in the Credit Facility as a
direct lender to Borrower.
2. COMMITMENT AMOUNT. The Bank shall participate in the Credit Facility
in the principal amount of $10,000,000 (the "Commitment Amount"); provided,
however, that the Bank shall have no obligation to advance more than $5,000,000
until the Borrower successfully completes a sale of capital stock resulting in
net proceeds of at least $10,000,000 to the Borrower (which sale must be
completed on or before October 31, 1996).
3. COMMITMENT PERCENTAGE. The Bank's percentage of the aggregate
commitments of all lenders participating in the Credit Facility shall be 40%
(the "Commitment Percentage").
4. PAYMENTS OF PRINCIPAL. The Bank shall share in any payments or
principal, including prepayments, made or required to be made by the Borrower
under the Credit Facility in accordance with its Commitment Percentage.
LOGO BANK OF BOSTON
==============
CONNECTICUT
George V. Flagg
President
July 22, 1996
Page 2
5. PAYMENTS OF INTEREST. The Bank shall share in any payments of
interest made or required to be made by the Borrower under the Credit Facility
in accordance with its Commitment Percentage.
6. FEES. The Bank shall share in any fees, commissions or other amounts
paid by or required to be paid by the Borrower under the Credit Facility or the
Merita Commitment (as hereinafter defined) in accordance with its Commitment
Percentage, including any fees, commissions or other amounts paid in connection
with any letters of credit, with the exception of any fees paid to Merita in its
capacity as agent for the lenders.
7. COLLATERAL. The Bank shall share in (i) any collateral now or
hereafter provided by the Borrower to secure the payment and performance of its
obligations under the Credit Facility, (ii) any guarantees now or hereafter
provided with respect to the obligations of the Borrower under the Credit
Facility and (iii) any collateral now or hereafter provided to secure any of
such guarantees in accordance with the Commitment Percentage.
8. YIELD ENHANCEMENT. On the closing date, the Borrower shall issue to
the Bank or, if reqested, an affiliate of the Bank, a warrant exercisable into
66,666 shares of the Borrower's capital stock at an exercise price equal to the
lesser of 105% of the closing price on the date of issuance of the Merita
Commitment or $9.75 per share (the "Warrant"). The Warrant shall be exercisable
for the later of a term of six (6) years after issuance or one (1) year after
the repayment in full of the Credit Facility and shall contain terms,
conditions, rights and preferences customarily required by the Bank, including
but not being limited to, price and other dilution protection and one demand and
unlimited piggyback registration rights, and otherwise be satisfactory to the
Bank and its legal counsel.
9. GENERAL CONDITIONS. The commitment set forth herein is subject to the
following general terms and conditions:
a. The satisfactory review of the documents, agreements and instruments
evidencing and securing the Credit Facility (collectively, the
"Credit Documents") by the Bank and its legal counsel, including, but
not being limited to, the terms and conditions of the Credit
Documents setting forth Merita's rights and obligations as agent
under the Credit Facility and the voting rights of the Bank as a
lender thereunder.
b. The negotiation, execution and delivery of definitive documentation
to evidence the Bank's participation in the Credit Facility,
including a separate promissory note evidencing the Bank's pro rata
share of the Credit Facility, and the Warrant, such documentation to
be in a form acceptable to the Bank and its legal counsel.
LOGO BANK OF BOSTON
==============
CONNECTICUT
George V. Flagg,
President
July 22, 1996
Page 3
c. The terms and conditions set forth within the commitment letter dated
July 3, 1996 issued by Merita in connection with the Credit Facility
(the "Merita Commitment"), the terms and conditions of which are
incorporated herein by this reference.
d. The compliance by the Borrower, the Bank and/or Merita with any and
all applicable legal requirements relating to the Credit Facility and
the making of loans and advances thereunder and the issuance of the
Warrant.
e. The satisfaction by the Borrower of such other conditions as may be
required by the Bank or its legal counsel and which are customary for
transactions similar to the transactions contemplated by this
commitment including the delivery of evidence of corporate power and
authority to enter into the transactions contemplated by this
commitment, the delivery of appropriate legal opinions, the valid,
binding and legal effect of all documentation required by this
commitment, the absence of any violation of Federal, state or local
law and the filing and recording of security documents.
10. INDEMNITY. The Borrower agrees to indemnify and hold the Bank and its
respective shareholders, directors, agents, officers, employees, subsidiaries
and affiliates harmless from and against any and all damages, losses,
obligations, payments, liabilities, claims, actions or causes of action, fees or
expenses (including legal fees) and other matters incurred, sustained or paid by
the Bank in connection with or as a result of the transactions contemplated by
this commitment, except to the extent that any of the foregoing matters result
from the gross negligence or wilful misconduct of the Bank or any other
indemnified party.
11. ASSIGNMENT. The Borrower may not assign this commitment, and any
attempted assignment by the Borrower shall be null and void and without legal
effect.
12. AMENDMENTS. Amendments to this commitment, which shall be deemed to
include any amendments to the Merita Commitment, must be in writing and signed
as to acceptance by the Bank.
13. NO WAIVER. No delays on the part of the Bank in exercising any of its
right under this commitment shall operate as a waiver thereof.
14. FEES AND EXPENSES. The Borrower shall pay all fees and expenses
incurred by the Bank in connection with the closing of the Credit Facility and
the issuance of the Warrant, including the fees and expenses of the Bank's
auditors, credit examiners and legal counsel, Updike, Kelly & Spellacy, P.C.,
without regard to whether a closing occurs.
LOGO BANK OF BOSTON
==============
CONNECTICUT
George V. Flagg
President
July 22, 1996
Page 4
15. ENTIRE AGREEMENT. This commitment constitutes the entire obligation
of the Bank, and no covenant, promise, agreement, waiver, representation or
undertaking of any kind, whether written or oral not specifically set forth
herein shall be binding upon the Bank.
16. TERMINATION. This commitment shall automatically terminate at the
Bank's option and the Bank shall not be obligated to participate in the Credit
Facility if:
a. The Borrower shall fail to accept this commitment by July 24, 1996.
b. The Bank should discover that any representation or warranty made by
the Borrower in any statement or information submitted to the Bank in
connection with preparation of this commitment should be false,
incomplete, or incorrect in any material respect.
c. There should be a material adverse change in the business operations
or financial condition of the Borrower or if the Borrower should
default under the Credit Facility.
d. Merita shall terminate or be unable to fulfill its commitment to
provide the Credit Facility for any reason.
e. Any of the terms and conditions set forth in this commitment or the
Merita Commitment, including but not being limited to, the receipt of
the collateral audit report, shall not be fulfilled or satisfied to
the satisfaction of the Bank or its legal counsel.
f. The Borrower shall fail to close the Credit Facility for any reason
on or before August 31, 1996.
Very truly yours,
BANK OF BOSTON CONNECTICUT
By: /s/ Roger J. Roche
------------------------------
Roger J. Roche
Director
The foregoing is accepted and
agreed to as of this 23rd day of July, 1996.
HOLMES PROTECTION GROUP, INC.
By: /s/ George V. Flagg
--------------------------------
Name: George V. Flagg
Title: President and CEO