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EXHIBIT 12
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CREDIT AGREEMENT
Dated as of March 29, 1999
Among
CODE-ALARM, INC.
and
THE LENDERS NAMED HEREIN
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TABLE OF CONTENTS
Page
I. DEFINITIONS 1
II. THE LOANS 5
SECTION 2.01 Commitments 5
SECTION 2.02 Loans; Use of Proceeds 6
SECTION 2.03 Notice of Loans 6
SECTION 2.04 Notes; Repayment of Loans 6
SECTION 2.05 Interest on Loans 7
SECTION 2.06 Fees 7
SECTION 2.07 Termination and Reduction of Commitments 7
SECTION 2.08 Interest on Overdue Amounts 7
SECTION 2.09 Prepayment of Loans 7
SECTION 2.10 Pro Rata Treatment 8
SECTION 2.11 Payments and Computations 8
III. [INTENTIONALLY OMITTED] 8
IV. REPRESENTATIONS AND WARRANTIES 8
SECTION 4.01 Organization
SECTION 4.02 Capitalization 9
SECTION 4.03 Authorization; Validity of Agreement; etc 9
SECTION 4.04 Consents and Approvals, etc 9
SECTION 4.05 Use of Proceeds 10
V. CONDITIONS OF LOANS 10
SECTION 5.01 All Loans 10
SECTION 5.02 First Borrowing 10
VI. AFFIRMATIVE COVENANTS 12
SECTION 6.01 Legal Existence 12
SECTION 6.02 Businesses and Properties 12
SECTION 6.03 Insurance 12
SECTION 6.04 Taxes 13
SECTION 6.05 Financial Statements, Reports, etc 13
SECTION 6.06 Litigation and Other Notices 13
SECTION 6.07 Maintaining Records; Access to Properties and Inspections; Right to Audit 14
VII. NEGATIVE COVENANTS 14
SECTION 7.01 Dividends, Distributions and Payments 14
SECTION 7.02 Business 14
SECTION 7.03 Use of Proceeds 14
SECTION 7.04 Prepayment of Subordinated Indebtedness 14
SECTION 7.05 Negative Pledges, Etc. 14
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VIII. EVENTS OF DEFAULT 15
IX. MISCELLANEOUS 16
SECTION 9.01 Notices 16
SECTION 9.02 Survival of Agreement 17
SECTION 9.03 Successors and Assigns; Participations 17
SECTION 9.04 Expenses; Indemnity 18
SECTION 9.05 Applicable Law 19
SECTION 9.06 Payments on Business Days 19
SECTION 9.07 Waivers; Amendments 19
SECTION 9.08 Severability 20
SECTION 9.09 Entire Agreement; Waiver of Jury Trial, etc 20
SECTION 9.10 Confidentiality 20
SECTION 9.11 Submission to Jurisdiction 21
SECTION 9.12 Counterparts; Facsimile Signature 21
SECTION 9.13 Interest Rate Limitation 21
SECTION 9.14 Headings 22
X. SUBORDINATION 22
SECTION 10.01 General 22
SECTION 10.02 Limitation on Payment and Remedies 22
SECTION 10.03 Subordination Upon Certain Events 23
SECTION 10.04 Payments and Distributions Received 23
SECTION 10.05 No Prejudice or Impairment 23
SECTION 10.06 Subrogation 23
SECTION 10.07 Relative Rights 23
SECTION 10.08 Section Not to Prevent Events of Default 24
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Amendment to Warrants
SCHEDULES
SCHEDULE 2.01 Commitments
SCHEDULE 4.02 Capitalization
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CREDIT AGREEMENT dated as of March 29, 1999, among CODE- ALARM, INC., a
Michigan corporation (the "Borrower"), PEGASUS PARTNERS, L.P., a Delaware
limited partnership, PEGASUS RELATED PARTNERS, L.P., a Delaware limited
partnership and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(together with their respective successors and assigns, collectively, the
"Lenders").
The Borrower has applied to the Lenders for Loans (such term and
all other capitalized terms used in this paragraph having the respective
meanings ascribed to such terms above or hereinafter) up to an aggregate
principal amount not in excess of $1,500,000 at any time outstanding prior to
the Termination Date. The proceeds of the Loans shall be used for working
capital needs of the Borrower. The Lenders are severally, and not jointly,
willing to extend such Loans to the Borrower subject to the terms and conditions
hereinafter set forth. Accordingly, the Borrower and the Lenders hereby agree as
follows:
I. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified below:
"Affiliate" of any person shall mean any other person (i) which
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Borrower or (ii) who is a
director or executive officer (as such term is defined in Rule 3b-7 under the
Exchange Act) of the Borrower. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a person, whether through the ownership of securities, by
contract or otherwise.
"Blockage Notice" shall mean a notice that a Senior Default has
occurred and is continuing, given to the Borrower and the Lenders by the holders
of a majority in principal amount of the Senior Indebtedness then outstanding
(or their authorized agent); provided, however, that no such notice shall be
effective as a Blockage Notice with respect to a non-monetary Senior Default (A)
if an effective Blockage Notice with respect to any non-monetary Senior Default
shall have been given within 270 days prior thereto or (B) if based upon a
non-monetary Senior Default that was the basis of a prior effective Blockage
Notice and such non-monetary Senior Default has not been cured or waived for a
period of at least 90 days.
"Blockage Period" with respect to a Blockage Notice is the period
commencing upon the Company's receipt of such Blockage Notice and expiring (i)
in the case of a non-monetary Senior Default, after the earlier of (A) 90 days
and (B) the date that all Senior Defaults that gave rise to the Blockage Notice
shall have been remedied or waived in writing or shall have ceased to exist and
(ii) in the case of a monetary Senior Default, upon the date that all Senior
Defaults that gave rise to the Blockage Notice shall have been remedied or
waived in writing or shall have ceased to exist.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning assigned to such term in the
preamble to this
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Agreement.
"Business Day" shall mean any day, other than a Saturday, Sunday
or legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City.
"Closing Date" shall mean the date of the first borrowing under
this Agreement, but in no event later than April 2, 1999.
"Commitment" shall mean, with respect to any Lender, the
commitment of such Lender as set forth in Schedule 2.01 annexed hereto, as the
same may be reduced from time to time pursuant to this Agreement including,
without limitation, Section 2.07 hereof.
"Default" shall mean any condition, act or event which, with
notice or lapse of time or both, would constitute an Event of Default.
"dollars" or the symbol "$" shall mean lawful currency of the
United States of America.
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.), the
Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Oil
Pollution Act of 1990 (33 U.S.C. Section2701 et. seq.), the Safe Drinking Water
Act (42 U.S.C. Section 300f, et seq.), the Clear Air Act (42 U.S.C. Section 7401
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section 2601
et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Occupational Safety and Health Act (29 U.S.C.
Section 651 et seq.), as such laws have been and hereafter may be amended or
supplemented, and any related or analogous present or future Federal, state or
local statutes, rules, regulations, ordinances, licenses, permits and
interpretations and orders of regulatory and administrative bodies.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time.
"Financial Officer" shall mean, with respect to any person, the
chief financial officer of such person.
"GE Credit Agreement" shall mean the Credit Agreement dated as of
October 24, 1997 among the Borrower, the credit parties specified therein, the
lenders specified therein and General Electric Capital Corporation as agent for
said lenders, as amended, modified, restated, extended, refinanced or replaced
from time to time.
"Guarantee" shall mean any obligation, contingent or otherwise, of
any person
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guaranteeing or having the economic effect of guaranteeing any Indebtedness or
obligation of any other person in any manner, whether directly or indirectly,
and shall include, without limitation, any obligation of such person, direct or
indirect, to (i) purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such
Indebtedness or obligation, (ii) purchase property, securities or services for
the purpose of assuring the owner of such Indebtedness or obligation of the
payment of such Indebtedness or obligation, or (iii) maintain working capital,
equity capital, available cash or other financial condition of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or
obligation; provided, however, that the term Guarantee shall not include
endorsements for collection or collections for deposit, in either case in the
ordinary course of business.
"Guarantor" shall mean, collectively, any person that becomes a
guarantor of the Obligations after the date hereof.
"Indebtedness" shall mean, with respect to any person, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or other similar instruments or upon which interest charges
are customarily paid, (c) all obligations of such person for the deferred
purchase price of property or services, except current accounts payable arising
in the ordinary course of business and not overdue beyond such period as is
commercially reasonable for such person's business, (d) all obligations of such
person under conditional sale or other title retention agreements relating to
property purchased by such person and all obligations under or in respect of
capital leases, (e) all payment obligations of such person with respect to
interest rate or currency protection agreements, (f) all obligations of such
person as an account party under any letter of credit or in respect of bankers'
acceptances, (g) all obligations of any third party secured by property or
assets of such person (regardless of whether or not such person is liable for
repayment of such obligations), (h) all Guarantees of such person and (i) the
redemption price of all redeemable preferred stock of such person, but only to
the extent that such stock is redeemable at the option of the holder or requires
sinking fund or similar payments at any time prior to the Termination Date.
"Indemnitees" shall have the meaning assigned to such term in
Section 9.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 9.10 hereof.
"Lenders" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset, (ii)
the interest of a vendor or a lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset, (iii)
in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities or (iv) any other right of or arrangement
with any creditor to have such creditor's claim satisfied out of such assets, or
the proceeds therefrom, prior to the general creditors of the owner thereof.
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"Loan" shall mean a loan made pursuant to Section 2.01 hereof.
"Loan Documents" shall mean this Agreement, the Notes and each
other document, instrument or agreement now or hereafter delivered to any Lender
in connection herewith or therewith.
"Loan Party" shall mean the Borrower, each Guarantor (if any) and
each subsidiary of any thereof.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, prospects, operations or financial or other condition
of the Borrower and its subsidiaries, taken as a whole, measured in each case
since December 31, 1998, (ii) the ability of any Loan Party to perform or pay
the Obligations in accordance with the terms hereof or of any other Loan
Document or (iii) the rights of, or benefits available to, any Lender under any
Loan Document.
"Net Borrowing Availability" shall have the meaning set forth in
the GE Credit Agreement as defined on the date hereof.
"Notes" shall mean the revolving credit notes of the Borrower,
executed and delivered as provided in Section 2.04 hereof, in substantially the
form of Exhibit A annexed hereto, as amended, modified or supplemented from time
to time.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of the Borrower to the Lenders, whether now existing or hereafter
created, direct or indirect, due or not, whether created directly or acquired by
assignment, participation or otherwise, with respect to the principal of and
interest on the Loans and the payment or performance of all other obligations,
liabilities and Indebtedness of the Borrower to the Lenders hereunder or under
any one or more of the other Loan Documents (including, without limitation, the
payment of amounts that would become due but for the operation of the automatic
stay under Section 362(a) of the Bankruptcy Code, and interest that, but for the
filing of a petition in bankruptcy with respect to the Borrower, would accrue on
such obligations, whether or not a claim is allowed against the Borrower for
such interest in the related bankruptcy proceeding), including without
limitation all fees, costs, expenses and indemnity obligations hereunder and
thereunder.
"person" shall mean any natural person, corporation, business
trust, limited liability company, association, company, joint venture, limited
liability partnership, partnership or government or any agency or political
subdivision thereof.
"Regulation T" shall mean Regulation T of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation U" shall mean Regulation U of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same
is from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
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"Remedy Notice" shall have the meaning set forth in Section 10.02
hereof.
"Remedy Standstill Period" shall have the meaning set forth in
Section 10.02 hereof.
"Required Lenders" shall mean Lenders having 51% of the Total
Commitment.
"Responsible Officer" shall mean, with respect to any person, any
vice president or president, or the chief financial officer or controller, of
such person.
"Senior Default" shall mean an event of default that occurs and is
continuing with respect to Senior Indebtedness that permits the holders thereof
to accelerate the maturity of such Senior Indebtedness.
"Senior Indebtedness" shall mean (i) the principal of and interest
on (including without limitation any interest, fees, charges and other amounts
that accrue after the commencement of any case, proceeding or other legal action
relating to the bankruptcy, insolvency or reorganization of the Borrower whether
or not such interest constitutes an allowed claim) the loans made to the
Borrower pursuant to the GE Credit Agreement and (ii) any other monetary
obligations of the Borrower arising out of or in connection with the GE Credit
Agreement or any related instruments or agreements, including, without
limitation, expenses, fees, reimbursements and indemnities.
"subsidiary" shall mean, with respect to any person, any
corporation, association or other business entity of which securities or other
ownership interests representing more than 50% of the ordinary voting power are,
at the time as of which any determination is being made, owned or controlled,
directly or indirectly, by the parent of such person or one or more subsidiaries
of the parent of such person.
"Termination Date" shall mean October 24, 2000 or such earlier
date as the Loans shall otherwise be payable in full and the Total Commitment
shall terminate, expire or be canceled in accordance with the terms of this
Agreement.
"Total Commitment" shall mean the sum of the Commitments, as the
same may be reduced from time to time pursuant to this Agreement, including,
without limitation, pursuant to Section 2.07 hereof.
II. THE LOANS
SECTION 2.01 Commitments. (a) Subject to the terms and conditions
and relying upon the representations and warranties made herein, each Lender,
severally and not jointly, agrees to make Loans to the Borrower, at any time and
from time to time from the date hereof to the Termination Date; provided, that
no Loan by any Lender shall exceed the Commitment of such Lender at the time
such Loan is to be made and the aggregate principal amount of all Loans made by
any Lender at any time outstanding shall not exceed the amount of such Lender's
initial Commitment set forth opposite its name in Schedule 2.01 annexed hereto.
(b) Subject to the foregoing and within the foregoing limits, the
Borrower may
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borrow and repay (or, subject to the provisions of Section 2.09 hereof, prepay),
Loans on and after the date hereof and prior to the Termination Date, subject to
the terms, provisions and limitations set forth herein, including, without
limitation, the requirement that no Loan shall be made hereunder if the amount
thereof would exceed the Total Commitment. In addition, without limiting the
foregoing, no Loan shall be made hereunder unless after giving effect to such
Loan and any contemporaneous borrowing made under the GE Credit Agreement the
Net Borrowing Availability under the GE Credit Agreement is less than $100,000.
No Loan or portion thereof that is repaid or prepaid may be reborrowed.
SECTION 2.02 Loans; Use of Proceeds. (a) The Loans made by the
Lenders on any date shall be in integral multiples of $500,000.
(b) Loans shall be made ratably by the Lenders in accordance with
their respective Commitments; provided, however, that the failure of any Lender
to make any Loan shall not in itself relieve any other Lender of its obligation
to lend hereunder. The initial Loans shall be made by the Lenders against
delivery of Notes, payable to the order of the Lenders, as referred to in
Section 2.04 hereof.
(c) Each Lender shall make its Loans on the proposed dates thereof
by wire transfer to the Borrower in accordance with the Borrower's written
instructions.
(d) The proceeds of each Loan shall be used solely for working
capital requirements of the Borrower.
SECTION 2.03 Notice of Loans. The Borrower shall, through a
Responsible Officer of the Borrower, give the Lenders irrevocable written, telex
or facsimile notice (promptly confirmed in writing) of each borrowing not later
than 11:00 A.M., New York City time, two (2) Business Days before a proposed
borrowing. Such notice shall specify the date of such borrowing (which shall be
a Business Day) and the amount thereof.
SECTION 2.04 Notes; Repayment of Loans. (a) All Loans made by a
Lender to the Borrower shall be evidenced by a single Note, duly executed on
behalf of the Borrower, dated the Closing Date, in substantially the form of
Exhibit A annexed hereto, delivered and payable to such Lender in a principal
amount equal to its Commitment on such date. The outstanding balance of each
Loan, as evidenced by any such Note, shall mature and be due and payable on the
Termination Date.
(b) Each Note shall bear interest from its date on the outstanding
principal balance thereof, as provided in Section 2.05 hereof.
(c) Each Lender is hereby authorized by the Borrower to endorse on
the schedule attached to the Note, as applicable, of such Lender (or on a
continuation of such schedule attached to such Note and made a part thereof) an
appropriate notation evidencing the date and amount of each Loan to the Borrower
from such Lender, as well as the date and amount of each payment and prepayment
with respect thereto; provided, however, that no Lender shall be required to
make such a notation and the failure of any person to make such a notation on a
Note shall not affect any obligations of the Borrower under such Note. Any such
notation shall be conclusive and binding as to the date and amount of such Loan
or portion thereof, or payment or prepayment of principal or interest thereon,
absent manifest error.
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(d) The Borrower shall repay the principal amount of the Loans in
consecutive monthly installments commencing on June 3, 1999, and continuing on
the third (3rd) Business Day of each calendar month thereafter until repaid in
full. Each such installment shall be in an amount equal to the lesser of: (A)
the lowest daily Net Borrowing Availability as of the close of business for each
Business Day of the then immediately preceding calendar month (and if Net
Borrowing Availability was less than $100,000 or was negative as of the close of
business on any such day, the amount determined for purposes of this clause (A),
and therefore the proposed principal installment amount due for such month,
shall be zero) and (B) the amount, if any, by which the Net Borrowing
Availability as of the close of business on the Business Day immediately
preceding the proposed date of such installment payment exceeds $350,000. To the
extent that as of any installment date, the amount required to be repaid, as
determined pursuant to the immediately preceding sentence, exceeds the then
outstanding principal balance of the Loans, then the Total Commitment shall
thereupon be reduced permanently by the amount of such excess, which reduction
shall be allocated ratably among the Lenders in the proportions that their
Commitments bear to the Total Commitment.
SECTION 2.05 Interest on Loans. (a) Subject to the provisions of
Section 2.08 hereof, each Loan shall bear interest at a rate per annum equal to
fifteen percent (15%).
(b) Interest on each Loan shall be payable in arrears on the first
Business Day of each calendar month and on the Termination Date. Interest on
each Loan shall be computed based on the number of days elapsed in a year of 360
days.
SECTION 2.06 Fees. On or before September 1, 1999, the Borrower
shall pay to Pegasus Partners, L.P. and Pegasus Related Partners, L.P. (for
their ratable benefit based on the proportions that their initial Commitments
bear to $1,150,000) a nonrefundable fee of $15,000, it being understood and
agreed that such fee is fully earned as of the date that the initial Loans are
made hereunder.
SECTION 2.07 Termination and Reduction of Commitments. (a)
Notwithstanding any reductions in the Commitment pursuant to any other
subsection of this Section 2.07, the Total Commitment shall be reduced
automatically and permanently (pro rata among the Lenders in the proportions
that their Commitments bear to the Total Commitment) by the original principal
amount of each Loan made by such Lender upon the making of such Loan. In any
event, the Total Commitment and the Commitment of each Lender shall
automatically and permanently terminate on the Termination Date, and all Loans
still outstanding on such date shall be due and payable in full together with
accrued interest thereon.
(b) Upon at least one (1) Business Day's prior irrevocable written
notice (or facsimile notice promptly confirmed in writing) to the Lenders, the
Borrower may at any time in whole permanently terminate, or from time to time in
part permanently reduce, the Total Commitment, ratably among the Lenders in
accordance with the amounts of their Commitments. Each partial reduction of the
Total Commitment shall be in an integral multiple of $100,000.
SECTION 2.08 Interest on Overdue Amounts. (a) If the Borrower
shall default in the payment of the principal of or interest on any Loan or any
other amount becoming due
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hereunder, by acceleration or otherwise, the Borrower shall on demand from time
to time pay interest, to the extent permitted by law, on all Obligations
outstanding up to the date of actual payment of such defaulted amount (after as
well as before judgment) at a rate per annum equal to eighteen percent (18%).
SECTION 2.09 Prepayment of Loans. (a) Subject to the terms and
conditions contained in this Section 2.09 and elsewhere in this Agreement,
following repayment in full in cash of all Senior Indebtedness and termination
of all commitments of the lenders under the GE Credit Agreement the Borrower
shall have the right to prepay the Loans at any time in whole or from time to
time in part without penalty. Each prepayment of the Loans shall be in an
integral multiple of $100,000 (or if less, the outstanding balance of the
Loans).
(b) When making a prepayment of the Loans, the Borrower shall
furnish to the Lenders, not later than 11:00 A.M. (New York City time) (i) one
Business Day prior to the date of such prepayment, written, telex or facsimile
notice (promptly confirmed in writing) of prepayment which shall specify the
prepayment date and the principal amount of the Loans to be prepaid, which
notice shall be irrevocable and shall commit the Borrower to prepay the Loans by
the amount stated therein on the date stated therein. All prepayments shall be
accompanied by accrued interest on the principal amount being prepaid to the
date of prepayment.
SECTION 2.10 Pro Rata Treatment. Except as otherwise expressly
stated herein, each borrowing, each payment or prepayment of principal of the
Notes, each payment of interest on the Notes, each payment of any fee or other
amount payable hereunder and each reduction of the Total Commitment shall be
made pro rata among the Lenders in the proportions that their initial
Commitments bear to the Total Commitment; provided, however, that to the extent
that General Electric Capital Corporation applies the proceeds of Collateral (as
defined in the GE Credit agreement) to its outstanding Loans hereunder, General
Electric Capital Corporation shall not be required to share such "payments" with
the other Lenders hereunder.
SECTION 2.11 Payments and Computations. The Borrower shall make
each payment hereunder and under any instrument delivered hereunder not later
than 1:00 p.m. (New York City time) on the day when due in lawful money of the
United States (in freely transferable dollars) to the Lenders in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Lenders, be deemed to have
been received on the next succeeding Business Day for purposes of calculating
interest thereon.
III. [INTENTIONALLY OMITTED]
IV. REPRESENTATIONS AND WARRANTIES
Each Loan Party makes the following representations and warranties
to the Lenders as of the Closing Date and each date thereafter that a Loan is
requested by or made to the Borrower.
SECTION 4.01 Organization. (a) The Borrower and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the
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jurisdiction of its incorporation and has all requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to have such governmental approvals could not reasonably be expected to
have a Material Adverse Effect. The Borrower and each of its subsidiaries is
duly qualified or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or licensed and in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect or prevent the Borrower from consummating any of
the transactions contemplated by this Agreement.
(b) The Borrower has heretofore made available to the Lenders
a complete and correct copy of its articles of incorporation, as amended, and
its by-laws and the organizational documents of each of its subsidiaries, as
currently in effect. Each such document is in full force and effect and no other
organizational documents are applicable to or binding upon the Borrower or any
subsidiary thereof.
SECTION 4.02 Capitalization. (a) The authorized capital stock of
the Borrower consists of 20,000,000 shares of common stock and 500,000 shares of
preferred stock, no par value, 400,000 shares of which are designated Series A
preferred stock, of which 200,000 are designated Series A-1 preferred shares and
200,000 are designated Series A-2 preferred shares and one share of which is
designated Series B preferred stock. Schedule 4.02 sets forth as of the Closing
Date each subsidiary of the Borrower and the (i) the number of issued and
outstanding shares of common stock and preferred stock as of the date hereof;
(ii) a description of all unexpired options to purchase common stock (" Borrower
Options"), including number of shares, exercise price, date of vesting and
exercise date as well as a statement describing outstanding Borrower Options;
and (iii) all other shares of common stock issuable to any person pursuant to
any existing options, warrants, calls, preemptive (or similar) rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character. None of the Borrower or any of its subsidiaries is required to
redeem, repurchase or otherwise acquire shares of capital stock of the Borrower
or any of its subsidiaries, respectively, as a result of the transactions
contemplated by this Agreement.
(b) All of the outstanding shares of capital stock of each of
the Borrower's subsidiaries are beneficially owned by the Borrower, directly or
indirectly, free and clear of all security interests, liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever, except for liens securing Indebtedness under the GE Credit
Agreement.
SECTION 4.03 Authorization; Validity of Agreement; etc. The
Borrower has full corporate power and authority to execute and deliver the Loan
Documents and to issue the Notes and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by the Borrower of
the Loan Documents and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of the
Borrower and no other corporate or shareholder action on the part of the
Borrower is necessary to authorize the execution, delivery or performance by the
Borrower of any Loan Document, the issuance of any Notes or the consummation by
it of the transactions contemplated hereby and thereby. Each Loan Document has
been duly executed and delivered by the Borrower and constitutes a valid and
binding obligation of the Borrower
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enforceable against the Borrower in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
SECTION 4.04 Consents and Approvals, etc. Neither execution,
delivery or performance of any Loan Document, issuance of any Note, consummation
by the Borrower of the transactions contemplated hereby or thereby, nor
compliance by the Borrower with any of the provisions hereof or thereof will (i)
conflict with or result in any breach of any provision of the Borrower's
articles of incorporation, as amended, or the by-laws or other organizational
documents of the Borrower or of any of its subsidiaries, (ii) require on the
part of the Borrower any filing with, or permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or other
governmental or regulatory authority or agency, including, without limitation,
any consent or approval of any federal, state, local or foreign insurance
industry agency, commission or other governing body, except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect or prevent the Borrower from consummating the
transactions contemplated hereby or thereby, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any material note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Borrower or any of its subsidiaries is a party or by
which any of them or any of their properties or assets may be bound or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Borrower, any of its subsidiaries or any of their properties
or assets.
SECTION 4.05 Use of Proceeds. No proceeds of any Loan will be used
for any purpose which entails a violation of, or is inconsistent with,
Regulation T, U or X of the Board of Governors of the Federal Reserve System, or
for any purpose other than the working capital requirements of the Borrower.
V. CONDITIONS OF LOANS
The right of the Borrower to request any Loan hereunder and the
obligation of each Lender to make any Loan hereunder shall be subject to the
following conditions precedent:
SECTION 5.01 All Loans.
(a) The Lenders shall have received a notice of borrowing with
respect to such Loan as required by Section 2.03 hereof.
(b) On the date that such Loan is requested by the Borrower and
the date that such Loan is made by the Lenders (immediately before and
after giving effect to such request or Loan, as the case may be), the
representations and warranties set forth in Article IV hereof and in
any document delivered herewith, including, without limitation, the
Loan Documents, shall be true and correct in all material respects with
the same
14
effect as though made on and as of such date (except insofar as such
representations and warranties relate expressly to an earlier date, in
which case they shall have been true on and as of such date).
(c) No Default or Event of Default shall have occurred and be
continuing, immediately before and after giving effect to such request
or Loan, as the case may be.
(d) No event or condition exists or has occurred or has failed to
occur if the effect thereof, individually or in the aggregate, has had
or could reasonably be expected to have a Material Adverse Effect.
(e) The Lenders shall have received a certificate signed by the
Financial Officer of the Borrower (i) as to the compliance with (b),
(c) and (d) above and (ii) confirming that as of the Business Day prior
to the date such Loan is to be made Net Borrowing Availability under
the GE Credit Agreement (giving effect on a pro forma basis to any
proposed borrowing to be made under the GE Credit Agreement on the date
of such proposed Loan) was less than $100,000.
SECTION 5.02 First Borrowing. The obligations of the Lenders in
respect of the initial Loans hereunder is subject to the following additional
conditions precedent:
(a) The Lenders shall have received one or more favorable written
opinions of counsel for the Borrower dated the Closing Date, addressed
to the Lenders and satisfactory to them in form and substance.
(b) The Lenders shall have received (i) a copy of the certificate
or articles of incorporation or constitutive documents, in each case as
amended to date, of the Borrower, certified as of a recent date by the
Secretary of State or other appropriate official of the state of its
organization, and a certificate as to the good standing of each from
such Secretary of State or other official, in each case dated as of a
recent date; (ii) a certificate of the Secretary of the Borrower dated
the Closing Date and certifying (A) that attached thereto is a true and
complete copy of such person's bylaws as in effect on the date of such
certificate and at all times since a date prior to the date of the
resolution described in item (B) below, (B) that attached thereto is a
true and complete copy of a resolution adopted by such person's Board
of Directors authorizing the execution, delivery and performance of
this Agreement, the Notes, the other Loan Documents and the borrowings
made and to be made hereunder, as applicable, and that such resolution
has not been modified, rescinded or amended and is in full force and
effect, (C) that such person's certificate or articles of incorporation
or constitutive documents has not been amended since the date of the
last amendment thereto shown on the certificate of good standing
furnished pursuant to (i) above, and (D) as to the incumbency and
specimen signature of each of such person's officers executing this
Agreement, the Notes or any other Loan Document delivered in connection
herewith or therewith, as applicable; (iii) a certificate of another of
such person's officers as to incumbency and signature of its Secretary;
and (iv) such other documents as any Lender may reasonably request.
(c) The Lenders shall have received a certificate, dated the
Closing Date and
15
signed by the Financial Officer of the Borrower, confirming compliance
with the conditions precedent set forth in paragraphs (b) and (c) of
Section 5.01 hereof and the conditions set forth in this Section 5.02.
(d) Each Lender shall have received its Note duly executed by the
Borrower, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) [Intentionally omitted]
(f) The Lenders shall have received fully executed copies of the
Amendment to Warrants in the form annexed hereto as Exhibit C, and such
amendment agreement shall be in full force and effect.
(g) The Lenders shall have received fully executed copies of an
agreement in form and substance satisfactory to them modifying various
provisions of the GE Credit Agreement, and such amendment agreement
shall be in full force and effect.
(h) The Lenders shall have received evidence in form and substance
satisfactory to them that all requisite third party consents
(including, without limitation, the consent of the agent and the
lenders under the GE Credit Agreement) to the transactions herein
contemplated have been received.
(i) Xxxx, Scholer, Fierman, Xxxx & Handler, LLP, counsel to the
Lenders, shall have received payment in full for all legal fees
charged, and all costs and expenses incurred, by such counsel through
the Closing Date in connection with the transactions contemplated under
this Agreement and the other Loan Documents and instruments in
connection herewith and therewith.
(j) All legal matters in connection with the Loan Documents and
the Loans shall be satisfactory to the Lenders and their counsel in
their sole discretion.
(k) The Borrower shall have executed and delivered to the Lenders
a disbursement authorization letter with respect to the disbursement of
the proceeds of the Loans to be made on the Closing Date, in form and
substance satisfactory to the Lenders.
(l) The Lenders shall have received such other documents as the
Lenders or their counsel shall reasonably deem necessary or desirable.
VI. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, so long
as this Agreement shall remain in effect or the principal of or interest on any
Note, or any fee, expense or other Obligation payable hereunder or any other
Loan Document shall be unpaid, it will, and will cause each of its subsidiaries,
to:
SECTION 6.01 Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence.
16
SECTION 6.02 Businesses and Properties. At all times do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect the rights, licenses, Permits, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its businesses; maintain
and operate such businesses in the same general manner in which they are
presently conducted and operated; comply with all laws, rules, regulations and
governmental orders (whether Federal, state or local) applicable to the
operation of such businesses whether now in effect or hereafter enacted
(including, without limitation, all applicable laws, rules, regulations and
governmental orders relating to public and employee health and safety and all
Environmental Laws) and with any and all other applicable laws, rules,
regulations and governmental orders, the lack of compliance with which would
have a Material Adverse Effect; take all actions which may be required to
obtain, preserve, renew and extend all Permits and other authorizations which
are material to the operation of such businesses; and at all times maintain,
preserve and protect all property material to the conduct of such businesses and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times.
SECTION 6.03 Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers, (b)
maintain such other insurance, to such extent and against such risks, including
fire and other risks insured against by extended coverage, as is customary with
companies similarly situated and in the same or similar businesses, (c) maintain
in full force and effect public liability insurance against claims for personal
injury or death or property damage occurring upon, in, about or in connection
with the use of any properties owned, occupied or controlled by the Borrower or
any of its subsidiaries, in such amount as the Lenders shall reasonably deem
necessary, (d) maintain business interruption insurance to such extent as is
customary with companies similarly situated and in the same or similar
businesses, and (e) maintain such other insurance as may be required by law or
as may be reasonably requested by the Lenders for purposes of assuring
compliance with this Section 6.03.
SECTION 6.04 Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise, which, if unpaid, might give rise to Liens upon its
properties or any part thereof.
SECTION 6.05 Financial Statements, Reports, etc. Furnish to the
Lenders:
(a) copies of all financial statements, notices, reports,
certifications, projections, management letters and other written
communications provided to the agent and/or the lenders under the GE
Credit Agreement, as and when same is furnished pursuant thereto.
(b) copies of all notices received from the agent and/or the
lenders under the GE Credit Agreement or any other material agreement
to which any Loan Party is a party;
(c) immediately upon becoming aware thereof, notice of the breach
by any
17
party of any material agreement with any Loan Party; and
(d) such other information as any Lender may from time to time
reasonably request.
SECTION 6.06 Litigation and Other Notices. Give the Lenders prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority
of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the Loans, or
invalidating, or having the effect of invalidating, any provision of
this Agreement, the Notes or the other Loan Documents, or the
initiation of any litigation or similar proceeding seeking any such
injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against any Loan Party, whether at law or in equity or by or before any
court or any federal, state, municipal or other governmental agency or
authority, (i) which is material and is brought by or on behalf of any
governmental agency or authority, or in which injunctive or other
equitable relief is sought or (ii) as to which it is probable (within
the meaning of Statement of Financial Accounting Standards No. 5) that
there will be an adverse determination and which, if adversely
determined, would (A) reasonably be expected to result in liability of
one or more Loan Parties in an aggregate amount of $50,000 or more, not
reimbursable by insurance, or (B) materially impair the right of any
Loan Party to perform its obligations under this Agreement, any Note or
any other Loan Document to which it is a party;
(c) any Default or Event of Default, specifying the nature and
extent thereof and the action (if any) which is proposed to be taken
with respect thereto; and
(d) any development in the business or affairs of any Loan Party
which has had or which is likely to have, in the reasonable judgment of
any Responsible Officer of the Borrower, a Material Adverse Effect.
SECTION 6.07 Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Lender may request,
permit any authorized representative designated by such Lender to visit and
inspect the properties and financial records of the Borrower and its
subsidiaries and to make extracts from such financial records at the Borrower's
expense, and permit any authorized representative designated by such Lender to
discuss the affairs, finances and condition of the Borrower and its subsidiaries
with the appropriate Financial Officer and such other officers as the Borrower
shall deem appropriate and the Borrower's independent public accountants, as
applicable. At the Borrower's expense, the Lenders shall have the right to
audit, as often as it may request, the existence and condition of the accounts
receivables, inventory, books and records of the Borrower and its subsidiaries
and to review their compliance with the terms and conditions of this Agreement
and the other Loan Documents.
VII. NEGATIVE COVENANTS
18
The Borrower covenants and agrees with each Lender that, so long
as this Agreement shall remain in effect or the principal of or interest on any
Note, or any fee, expense or other Obligation payable hereunder or in connection
with any Loan Document shall be unpaid, it will not and will not cause or permit
any of its subsidiaries, either directly or indirectly, to:
SECTION 7.01 Dividends, Distributions and Payments. Except as
permitted under the GE Credit Agreement, declare or pay, directly and
indirectly, any cash dividends or make any other distribution, whether in cash,
property, securities or a combination thereof, with respect to (whether by
reduction of capital or otherwise) any shares of its capital stock or directly
or indirectly redeem, purchase, retire or otherwise acquire for value (or permit
any subsidiary to purchase or acquire) any shares of any class of its capital
stock or set aside any amount for any such purpose.
SECTION 7.02 Business. Alter the nature of its business as
operated on the Closing Date in any material respect.
SECTION 7.03 Use of Proceeds. Permit the proceeds of any Loan to
be used for any purpose which entails a violation of, or is inconsistent with,
Regulation T, U or X of the Board, or for any purpose other than the working
capital requirements of the Borrower.
SECTION 7.04 Prepayment of Subordinated Indebtedness. Directly or
indirectly make a voluntary prepayment, redemption, repurchase, or otherwise
retire, any Subordinated Indebtedness.
SECTION 7.05 Negative Pledges, Etc. Enter into any agreement
(other than this Agreement, any other Loan Document and the GE Credit Agreement)
which (a) prohibits the creation or assumption of any Lien upon any property or
asset of any Loan Party, including, without limitation, any hereafter acquired
property, or (b) specifically prohibits the amendment or other modification of
this Agreement or any other Loan Document.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made or
incorporated into this Agreement, the Notes or any other Loan Document,
or in connection with any of the foregoing, shall prove to have been
incorrect in any material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any
Note when and as the same shall become due and payable, whether at the
due date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on any
Note, or any fee or any other amount payable hereunder, or under the
Notes or any other Loan Document when and as the same shall become due
and payable and such default shall
19
continue unremedied for ten days or more;
(d) default shall be made in the due observance or performance of
any covenant, condition or agreement to be observed or performed on the
part of any Loan Party pursuant to the terms of this Agreement, any of
the Notes or any other Loan Document (other than any default of the
sort described in clause (a) or (b) above), and such default shall
continue unremedied for fifteen days or more;
(e) any Loan Party shall (i) voluntarily commence any proceeding
or file any petition seeking relief under Title 11 of the United States
Code or any other Federal, state or foreign bankruptcy, insolvency,
liquidation or similar law, (ii) consent to the institution of, or fail
to contravene in a timely and appropriate manner, any such proceeding
or the filing of any such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or similar
official for any Loan Party or for a substantial part of its property
or assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become
due or (vii) take corporate action for the purpose of effecting any of
the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of any Loan Party, or of a substantial part of
the property or assets of any Loan Party, under Title 11 of the United
States Code or any other Federal state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) the appointment of a
receiver, trustee, custodian, sequestrator or similar official for any
Loan Party or for a substantial part of the property of any Loan Party
or (iii) the winding-up or liquidation of any Loan Party; and such
proceeding or petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for 60 days;
(g) (i) the maturity of any Indebtedness under the GE Credit
Agreement shall have been accelerated or (ii) a default shall be made
with respect to any Indebtedness or obligations under a capitalized
lease of any Loan Party (excluding the Obligations and Indebtedness
under the GE Credit Agreement) which either individually or taken
together with other such Indebtedness as to which a default has
occurred shall exceed $250,000 if the effect of any such default shall
be to accelerate, or to permit the holder or obligee of any such
Indebtedness or obligations under a capitalized lease (or any trustee
on behalf of such holder or obligee) at its option to accelerate, the
maturity of such Indebtedness or obligations under a capitalized lease;
(h) a judgment (not reimbursed by insurance policies of any Loan
Party) or decree for the payment of money, a fine or penalty which when
taken together with all other such judgments, decrees, fines and
penalties shall exceed $250,000 shall be rendered by a court or other
tribunal against any Loan Party and (i) shall remain undischarged or
unbonded for a period of 30 consecutive days during which the execution
of such judgment, decree, fine or penalty shall not have been stayed
effectively or (ii) any judgment creditor or other person shall legally
commence actions to collect on or enforce such judgment, decree, fine
or penalty;
20
(i) this Agreement, any Note or any other Loan Documents shall for
any reason cease to be, or shall be asserted by any Loan Party not to
be, a legal, valid and binding obligation of any Loan Party,
enforceable in accordance with its terms;
then, and in any such event (other than an event described in paragraph (e) or
(f) above), and at any time thereafter during the continuance of such event, the
Required Lenders may, by written notice (or facsimile notice promptly confirmed
in writing) to the Borrower, take any or all of the following actions at the
same or different times: (i) terminate forthwith all or any portion of the Total
Commitment and (ii) declare the Notes and all Obligations to be forthwith due
and payable, whereupon the principal of such Notes, together with accrued
interest and fees thereon and other liabilities of the Borrower accrued
hereunder, shall become forthwith due and payable both as to principal and
interest, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in the Notes to the contrary notwithstanding; provided, however, that
with respect to a default described in paragraph (e) or (f) above, the Total
Commitment shall automatically terminate and the principal of the Notes,
together with accrued interest and fees thereon and all other Obligations shall
automatically become due and payable, both as to principal and interest, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in the
Notes to the contrary notwithstanding.
IX. MISCELLANEOUS
SECTION 9.01 Notices. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered or mailed (or in
the case of telex or facsimile communication, delivered by telex, graphic
scanning, telecopier or other telecommunications equipment, with receipt
confirmed) addressed,
(a) if to the Borrower or any other Loan Party, to Code-Alarm,
Inc. at 000 Xxxx Xxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxxx 00000, Attention:
Xxxxx X. Xxxxxx Telecopier No.: (000) 000-0000, Telephone No.: (248)
583-9620, with a copy to Xxxxxx Xxxxxxxx, LLP, 000 Xxxxxxxxxxx Xxxxxx,
00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000-0000, Attention: Xxxxxx X. Xxxxx,
Telecopier No.: (000) 000-0000, Telephone No.: (000) 000-0000;
(b) if to Pegasus Partners, L.P. or Pegasus Related Partners,
L.P., c/o Pegasus Investors, L.P. at 00 Xxxxx Xxxx, Xxx Xxx,
Xxxxxxxxxxx 00000, Attention: Xxxxxxx Xxxx, with a copy to Xxxx,
Scholer, Fierman, Xxxx & Handler, LLP, at 000 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx Xxxxxx, Esq.; and
(c) If to General Electric Capital Corporation, at 00 Xxxxx
XxXxxxx Xxxxxx Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Account
Manager, Telecopier No.: (000) 000-0000, Telephone No.: (000) 000-0000,
with copies to Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000, Attention: H. Xxxxx Xxxxxxxxx, Telecopier No.: (312)
000-0000, Telephone No.: (000) 000-0000 and General Electric Capital
Corporation, 000 Xxxx Xxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000-0000,
Attention: Corporate Counsel, Telecopier No.: (000) 000-0000, Telephone
No.: (000) 000-0000.
21
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if hand delivered or three days after being sent by registered
or certified mail, postage prepaid, return receipt requested, if by mail, or
upon receipt if by any telex, facsimile or other telecommunications equipment,
in each case addressed to such party as provided in this Section 9.01 or in
accordance with the latest unrevoked direction from such party.
SECTION 9.02 Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower or any of its subsidiaries
herein and in the certificates or other instruments prepared or delivered in
connection with this Agreement or any other Loan Document, shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans and the execution and delivery to the Lenders of the Notes
and shall continue in full force and effect as long as the principal of or any
accrued interest on the Notes or any other fee or amount payable under the Notes
or this Agreement or any other Loan Document is outstanding and unpaid and so
long as the Total Commitment has not been terminated.
SECTION 9.03 Successors and Assigns; Participations. (a) Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower or any other
Loan Party, or the Lenders, that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and assigns. The Borrower
may not assign or transfer any of its rights or obligations hereunder without
the written consent of all the Lenders.
(b) Each Lender, without the consent of the Borrower, may sell
participations to one or more banks or other entities in all or a portion of its
rights and obligations under this Agreement and the Loans owing to it and the
Notes held by it); provided, however, that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement; provided, further, however, that such Lender
shall retain the sole right and responsibility to enforce the obligations of the
Borrower and the other Loan Parties relating to the Loans, including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement, other than amendments, modifications or waivers
with respect to decreasing any fees payable hereunder or the amount of principal
or the rate of interest payable on the Loans, or extending the dates fixed for
any payment of principal of or interest on, the Loans or increasing or extending
the Commitments or the release of all Collateral.
(c) Each Lender may assign by novation, to any one or more banks
or other entities without the prior written consent of the Borrower, all or a
portion of its interests, rights and obligations under this Agreement and the
other Loan Documents. Each of Pegasus Partners, L.P. and Pegasus Related
Partners, L.P. agrees that it shall not make any such assignment without the
prior written consent of General Electric Capital Corporation (which shall not
be withheld unreasonably) unless all Indebtedness owing to General Electric
Capital Corporation under the GE Credit Agreement has been repaid in full and
the commitments of the lenders under the GE Credit Agreement have been
terminated. Upon effectiveness of any such assignment, (x) the assignee
thereunder shall be a party hereto and, to the extent provided in
22
the agreement governing such assignment, have the rights and obligations of a
Lender hereunder and under the other Loan Documents and (y) the Lender which is
assignor thereunder shall, to the extent of such assignment, be released from
its obligations under this Agreement (but shall continue to be entitled to the
benefits of those Sections under the Loan Documents that by their terms survive
termination of this Agreement, including, without limitation, Section 9.04 of
this Agreement).
(d) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 9.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to the Borrower furnished to such
Lender by or on behalf of the Borrower in connection with this Agreement;
provided, however, that prior to any such disclosure, each such assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any confidential Information relating to the Borrower
received from such Lender.
SECTION 9.04 Expenses; Indemnity. (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by any Lender in connection with
the preparation of this Agreement and the other Loan Documents or with any
amendments, modifications, waivers, extensions, renewals, renegotiations or
"workouts" of the provisions hereof or thereof (whether or not the transactions
hereby contemplated shall be consummated) or incurred by any Lender in
connection with the enforcement or protection of its rights in connection with
this Agreement or any of the other Loan Documents or with the Loans made or the
Notes issued hereunder, or in connection with any pending or threatened action,
proceeding, or investigation relating to the foregoing and, in connection with
such enforcement or protection, the reasonable fees and disbursements of counsel
for the Lenders. The Borrower further indemnifies each Lender from and agrees to
hold them harmless against any documentary taxes, assessments or charges made by
any governmental authority by reason of the execution and delivery of this
Agreement or the Notes.
(b) The Borrower indemnifies each Lender and its respective
directors, officers, employees and agents against, and agrees to hold each
Lender and each such person harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against the Lender or any such person arising
out of, in any way connected with, or as a result of (i) the use of any of the
proceeds of the Loans, (ii) this Agreement or the other Loan Documents, (iii)
the performance by the parties hereto and thereto of their respective
obligations hereunder and thereunder (including but not limited to the making of
the Total Commitment) and consummation of the transactions contemplated hereby
and thereby, (iv) breach of any representation or warranty, or (v) any claim,
litigation, investigation or proceedings relating to any of the foregoing,
whether or not any Lender or any such person is a party thereto; provided,
however, that such indemnity shall not, as to any Lender, apply to any such
losses, claims, damages, liabilities or related expenses to the extent that they
result from the gross negligence or willful misconduct of such Lender.
(c) The Borrower indemnifies, and agrees to defend and hold
harmless the Lenders and their respective officers, directors, shareholders,
agents and employees (collectively, the "Indemnitees") from and against any
loss, cost, damage, liability, lien, deficiency, fine, penalty or expense
(including, without limitation, reasonable attorneys' fees and reasonable
expenses
23
for investigation, removal, cleanup and remedial costs and modification costs
incurred to permit, continue or resume normal operations of any property or
assets or business of the Borrower or any subsidiary thereof) arising from a
violation of, or failure to comply with any Environmental Law and to remove any
Lien arising therefrom except to the extent caused by the gross negligence or
willful misconduct of any Indemnitee, which any of the Indemnitees may incur or
which may be claimed or recorded against any of the Indemnitees by any person.
(d) The provisions of this Section 9.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term or
provision of this Agreement or the Notes, or any investigation made by or on
behalf of any Lender. All amounts due under this Section 9.04 shall be payable
on written demand therefor.
SECTION 9.05 APPLICABLE LAW. THIS AGREEMENT AND THE NOTES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK
(OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION 9.06 Payments on Business Days. (a) Should the principal
of or interest on the Notes or any fee or other amount payable hereunder become
due and payable on other than a Business Day, payment in respect thereof may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in computing interest, if any, in connection with such
payment.
(b) All payments by the Borrower hereunder and all Loans made by
each Lender hereunder shall be made in lawful money of the United States of
America in immediately available funds at the address of such Lender set forth
in Section 9.01 hereof (or otherwise in accordance with the written instruction
of such Lender).
SECTION 9.07 Waivers; Amendments. (a) No failure or delay of any
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lenders hereunder are cumulative
and not exclusive of any rights or remedies which they may otherwise have. No
waiver of any provision of this Agreement or the Notes nor consent to any
departure by the Borrower therefrom shall in any event be effective unless the
same shall be authorized as provided in paragraph (b) below, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No notice to or demand on the Borrower in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any amendment,
modification, waiver or consent authorized as provided herein, whether or not
such Note shall have been marked to indicate such amendment, modification,
waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders; provided, however, that
no such agreement shall (i) change the principal amount of, or extend or advance
the maturity of or the dates for the payment of principal of or interest on, any
Note or reduce the rate of interest on any Note,
24
(ii) change the Commitment of any Lender or amend or modify the provisions of
this Section, Section 2.10, Section 7.03, Section 9.04 or Article X hereof, or
the definition of "Required Lenders." Each Lender and holder of any Note shall
be bound by any modification or amendment authorized by this Section regardless
of whether its Notes shall be marked to make reference thereto, and any consent
by any Lender or holder of a Note pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall be so
marked.
(c) Notwithstanding anything to the contrary contained herein or
elsewhere, no amendment or modification of Article X hereof or this Section
9.07(c) shall be effective without the prior written consent of the holders of a
majority in principal amount of the Senior Indebtedness then outstanding (or
their authorized representative).
SECTION 9.08 Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes should be held invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall not
in any way be affected or impaired thereby.
SECTION 9.09 Entire Agreement; Waiver of Jury Trial, etc. (a) This
Agreement, the Notes and the other Loan Documents constitute the entire contract
between the parties hereto relative to the subject matter hereof. Any previous
agreement among the parties hereto with respect to the Transactions is
superseded by this Agreement, the Notes and the other Loan Documents. Except as
expressly provided herein or in the Notes or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes or in the other Loan Documents,
expressed or implied, is intended to confer upon any party, other than the
parties hereto, any rights, remedies, obligations or liabilities under or by
reason of this Agreement, the Notes or the other Loan Documents.
(b) Except as prohibited by law, each party hereto hereby waives
any right it may have to a trial by jury in respect of any litigation directly
or indirectly arising out of, under or in connection with this Agreement, the
Notes, any of the other Loan Documents or the Transactions.
(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 9.09 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative, agent
or attorney of any Lender has represented, expressly or otherwise, that such
Lender would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable, by, among other
things, the mutual waivers and certifications herein.
SECTION 9.10 Confidentiality. Each Lender agrees to keep
confidential (and to cause its officers, directors, employees, agents and
representatives to keep confidential) all information, materials and documents
furnished to such Lender (the "Information"). Notwithstanding the foregoing,
each Lender shall be permitted to disclose Information (i) to such of its
officers, directors, employees, agents and representatives as need to know such
25
Information in connection with its participation in any of the Transactions or
the administration of this Agreement or the other Loan Documents; (ii) to the
extent required by applicable laws and regulations or by any subpoena or similar
legal process, or requested by any governmental agency or authority; (iii) to
the extent such Information (A) becomes publicly available other than as a
result of a breach of this Agreement, (B) becomes available to such Lender on a
non-confidential basis from a source other than the Borrower or another Loan
Party or (C) was available to such Lender on a non-confidential basis prior to
its disclosure to such Lender by the Borrower or another Loan Party; (iv) to the
extent the Borrower or another Loan Party shall have consented to such
disclosure in writing; or (vi) to any assignee or participant or any proposed
assignee or participant.
SECTION 9.11 Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in the courts of the State of New York or of the United
States of America for the Southern District of New York, and, by execution and
delivery of this Agreement, the Borrower and each of the other Loan Parties
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.
(b) The Borrower and each other Loan Party hereby irrevocably
waives, in connection with any such action or proceeding, any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which they may now or hereafter have to the
bringing of any such action or proceeding in such respective jurisdictions.
(c) The Borrower and each other Loan Party hereby irrevocably
consents to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to each such person, as the case may be, at its
address set forth in Section 9.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower or any other Loan
Party in any other jurisdiction.
SECTION 9.12 Counterparts; Facsimile Signature. This Agreement may
be executed in counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall become
effective when copies hereof which, when taken together, bear the signatures of
each of the parties hereto shall be delivered to the Lenders. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed signature page hereto.
SECTION 9.13 Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively, the "Charges"), shall exceed
the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section
26
shall be cumulated and the interest and Charges payable to such Lender in
respect of other Loans or periods shall be increased (but not above the Maximum
Rate therefor) until such cumulated amount, together with interest thereon, at
the rate determined in accordance with in Sections 2.05 and 2.08 hereof, to the
date of repayment, shall have been received by such Lender.
SECTION 9.14 Headings. Article and Section headings and the Table
of Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
X. SUBORDINATION
SECTION 10.01 General. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or any other Loan Document, subject to the
terms and conditions of this Article, the Senior Indebtedness shall first be
paid in full in cash, before any payment is made or provided for on account of
the Obligations other than any mandatory repayment of the Loans required under
Section 2.04(d) hereof.
SECTION 10.02 Limitation on Payment and Remedies.
(a) Upon receipt by the Borrower and the Lenders of a Blockage
Notice, then unless and until (i) all Senior Defaults that gave rise to the
Blockage Notice shall have been remedied or waived in writing or shall have
ceased to exist or (ii) the Senior Indebtedness in respect of which such Senior
Defaults shall have occurred shall have been paid in full in cash, no direct or
indirect payment (in cash, property or securities, by set-off or otherwise) of
or on account of the principal of or interest on the Notes or as a sinking fund
for the Notes or in respect of any redemption, retirement, purchase or other
acquisition of the Notes shall be made prior to the expiration of the resulting
Blockage Period.
(b) As long as any Senior Indebtedness remains outstanding, the
Lenders shall not declare the Obligations to be due and payable, or bring suit
or commence any proceeding or other enforcement action against the Borrower or
any other Loan Party, by reason of any Event of Default prior to the expiration
of 10 Business Days (a "Remedy Standstill Period") after the written notice of
intention to accelerate or exercise such other remedies on account of the
occurrence of such Event of Default, specifying same (the "Remedy Notice") shall
have been given by the Required Lenders to the Borrower and the holders of the
Senior Indebtedness (or their authorized agent), unless the holders of any
Senior Indebtedness shall have caused such Senior Indebtedness to become due
prior to its stated maturity or any Event of Default described in clause (e) or
(f) of Article VIII hereof shall have occurred; provided, however, that if at
the time the Remedy Standstill Period would otherwise expire a Blockage Period
is in effect, then such Remedy Standstill Period shall be extended to the
earlier to occur of (i) 90 days from the date of the Remedy Notice or (ii) such
earlier date as the Blockage Period shall have terminated or expired. Upon the
expiration or termination of any Remedy Standstill Period, the Lenders shall be
entitled to exercise any of their rights with respect to the Notes other than
any right to accelerate the maturity date of the Notes based upon the occurrence
of any Event of Default which has been cured or otherwise remedied during the
Remedy Standstill Period.
(c) Notwithstanding the foregoing, any Blockage Period or Remedy
Standstill Period shall be inapplicable or cease to be effective if an Event of
Default described in clause (e) or (f)
27
of Article VIII hereof shall have occurred. In addition, any Blockage Period or
Remedy Standstill Period shall cease to be effective if at any time during such
period: (i) substantial assets of the Borrower are sold or otherwise disposed of
outside of the ordinary course of business for less than fair value;
(ii) payment or any distribution of any character, whether in cash, securities
or other property of the Borrower shall be made to or received by any creditor
on any Indebtedness which is on the same level of priority with or junior and
subordinate in right of payment to the Obligations or (iii) a notice of
acceleration of the maturity of the Senior Indebtedness shall have been
transmitted to the Borrower.
SECTION 10.03 Subordination Upon Certain Events. Upon the
occurrence of any Event of Default described in clause (e) or (f) of Article
VIII hereof:
(a) Upon any payment or distribution of assets of the Borrower to
creditors of the Borrower, holders of Senior Indebtedness shall be entitled to
receive payment in full in cash before the Lenders shall be entitled to receive
any payment in respect of the Obligations.
(b) Until all Senior Indebtedness is paid in full in cash, any
distribution to which the Lenders would be entitled but for this Article X shall
be made to holders of Senior Indebtedness, as their interests may appear.
SECTION 10.04 Payments and Distributions Received. If the Lenders
shall have received any payment from or distribution of assets of the Borrower
in respect of the Obligations in contravention of the terms of this Article X or
in contravention of Section 2.09(a) hereof, then and in such event payment or
distribution shall be received and held in trust for and shall be paid over or
delivered to the holders of Senior Indebtedness (or their authorized agent) to
the extent necessary to pay all such Senior Indebtedness in full.
SECTION 10.05 No Prejudice or Impairment. The rights of the
holders of Senior Indebtedness under this Article shall remain in full force and
effect without regard to, and shall not be impaired or affected by, (a) any
amendment, modification, restatement, waiver, compromise, release or consent
with respect to the GE Credit Agreement or other instrument evidencing or
governing any Senior Indebtedness, (b) any loss, release, subordination or
depreciation of any collateral or guaranty for the Senior Indebtedness, (c) any
failure to collect or receive payment of any Senior Indebtedness or (d) any
invalidity, unenforceability or subordination of any Senior Indebtedness in any
insolvency, bankruptcy or similar proceeding.
SECTION 10.06 Subrogation. After all amounts payable under or in
respect of Senior Indebtedness are paid in full in cash and all commitments of
the lenders under the GE Credit Agreement have been terminated, the Lenders
shall be subrogated to the rights of holders of Senior Indebtedness to receive
payments or distributions applicable to Senior Indebtedness to the extent that
distributions otherwise payable to the Lenders have been applied to the payment
of Senior Indebtedness. A distribution made under this Article X to a holder of
Senior Indebtedness which otherwise would have been made to the Lenders is not,
as between the Borrower and the Lenders, a payment by the Borrower in respect of
Senior Indebtedness.
SECTION 10.07 Relative Rights. The provisions of this Article X
are for the benefit of, and shall be enforceable directly by, the holders of
Senior Indebtedness and are solely for the purpose of defining the relative
rights of the Lenders, on the one hand, and the holders of Senior Indebtedness,
on the other hand. The parties hereto expressly intend that the holders of
28
the Senior Indebtedness are third party beneficiaries of the provisions of this
Article X to the same extent and effect as if they were signatories hereto.
Nothing in this Agreement shall: (i) impair, as between the Borrower and the
Lenders, the obligation of the Borrower, which is absolute and unconditional, to
pay principal of and interest (including default interest) on the Notes and all
other Obligations in accordance with its terms; (ii) affect the relative rights
of Lenders and creditors of the Borrower other than holders of Senior
Indebtedness; or (iii) except as provided in Section 10.02(b), prevent the
Lenders from exercising their available remedies upon a Default or Event of
Default, subject to the rights, if any, under this Article X of holders of
Senior Indebtedness to receive distributions otherwise payable to the Lenders.
No right of any holder of any Senior Indebtedness to enforce the subordination
of the Obligations shall be impaired by any failure by the Borrower to comply
with this Article X.
SECTION 10.08 Section Not to Prevent Events of Default. The
failure to make a payment on account of principal of or interest on the Notes or
other Obligations by reason of any provision of this Article X shall not be
construed as preventing the occurrence of a Default or an Event of Default.
* * *
29
IN WITNESS WHEREOF, the Borrower and the Lenders have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
CODE-ALARM, INC.
By:/s/ Xxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxx
Title: VP Finance & CEO
PEGASUS PARTNERS, L.P.
By: Pegasus Investors, L.P., its general partner
By: Pegasus Investors GP, Inc., its general partner
By:/s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
PEGASUS RELATED PARTNERS, L.P.
By: Pegasus Investors, L.P., its general partner
By: Pegasus Investors GP, Inc., its general partner
By:/s/ Xxxxxxx X. Xxxx
---------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By:/s/ Xxxxxxx X. XxXxx
---------------------------------------
Name: Xxxxxxx X. XxXxx
Title: Duly Authorized Signatory
