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EXHIBIT 10.28
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT, dated as of June 30, 1995 (this
"First Amendment"), is between CODE-ALARM, INC., a Michigan corporation (the
"Company") and NBD BANK, a Michigan banking corporation (the "Bank").
RECITALS
A. The Company and the Bank have executed a Loan Agreement dated as
of May 23, 1995 (the "Loan Agreement"), to provide for a revolving credit
facility and term loans to the Company.
B. The Company has defaulted under the Loan Agreement.
C. The Company has requested that the Bank waive such defaults and
the Bank is willing to do so strictly in accordance with the terms hereof, and
provided the Loan Agreement is amended on the terms and conditions set forth
herein.
AGREEMENT
Based upon these recitals, the parties agree as follows:
1. Upon satisfaction by the Company of the conditions set forth in
paragraph 4 hereof, the Loan Agreement shall hereby be amended as of the
effective date hereof as follows:
(a) Section 5.1(d)(vi) shall be amended by deleting the
reference therein to "the following Business Day" and inserting "30 days after
the end of each quarter" in place thereof.
(b) Section 5.1(d)(ix) shall be deleted in it entirety and the
following shall be inserted in place thereof:
(ix) As soon as available and in any event within 30 days
after the end of each quarter with respect to clause (A) and within 30
days after the end of each month with respect to clauses (B) and (C), a
report with respect to the Company setting forth a summary as of the end
of such quarter or such month, as the case may be, of (A) accounts
payable of the Company, containing an aging of such accounts payable and
consolidated totals, (B) accounts receivable, indicating the total of
accounts receivable by type, by account debtor, by terms and by age,
describing any returns, defenses, setoffs or other pertinent information
in connection therewith, and (C) inventory, indicating the types of
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inventory, amounts, locations and values of the types of inventory, in
form and detail satisfactory to the Bank, certified as true and correct
by the Vice President-Finance of the Company;
(c) Section 5.2(d) shall be amended by deleting the reference
to "6.25 to 1.0" contained therein and inserting "6.50 to 1.0" in place
thereof.
(d) Section 5.2(e) shall be deleted in its entirety and the
following shall be inserted in place thereof:
(e) Fixed Charge Coverage Ratio. Permit or suffer the
Consolidated Fixed Charge Coverage Ratio of the Company and its
Subsidiaries to be less than 0.90 to 1.0 as of June 30, 1995 as
calculated for the fiscal quarter then ending, 1.0 to 1.0 as of
September 30, 1995 as calculated for the two (2) consecutive fiscal
quarters then ending, 1.0 to 1.0 as of December 31, 1995 as calculated
for the three (3) consecutive fiscal quarters then ending and 1.0 to 1.0
as of March 31, 1996 and as of the end of each fiscal quarter
thereafter, as calculated for the four (4) consecutive fiscal quarters
then ending; provided, however, for the purpose of calculating the Fixed
Charge Coverage Ratio under this Section 5.2(e), for the period from and
including the Effective Date to and including December 31, 1995, the
Company may add back to Consolidated EBITDA the lesser of (i) $1,825,000
or (ii) the amount of litigation expenses reflected in the financial
statements of the Company delivered pursuant to Section 5.1(d).
(e) Section 6.1(f) shall be amended by deleting the reference
to "$5,200,000" contained therein and inserting "$5,900,000" in place thereof.
2. From and after the effective date of this First Amendment,
references in the Loan Agreement, the Notes, the Security Documents and all
other documents executed pursuant to the Loan Agreement (as each of the
foregoing is amended hereby or pursuant hereto) to the Loan Agreement shall be
deemed to be references to the Loan Agreement as amended hereby.
3. The Company represents and warrants to the Bank that:
(a) (i) The execution, delivery and performance of this First
Amendment and all agreements and documents delivered pursuant hereto by the
Company have been duly authorized by all necessary corporate action and do not
and will not require any consent or approval of its stockholders, violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability
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to it or of its Articles of Incorporation or By-Laws, or result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which the Company is a party or by
which it or its properties may be bound or affected; (ii) no authorization,
consent, approval, license, exemption of or filing a registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary to the valid
execution, delivery or performance by the Company of this First Amendment and
all agreements and documents delivered pursuant hereto; and (iii) this First
Amendment and all agreements and documents delivered pursuant hereto by the
Company are the legal, valid and binding obligations of the Company enforceable
against it in accordance with the terms thereof.
(b) After giving effect to the amendments contained herein and
effected pursuant hereto, the representations and warranties contained in
Article IV of the Loan Agreement and the representations and warranties of the
Company in the Security Documents are true and correct on and as of the
effective date hereof with the same force and effect as if made on and as of
such effective date.
(c) Other than the Existing Defaults as defined in, and to be
waived pursuant to paragraph 5 hereof, no Default or Event of Default has
occurred and is continuing or will exist under the Loan Agreement as of the
effective date hereof.
4. This First Amendment shall not become effective until:
(a) This First Amendment shall be signed by the Company and
the Bank;
(b) The Company shall have delivered or caused to be delivered
to the Bank such other documents and instruments as the Bank may request in
connection herewith and all documents which have not been delivered as required
pursuant to the Loan Agreement, including without limitation the opinion of
counsel for the Company and the Guarantors.
5. The Company acknowledges that Events of Default have occurred
because the Company has breached Sections 5.2(c), (d) and (e) for the fiscal
quarter ending June 30, 1995 (the "Financial Covenant Defaults") and an Event
of Default has occurred under Section 6.1(f) because the Expected Judgment was
in excess of $5,200,000 (this Event of Default, together with the Financial
Covenant Defaults shall be referred to collectively as the "Existing Defaults")
and the Company has requested that the Bank waive such Existing Defaults
subject to the terms and conditions set forth herein. In consideration of the
execution of this Amendment and subject to the satisfaction of all conditions
required by paragraph 4 hereof, the Bank agrees to waive the Existing Defaults,
provided that such waiver of the Financial Covenant Defaults shall be only for
the fiscal quarter ending June 30, 1995 and provided further that such waiver
shall waive only the Existing Defaults and does not waive any other Event of
Default, including without limitation any future Event of Default caused by any
violation of Sections 5.2(b), 5.2(c), 5.2(d) or 6.1(f),
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and this waiver shall not be deemed to be a waiver, or a consent to any
modification or amendment, of any other term or condition of the Loan Agreement
or any term or condition of any agreement, instrument or document referred to
therein or executed pursuant thereto, or to prejudice any present or future
right or rights which the Bank now has or may have thereunder.
6. The Company hereby agrees that the Security Documents to which it
is a party are each ratified and confirmed and shall remain in full force and
effect, and the Company acknowledges that it has no defense, offset or
counterclaim with respect to any Security Document.
7. The Company agrees to pay and save the Bank harmless from
liability for the payment of all costs and expenses arising in connection with
this First Amendment, including the reasonable fees and expenses in Dickinson,
Wright, Moon, Van Dusen & Xxxxxxx, counsel to the Agent, in connection with the
preparation and review of this First Amendment and any related documents.
8. The terms used but not defined herein shall have the respective
meanings ascribed thereto in the Loan Agreement. Except as expressly
contemplated hereby, the Loan Agreement, the Notes, the Security Documents and
all other related agreements, certificates, instruments and other documents,
are hereby ratified and confirmed and shall remain in full force and effect and
the Company acknowledges that it has no defense, offset or counterclaim with
respect thereto.
9. This First Amendment is a contract made under, and shall be
governed by and construed in accordance with, the law of the State of Michigan
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State.
10. This First Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one in the same
instrument and any of the parties hereto may execute this First Amendment by
signing any such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be duly executed and delivered as of the day and year first above written.
CODE-ALARM, INC.
By: _____________________________________
Its: ___________________________________
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NBD BANK
By: _____________________________________
Its: ___________________________________
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NBD Bank
0000 Xxxx Xxx Xxxxxx Xxxx
Xxxx, Xxxxxxxx 00000-0000
Phone 000-000-0000
FAX 000-000-0000
[NBD LOGO]
Xxxxxxx X. Xxxxxx
Vice President
October 3, 1995
Xx. Xxxx X. Xxxxxxx
Chief Executive Officer
Code Alarm, Inc.
000 X. Xxxxxxxx
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxxx:
Re: Loan Agreement as of May 23, 1995, as amended
Reference is made to the Loan Agreement dated as of May 23, 1995, as amended,
between NBD Bank and Code Alarm, Inc. Notwithstanding section 5.2(f)(viii)
which prohibits subordinated debt in excess of $5,000,000; NBD Bank agrees to
waive this provision on a one time basis as follows: Code Alarm, Inc.
anticipates issuance of a public offering of subordinated, unsecured,
convertible debentures in an amount not to exceed $11,500,000. The offering is
scheduled to be made prior to January 31, 1996. NBD Bank on this occasion
waives the $5,000,000 limit on subordinated debt. However, a waiver on this
occasion shall not be construed as a waiver for any future occasion.
Please indicate your agreement with this waiver by executing below.
Sincerely,
Xxxxxxx X. Xxxxxx
KMR:mlp
Accepted and Agreed to this 10th day of October, 1995
CODE ALARM, INC.
By: Xxxx X. Xxxxxxx
---------------
Its: President CEO
---------------
Subsidiary of NBD Bancorp, Inc.
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SECOND AMENDMENT TO LOAN AGREEMENT
THIS SECOND AMENDMENT TO LOAN AGREEMENT, dated as of October 17, 1995
(this "Amendment"), is between CODE-ALARM, INC., a Michigan corporation (the
"Company") and NBD BANK, a Michigan banking corporation (the "Bank").
RECITALS
A. The Company and the Bank have executed a Loan Agreement dated as
of May 23, 1995, as amended by a First Amendment to Loan Agreement dated as of
June 30, 1995 (the "Loan Agreement"), to provide for a revolving credit
facility and term loans to the Company.
B. The Company has requested that the Bank temporarily increase the
amount available under the revolving credit facility and the Bank is willing to
do so strictly in accordance with the terms hereof, and provided the Loan
Agreement is amended on the terms and conditions set forth herein.
AGREEMENT
Based upon these recitals, the parties agree as follows:
1. Upon satisfaction by the Company of the conditions set forth in
paragraph 4 hereof, the Loan Agreement shall hereby be amended as of the
effective date hereof as follows:
(a) The first paragraph of the "Introduction" shall be amended
by deleting the reference to "$13,000,000" contained therein and inserting
"$13,750,000 for the period from the Amendment Effective Date to and including
February 29, 1996 and $13,000,000 thereafter" in place thereof.
(b) Section 1.1 shall be amended as follows:
(i) The definition of "Commitment" shall be amended by
deleting the reference in clause (a) therein to "$13,000,000" and
inserting the following in place thereof: "(i) at any time during the
period from and including the Amendment Effective Date to and including
February 29, 1996, $13,750,000 and (ii) at any time thereafter,
$13,000,000".
(ii) A new definition of "Amendment Effective Date"
shall be added in appropriate alphabetical order to read as follows:
"Amendment Effective Date" shall mean October __, 1995.
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(c) Exhibit C to the Loan Agreement shall be deleted and the
form of Exhibit C attached hereto (the "New Revolving Credit Note") shall be
substituted in place thereof.
2. From and after the effective date of this Amendment, references
in the Loan Agreement, the Notes, the Security Documents and all other
documents executed pursuant to the Loan Agreement (as each of the foregoing is
amended hereby or pursuant hereto) to the Loan Agreement shall be deemed to be
references to the Loan Agreement as amended hereby.
3. The Company represents and warrants to the Bank that:
(a) (i) The execution, delivery and performance of this
Amendment, the New Revolving Credit Note and all agreements and documents
delivered pursuant hereto by the Company have been duly authorized by all
necessary corporate action and do not and will not require any consent or
approval of its stockholders, violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or of its Articles of
Incorporation or By-Laws, or result in a breach of or constitute a default
under any indenture or loan or credit agreement or any other agreement, lease
or instrument to which the Company is a party or by which it or its properties
may be bound or affected; (ii) no authorization, consent, approval, license,
exemption of or filing a registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary to the valid execution, delivery or
performance by the Company of this Amendment, the New Revolving Credit Note and
all agreements and documents delivered pursuant hereto; and (iii) this
Amendment, the New Revolving Credit Note and all agreements and documents
delivered pursuant hereto by the Company are the legal, valid and binding
obligations of the Company enforceable against it in accordance with the terms
thereof.
(b) After giving effect to the amendments contained herein and
effected pursuant hereto, the representations and warranties contained in
Article IV of the Loan Agreement and the representations and warranties of the
Company in the Security Documents are true and correct on and as of the
effective date hereof with the same force and effect as if made on and as of
such effective date.
(c) No Default or Event of Default has occurred and is
continuing or will exist under the Loan Agreement as of the effective date
hereof.
4. This Amendment shall not become effective until:
(a) This Amendment shall be signed by the Company and the Bank;
(b) The Company shall have executed and delivered the New
Revolving Credit Note to the Bank;
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(c) The Company shall have delivered or caused to be delivered
to the Bank such other documents and instruments as the Bank may request in
connection herewith and all documents which have not been delivered as required
pursuant to the Loan Agreement, including without limitation the opinion of
counsel for the Company and the Guarantors; and
(d) The Company shall have paid an amendment fee to the Bank
in the amount of $5,000.
5. The Company hereby agrees that the Security Documents to which it
is a party are each ratified and confirmed and shall remain in full force and
effect, and the Company acknowledges that it has no defense, offset or
counterclaim with respect to any Security Document.
6. The Company agrees to pay and save the Bank harmless from
liability for the payment of all costs and expenses arising in connection with
this Amendment, including the reasonable fees and expenses in Dickinson,
Wright, Moon, Van Dusen & Xxxxxxx, counsel to the Agent, in connection with the
preparation and review of this Amendment and any related documents.
7. The terms used but not defined herein shall have the respective
meanings ascribed thereto in the Loan Agreement. Except as expressly
contemplated hereby, the Loan Agreement, the Notes, the Security Documents and
all other related agreements, certificates, instruments and other documents,
are hereby ratified and confirmed and shall remain in full force and effect and
the Company acknowledges that it has no defense, offset or counterclaim with
respect thereto.
8. This Amendment is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable
to contracts made and to be performed entirely within such State and without
giving effect to choice of law principles of such State.
9. This Amendment may be executed in any number of counterparts, all
of which taken together shall constitute one in the same instrument and any of
the parties hereto may execute this Amendment by signing any such counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered as of the day and year first above written.
CODE-ALARM, INC.
By: _____________________________________
Its: ___________________________________
NBD BANK
By: _____________________________________
Its: ___________________________________
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[NBD Letterhead]
XXXXXXX X. XXXXXX
Vice President
November 1, 1995
Deloitte & Touche
C/O Xxxxxx X. Xxxxxx
Code Alarm, Inc.
000 X. Xxxxxxxx
Xxxxxxx Xxxxxxx, XX 00000
RE: Code Alarm, Inc. Loan Agreement dated as of May 23, 1995 and all
amendments.
Ladies and Gentlemen:
NBD Bank agrees to amend the above referenced Loan Agreement as to the
following, subject to documentation and other conditions of effectiveness.
1) Section 1.1 Certain Definitions
A. The definition of "Tangible Net Worth" shall be amended to exclude
deferred taxes, in an amount not exceeding $1,600,000, as a reduction
to "Tangible Net Worth".
2) Section 5.2 (d) Total Liabilities to Tangible Net Worth (as previsouly
amended).
The phrase "decreasing by 0.30 as of the end of each fiscal quarter ending
after the Effective Date" shall be deleted in its entirety and replaced
with the phrase "decreasing to 6.25 to 1.00 at September 30, 1995 and
decreasing to 6.00 to 1.00 at fiscal year end December 31, 1995 and further
decreasing by 1.00 at each successive fiscal year end.
3) Section 5.2 (1) Capital Expenditures
This section shall be revised to limit capital expenditures by the Company
to $1,500,000 at fiscal year end December 31, 1995 and to $750,000 for
each fiscal year end thereafter.
4) In addition the Loan Agreement will be appropriately amended to exclude
from the definition of Total Liabilities two leases which were previously
classified as operating leases, but will be shown as capitalized leases by
fiscal year end December 31, 1995. These are leases for test lab equipment
in an amount not exceeding $200,000 and for computer hardware and software
in an amount not exceeding $500,000.
The amendment will be effective as of September 30, 1995.
Sincerely,
Xxxxxxx X. Xxxxxx
Subsidiary of NBD Bancorp, Inc.
