CREDIT AGREEMENT
dated as of November 30, 1998
among
COMPUDYNE CORPORATION,
THE SUBSIDIARY BORROWERS,
VARIOUS FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO
and
LASALLE NATIONAL BANK,
as Agent
TABLE OF CONTENTS
SECTION 1 DEFINITIONS 1
1.1 Definitions 1
1.2 Other Interpretive Provisions 17
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND
LETTER OF CREDIT PROCEDURES 18
2.1 Commitments 18
2.1.1 Revolving Loan Commitment 18
2.1.2 Term Loan Commitment 18
2.1.3 L/C Commitment 19
2.2 Loan Procedures 19
2.2.1 Various Types of Loans 19
2.2.2 Borrowing Procedures 19
2.2.3 Conversion and Continuation Procedures 20
2.3 Letter of Credit Procedures 21
2.3.1 L/C Applications 21
2.3.2 Participations in Letters of Credit 22
2.3.3 Reimbursement Obligations 22
2.3.4 Limitation on Obligations of Issuing Bank 22
2.3.5 Funding by Banks to Issuing Bank 22
2.4 Commitments Several 23
2.5 Certain Conditions 23
SECTION 3 NOTES EVIDENCING LOANS 23
3.1 Notes 23
3.2 Recordkeeping 24
SECTION 4 INTEREST 24
4.1 Interest Rates 24
4.2 Interest Payment Dates 24
4.3 Setting and Notice of Eurodollar Rates 24
4.4 Computation of Interest 25
SECTION 5 FEES 25
5.1 Non-Use Fee 25
5.2 Letter of Credit Fees 25
5.3 Upfront Fees 25
5.4 Agent's Fees 26
SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT
AMOUNT; PREPAYMENTS 26
6.1 Reduction or Termination of the Revolving
Commitment Amount 26
6.1.1 Voluntary Reduction or Termination of the Revolving
Commitment Amount 26
6.1.2 All Reductions of the Revolving Commitment Amount 26
6.2 Prepayments 26
6.2.1 Voluntary Prepayments 26
6.2.2 Mandatory Prepayments 26
6.3 All Prepayments 27
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES 27
7.1 Making of Payments 27
7.2 Application of Certain Payments 28
7.3 Due Date Extension 28
7.4 Setoff 28
7.5 Proration of Payments 28
7.6 Taxes 28
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
LOANS 30
8.1 Increased Costs 30
8.2 Basis for Determining Interest Rate Inadequate or Unfair 31
8.3 Changes in Law Rendering Eurodollar Loans Unlawful 31
8.4 Funding Losses 32
8.5 Right of Banks to Fund through Other Offices 32
8.6 Discretion of Banks as to Manner of Funding 32
8.7 Mitigation of Circumstances; Replacement of Banks 32
8.8 Conclusiveness of Statements; Survival of Provisions 33
SECTION 9 WARRANTIES 33
9.1 Organization 33
9.2 Authorization; No Conflict 34
9.3 Validity and Binding Nature 34
9.4 Financial Statements and Projections 34
9.5 No Material Adverse Change 35
9.6 Litigation and Contingent Liabilities 35
9.7 Ownership of Properties; Liens 35
9.8 Subsidiaries 35
9.9 Pension Plans 35
9.10 Investment Company Act 36
9.11 Public Utility Holding Company Act 36
9.12 Regulation U 36
9.13 Taxes 36
9.14 Solvency, etc. 36
9.15 Environmental Matters 37
9.16 Year 2000 Problem 38
9.17 Insurance 38
9.18 Real Property 38
9.19 Information 38
9.20 Intellectual Property 39
9.21 Burdensome Obligations 39
9.22 Labor Matters 39
9.23 No Default 39
9.24 Purchase Agreement, etc. 39
SECTION 10 COVENANTS 40
10.1 Reports, Certificates and Other Information 40
10.1.1 Annual Report 40
10.1.2 Interim Reports 41
10.1.3 Compliance Certificates 41
10.1.4 Reports to the SEC and to Shareholders 41
10.1.5 Notice of Default, Litigation and ERISA Matters 41
10.1.6 Borrowing Base Certificates 42
10.1.7 Management Reports 43
10.1.8 Projections 43
10.1.9 Subordinated Debt Notices 43
10.1.10 Year 2000 Problem 43
10.1.11 Other Information 43
10.2 Books, Records and Inspections 43
10.3 Maintenance of Property; Insurance 44
10.4 Compliance with Laws; Payment of Taxes and Liabilities 45
10.5 Maintenance of Existence, etc. 45
10.6 Financial Covenants 45
10.6.1 Fixed Charge Coverage Ratio 45
10.6.2 Interest Coverage Ratio 45
10.6.3 Senior Debt to EBITDA Ratio 46
10.6.4 Capital Expenditures 46
10.6.5 EBITDA 46
10.7 Limitations on Debt 47
10.8 Liens 47
10.9 Operating Leases 48
10.10 Restricted Payments 49
10.11 Mergers, Consolidations, Sales 49
10.12 Modification of Organizational Documents 50
10.13 Use of Proceeds 50
10.14 Further Assurances 50
10.15 Transactions with Affiliates 50
10.16 Employee Benefit Plans 51
10.17 Environmental Matters 51
10.18 Unconditional Purchase Obligations 51
10.19 Inconsistent Agreements 51
10.20 Business Activities 51
10.21 Investments 51
10.22 Restriction of Amendments to Certain Documents 52
10.24 Fiscal Year 52
10.25 Cancellation of Debt 53
10.26 Certain Documents 53
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC 53
11.1 Initial Credit Extension 53
11.1.1 Notes 53
11.1.2 Resolutions 54
11.1.3 Consents, etc. 54
11.1.4 Incumbency and Signature Certificates 54
11.1.5 Security Agreement 54
11.1.6 Pledge Agreements 54
11.1.7 Real Estate Documents 54
11.1.8 Purchase Agreement Assignment 55
11.1.10 Opinions of Counsel 55
11.1.11 Insurance 55
11.1.13 Payment of Fees 55
11.1.14 Solvency Certificate 56
11.1.16 Search Results; Lien Terminations 56
11.1.17 Filings, Registrations and Recordings 56
11.1.18 Closing Certificate 56
11.1.19 Borrowing Base Certificate 56
11.1.20 Purchase Certificate, Consents and Permits 56
11.1.21 Other 57
11.2 Conditions 57
11.2.1 Compliance with Warranties, No Default, etc. 57
11.2.2 Confirmatory Certificate 57
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT 58
12.1 Events of Default 58
12.1.1 Non-Payment of the Loans, etc. 58
12.1.2 Non-Payment of Other Debt 58
12.1.3 Other Material Obligations 58
12.1.4 Bankruptcy, Insolvency, etc. 58
12.1.5 Non-Compliance with Loan Documents 59
12.1.6 Warranties 59
12.1.7 Pension Plans 59
12.1.8 Judgments 59
12.1.9 Invalidity of Guaranty, etc. 59
12.1.10 Invalidity of Collateral Documents, etc. 59
12.1.11 Invalidity of Subordination Provisions, etc. 59
12.1.12 Change of Control 60
12.1.13 Material Adverse Effect 60
12.2 Effect of Event of Default 60
SECTION 13 THE AGENT 61
13.1 Appointment and Authorization 61
13.2 Delegation of Duties 61
13.3 Liability of Agent 61
13.4 Reliance by Agent 62
13.5 Notice of Default 62
13.6 Credit Decision 62
13.7 Indemnification 63
13.8 Agent in Individual Capacity 64
13.9 Successor Agent 64
13.10 Collateral Matters 64
SECTION 14 GENERAL 64
14.1 Waiver; Amendments 64
14.2 Confirmations 65
14.3 Notices 65
14.4 Computations 65
14.5 Regulation U 66
14.6 Costs, Expenses and Taxes 66
14.7 Subsidiary References 66
14.8 Captions 66
14.9 Assignments; Participations 66
14.9.1 Assignments 66
14.9.2 Participations 68
14.10 Governing Law 68
14.11 Counterparts 69
14.12 Successors and Assigns 69
14.13 Indemnification by the Company 69
14.14 Nonliability of Lenders 69
14.15 Forum Selection and Consent to Jurisdiction 70
14.16 Waiver of Jury Trial 70
SCHEDULES
Pricing Schedule
SCHEDULE 2.1 Banks and Pro Rata Shares
SCHEDULE 3.1 Term Loan Installments
SCHEDULE 9.4 Financial Statements and Projections
SCHEDULE 9.6 Litigation and Contingent Liabilities
SCHEDULE 9.8 Subsidiaries
SCHEDULE 9.15 Environmental Matters
SCHEDULE 9.17 Insurance
SCHEDULE 9.18 Real Property
SCHEDULE 9.22 Labor Matters
SCHEDULE 9.24 Purchase Agreement
SCHEDULE 10.6 ERP Upgrade
SCHEDULE 10.7 Existing Debt
SCHEDULE 10.8 Existing Liens
SCHEDULE 10.21 Investments
SCHEDULE 11.1 Debt to be Repaid
SCHEDULE 12.1.12 Key Executives
SCHEDULE 14.3 Addresses for Notices
EXHIBITS
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Compliance Certificate (Section 10.1.3)
EXHIBIT C Form of Guaranty (Section 1.1)
EXHIBIT D Form of Security Agreement (Section 1.1)
EXHIBIT E Form of Pledge Agreement (Section 1.1)
EXHIBIT F Form of Purchase Agreement Assignment (Section 11.1.8)
EXHIBIT G Form of Borrowing Base Certificate (Section 1.1)
EXHIBIT H [Intentionally Omitted]
EXHIBIT I Form of Opinion of Counsel to the Companies (Section 11.1.10)
EXHIBIT J Form of Solvency Certificate (Section 11.1.14)
EXHIBIT K Form of Subordination and Intercreditor Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT dated as of November 30, 1998 (this
"Agreement") is entered into among COMPUDYNE CORPORATION, a Nevada
corporation ("Compudyne"), the SUBSIDIARY BORROWERS (as hereinafter
defined) (Compudyne and each Subsidiary Borrower are sometimes referred
to herein, collectively, as the "Company" or the "Companies"), the
financial institutions that are or may from time to time become parties
hereto (together with their respective successors and assigns, the
"Banks") and LASALLE NATIONAL BANK (in its individual capacity,
"LaSalle"), as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company
term loans and a revolving credit facility (which includes letters of
credit) upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1 DEFINITIONS.
1.1 Definitions. When used herein the following terms shall have
the following meanings:
Account Debtor means any Person who is obligated to the Company or
any Subsidiary under an Account Receivable.
Account Receivable means, with respect to any Person, any right of
such person to payment for goods sold or leased or for services rendered,
whether or not evidenced by an instrument or chattel paper and whether or
not yet earned by performance.
Acquired Debt means mortgage Debt or Debt with respect to Capital
Leases of a Person existing at the time such Person became a Subsidiary
or assumed by the Company or a Subsidiary of the Company pursuant to an
Acquisition permitted hereunder (and not created or incurred in
connection with or in anticipation of such Acquisition).
Acquisition means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
all or substantially all of any business or division of a Person, (b) the
acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than a
Person that is a Subsidiary).
Adjusted Working Capital means the remainder of:
(a) (i) the consolidated current assets of the Company and its
Subsidiaries less (ii) the amount of cash and cash equivalents included
in such consolidated current assets;
minus
(b) (i) consolidated current liabilities of the Company and its
Subsidiaries less (ii) the amount of short-term Debt (including current
maturities of long-term Debt) of the Company and its Subsidiaries
included in such consolidated current liabilities.
Affected Loan - see Section 8.3.
Affiliate of any Person means (i) any other Person which, directly
or indirectly, controls or is controlled by or is under common control
with such Person and (ii) any officer or director of such Person. A
Person shall be deemed to be "controlled by" any other Person if such
Person possesses, directly or indirectly, power to vote 5% or more of the
securities (on a fully diluted basis) having ordinary voting power for
the election of directors or managers or power to direct or cause the
direction of the management and policies of such Person whether by
contract or otherwise.
Agent means LaSalle in its capacity as agent for the Banks
hereunder and any successor thereto in such capacity.
Agreement - see the Preamble.
Asset Sale means the sale, lease, assignment or other transfer for
value (each a "Disposition") by the Company or any Subsidiary to any
Person (other than the Company or any Subsidiary) of any asset or right
of the Company or such Subsidiary other than (a) the Disposition of any
asset which is to be replaced, and is in fact replaced, within 30 days
with another asset performing the same or a similar function, and (b) the
sale or lease of inventory in the ordinary course of business.
Assignment Agreement - see Section 14.9.1.
Attorney Costs means, with respect to any Person, all reasonable
fees, charges and disbursements of any counsel to such Person, the
reasonable allocable cost of internal legal services of such Person, all
reasonable disbursements of such counsel and all filing, search, court
costs and similar legal expenses.
Bank - see the Preamble. References to the "Banks" shall include
the Issuing Bank; for purposes of clarification only, to the extent that
LaSalle (or any successor Issuing Bank) may have any rights or
obligations in addition to those of the other Banks due to its status as
Issuing Bank, its status as such will be specifically referenced.
Base Rate means at any time the greater of (a) the Federal Funds
Rate plus 0.5% and (b) the Prime Rate.
Base Rate Loan means any Loan which bears interest at or by
reference to the Base Rate.
Base Rate Margin - see the Pricing Schedule.
Xxxxx means Xxxxxxx Xxxxx Mezzanine Capital Fund II, L.P., its
successors, assigns and its transferees of any rights under the
Subordinated Debt Documents.
Borrowing Base means an amount equal to the total of (a) 50% of the
unpaid amount (net of such reserves and allowances as the Agent deems
necessary in its reasonable discretion) of all Eligible Accounts
Receivable plus (b) 25% of the value of all Eligible Inventory valued at
the lower of cost or market (net of such reserves and allowances as the
Agent deems necessary in its reasonable discretion).
Borrowing Base Certificate means a certificate substantially in the
form of Exhibit G.
Business Day means any day on which LaSalle is open for commercial
banking business in Chicago, Illinois and, in the case of a Business Day
which relates to a Eurodollar Loan, on which dealings are carried on in
the London interbank eurodollar market.
Capital Expenditures means all expenditures which, in accordance
with GAAP, would be required to be capitalized and shown on the
consolidated balance sheet of the Company, but excluding expenditures
made in connection with the replacement, substitution or restoration of
assets to the extent financed (i) from insurance proceeds (or other
similar recoveries) paid on account of the loss of or damage to the
assets being replaced or restored or (ii) with awards of compensation
arising from the taking by eminent domain or condemnation of the assets
being replaced.
Capital Lease means, with respect to any Person, any lease of (or
other agreement conveying the right to use) any real or personal property
by such Person that, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of such Person.
Cash Collateralize means to deliver cash collateral to the Agent,
to be held as cash collateral for outstanding Letters of Credit, pursuant
to documentation satisfactory to the Agent, Derivatives of such term have
corresponding meanings.
Cash Equivalent Investment means, at any time, (a) any evidence of
Debt, maturing not more than one year after such time, issued or
guaranteed by the United States Government or any agency thereof, (b)
commercial paper, maturing not more than one year from the date of issue,
or corporate demand notes, in each case (unless issued by a Bank or its
holding company) rated at least A-l by Standard & Poor's Ratings Group or
P-l by Xxxxx'x Investors Service, Inc., (c) any certificate of deposit
(or time deposits represented by such certificates of deposit) or
banker's acceptance, maturing not more than one year after such time, or
overnight Federal Funds transactions that are issued or sold by any Bank
or its holding company or by a commercial banking institution that is a
member of the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000 and (d) any
repurchase agreement entered into with any Bank (or other commercial
banking institution of the stature referred to in clause (c)) which (i)
is secured by a fully perfected security interest in any obligation of
the type described in any of clauses (a) through (c) and (ii) has a
market value at the time such repurchase agreement is entered into of not
less than 100% of the repurchase obligation of such Bank (or other
commercial banking institution) thereunder.
CERCLA - see Section 9.15.
Closing Date - see Section 11.1.
Code means the Internal Revenue Code of 1986.
Collateral Access Agreement means an agreement in form and
substance reasonably satisfactory to the Agent pursuant to which a
mortgagee or lessor of real property on which collateral is stored or
otherwise located, or a warehouseman, processor or other bailee of
Inventory, acknowledges the Liens of the Agent and waives any Liens held
by such Person on such property, and, in the case of any such agreement
with a mortgagee or lessor, permits the Agent access to and use of such
real property for a reasonable amount of time following the occurrence
and during the continuance of an Event of Default to assemble, complete
and sell any collateral stored or otherwise located thereon.
Collateral Documents means the Security Agreement, the Purchase
Agreement Assignment, each Mortgage, each Pledge Agreement and any other
agreement or instrument pursuant to which the Company, any Subsidiary or
any other Person grants collateral to the Agent for the benefit of the
Banks.
Commitment means, as to any Bank, such Bank's commitment to make
Loans, and to issue or participate in Letters of Credit, under this
Agreement. The initial amount of each Bank's Pro Rata Share of the
Revolving Commitment Amount and of the aggregate amount of the Term Loans
is set forth on Schedule 2.1.
Company - see the Preamble.
Computation Period means each of the following periods: (i) the
Fiscal Quarter ending March 31, 1999; (ii) the period of two consecutive
Fiscal Quarters ending June 30, 1999; (iii) the period of three
consecutive Fiscal Quarters ending September 30, 1999; and (iv) each
period of four consecutive Fiscal Quarters ending on the last day of a
Fiscal Quarter thereafter.
Consolidated Net Income means, with respect to the Company and its
Subsidiaries for any period, the net income (or loss) of the Company and
its Subsidiaries for such period.
Controlled Group means all members of a controlled group of
corporations and all members of a controlled group of trades or
businesses (whether or not incorporated) under common control which,
together with the Company, are treated as a single employer under Section
414 of the Code or Section 4001 of ERISA.
Debt of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such
Person as lessee under Capital Leases which have been or should be
recorded as liabilities on a balance sheet of such Person in accordance
with GAAP, (c) all obligations of such Person to pay the deferred
purchase price of property or services (excluding trade accounts payable
in the ordinary course of business), (d) all indebtedness secured by a
Lien on the property of such Person, whether or not such indebtedness
shall have been assumed by such Person, (e) all obligations, contingent
or otherwise, with respect to the face amount of all letters of credit
(whether or not drawn) and banker's acceptances issued for the account of
such Person (including the Letters of Credit), (f) all Hedging
Obligations of such Person, (g) all Suretyship Liabilities of such Person
and (h) all Debt of any partnership of which such Person is a general
partner.
Debt to be Repaid means Debt listed on Schedule 11.1.
Designated Proceeds - see Section 6.2.2(a).
Disposal - see the definition of "Release".
Dollar and the sign "$" mean lawful money of the United States of
America.
EBITDA means, for any period, Consolidated Net Income for such
period plus, to the extent deducted in determining such Consolidated Net
Income, Interest Expense, income tax expense, depreciation, amortization
and noncash extraordinary losses for such period, minus any gains from
Asset Sales, any noncash extraordinary gains and any gains from
discontinued operations.
Eligible Account Receivable means an Account Receivable owing to
the Company or any Subsidiary which meets each of the following
requirements:
(1) it arises from the sale of goods or the rendering of services by the
Company or the applicable Subsidiary; and if it arises from the sale of
goods, (i) such goods comply with such Account Debtor's specifications
(if any) and have been delivered to such Account Debtor and (ii) the
Company or the applicable Subsidiary has possession of, or if requested
by the Agent has delivered to the Agent, delivery receipts evidencing
such delivery;
(2) it (a) is subject to a perfected Lien in favor of the Agent and (b)
is not subject to any other assignment, claim or Lien;
(3) it is a valid, legally enforceable and unconditional obligation of
the Account Debtor with respect thereto, and is not subject to any
counterclaim, credit, allowance, discount, rebate or adjustment by the
Account Debtor with respect thereto, or to any claim by such Account
Debtor denying liability thereunder in whole or in part (provided, that
in the event any counterclaim, credit, allowance, rebate or adjustment is
asserted, or discount is granted, the Account Receivable shall only be
ineligible pursuant to this clause (3) to the extent of the same);
(4) there is no bankruptcy, insolvency or liquidation proceeding by or
against the Account Debtor with respect thereto;
(5) the Account Debtor with respect thereto is a resident or citizen of,
and is located within, the United States or Canada, unless the sale of
goods or services giving rise to such Account Receivable is on letter of
credit, banker's acceptance or other credit support terms reasonably
satisfactory to the Agent;
(6) it is not an Account Receivable arising from a "sale on approval,"
"sale or return," "consignment" or "xxxx and hold" or subject to any
other repurchase or return agreement;
(7) it is not an Account Receivable with respect to which possession
and/or control of the goods sold giving rise thereto is held, maintained
or retained by the Company or any Subsidiary (or by any agent or
custodian of the Company or any Subsidiary) for the account of or subject
to further and/or future direction from the Account Debtor with respect
thereto;
(8) it arises in the ordinary course of business of the Company or the
applicable Subsidiary;
(9) if the Account Debtor is the United States or any department, agency
or instrumentality thereof, the Company or the applicable Subsidiary has
assigned its right to payment of such Account Receivable to the Agent
pursuant to the Assignment of Claims Act of 1940;
(10) if the Company maintains a credit limit for an Account Debtor, the
aggregate dollar amount of Accounts Receivable due from such Account
Debtor, including such Account Receivable, does not exceed such credit
limit;
(11) if the Account Receivable is evidenced by chattel paper or an
instrument, the originals of such chattel paper or instrument shall have
been endorsed and/or assigned and delivered to the Agent in a manner
satisfactory to the Agent;
(12) such Account Receivable is not more than (a) 90 days past the due
date thereof (reduced by the number of days, if any, by which the due
date exceeds 30) or (b) 120 days past the original invoice date thereof,
in each case according to the original terms of sale;
(13) it is not an Account Receivable with respect to an Account Debtor
that is located in any jurisdiction which has adopted a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction must file a notice of business activities report
or make any other required filings in a timely manner in order to enforce
its claims in such jurisdiction's courts unless such notice of business
activities report has been duly and timely filed or the Company or the
applicable Subsidiary is exempt from filing such report and has provided
the Agent with satisfactory evidence of such exemption;
(14) the Account Debtor with respect thereto is not the
Company or an Affiliate of the Company;
(15) it is not owed by an Account Debtor with respect to which 25% or
more of the aggregate amount of outstanding Accounts Receivable owed at
such time by such Account Debtor is classified as ineligible under clause
(12) of this definition; and
(16) if the aggregate amount of all Accounts Receivable owed by the
Account Debtor thereon exceeds 50% (or, in the case of Accounts
Receivable owed by the Account Debtor in respect of a particular
contract, 25%) of the aggregate amount of all Accounts Receivable at such
time, then, in either case, all Accounts Receivable owed by such Account
Debtor in excess of such amount shall be deemed ineligible.
An Account Receivable which is at any time an Eligible Account
Receivable, but which subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible Account Receivable.
Further, with respect to any Account Receivable, if the Agent or the
Required Banks at any time hereafter determine in their discretion that
the prospect of payment or performance by the Account Debtor with respect
thereto is materially impaired for any reason whatsoever, such Account
Receivable shall cease to be an Eligible Account Receivable after notice
of such determination is given to the Company.
Eligible Inventory means Inventory of the Company or any Subsidiary
which meets each of the following requirements:
(1) it (a) is subject to a perfected Lien in favor of the Agent and (b)
is not subject to any other assignment, claim or Lien;
(2) it is salable;
(3) it is in the possession and control of the Company or any
Subsidiary and it is stored and held in facilities owned by the Company
or any Subsidiary or, if such facilities are not so owned, the Agent is
in possession of a Collateral Access Agreement or a consent referred to
in Section 11.1.7 with respect thereto;
(4) it is not Inventory produced in violation of the Fair Labor
Standards Act and subject to the "hot goods" provisions contained in
Title 29 U.S.C. Section 215;
(5) it is not subject to any agreement which would restrict the Agent's
ability to sell or otherwise dispose of such Inventory;
(6) it is located in the United States or in any territory or possession
of the United States that has adopted Article 9 of the Uniform Commercial
Code;
(7) it is not "in transit" to the Company or any Subsidiary or held by
the Company or any Subsidiary on consignment; and
(8) the Agent shall not have determined in its discretion that it is
unacceptable due to age, type, category, quality, quantity and/or any
other reason whatsoever.
Inventory which is at any time Eligible Inventory but which subsequently
fails to meet any of the foregoing requirements shall forthwith cease to
be Eligible Inventory.
Environmental Claims means all claims, however asserted, by any
governmental, regulatory or judicial authority or other Person alleging
potential liability or responsibility for violation of any Environmental
Law, or for release or injury to the environment.
Environmental Laws means all present or future federal, state or
local laws, statutes, common law duties, rules, regulations, ordinances
and codes, together with all administrative orders, directed duties,
requests, licenses, authorizations and permits of, and agreements with,
any governmental authority, in each case relating to Environmental
Matters.
Environmental Matters means any matter arising out of or relating
to health and safety, or pollution or protection of the environment or
workplace, including any of the foregoing relating to the presence, use,
production, generation, handling, transport, treatment, storage,
disposal, distribution, discharge, release, control or cleanup of any
Hazardous Substance.
ERISA means the Employee Retirement Income Security Act of 1974.
Eurocurrency Reserve Percentage means, with respect to any
Eurodollar Loan for any Interest Period, a percentage (expressed as a
decimal) equal to the daily average during such Interest Period of the
percentage in effect on each day of such Interest Period, as prescribed
by the FRB, for determining the aggregate maximum reserve requirements
applicable to "Eurocurrency Liabilities" pursuant to Regulation D or any
other then applicable regulation of the FRB which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently
defined in Regulation D.
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Margin - see the Pricing Schedule.
Eurodollar Office means with respect to any Bank the office or
offices of such Bank which shall be making or maintaining the Eurodollar
Loans of such Bank hereunder. A Eurodollar Office of any Bank may be, at
the option of such Bank, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, a rate per annum equal to the offered rate for deposits
in Dollars for a period equal or comparable to such Interest Period which
appears on Telerate page 3750 as of 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period. "Telerate Page 3750
"means the display designated as "Page 3750" on the Telerate Service (or
such other page as may replace page 3750 on that service or such other
service as may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for Dollar deposits).
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/16th of 1%) determined pursuant
to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage.
Event of Default means any of the events described in Section 12.1.
Excess Cash Flow means, for any period, the remainder of
(a) EBITDA for such period,
less
(b) the sum, without duplication, of
(i) scheduled repayments of principal of Term Loans made during such
period,
plus
(ii) voluntary prepayments of the Term Loans pursuant to Section 6.2.1
during such period,
plus
(iii) cash payments made in such period with respect to Capital
Expenditures,
plus
(iv) all federal, state, local and foreign income taxes paid in cash by
the Company and its Subsidiaries during such period,
plus
(v) cash Interest Expense of the Company and its Subsidiaries during
such period,
plus
(vi) any net increase in Adjusted Working Capital during such period.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor publication, "H.15(519)") on the preceding Business
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding Business
Day, the rate for such day will be the arithmetic mean as determined by
the Agent of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 A.M. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York
City selected by the Agent.
Fiscal Quarter means a fiscal quarter of a Fiscal Year.
Fiscal Year means the fiscal year of the Company and its
Subsidiaries, which period shall be the 12-month period ending on
December 31 of each year. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1998") refer to
the Fiscal Year ending on December 31 of such calendar year.
Fixed Charge Coverage Ratio means, for any Computation Period, the
ratio of (a) the total for such period of EBITDA minus the sum of all
income taxes paid by the Company and its Subsidiaries and all Capital
Expenditures to (b) the sum for such period of (i) Interest Expense plus
(ii) required payments of principal of Funded Debt (including, without
limitation, the Term Loans but excluding the Revolving Loans).
FRB means the Board of Governors of the Federal Reserve System or
any successor thereto.
Funded Debt means, as to any Person, all Debt of such Person that
matures more than one year from the date of its creation (or is renewable
or extendible, at the option of such Person, to a date more than one year
from such date).
GAAP means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature
and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the date of determination.
Group - see Section 2.2.1.
Guaranty means a guaranty substantially in the form of Exhibit C.
Hazardous Substances - see Section 9.15.
Hedging Agreement means any interest rate, currency or commodity
swap agreement, cap agreement or collar agreement, and any other
agreement or arrangement designed to protect a Person against
fluctuations in interest rates, currency exchange rates or commodity
prices.
Hedging Obligation means, with respect to any Person, any liability
of such Person under any Hedging Agreement.
Interest Coverage Ratio means, for any Computation Period, the
ratio of (a) EBITDA for such Computation Period to (b) Interest Expense
for such Computation Period.
Interest Expense means for any period the consolidated interest
expense of the Company and its Subsidiaries for such period (including
all imputed interest on Capital Leases and excluding any noncash interest
payable with respect to Subordinated Debt).
Interest Period means, as to any Eurodollar Loan, the period
commencing on the date such Loan is borrowed or continued as, or
converted into, a Eurodollar Loan and ending on the date one, two, three
or six months thereafter as selected by the Company pursuant to Section
2.2.2 or 2.2.3, as the case may be; provided that:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the following
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(ii) any Interest Period that begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period shall end on the last Business Day of the calendar month
at the end of such Interest Period;
(iii) the Company may not select any Interest Period for a Revolving
Loan which would extend beyond the scheduled Termination Date; and
(iv) the Company may not select any Interest Period for a Term Loan if,
after giving effect to such selection, the aggregate principal amount of
all Term Loans having Interest Periods ending after any date on which an
installment of the Term Loans is scheduled to be repaid would exceed the
aggregate principal amount of the Term Loans scheduled to be outstanding
after giving effect to such repayment.
Inventory has the meaning assigned to such term in the Uniform
Commercial Code as in effect in the State of Illinois on the date hereof.
Investment means, relative to any Person, any investment in another
Person, whether by acquisition of any debt or equity security, by making
any loan or advance or by becoming obligated with respect to a Suretyship
Liability in respect of obligations of such other Person (other than
travel and similar advances to employees in the ordinary course of
business).
Issuing Bank means LaSalle in its capacity as the issuer of Letters
of Credit hereunder and its successors and assigns in such capacity.
LaSalle - see the Preamble.
L/C Application means, with respect to any request for the issuance
of a Letter of Credit, a letter of credit application in the form being
used by the Issuing Bank at the time of such request for the type of
letter of credit requested.
LC Fee Rate - see the Pricing Schedule.
Letter of Credit - see Section 2.1.3.
Lien means, with respect to any Person, any interest granted by
such Person in any real or personal property, asset or other right owned
or being purchased or acquired by such Person which secures payment or
performance of any obligation and shall include any mortgage, lien,
encumbrance, charge or other security interest of any kind, whether
arising by contract, as a matter of law, by judicial process or
otherwise.
Loan Documents means this Agreement, the Notes, the Guaranty, the
L/C Applications, the Subordination Agreement and the Collateral
Documents.
Loan Party means the Company and each Subsidiary.
Loans means Revolving Loans and Term Loans.
Mandatory Prepayment Event - see Section 6.2.2(a).
Margin Stock means any "margin stock" as defined in Regulation U.
Material Adverse Effect means (a) a material adverse change in, or
a material adverse effect upon, the financial condition, operations,
assets, business, properties or prospects of the Company and its
Subsidiaries taken as a whole, (b) a material impairment of the ability
of the Company or any Subsidiary (other than MicroAssembly or Sysco) to
perform any of its obligations under any Loan Document or (c) a material
adverse effect upon any substantial portion of the collateral under the
Collateral Documents or upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any Loan
Document.
Mortgage means a mortgage, deed of trust, leasehold mortgage or
similar instrument granting the Agent a Lien on real property of the
Company or any Subsidiary.
Multiemployer Pension Plan means a multiemployer plan, as defined
in Section 4001(a)(3) of ERISA, to which the Company or any member of the
Controlled Group may have any liability.
Net Cash Proceeds means:
(a) with respect to any Asset Sale the aggregate cash proceeds(including
cash proceeds received by way of deferred payment of principal pursuant
to a note, installment receivable or otherwise, but only as and when
received) received by the Company or any Subsidiary pursuant to such
Asset Sale, but only to the extent such proceeds exceed $100,000 in any
Fiscal Year, net of (i) the direct costs relating to such sale, transfer
or other disposition (including sales commissions and legal, accounting
and investment banking fees), (ii) taxes paid or reasonably estimated by
the Company to be payable as a result thereof (after taking into account
any available tax credits or deductions and any tax sharing arrangements)
and (iii) amounts required to be applied to the repayment of any Debt
secured by a Lien on the asset subject to such Asset Sale (other than the
Loans); and
(b) with respect to any issuance of equity securities, the aggregate
cash proceeds received by the Company or any Subsidiary pursuant to such
issuance, net of the direct costs relating to such issuance (including
sales and underwriter's commission); and
(c) with respect to any issuance of Debt, the aggregate cash proceeds
received by the Company or any Subsidiary pursuant to such issuance, net
of the direct costs of such issuance(including up-front fees and
placement fees).
Non-Use Fee Rate - see the Pricing Schedule.
Note - see Section 3.1.
Operating Lease means any lease of (or other agreement conveying
the right to use) any real or personal property by the Company or any
Subsidiary, as lessee, other than any Capital Lease.
PBGC means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Pension Plan means a "pension plan", as such term is defined in
Section 3(2) of ERISA, which is subject to Title IV of ERISA (other than
a Multiemployer Pension Plan), and to which the Company or any member of
the Controlled Group may have any liability, including any liability by
reason of having been a substantial employer within the meaning of
Section 4063 of ERISA at any time during the preceding five years, or by
reason of being deemed to be a contributing sponsor under Section 4069 of
ERISA.
Person means any natural person, corporation, partnership, trust,
limited liability company, association, governmental authority or unit,
or any other entity, whether acting in an individual, fiduciary or other
capacity.
Pledge Agreement means a pledge agreement in substantially the form
of Exhibit E.
Pro Rata Share means, with respect to any Bank, the percentage
specified opposite such Bank's name on Schedule 2.1 hereto, as adjusted
from time to time in accordance with the terms hereof.
Prime Rate means, for any day, the rate of interest in effect for
such day as publicly announced from time to time by LaSalle as its prime
rate (whether or not such rate is actually charged by LaSalle). Any
change in the Prime Rate announced by LaSalle shall take effect at the
opening of business on the day specified in the public announcement of
such change.
Purchase means the acquisition by Compudyne of all of the
outstanding capital stock of Xxxxxxx and Norshield pursuant to the
Purchase Agreement.
Purchase Agreement means that certain Stock Purchase Agreement
dated as of November 10, 1998 by and between Apogee Enterprises, Inc., a
Minnesota corporation, and Compudyne.
Purchase Agreement Assignment means a purchase agreement assignment
in substantially the form of Exhibit F.
RCRA - see Section 9.15.
Regulation D means Regulation D of the FRB.
Regulation U means Regulation U of the FRB.
Release has the meaning specified in CERCLA and the term "Disposal"
(or "Disposed") has the meaning specified in RCRA; provided that in the
event either CERCLA or RCRA is amended so as to broaden the meaning of
any term defined thereby, such broader meaning shall apply as of the
effective date of such amendment; and provided, further, that to the
extent that the laws of a state wherein any affected property lies
establish a meaning for "Release" or "Disposal" which is broader than is
specified in either CERCLA or RCRA, such broader meaning shall apply.
Required Banks means Banks having Pro Rata Shares aggregating 66 %
or more.
Revolving Commitment Amount means $6,500,000, as reduced from time
to time pursuant to Section 6.1.
Revolving Loan - see Section 2.1.1.
Revolving Outstandings means, at any time, the sum of (a) the
aggregate principal amount of all outstanding Revolving Loans, plus (b)
the Stated Amount of all Letters of Credit.
SEC means the Securities and Exchange Commission or any other
governmental authority succeeding to any of the principal functions
thereof.
Security Agreement means a security agreement substantially in the
form of Exhibit D.
Senior Debt means all Debt of the Company and its Subsidiaries
other than Subordinated Debt and Hedging Obligations.
Senior Debt to EBITDA Ratio means, as of the last day of any Fiscal
Quarter, the ratio of (i) Senior Debt as of such day to (ii) EBITDA for
the Computation Period ending on such day.
Stated Amount means, with respect to any Letter of Credit at any
date of determination, (a) the maximum aggregate amount available for
drawing thereunder under any and all circumstances plus (b) the aggregate
amount of all unreimbursed payments and disbursements under such Letter
of Credit.
Subordinated Debt means (i) the $9,000,000 Senior Subordinated Term
Note issued by Compudyne to Xxxxx and (ii) any other unsecured Debt of
the Company which has subordination terms, covenants, pricing and other
terms which have been approved in writing by the Required Banks.
Subordination Agreement means the subordination and intercreditor
agreement substantially in the form of Exhibit K.
Subordinated Debt Documents means the (i) Subordinated Loan and
Investment Agreement dated November 30, 1998 between Compudyne and Xxxxx
(the "Investment Agreement"), (ii) Senior Subordinated Term Note in the
principal amount of $9,000,000 issued by Compudyne to Xxxxx, (iii)
Warrant to Purchase 297,924 shares of Compudyne stock issued to Xxxxx by
Compudyne, (iv) Registration Rights Agreement dated November 30, 1998
between Compudyne and Xxxxx, and (v) Corporate Governance and Shareholder
Agreement dated November 30, 1998 among Compudyne, Xxxxx and certain
shareholders of Compudyne.
Subsidiary means, with respect to any Person, a corporation,
partnership, limited liability company or other entity of which such
Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares or other ownership interests as have more
than 50% of the ordinary voting power for the election of directors or
other managers of such corporation, partnership, limited liability
company or other entity. Unless the context otherwise requires, each
reference to Subsidiaries herein shall be a reference to Subsidiaries of
the Company.
Subsidiary Borrower means each of Xxxxxxx Industries, Inc., a
Delaware corporation ("Xxxxxxx"), Norshield Corporation, an Alabama
corporation ("Norshield"), Quanta Systems Corporation, a Connecticut
corporation, Quanta SecurSystems, Inc., a Maryland corporation,
MicroAssembly Systems, Inc., a Connecticut corporation ("MicroAssembly"),
and Sysco Security Systems, Inc., a Nevada corporation ("Sysco").
Suretyship Liability means any agreement, undertaking or
arrangement by which any Person guarantees, endorses or otherwise becomes
or is contingently liable upon (by direct or indirect agreement,
contingent or otherwise, to provide funds for payment, to supply funds to
or otherwise to invest in a debtor, or otherwise to assure a creditor
against loss) any indebtedness, obligation or other liability of any
other Person (other than by endorsements of instruments in the course of
collection), or guarantees the payment of dividends or other
distributions upon the shares of any other Person. The amount of any
Person's obligation in respect of any Suretyship Liability shall (subject
to any limitation set forth therein) be deemed to be the principal amount
of the debt, obligation or other liability supported thereby.
Term Loan - see Section 2.1.2.
Termination Date means the earlier to occur of (a) November 30,
2001 or (b) such other date on which the Commitments terminate pursuant
to Section 6 or 12.
Total Debt means all Debt of the Company and its Subsidiaries,
determined on a consolidated basis, excluding (i) contingent obligations
in respect of Suretyship Liabilities (except to the extent constituting
Suretyship Liabilities in respect of Debt of a Person other than the
Company or any Subsidiary), (ii) Hedging Obligations , and (iii) Debt of
the Company to Subsidiaries and Debt of Subsidiaries to the Company or to
other Subsidiaries and (iv) contingent obligations in respect of undrawn
letters of credit.
Type of Loan or Borrowing - see Section 2.2.1. The types of Loans
or borrowings under this Agreement are as follows: Base Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unmatured Event of Default means any event that, if it continues
uncured, will, with lapse of time or notice or both, constitute an Event
of Default.
Unobtained Permits - see Section 11.1.21.
Wholly-Owned Subsidiary means, as to any Person, another Person all
of the shares of capital stock or other ownership interests of which
(except directors' qualifying shares) are at the time directly or
indirectly owned by such Person and/or another Wholly-Owned Subsidiary of
such Person.
Year 2000 Problem means the risk that computer applications and
embedded microchips in non-computing devices may be unable to recognize
and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999.
1.2 Other Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) Section, Schedule and Exhibit references are to this Agreement
unless otherwise specified.
(c) The term "including" is not limiting and means "including without
limitation."
(d) In the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(e) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation shall be construed as
including all statutory and regulatory provisions amending, replacing,
supplementing or interpreting such statute or regulation.
(f) This Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are
cumulative and each shall be performed in accordance with its terms.
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agent, the
Company, the Banks and the other parties thereto and are the products of
all parties. Accordingly, they shall not be construed against the Agent
or the Banks merely because of the Agent's or Banks' involvement in their
preparation.
SECTION 2 COMMITMENTS OF THE BANKS; BORROWING, CONVERSION AND LETTER
OF CREDIT PROCEDURES.
2.1 Commitments. On and subject to the terms and conditions of this
Agreement, each of the Banks, severally and for itself alone, agrees
to make loans to, and to issue or participate in letters of credit for
the account of, the Company as follows:
2.1.1 Revolving Loan Commitment. Each Bank will make loans on a
revolving basis ("Revolving Loans") from time to time until the
Termination Date in such Bank's Pro Rata Share of such aggregate amounts
as the Company may request from all Banks; provided that the Revolving
Outstandings will not at any time exceed the lesser of (x) the Revolving
Commitment Amount and (y) the Borrowing Base.
2.1.2 Term Loan Commitment. Each Bank agrees to make a loan to the
Company (each such loan, a "Term Loan") on the Closing Date in such
Bank's Pro Rata Share of $11,500,000. The commitments of the Banks to
make Term Loans shall expire concurrently with the making of the Term
Loans on the Closing Date.
2.1.3 L/C Commitment. (a) The Issuing Bank will issue letters of credit,
in each case containing such terms and conditions as are permitted by
this Agreement and are reasonably satisfactory to the Issuing Bank (each
a "Letter of Credit"), at the request of and for the account of the
Company from time to time before the date which is 30 days prior to the
Termination Date and (b) as more fully set forth in Section 2.3.2, each
Bank agrees to purchase a participation in each such Letter of Credit;
provided that (i) the aggregate Stated Amount of all Letters of Credit
shall not at any time exceed $1,500,000 and (ii) the Revolving
Outstandings will not at any time exceed the lesser of (x) the Revolving
Commitment Amount and (y) the Borrowing Base.
2.2 Loan Procedures.
2.2.1 Various Types of Loans. Each Revolving Loan shall be, and each
Term Loan may be divided into tranches which are, either a Base Rate
Loan or a Eurodollar Loan (each a "type" of Loan), as the Company shall
specify in the related notice of borrowing or conversion pursuant to
Section 2.2.2 or 2.2.3. Eurodollar Loans having the same Interest Period
are sometimes called a "Group" or collectively "Groups". Base Rate Loans
and Eurodollar Loans may be outstanding at the same time, provided that
not more than five different Groups of Eurodollar Loans shall be
outstanding at any one time. All borrowings, conversions and repayments
of Revolving Loans shall be effected so that each Bank will have a pro
rata share (according to its Pro Rata Share) of all types and Groups of
Loans.
2.2.2 Borrowing Procedures. (a) The Company shall give written notice or
telephonic notice (followed immediately by written confirmation thereof)
to the Agent of each proposed borrowing not later than (a) in the case of
a Base Rate borrowing, 11:00 A.M., Chicago time, on the proposed date of
such borrowing, and (b) in the case of a Eurodollar borrowing, 11:00
A.M., Chicago time, at least three Business Days prior to the proposed
date of such borrowing. Each such notice shall be effective upon receipt
by the Agent, shall be irrevocable, and shall specify the date, amount
and type of borrowing and, in the case of a Eurodollar borrowing, the
initial Interest Period therefor. Promptly upon receipt of such notice,
the Agent shall advise each Bank thereof. Not later than 1:00 P.M.,
Chicago time, on the date of a proposed borrowing, each Bank shall
provide the Agent at the office specified by the Agent with immediately
available funds covering such Bank's Pro Rata Share of such borrowing
and, so long as the Agent has not received written notice that the
conditions precedent set forth in Section 11 with respect to such
borrowing have not been satisfied, the Agent shall pay over the funds
received by the Agent to the Company on the requested borrowing date.
Each borrowing shall be on a Business Day. Each Base Rate borrowing
shall be in an aggregate amount of at least $50,000 and an integral
multiple of $50,000, and each Eurodollar borrowing shall be in an
aggregate amount of at least $300,000 and an integral multiple of
at least $100,000.
(b) Each Subsidiary Borrower hereby designates Compudyne as its
representative and agent on its behalf for the purposes of issuing
notices of borrowing and conversion notices, giving instructions with
respect to the disbursement of proceeds of the Loans, selecting interest
rate options, requesting Letters of Credit, giving and receiving all
other notices and consents hereunder or under any of the other Loan
Documents and taking all other actions (including in respect of
compliance with covenants and with respect to any agreement for any
amendments, modifications, consents and waivers regarding this Agreement
or any other Loan Document) on behalf of any Subsidiary Borrower under
the Loan Documents. Compudyne hereby accepts such appointment. The
Agent and each Bank may regard any notice or other communication pursuant
to any Loan Document from Compudyne as a notice or communication from all
of the Companies, and may give any notice or communication required to be
given to any Subsidiary Borrower hereunder to Compudyne on behalf of such
Subsidiary Borrower. Each Subsidiary Borrower agrees that each notice,
election, representation, warranty, covenant, agreement and undertaking
made on its behalf by Compudyne shall be deemed for all purposes to have
been made by such Subsidiary Borrower and shall be binding upon and
enforceable against such Subsidiary Borrower to the same extent as if the
same had been made directly by such Subsidiary Borrower.
2.2.3 Conversion and Continuation Procedures. (a) Subject to Section
2.2.1, the Company may, upon irrevocable written notice to the Agent in
accordance with clause (b) below:
(i) elect, as of any Business Day, to convert any Loans(or any part
thereof in an aggregate amount not less than $300,000 or a higher
integral multiple of $100,000) into Loans of the other type; or
(ii) elect, as of the last day of the applicable Interest Period, to
continue any Eurodollar Loans having Interest Periods expiring on such
day (or any part thereof in an aggregate amount not less than $300,000 or
a higher integral multiple of $100,000) for a new Interest Period;
provided that after giving effect to any prepayment, conversion or
continuation, the aggregate principal amount of each Group of Eurodollar
Loans shall be at least $300,000 and an integral multiple of $100,000.
(b) The Company shall give written or telephonic (followed immediately
by written confirmation thereof) notice to the Agent of each proposed
conversion or continuation not later than (i) in the case of conversion
into Base Rate Loans, 11:00 A.M., Chicago time, on the proposed date of
such conversion and (ii) in the case of conversion into or continuation
of Eurodollar Loans, 11:00 A.M., Chicago time, at least three Business
Days prior to the proposed date of such conversion or continuation,
specifying in each case:
(i) the proposed date of conversion or continuation;
(ii) the aggregate amount of Loans to be converted or continued;
(iii) the type of Loans resulting from the proposed conversion or
continuation; and
(iv) in the case of conversion into, or continuation of, Eurodollar
Loans, the duration of the requested Interest Period therefor.
(c) If upon the expiration of any Interest Period applicable to
Eurodollar Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Eurodollar Loans, the Company
shall be deemed to have elected to convert such Eurodollar Loans into
Base Rate Loans effective on the last day of such Interest Period.
(d) The Agent will promptly notify each Bank of its receipt of a notice
of conversion or continuation pursuant to this Section 2.2.3 or, if no
timely notice is provided by the Company, of the details of any automatic
conversion.
(e) Any conversion of a Eurodollar Loan on a day other than the last day
of an Interest Period therefor shall be subject to Section 8.4.
2.3 Letter of Credit Procedures.
2.3.1 L/C Applications. The Company shall give notice to the Agent
and the Issuing Bank of the proposed issuance of each Letter of Credit on
a Business Day which is at least three Business Days (or such lesser
number of days as the Agent and the Issuing Bank shall agree in any
particular instance in their sole discretion) prior to the proposed date
of issuance of such Letter of Credit. Each such notice shall be
accompanied by an L/C Application, duly executed by the Company and in
all respects satisfactory to the Agent and the Issuing Bank, together
with such other documentation as the Agent or the Issuing Bank may
request in support thereof, it being understood that each L/C Application
shall specify, among other things, the date on which the proposed Letter
of Credit is to be issued, the expiration date of such Letter of Credit
(which shall not be later than the earlier to occur of (x) one year after
the date of issuance thereof (provided that a Letter of Credit with a
one-year tenor may be automatically renewable annually upon notice to the
Agent so long as, after giving effect to any renewal, the expiration date
of such Letter of Credit shall not extend beyond the date referred to in
clause (y)) and (y) thirty days prior to the scheduled Termination Date)
and whether such Letter of Credit is to be transferable in whole or in
part. So long as the Issuing Bank has not received written notice that
the conditions precedent set forth in Section 11 with respect to the
issuance of such Letter of Credit have not been satisfied, the Issuing
Bank shall issue such Letter of Credit on the requested issuance date.
The Issuing Bank shall promptly advise the Agent of the issuance of each
Letter of Credit and of any amendment thereto, extension thereof or event
or circumstance changing the amount available for drawing thereunder. In
the event of any inconsistency between the terms of any L/C Application
and the terms of this Agreement, the terms of this Agreement shall
control.
2.3.2 Participations in Letters of Credit. Concurrently with the
issuance of each Letter of Credit, the Issuing Bank shall be deemed to
have sold and transferred to each other Bank, and each other Bank shall
be deemed irrevocably and unconditionally to have purchased and received
from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such other Bank's Pro Rata
Share, in such Letter of Credit and the Company's reimbursement
obligations with respect thereto. For the purposes of this Agreement,
the unparticipated portion of each Letter of Credit shall be deemed to be
the Issuing Bank's "participation" therein. The Issuing Bank hereby
agrees, upon request of the Agent or any Bank, to deliver to the Agent or
such Bank a list of all outstanding Letters of Credit issued by the
Issuing Bank, together with such information related thereto as the Agent
or such Bank may reasonably request.
2.3.3 Reimbursement Obligations. The Company hereby unconditionally and
irrevocably agrees to reimburse the Issuing Bank for each payment or
disbursement made by the Issuing Bank under any Letter of Credit honoring
any demand for payment made by the beneficiary thereunder, in each case
on the date that such payment or disbursement is made. Any amount not
reimbursed on the date of such payment or disbursement shall bear
interest from the date of such payment or disbursement to the date that
the Issuing Bank is reimbursed by the Company therefor, payable on
demand, at a rate per annum equal to the Base Rate from time to time in
effect plus the Base Rate Margin from time to time in effect plus,
beginning on the third Business Day after receipt of notice from the
Issuing Bank of such payment or disbursement, 2%. The Issuing Bank shall
notify the Company and the Agent whenever any demand for payment is made
under any Letter of Credit by the beneficiary thereunder; provided that
the failure of the Issuing Bank to so notify the Company shall not affect
the rights of the Issuing Bank or the Banks in any manner whatsoever.
2.3.4 Limitation on Obligations of Issuing Bank. In determining whether
to pay under any Letter of Credit, the Issuing Bank shall not have any
obligation to the Company or any Bank other than to confirm that any
documents required to be delivered under such Letter of Credit appear
to have been delivered and appear to comply on their face with the
requirements of such Letter of Credit. Any action taken or omitted to be
taken by the Issuing Bank under or in connection with any Letter of
Credit, if taken or omitted in the absence of gross negligence and
willful misconduct, shall not impose upon the Issuing Bank any liability
to the Company or any Bank and shall not reduce or impair the Company's
reimbursement obligations set forth in Section 2.3.3 or the obligations
of the Banks pursuant to Section 2.3.5.
2.3.5 Funding by Banks to Issuing Bank. If the Issuing Bank makes any
payment or disbursement under any Letter of Credit and the Company has
not reimbursed the Issuing Bank in full for such payment or disbursement
by 11:00 A.M., Chicago time, on the date of such payment or disbursement,
or if any reimbursement received by the Issuing Bank from the Company is
or must be returned or rescinded upon or during any bankruptcy or
reorganization of the Company or otherwise, each other Bank shall be
obligated to pay to the Agent for the account of the Issuing Bank, in
full or partial payment of the purchase price of its participation in
such Letter of Credit, its Pro Rata Share of such payment or disbursement
(but no such payment shall diminish the obligations of the Company under
Section 2.3.3), and, upon notice from the Issuing Bank, the Agent shall
promptly notify each other Bank thereof. Each other Bank irrevocably and
unconditionally agrees to so pay to the Agent in immediately available
funds for the Issuing Bank's account the amount of such other Bank's
Percentage of such payment or disbursement. If and to the extent any
Bank shall not have made such amount available to the Agent by 2:00 P.M.,
Chicago time, on the Business Day on which such Bank receives notice from
the Agent of such payment or disbursement (it being understood that any
such notice received after noon, Chicago time, on any Business Day shall
be deemed to have been received on the next following Business Day), such
Bank agrees to pay interest on such amount to the Agent for the Issuing
Bank's account forthwith on demand, for each day from the date such
amount was to have been delivered to the Agent to the date such amount is
paid, at a rate per annum equal to (a) for the first three days after
demand, the Federal Funds Rate from time to time in effect and (b)
thereafter, the Base Rate from time to time in effect. Any Bank's
failure to make available to the Agent its Pro Rata Share of any such
payment or disbursement shall not relieve any other Bank of its
obligation hereunder to make available to the Agent such other Bank's Pro
Rata Share of such payment, but no Bank shall be responsible for the
failure of any other Bank to make available to the Agent such other
Bank's Pro Rata Share of any such payment or disbursement.
2.4 Commitments Several. The failure of any Bank to make a requested
Loan on any date shall not relieve any other Bank of its obligation (if
any) to make a Loan on such date, but no Bank shall be responsible for
the failure of any other Bank to make any Loan to be made by such other
Bank.
2.5 Certain Conditions. Notwithstanding any other provision of this
Agreement, no Bank shall have an obligation to make any Loan, or to
permit the continuation of or any conversion into any Eurodollar Loan,
and the Issuing Bank shall not have any obligation to issue any Letter of
Credit, if an Event of Default or Unmatured Event of Default exists.
SECTION 3 NOTES EVIDENCING LOANS.
3.1 Notes. The Loans of each Bank shall be evidenced by a promissory
note (each a "Note") substantially in the form set forth in Exhibit A,
with appropriate insertions, payable to the order of such Bank in a face
principal amount equal to the sum of such Bank's Pro Rata Share of the
Revolving Commitment Amount plus the principal amount of such Bank's Term
Loan, as follows:
(a) each Revolving Loan of such Bank shall be paid in full on the
Termination Date; and
(b) the Term Loan of such Bank shall be paid in installments equal to
such Bank's Pro Rata Share of the aggregate principal amount of the
installments of the Term Loans as set forth on Schedule 3.1.
3.2 Recordkeeping. Each Bank shall record in its records, or at its
option on the schedule attached to its Note, the date and amount of
each Loan made by such Bank, each repayment or conversion thereof and, in
the case of each Eurodollar Loan, the dates on which each Interest Period
for such Loan shall begin and end. The aggregate unpaid principal amount
so recorded shall be rebuttable presumptive evidence of the principal
amount owing and unpaid on such Note. The failure to so record any such
amount or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of the Company hereunder or
under any Note to repay the principal amount of the Loans evidenced by
such Note together with all interest accruing thereon.
SECTION 4 INTEREST.
4.1 Interest Rates. Each of the Companies promises to pay, on a joint
and several basis, interest on the unpaid principal amount of each Loan
for the period commencing on the date of such Loan until such Loan is
paid in full as follows:
(a) at all times while such Loan is a Base Rate Loan, at a rate per
annum equal to the sum of the Base Rate from time to time in effect plus
the Base Rate Margin from time to time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a rate per
annum equal to the sum of the Eurodollar Rate (Reserve Adjusted)
applicable to each Interest Period for such Loan plus the Eurodollar
Margin from time to time in effect;
provided that at any time an Event of Default exists, if requested by the
Required Banks, the interest rate applicable to each Loan shall be
increased by 2%.
4.2 Interest Payment Dates. Accrued interest on each Base Rate Loan
shall be payable in arrears on the last day of each calendar quarter
and at maturity. Accrued interest on each Eurodollar Loan shall be
payable on the last day of each Interest Period relating to such Loan
(and, in the case of a Eurodollar Loan with a six-month Interest Period,
on the three-month anniversary of the first day of such Interest Period)
and at maturity. After maturity, accrued interest on all Loans shall be
payable on demand.
4.3 Setting and Notice of Eurodollar Rates. The applicable Eurodollar
Rate for each Interest Period shall be determined by the Agent, and
notice thereof shall be given by the Agent promptly to the Company and
each Bank. Each determination of the applicable Eurodollar Rate by the
Agent shall be conclusive and binding upon the parties hereto, in the
absence of demonstrable error. The Agent shall, upon written request of
the Company or any Bank, deliver to the Company or such Bank a statement
showing the computations used by the Agent in determining any applicable
Eurodollar Rate hereunder.
4.4 Computation of Interest. Interest shall be computed for the actual
number of days elapsed on the basis of a year of 360 days. The
applicable interest rate for each Base Rate Loan shall change
simultaneously with each change in the Base Rate.
SECTION 5 FEES.
5.1 Non-Use Fee. Each of the Companies agrees to pay, on a joint and
several basis, to the Agent for the account of each Bank a non-use fee,
for the period from the Closing Date to the Termination Date, at the
Non-Use Fee Rate in effect from time to time of such Bank's Pro Rata
Share (as adjusted from time to time) of the unused amount of the
Revolving Commitment Amount. For purposes of calculating usage under
this Section, the Revolving Commitment Amount shall be deemed used to the
extent of the aggregate principal amount of all outstanding Revolving
Loans plus the Stated Amount of all Letters of Credit. Such non-use fee
shall be payable in arrears on the last day of each calendar quarter and
on the Termination Date for any period then ending for which such non-use
fee shall not have previously been paid. The non-use fee shall be
computed for the actual number of days elapsed on the basis of a year of
360 days.
5.2 Letter of Credit Fees. (a) Each of the Companies agrees to pay, on
a joint and several basis, to the Agent for the account of each Bank a
letter of credit fee for each Letter of Credit equal to the LC Fee Rate
in effect from time to time of such Bank's Pro Rata Share (as adjusted
from time to time) of the undrawn amount of such Letter of Credit
(computed for the actual number of days elapsed on the basis of a year of
360 days); provided that, if requested by the Required Banks, the rate
applicable to each Letter of Credit shall be increased by 2% at any time
that an Event of Default exists. Such letter of credit fee shall be
payable in arrears on the last day of each calendar quarter and on the
Termination Date (or such later date on which such Letter of Credit
expires or is terminated) for the period from the date of the issuance of
each Letter of Credit (or the last day on which the letter of credit fee
was paid with respect thereto) to the date such payment is due or, if
earlier, the date on which such Letter of Credit expired or was
terminated.
(b) In addition, with respect to each Letter of Credit, each of the
Companies agrees to pay, on a joint and several basis, to the Issuing
Bank, for its own account, (i) such fees and expenses as the Issuing Bank
customarily requires in connection with the issuance, negotiation,
processing and/or administration of letters of credit in similar
situations and (ii) a letter of credit fronting fee in the amount and at
the times agreed to by the Company and the Issuing Bank.
5.3 Upfront Fees. Each of the Companies agrees to pay, on a joint and
several basis, to the Agent an upfront fee of $225,000.
5.4 Agent's Fees. Each of the Companies agrees to pay, on a joint and
several basis, to the Agent such agent's fees as are mutually agreed to
from time to time by the Company and the Agent; provided that no such
agent's fees shall be payable hereunder for so long as (i) LaSalle is the
sole Bank or (ii) the Revolving Commitment Amount and the Term Loans do
not exceed $18,000,000, in aggregate; provided further that, to the
extent payable hereunder, such agent's fees shall be payable in respect
of the aggregate Commitments of the Banks.
SECTION 6 REDUCTION OR TERMINATION OF THE REVOLVING COMMITMENT AMOUNT;
PREPAYMENTS.
6.1 Reduction or Termination of the Revolving Commitment Amount.
6.1.1 Voluntary Reduction or Termination of the Revolving Commitment
Amount. The Company may from time to time on at least five Business
Days' prior written notice received by the Agent (which shall promptly
advise each Bank thereof) permanently reduce the Revolving Commitment
Amount to an amount not less than the Revolving Outstandings. Any such
reduction shall be in an amount not less than $500,000 or a higher
integral multiple of $100,000. Concurrently with any reduction of the
Revolving Commitment Amount to zero, the Company shall pay all interest
on the Revolving Loans, all non-use fees and all letter of credit fees
and shall Cash Collateralize in full all obligations arising with respect
to the Letters of Credit.
6.1.2 All Reductions of the Revolving Commitment Amount. All reductions
of the Revolving Commitment Amount shall reduce the Commitments pro rata
among the Banks according to their respective ProRata Shares.
6.2 Prepayments.
6.2.1 Voluntary Prepayments. The Company may from time to time prepay
the Loans in whole or in part; provided that the Company shall give the
Agent (which shall promptly advise each Bank) notice thereof not later
than 11:00 A.M., Chicago time, on the day of such prepayment (which shall
be a Business Day), specifying the Loans to be prepaid and the date and
amount of prepayment. Any such partial prepayment shall be in an amount
equal to $50,000 or a higher integral multiple of $50,000.
6.2.2 Mandatory Prepayments. (a) The Company shall make a prepayment of
the Term Loans upon the occurrence of any of the following (each a
"Mandatory Prepayment Event") at the following times and in the following
amounts (such applicable amounts being referred to as "Designated
Proceeds"):
(i) Concurrently with the receipt by the Company or any Subsidiary of
any Net Cash Proceeds from any Asset Sale, in an amount equal to 100% of
such Net Cash Proceeds.
(ii) Concurrently with the receipt by the Company or any Subsidiary of
any Net Cash Proceeds from any issuance of equity securities of the
Company or any Subsidiary (excluding (x) any issuance of shares of
capital stock pursuant to any employee or director stock option program,
benefit plan or compensation program and (y) any issuance by a Subsidiary
to the Company or another Subsidiary), in an amount equal to 100% of such
Net Cash Proceeds.
(iii) Concurrently with the receipt by the Company or any Subsidiary of
any Net Cash Proceeds from any issuance of any Debt of the Company or any
Subsidiary (excluding Debt permitted by clauses (a) through (i)of Section
10.7), in an amount equal to 100% of such Net Cash Proceeds.
(iv) Within 90 days after the end of each Fiscal Year(commencing with
Fiscal Year 1999), in an amount equal to 75% of Excess Cash Flow for such
Fiscal Year, or, if for any Fiscal Year (commencing with Fiscal Year
1999) the Senior Debt to EBITDA Ratio shall be equal to or less than
1.50, 50% of Excess Cash Flow for such Fiscal Year.
(b) If on any day the Revolving Outstandings exceed the Borrowing Base,
the Company shall immediately prepay Revolving Loans and/or Cash
Collateralize the outstanding Letters of Credit, or do a combination of
the foregoing, in an amount sufficient to eliminate such excess.
6.3 All Prepayments. Each voluntary partial prepayment shall be in a
principal amount of $50,000 or a higher integral multiple of $50,000. Any
partial prepayment of a Group of Eurodollar Loans shall be subject to the
proviso to Section 2.2.3(a). Any prepayment of a Eurodollar Loan on a
day other than the last day of an Interest Period therefor shall include
interest on the principal amount being repaid and shall be subject to
Section 8.4. All prepayments of Term Loans shall be applied pro rata to
the remaining installments thereof.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments of principal of or interest on the
Notes, and of all fees, shall be made by the Company to the Agent in
immediately available funds at the office specified by the Agent not
later than noon, Chicago time, on the date due; and funds received after
that hour shall be deemed to have been received by the Agent on the
following Business Day. The Agent shall promptly remit to each Bank its
share of all such payments received in collected funds by the Agent for
the account of such Bank. All payments under Section 8.1 shall be made
by the Company directly to the Bank entitled thereto.
7.2 Application of Certain Payments. Each payment of principal shall be
applied to such Loans as the Company shall direct by notice to be
received by the Agent on or before the date of such payment or, in the
absence of such notice, as the Agent shall determine in its discretion.
Concurrently with each remittance to any Bank of its share of any such
payment, the Agent shall advise such Bank as to the application of such
payment.
7.3 Due Date Extension. If any payment of principal or interest with
respect to any of the Loans, or of any fees, falls due on a day which is
not a Business Day, then such due date shall be extended to the
immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day
of a calendar month, in which case such due date shall be the immediately
preceding Business Day) and, in the case of principal, additional
interest shall accrue and be payable for the period of any such
extension.
7.4 Setoff. The Company agrees that the Agent and each Bank have all
rights of set-off and bankers' lien provided by applicable law, and in
addition thereto, the Company agrees that at any time any Event of
Default exists, the Agent and each Bank may apply to the payment of any
obligations of the Company hereunder, whether or not then due, any and
all balances, credits, deposits, accounts or moneys of the Company then
or thereafter with the Agent or such Bank.
7.5 Proration of Payments. If any Bank shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of offset
or otherwise, but excluding any payment pursuant to Section 8.7 or 14.9
and payments of interest on any Affected Loan) on account of principal of
or interest on any Loan (or on account of its participation in any Letter
of Credit) in excess of its pro rata share of payments and other
recoveries obtained by all Banks on account of principal of and interest
on the Loans (or such participation) then held by them, such Bank shall
purchase from the other Banks such participations in the Loans (or sub-
participations in Letters of Credit) held by them as shall be necessary
to cause such purchasing Bank to share the excess payment or other
recovery ratably with each of them; provided that if all or any portion
of the excess payment or other recovery is thereafter recovered from such
purchasing Bank, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery.
7.6 Taxes. All payments of principal of, and interest on, the Loans and
all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or
franchise taxes and other taxes, fees, duties, withholdings or other
charges of any nature whatsoever imposed by any taxing authority,
excluding franchise taxes and taxes imposed on or measured by any Bank's
net income or receipts (all non-excluded items being called "Taxes"). If
any withholding or deduction from any payment to be made by the Company
hereunder is required in respect of any Taxes pursuant to any applicable
law, rule or regulation, then the Company will:
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Banks such additional amount
or amounts as is necessary to ensure that the net amount actually
received by each Bank will equal the full amount such Bank would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the Agent or any
Bank with respect to any payment received by the Agent or such Bank
hereunder, the Agent or such Bank may pay such Taxes and the Company will
promptly pay such additional amounts (including any penalty, interest or
expense) as is necessary in order that the net amount received by such
Person after the payment of such Taxes (including any Taxes on such
additional amount) shall equal the amount such Person would have received
had such Taxes not been asserted.
If the Company fails to pay any Taxes when due to the appropriate
taxing authority or fails to remit to the Agent, for the account of the
respective Banks, the required receipts or other required documentary
evidence, the Company shall indemnify the Banks for any incremental
Taxes, interest or penalties that may become payable by any Bank as a
result of any such failure. For purposes of this Section 7.6, a
distribution hereunder by the Agent or any Bank to or for the account of
any Bank shall be deemed a payment by the Company.
Each Bank that (a) is organized under the laws of a jurisdiction
other than the United States of America and (b)(i) is a party hereto on
the Closing Date or (ii) becomes an assignee of an interest under this
Agreement under Section 14.9.1 after the Closing Date (unless such Bank
was already a Bank hereunder immediately prior to such assignment) shall
execute and deliver to the Company and the Agent one or more (as the
Company or the Agent may reasonably request) United States Internal
Revenue Service Forms 4224 or Forms 1001 or such other forms or
documents, appropriately completed, as may be applicable to establish
that such Bank is exempt from withholding or deduction of Taxes. The
Company shall not be required to pay additional amounts to any Bank
pursuant to this Section 7.6 to the extent that the obligation to pay
such additional amounts would not have arisen but for the failure of such
Bank to comply with this paragraph.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption
of, or any change in, any applicable law, rule or regulation, or any
change in the interpretation or administration of any applicable law,
rule or regulation by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Bank (or any Eurodollar Office of such
Bank) with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency
(i) shall subject any Bank (or any Eurodollar Office of such Bank) to
any tax, duty or other charge with respect to its Eurodollar Loans, its
Note or its obligation to make Eurodollar Loans, or shall change the
basis of taxation of payments to any Bank of the principal of or interest
on its Eurodollar Loans or any other amounts due under this Agreement in
respect of its Eurodollar Loans or its obligation to make Eurodollar
Loans (except for changes in the rate of tax on the overall net income of
such Bank or its Eurodollar Office imposed by the jurisdiction in which
such Bank's principal executive office or Eurodollar Office is located);
(ii) shall impose, modify or deem applicable any reserve (including any
reserve imposed by the FRB, but excluding any reserve included in the
determination of interest rates pursuant to Section 4), special deposit
or similar requirement against assets of, deposits with or for the
account of, or credit extended by any Bank(or any Eurodollar Office of
such Bank); or
(iii) shall impose on any Bank (or its Eurodollar Office) any other
condition affecting its Eurodollar Loans, its Note or its obligation to
make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or to
impose a cost on) such Bank (or any Eurodollar Office of such Bank) of
making or maintaining any Eurodollar Loan, or to reduce the amount of any
sum received or receivable by such Bank (or its Eurodollar Office) under
this Agreement or under its Note with respect thereto, then upon demand
by such Bank (which demand shall be accompanied by a statement setting
forth the basis for such demand and a calculation of the amount thereof
in reasonable detail, a copy of which shall be furnished to the Agent),
the Company shall pay directly to such Bank such additional amount as
will compensate such Bank for such increased cost or such reduction.
(b) If any Bank shall reasonably determine that any change in, the
adoption or phase-in of, any applicable law, rule or regulation regarding
capital adequacy, or any change in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance
by any Bank or any Person controlling such Bank with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on such Bank's or
such controlling Person's capital as a consequence of such Bank's
obligations hereunder or under any Letter of Credit to a level below that
which such Bank or such controlling Person could have achieved but for
such change, adoption, phase-in or compliance (taking into consideration
such Bank's or such controlling Person's policies with respect to capital
adequacy) by an amount deemed by such Bank or such controlling Person to
be material, then from time to time, upon demand by such Bank (which
demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail,
a copy of which shall be furnished to the Agent), the Company shall pay
to such Bank such additional amount as will compensate such Bank or such
controlling Person for such reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If with
respect to any Interest Period:
(a) deposits in Dollars (in the applicable amounts) are not being
offered to the Agent in the interbank eurodollar market for such Interest
Period, or the Agent otherwise reasonably determines (which determination
shall be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Eurodollar
Rate; or
(b) Banks having aggregate Pro Rata Shares of 40% or more advise the
Agent that the Eurodollar Rate (Reserve Adjusted) as determined by the
Agent will not adequately and fairly reflect the cost to such Banks of
maintaining or funding Eurodollar Loans for such Interest Period (taking
into account any amount to which such Banks may be entitled under Section
8.1) or that the making or funding of Eurodollar Loans has become
impracticable as a result of an event occurring after the date of this
Agreement which in the opinion of such Banks materially affects such
Loans;
then the Agent shall promptly notify the other parties thereof and, so
long as such circumstances shall continue, (i) no Bank shall be under any
obligation to make or convert into Eurodollar Loans and (ii) on the last
day of the current Interest Period for each Eurodollar Loan, such Loan
shall, unless then repaid in full, automatically convert to a Base Rate
Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. If any change
in, or the adoption of any new, law or regulation, or any change in the
interpretation of any applicable law or regulation by any governmental or
other regulatory body charged with the administration thereof, should
make it (or in the good faith judgment of any Bank cause a substantial
question as to whether it is) unlawful for any Bank to make, maintain or
fund Eurodollar Loans, then such Bank shall promptly notify each of the
other parties hereto and, so long as such circumstances shall continue,
(a) such Bank shall have no obligation to make or convert into Eurodollar
Loans (but shall make Base Rate Loans concurrently with the making of or
conversion into Eurodollar Loans by the Banks which are not so affected,
in each case in an amount equal to the amount of Eurodollar Loans which
would be made or converted into by such Bank at such time in the absence
of such circumstances) and (b) on the last day of the current Interest
Period for each Eurodollar Loan of such Bank (or, in any event, on such
earlier date as may be required by the relevant law, regulation or
interpretation), such Eurodollar Loan shall, unless then repaid in full,
automatically convert to a Base Rate Loan. Each Base Rate Loan made by a
Bank which, but for the circumstances described in the foregoing
sentence, would be a Eurodollar Loan (an "Affected Loan") shall remain
outstanding for the same period as the Group of Eurodollar Loans of which
such Affected Loan would be a part absent such circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by any
Bank (which demand shall be accompanied by a statement setting forth
the basis for the amount being claimed, a copy of which shall be
furnished to the Agent), the Company will indemnify such Bank against any
net loss or expense which such Bank may sustain or incur (including any
net loss or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Bank to fund or maintain any
Eurodollar Loan), as reasonably determined by such Bank, as a result of
(a) any payment, prepayment or conversion of any Eurodollar Loan of such
Bank on a date other than the last day of an Interest Period for such
Loan (including any conversion pursuant to Section 8.3) or (b) any
failure of the Company to borrow, convert or continue any Loan on a date
specified therefor in a notice of borrowing, conversion or continuation
pursuant to this Agreement. For this purpose, all notices to the Agent
pursuant to this Agreement shall be deemed to be irrevocable.
8.5 Right of Banks to Fund through Other Offices. Each Bank may, if it
so elects, fulfill its commitment as to any Eurodollar Loan by causing a
foreign branch or Affiliate of such Bank to make such Loan; provided that
in such event for the purposes of this Agreement such Loan shall be
deemed to have been made by such Bank and the obligation of the Company
to repay such Loan shall nevertheless be to such Bank and shall be deemed
held by it, to the extent of such Loan, for the account of such branch or
Affiliate.
8.6 Discretion of Banks as to Manner of Funding. Notwithstanding any
provision of this Agreement to the contrary, each Bank shall be entitled
to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood, however, that for the purposes
of this Agreement all determinations hereunder shall be made as if such
Bank had actually funded and maintained each Eurodollar Loan during each
Interest Period for such Loan through the purchase of deposits having a
maturity corresponding to such Interest Period and bearing an interest
rate equal to the Eurodollar Rate for such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Banks. (a) Each Bank
shall promptly notify the Company and the Agent of any event of which it
has knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Bank's sole judgment, otherwise
disadvantageous to such Bank) to mitigate or avoid, (i) any obligation by
the Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii) the
occurrence of any circumstances described in Section 8.2 or 8.3 (and, if
any Bank has given notice of any such event described in clause (i) or
(ii) above and thereafter such event ceases to exist, such Bank shall
promptly so notify the Company and the Agent). Without limiting the
foregoing, each Bank will designate a different funding office if such
designation will avoid (or reduce the cost to the Company of) any event
described in clause (i) or (ii) of the preceding sentence and such
designation will not, in such Bank's sole judgment, be otherwise
disadvantageous to such Bank.
(b) If the Company becomes obligated to pay additional amounts to any
Bank pursuant to Section 7.6 or 8.1, or any Bank gives notice of the
occurrence of any circumstances described in Section 8.2 or 8.3, the
Company may designate another bank which is acceptable to the Agent and
the Issuing Bank in their reasonable discretion (such other bank being
called a "Replacement Bank") to purchase the Loans of such Bank and such
Bank's rights hereunder, without recourse to or warranty by, or expense
to, such Bank, for a purchase price equal to the outstanding principal
amount of the Loans payable to such Bank plus any accrued but unpaid
interest on such Loans and all accrued but unpaid fees owed to such Bank
and any other amounts payable to such Bank under this Agreement, and to
assume all the obligations of such Bank hereunder, and, upon such
purchase and assumption (pursuant to an Assignment Agreement), such Bank
shall no longer be a party hereto or have any rights hereunder (other
than rights with respect to indemnities and similar rights applicable to
such Bank prior to the date of such purchase and assumption) and shall be
relieved from all obligations to the Company hereunder, and the
Replacement Bank shall succeed to the rights and obligations of such Bank
hereunder.
8.8 Conclusiveness of Statements; Survival of Provisions. Determinations
and statements of any Bank pursuant to Section 8.1, 8.2, 8.3 or 8.4 shall
be conclusive absent demonstrable error. Banks may use reasonable
averaging and attribution methods in determining compensation under
Sections 8.1 and 8.4, and the provisions of such Sections shall survive
repayment of the Loans, cancellation of the Notes, expiration or
termination of the Letters of Credit and termination of this Agreement.
SECTION 9 WARRANTIES.
To induce the Agent and the Banks to enter into this Agreement and
to induce the Banks to make Loans and issue and participate in Letters of
Credit hereunder, each of the Companies warrants, jointly and severally,
to the Agent and the Banks that:
9.1 Organization. Each of the Companies is a corporation validly
existing and in good standing under the laws of the State of its
incorporation; each Subsidiary is validly existing and in good standing
under the laws of the jurisdiction of its organization; and each of the
Companies and each Subsidiary is duly qualified to do business in each
jurisdiction where, because of the nature of its activities or
properties, such qualification is required, except for such jurisdictions
where the failure to so qualify would not have a Material Adverse Effect.
9.2 Authorization; No Conflict. Each of the Companies and each other
Loan Party is duly authorized to execute and deliver each Loan Document
to which it is a party, each of the Companies is duly authorized to
borrow monies hereunder and each of the Companies and each other Loan
Party is duly authorized to perform its obligations under each Loan
Document to which it is a party. The execution, delivery and performance
by each of the Companies of this Agreement and by each of the Companies
and each other Loan Party of each Loan Document to which it is a party,
and the borrowings by the Companies hereunder, do not and will not (a)
require any consent or approval of any governmental agency or authority
(other than any consent or approval which has been obtained and is in
full force and effect), (b) conflict with (i) any provision of law, (ii)
the charter, by-laws or other organizational documents of the Companies
or any other Loan Party or (iii) any material agreement, indenture,
instrument or other document, or any judgment, order or decree, which is
binding upon any of the Companies or any other Loan Party or any of their
respective properties or (c) require, or result in, the creation or
imposition of any Lien on any asset of any of the Companies, any
Subsidiary or any other Loan Party (other than Liens in favor of the
Agent created pursuant to the Collateral Documents).
9.3 Validity and Binding Nature. Each of this Agreement and each other
Loan Document to which any of the Companies or any other Loan Party is a
party is the legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with its terms, subject to
bankruptcy, insolvency and similar laws affecting the enforceability of
creditors' rights generally and to general principles of equity.
9.4 Financial Statements and Projections. (a) Schedule 9.4 contains a
complete and correct copy of the audited consolidated balance sheets of
Compudyne as of December 31, 1995, December 31, 1996 and December 31,
1997 and audited consolidated statements of income and cash flow for the
Fiscal Years then ended. Such consolidated financial statements were
prepared in accordance with GAAP consistently applied from prior periods,
and fairly present in all material respects the financial condition and
results of operations of Compudyne as of the dates thereof and for the
periods then ended. Schedule 9.4 also contains unaudited balance sheets
of Xxxxxxx and Norshield as of February 29, 1996, February 28, 1997 and
February 28, 1998 and unaudited statements of income and cash flow for
the fiscal years then ended. Such financial statements were prepared in
accordance with GAAP consistently applied from prior periods, and fairly
present in all material respects the financial condition and results of
operations of Xxxxxxx and Norshield, respectively, as of the dates
thereof and for the periods then ended.
(b) Schedule 9.4 also contains a complete and correct copy of the
unaudited pro forma consolidated balance sheet of Compudyne (including
Xxxxxxx and Norshield) as of September 30, 1998 and pro forma
consolidated statements of income, cash flow and shareholders' equity for
the nine-month period then ended. Such pro forma financial statements
were prepared in accordance with GAAP consistently applied from prior
periods, and fairly present in all material respects the pro forma
financial condition and pro forma results of operations of the Company
(including Xxxxxxx and Norshield) as of the date thereof and for the
period then ended, subject to normal year-end adjustments and the absence
of footnotes.
(c) The financial projections attached as Schedule 9.4(c) (the
"Projections") have been prepared by Compudyne in light of the past
operations of its business and in good faith, subject to the
uncertainties inherent in estimating Compudyne's future performance and
the limited familiarity of Compudyne with respect to Xxxxxxx and
Norshield. The Projections are based on assumptions that, as of the
respective dates thereof, were reasonable in light of the information
available to Compudyne on or prior to the date hereof.
9.5 No Material Adverse Change. Since September 30, 1998 there has
been no material adverse change in the financial condition, operations,
assets, business, properties or prospects of any of the Companies and
their Subsidiaries taken as a whole.
9.6 Litigation and Contingent Liabilities. No litigation (including
derivative actions), arbitration proceeding or governmental investigation
or proceeding is pending or, to the Companies' knowledge, threatened
against any of the Companies or any Subsidiary which might reasonably be
expected to have a Material Adverse Effect, except as set forth in
Schedule 9.6. Other than any liability incident to such litigation or
proceedings, none of the Companies or any Subsidiary has any material
contingent liabilities not listed on Schedule 9.6 or permitted by Section
10.7.
9.7 Ownership of Properties; Liens. Each of the Companies and each
Subsidiary owns good and, in the case of real property, marketable title
to all of its properties and assets, real and personal, tangible and
intangible, of any nature whatsoever (including patents, trademarks,
trade names, service marks and copyrights), free and clear of all Liens,
charges and claims (including infringement claims with respect to
patents, trademarks, service marks, copyrights and the like) except as
permitted by Section 10.8.
9.8 Subsidiaries. As of the Closing Date, the Companies have no
Subsidiaries other than those listed on Schedule 9.8. Neither Compudyne,
Inc. nor Compudyne Corp. of Maryland own, or will own, any assets or
engage, or will engage, in any business during the term hereof.
9.9 Pension Plans. (a) During the twelve-consecutive-month period prior
to the date of the execution and delivery of this Agreement or the making
of any Loan or the issuance of any Letter of Credit, (i) no steps have
been taken to terminate any Pension Plan and (ii) no contribution failure
has occurred with respect to any Pension Plan sufficient to give rise to
a Lien under Section 302(f) of ERISA. No condition exists or event or
transaction has occurred with respect to any Pension Plan which could
result in the incurrence by any of the Companies of any material
liability, fine or penalty.
(b) All contributions (if any) have been made to any Multiemployer
Pension Plan that are required to be made by any of the Companies or any
other member of the Controlled Group under the terms of the plan or of
any collective bargaining agreement or by applicable law; none of the
Companies or any member of the Controlled Group has withdrawn or
partially withdrawn from any Multiemployer Pension Plan, incurred any
withdrawal liability with respect to any such plan or received notice of
any claim or demand for withdrawal liability or partial withdrawal
liability from any such plan, and no condition has occurred which, if
continued, might result in a withdrawal or partial withdrawal from any
such plan; and none of the Companies or any member of the Controlled
Group has received any notice that any Multiemployer Pension Plan is in
reorganization, that increased contributions may be required to avoid a
reduction in plan benefits or the imposition of any excise tax, that any
such plan is or has been funded at a rate less than that required under
Section 412 of the Code, that any such plan is or may be terminated, or
that any such plan is or may become insolvent.
9.10 Investment Company Act. None of the Companies or any Subsidiary is
an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940.
9.11 Public Utility Holding Company Act. None of the Companies or any
Subsidiary is a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935.
9.12 Regulation U. None of the Companies are engaged principally, or as
one of their important activities, in the business of extending credit
for the purpose of purchasing or carrying Margin Stock.
9.13 Taxes. Each of the Companies and each Subsidiary has filed all tax
returns and reports required by law to have been filed by it and has paid
all taxes and governmental charges thereby shown to be owing, except any
such taxes or charges which are being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
9.14 Solvency, etc. On the Closing Date, and immediately prior to and
after giving effect to the issuance of each Letter of Credit and each
borrowing hereunder, the issuance of subordinated debt pursuant to the
Subordinated Debt Documents and the use of the proceeds thereof to fund
the Purchase and for other purposes permitted hereunder, (a) each of the
Companies' and each other Loan Party's assets will exceed its liabilities
and (b) each of the Companies and each other Loan Party will be solvent,
will be able to pay its debts as they mature, will own property with fair
saleable value greater than the amount required to pay its debts and will
have capital sufficient to carry on its business as then constituted.
9.15 Environmental Matters.
(a) No Violations. Except as set forth on Schedule 9.15, none of the
Companies or any Subsidiary, or, to the best knowledge of the Company,
any operator of the Companies' or any Subsidiary's properties, is in
violation, or alleged violation, of any judgment, decree, order, law,
permit, license, rule or regulation pertaining to environmental matters,
including those arising under the Resource Conservation and Recovery Act
("RCRA"), the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 or any other Environmental Law which (i) in
any single case, requires expenditures in any three-year period of
$100,000 or more by such Company and its Subsidiaries in penalties and/or
for investigative, removal or remedial actions or (ii) individually or in
the aggregate otherwise might reasonably be expected to have a Material
Adverse Effect.
(b) Notices. Except as set forth on Schedule 9.15 and for matters
arising after the Closing Date, in each case none of which could singly
or in the aggregate be expected to have a Material Adverse Effect, none
of the Companies or any Subsidiary has received notice from any third
party, including any Federal, state or local governmental authority: (a)
that any one of them has been identified by the U.S. Environmental
Protection Agency as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40 C.F.R. Part
000 Xxxxxxxx X; (b) that any hazardous waste, as defined by 42 U.S.C.
Section 6903(5), any hazardous substance as defined by 42 U.S.C. Section
601(14), any pollutant or contaminant as defined by 42 U.S.C. Section
9601(33) or any toxic substance, oil or hazardous material or other
chemical or substance regulated by any Environmental Law (all of the
foregoing, "Hazardous Substances") which any one of them has generated,
transported or disposed of has been found at any site at which a Federal,
state or local agency or other third party has conducted a remedial
investigation, removal or other response action pursuant to any
Environmental Law; (c) that any of the Companies or any Subsidiary must
conduct a remedial investigation, removal, response action or other
activity pursuant to any Environmental Law; or (d) of any Environmental
Claim.
(c) Handling of Hazardous Substances. Except as set forth on Schedule
9.15, (i) no portion of the real property or other assets of the
Companies or any Subsidiary has been used for the handling, processing,
storage or disposal of Hazardous Substances except in accordance in all
material respects with applicable Environmental Laws; and no underground
tank or other underground storage receptacle for Hazardous Substances is
located on such properties; (ii) in the course of any activities
conducted by the Companies, any Subsidiary or, to the best knowledge of
the Company, the operators of any real property of the Companies or any
Subsidiary, no Hazardous Substances have been generated or are being used
on such properties except in accordance in all material respects with
applicable Environmental Laws; (iii) there have been no Releases or
threatened Releases of Hazardous Substances on, upon, into or from any
real property or other assets of any of the Companies or any Subsidiary,
which Releases singly or in the aggregate might reasonably be expected to
have a material adverse effect on the value of such real property or
assets; (iv) there have been no Releases on, upon, from or into any real
property in the vicinity of the real property or other assets of the
Companies or any Subsidiary which, through soil or groundwater
contamination, may have come to be located on, and which might reasonably
be expected to have a material adverse effect on the value of, the real
property or other assets of any of the Companies or any Subsidiary; and
(v) to the best knowledge of the Company, any Hazardous Substances
generated by the Companies and their Subsidiaries have been transported
offsite only by properly licensed carriers and delivered only to
treatment or disposal facilities maintaining valid permits as required
under applicable Environmental Laws, which transporters and facilities
have been and are operating in compliance in all material respects with
such permits and applicable Environmental Laws.
9.16 Year 2000 Problem. Each of the Companies and its Subsidiaries (a)
have reviewed the areas within their business and operations which could
be adversely affected by, and have developed or are developing a program
to address on a timely basis, the Year 2000 Problem and (b) have made
appropriate inquiries as to the effect the Year 2000 Problem will have on
their material suppliers and customers. Based on such review, program
and inquiries, each of the Companies reasonably believes that the "Year
2000 Problem" will not have a Material Adverse Effect.
9.17 Insurance. Set forth on Schedule 9.17 is a complete and accurate
summary of the property and casualty insurance program of each of the
Companies and its Subsidiaries as of the Closing Date (including the
names of all insurers, policy numbers, expiration dates, amounts and
types of coverage, annual premiums, exclusions, deductibles, self-insured
retention, and a description in reasonable detail of any self-insurance
program, retrospective rating plan, fronting arrangement or other risk
assumption arrangement involving each Company or any Subsidiary).
9.18 Real Property. Set forth on Schedule 9.18 is a complete and
accurate list, as of the Closing Date, of the address of all real
property owned or leased by each of the Companies or any Subsidiary,
together with, in the case of leased property, the name and mailing
address of the lessor of such property.
9.19 Information. All information heretofore or contemporaneously
herewith furnished in writing by the Company or any other Loan Party to
the Agent or any Bank for purposes of or in connection with this
Agreement and the transactions contemplated hereby is, and all written
information hereafter furnished by or on behalf of the Company or any
Subsidiary to the Agent or any Bank pursuant hereto or in connection
herewith will be, true and accurate in every material respect on the date
as of which such information is dated or certified, and none of such
information is or will be incomplete by omitting to state any material
fact necessary to make such information not misleading in light of the
circumstances under which made (it being recognized by the Agent and the
Banks that any projections and forecasts provided by the Company are
based on good faith estimates and assumptions believed by the Company to
be reasonable as of the date of the applicable projections or assumptions
and that actual results during the period or periods covered by any such
projections and forecasts may differ from projected or forecasted
results).
9.20 Intellectual Property. Each of the Companies and each Subsidiary
owns and possesses or has a license or other right to use all patents,
patent rights, trademarks, trademark rights, trade names, tradename
rights, service marks, service xxxx rights and copyrights as are
necessary for the conduct of the business of such Company and its
Subsidiaries, without any infringement upon rights of others which could
reasonably be expected to have a Material Adverse Effect.
9.21 Burdensome Obligations. None of the Companies or any Subsidiary is
a party to any agreement or contract or subject to any corporate or
partnership restriction which might reasonably be expected to have a
Material Adverse Effect.
9.22 Labor Matters. Except as set forth on Schedule 9.22, none of the
Company or any Subsidiary is subject to any labor or collective
bargaining agreement. There are no existing or, to the best knowledge of
the Company, threatened strikes, lockouts or other labor disputes
involving any of the Companies or any Subsidiary that singly or in the
aggregate could reasonably be expected to have a Material Adverse Effect.
Hours worked by and payment made to employees of each of the Companies
and its Subsidiaries are not in violation of the Fair Labor Standards Act
or any other applicable law, rule or regulation dealing with such
matters.
9.23 No Default. No Event of Default or Unmatured Event of Default
exists or would result from the incurring by the Company of any Debt
hereunder or under any other Loan Document.
9.24 Purchase Agreement, etc. (a) The Company has heretofore furnished
the Agent a true and correct copy of the Purchase Agreement.
(b) Each of Compudyne and, to the Companies' knowledge, each other party
to the Purchase Agreement, has duly taken all necessary corporate,
partnership or other organizational action to authorize the execution,
delivery and performance of the Purchase Agreement and the consummation
of transactions contemplated thereby.
(c) Except as otherwise set forth on Schedule 9.24, the Purchase will
comply with all applicable legal requirements, and all necessary
governmental, regulatory, creditor, shareholder, partner and other
material consents, approvals and exemptions required to be obtained by
Compudyne and, to the Companies' knowledge, each other party to the
Purchase Agreement in connection with the Purchase will be, prior to
consummation of the Purchase, duly obtained and will be in full force and
effect. As of the date of the Purchase Agreement, all applicable waiting
periods with respect to the Purchase will have expired without any action
being taken by any competent governmental authority which restrains,
prevents or imposes material adverse conditions upon the consummation of
the Purchase.
(d) The execution and delivery of the Purchase Agreement did not, and
the consummation of the Purchase will not, violate any statute or
regulation of the United States (including any securities law) or of any
state or other applicable jurisdiction, or any order, judgment or decree
of any court or governmental body binding on any of the Companies or, to
the Companies' knowledge, any other party to the Purchase Agreement, or,
except as set forth on Schedule 9.24, result in a breach of, or
constitute a default under, any material agreement, indenture, instrument
or other document, or any judgment, order or decree, to which any of the
Companies is a party or by which any of the Companies is bound or, to the
Companies' knowledge, to which any other party to the Purchase Agreement
is a party or by which any such party is bound.
(e) No statement or representation made in the Purchase Agreement by any
of the Companies or, to the Companies' knowledge, any other Person,
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which
they are made, not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until all obligations of the Company hereunder and under the
other Loan Documents are paid in full and all Letters of Credit have been
terminated, the Company agrees that, unless at any time the Required
Banks shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to the Agent
and each Bank:
10.1.1 Annual Report. Promptly when available and in any event within 90
days after the close of each Fiscal Year: (a) a copy of the annual audit
report of the Company and its Subsidiaries for such Fiscal Year,
including therein consolidated balance sheets and statements of earnings
and cash flows of the Company and its Subsidiaries as at the end of such
Fiscal Year, certified without qualification by Deloitte & Touche LLP or
other independent auditors of recognized standing selected by the Company
and reasonably acceptable to the Required Banks, together with (i) a
written statement from such accountants to the effect that in making the
examination necessary for the signing of such annual audit report by such
accountants, nothing came to their attention that caused them to believe
that the Company was not in compliance with any provision of Section
10.6, 10.7, 10.9 or 10.10 of this Agreement insofar as such provision
relates to accounting matters or, if something has come to their
attention that caused them to believe that the Company was not in
compliance with any such provision, describing such non-compliance in
reasonable detail and (ii) a comparison with the budget for such Fiscal
Year and a comparison with the previous Fiscal Year; and (b)
consolidating balance sheets of the Company and its Subsidiaries as of
the end of such Fiscal Year and a consolidating statement of earnings for
the Company and its Subsidiaries for such Fiscal Year, certified by the
Chief Financial Officer or the Treasurer of the Company.
10.1.2 Interim Reports. (a) Promptly when available and in any event
within 45 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter of each Fiscal Year), consolidated and consolidating
balance sheets of the Company and its Subsidiaries as of the end of such
Fiscal Quarter, together with consolidated and consolidating statements
of earnings and cash flows for such Fiscal Quarter and for the period
beginning with the first day of such Fiscal Year and ending on the last
day of such Fiscal Quarter, together with a comparison with the
corresponding period of the previous Fiscal Year and a comparison with
the budget (which budget shall not include Xxxxxxx or Norshield for
periods prior to January 1, 1999) for such period of the current Fiscal
Year, certified by the Chief Financial Officer or the Treasurer of the
Company; and (b) promptly when available and in any event within 30 days
after the end of each month (except the last month of each Fiscal
Quarter), consolidated and consolidating balance sheets of the Company
and its Subsidiaries as of the end of such month, together with
consolidated and consolidating statements of earnings and a consolidated
statement of cash flows for such month and for the period beginning with
the first day of such Fiscal Year and ending on the last day of such
month, together with a comparison with the corresponding period of the
previous Fiscal Year and a comparison with the budget for such period of
the current Fiscal Year, certified by the Chief Financial Officer or the
Treasurer of the Company.
10.1.3 Compliance Certificates. Contemporaneously with the furnishing
of a copy of each annual audit report pursuant to Section 10.1.1 and each
set of quarterly statements pursuant to Section 10.1.2, a duly completed
compliance certificate in the form of Exhibit B, with appropriate
insertions, dated the date of such annual report or such monthly
statements and signed by the Chief Financial Officer or the Treasurer of
the Company, containing (i) a computation of each of the financial ratios
and restrictions set forth in Section 10.6 and to the effect that such
officer has not become aware of any Event of Default or Unmatured Event
of Default that has occurred and is continuing or, if there is any such
event, describing it and the steps, if any, being taken to cure it and
(ii) a written statement of the Company's management setting forth a
discussion of the Company's financial condition, changes in financial
condition and results of operations.
10.1.4 Reports to the SEC and to Shareholders. Promptly upon the filing
or sending thereof, copies of all regular, periodic or special reports of
the Company or any Subsidiary filed with the SEC; copies of all
registration statements of the Company or any Subsidiary filed with
the SEC (other than on Form S-8); and copies of all proxy statements or
other communications made to security holders generally.
10.1.5 Notice of Default, Litigation and ERISA Matters. Promptly upon
becoming aware of any of the following, written notice describing the
same and the steps being taken by the Company or the Subsidiary affected
thereby with respect thereto:
(a) the occurrence of an Event of Default or an Unmatured Event of
Default;
(b) any litigation, arbitration or governmental investigation or
proceeding not previously disclosed by the Company to the Banks which has
been instituted or, to the knowledge of the Company, is threatened
against the Company or any Subsidiary or to which any of the properties
of any thereof is subject which might reasonably be expected to have a
Material Adverse Effect;
(c) the institution of any steps by any member of the Controlled Group
or any other Person to terminate any Pension Plan, or the failure of any
member of the Controlled Group to make a required contribution to any
Pension Plan (if such failure is sufficient to give rise to a Lien under
Section 302(f) of ERISA) or to any Multiemployer Pension Plan, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that the Company furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan or Multiemployer Pension Plan which could result in the
incurrence by any member of the Controlled Group of any material
liability, fine or penalty (including any claim or demand for withdrawal
liability or partial withdrawal from any Multiemployer Pension Plan), or
any material increase in the contingent liability of the Company with
respect to any post-retirement welfare plan benefit, or any notice that
any Multiemployer Pension Plan is in reorganization, that increased
contributions may be required to avoid a reduction in plan benefits or
the imposition of an excise tax, that any such plan is or has been funded
at a rate less than that required under Section 412 of the Code, that any
such plan is or may be terminated, or that any such plan is or may become
insolvent;
(d) any cancellation or material change in any insurance maintained by
the Company or any Subsidiary;
(e) any other event (including (i) any violation of any Environmental
Law or the assertion of any Environmental Claim or (ii) the enactment or
effectiveness of any law, rule or regulation) which might reasonably be
expected to have a Material Adverse Effect; or
(f) any notice provided in connection with, or the occurrence of any
default under, the Bond Document (as defined in Section 12.1.2).
10.1.6 Borrowing Base Certificates. Within 30 days of the end of each
month, a Borrowing Base Certificate dated as of the end of such month and
executed by the Chief Financial Officer or the Treasurer of the Company
on behalf of the Company (provided that (i) the Company may deliver a
Borrowing Base Certificate more frequently if it chooses and (ii) at any
time an Event of Default exists, the Agent may require the Company to
deliver Borrowing Base Certificates more frequently).
10.1.7 Management Reports. Promptly upon the request of the Agent or
any Bank, copies of all detailed financial and management reports
submitted to the Company by independent auditors in connection with each
annual or interim audit made by such auditors of the books of the
Company.
10.1.8 Projections. As soon as practicable, and in any event prior to
the commencement of each Fiscal Year (or, in the case of Fiscal Year
1999, by no later than January 31, 1999), financial projections for the
Company and its Subsidiaries for such Fiscal Year (including an operating
budget and a cash flow budget) prepared in a manner consistent with the
projections delivered by the Company to the Banks prior to the Closing
Date or otherwise in a manner reasonably satisfactory to the Agent,
accompanied by a certificate of the Chief Financial Officer or the
Treasurer of the Company on behalf of the Company to the effect that (i)
such projections were prepared by the Company in good faith, (ii) the
Company has a reasonable basis for the assumptions contained in such
projections and (iii) such projections have been prepared in accordance
with such assumptions.
10.1.9 Subordinated Debt Notices. Promptly from time to time, copies of
any notices (including notices of default or acceleration) received from
any holder or trustee of, under or with respect to any Subordinated Debt
or with respect to any of the Subordinated Debt Documents.
10.1.10 Year 2000 Problem. Promptly upon the request of the Agent or
any Bank, such updated information or documentation as may be requested
from time to time regarding the efforts of the Company and its
Subsidiaries to address the Year 2000 Problem.
10.1.11 Other Information. Promptly from time to time, such other
information concerning the Company and its Subsidiaries as any Bank or
the Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each Subsidiary to
keep, its books and records in accordance with sound business practices
sufficient to allow the preparation of financial statements in accordance
with GAAP; permit, and cause each Subsidiary to permit, any Bank or the
Agent or any representative thereof to inspect the properties and
operations of the Company or such Subsidiary; and permit, and cause each
Subsidiary to permit, at any reasonable time and with reasonable notice
(or at any time without notice if an Event of Default exists), any Bank
or the Agent or any representative thereof to visit any or all of its
offices, to discuss its financial matters with its officers and its
independent auditors (and the Company hereby authorizes such independent
auditors to discuss such financial matters with any Bank or the Agent or
any representative thereof), and to examine (and, at the expense of the
Company or the applicable Subsidiary, photocopy extracts from) any of its
books or other records; and permit, and cause each Subsidiary to permit,
the Agent and its representatives to inspect the Inventory and other
tangible assets of the Company or such Subsidiary, to perform appraisals
of the equipment of the Company or such Subsidiary, and to inspect,
audit, check and make copies of and extracts from the books, records,
computer data, computer programs, journals, orders, receipts,
correspondence and other data relating to Inventory, Accounts Receivable
and any other collateral. All such inspections or audits by the Agent
shall be at the Company's expense, provided that so long as no Event of
Default or Unmatured Event of Default exists, the Company shall not be
required to reimburse the Agent for appraisals more frequently than once
each Fiscal Year or for field audits more frequently than twice each
Fiscal Year.
10.3 Maintenance of Property; Insurance. (a) Keep, and cause each
Subsidiary to keep, all property useful and necessary in the business of
the Company or such Subsidiary in good working order and condition,
ordinary wear and tear excepted.
(b) Maintain, and cause each Subsidiary to maintain, with responsible
insurance companies, such insurance as may be required by any law or
governmental regulation or court decree or order applicable to it and
such other insurance, to such extent and against such hazards and
liabilities, as is customarily maintained by companies similarly situated
and, upon request of the Agent or any Bank, furnish to the Agent or such
Bank a certificate setting forth in reasonable detail the nature and
extent of all insurance maintained by the Company and its Subsidiaries.
The Company shall cause each issuer of an insurance policy to provide the
Agent with an endorsement (i) showing loss payable to the Agent with
respect to each policy of property or casualty insurance and naming the
Agent and each Bank as an additional insured with respect to each policy
of insurance for liability for personal injury or property damage, (ii)
providing that 30 days' notice will be given to the Agent prior to any
cancellation of, material reduction or change in coverage provided by or
other material modification to such policy and (iii) reasonably
acceptable in all other respects to the Agent. The Company shall execute
and deliver to the Agent a collateral assignment, in form and substance
satisfactory to the Agent, of each business interruption insurance policy
maintained by the Company.
(c) UNLESS THE COMPANY PROVIDES THE AGENT WITH EVIDENCE OF THE INSURANCE
COVERAGE REQUIRED BY THIS AGREEMENT, THE AGENT MAY, UPON PRIOR NOTICE TO
THE COMPANY, PURCHASE INSURANCE AT THE COMPANY'S EXPENSE TO PROTECT THE
AGENT'S AND THE BANKS' INTERESTS IN THE COLLATERAL. THIS INSURANCE MAY,
BUT NEED NOT, PROTECT THE COMPANY'S INTERESTS. THE COVERAGE THAT THE
AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT IS MADE AGAINST THE COMPANY IN
CONNECTION WITH THE COLLATERAL. THE COMPANY MAY LATER CANCEL ANY
INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER PROVIDING THE AGENT WITH
EVIDENCE THAT THE COMPANY HAS OBTAINED INSURANCE AS REQUIRED BY THIS
AGREEMENT. IF THE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, THE
COMPANY WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING
INTEREST AND ANY OTHER CHARGES THAT MAY BE IMPOSED WITH THE PLACEMENT OF
THE INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION
OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE
PRINCIPAL AMOUNT OF THE LOANS OWING HEREUNDER. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF THE INSURANCE THE COMPANY MAY BE
ABLE TO OBTAIN ON ITS OWN.
10.4 Compliance with Laws; Payment of Taxes and Liabilities. (a)
Comply, and cause each Subsidiary to comply, in all material respects
with all applicable laws, rules, regulations, decrees, orders, judgments,
licenses and permits, except where failure to comply could not reasonably
be expected to have a Material Adverse Effect; and (b) pay, and cause
each Subsidiary to pay, prior to delinquency, all taxes and other
governmental charges against it or any of its property, as well as claims
of any kind which, if unpaid, might become a Lien on any of its property;
provided that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set
aside on its books adequate reserves with respect thereto in accordance
with GAAP.
10.5 Maintenance of Existence, etc. Maintain and preserve, and (subject
to Section 10.11) cause each Subsidiary to maintain and preserve, (a) its
existence and good standing in the jurisdiction of its organization and
(b) its qualification to do business and good standing in each
jurisdiction where the nature of its business makes such qualification
necessary (except in those instances in which the failure to be qualified
or in good standing does not have a Material Adverse Effect).
10.6 Financial Covenants.
10.6.1 Fixed Charge Coverage Ratio. Not permit the Fixed Charge Coverage
Ratio for any Computation Period to be less than the applicable ratio set
forth below for such Computation Period:
Computation Fixed Charge
Period Ending Coverage Ratio
3/31/99 - 12/31/02 1.10
3/31/03 and thereafter 1.15
10.6.2 Interest Coverage Ratio. Not permit the Interest Coverage Ratio
for any Computation Period to be less than the applicable ratio set forth
below for such Computation Period:
Computation Interest
Period Ending Coverage Ratio
3/31/99 - 12/31/99 1.50
3/31/00 - 12/31/00 2.00
3/31/01 - 12/31/01 2.25
3/31/02 - 12/31/02 2.75
3/31/03 and thereafter 3.00
10.6.3 Senior Debt to EBITDA Ratio. Not permit the Senior Debt to EBITDA
Ratio as of the last day of any Computation Period to exceed the
applicable ratio set forth below for such Computation Period:
Computation Senior Debt to
Period Ending EBITDA Ratio
03/31/99 12.00
6/30/99 5.75
9/30/99 3.50
12/31/99 - 6/30/00 2.75
9/30/00 2.50
12/31/00 and thereafter 2.00
10.6.4 Capital Expenditures. Not permit the aggregate amount of all
Capital Expenditures made by the Company and its Subsidiaries in any
period specified below to exceed the amounts set forth below for such
period:
Period EBITDA
11/30/98 - 12/31/98 $100,000
Fiscal Year 1999 800,000
Fiscal Year 2000 880,000
Fiscal Year 2001 968,000
Fiscal Year 2002 1,064,800
Fiscal Year 2003 1,171,280
Notwithstanding the above: (a) the Company may spend an additional
$850,000 on upgrading its computer systems during the period November 30,
1998 through December 31, 1999 (the "ERP Upgrade") (a preliminary budget
outlining various Capital Expenditures falling under the ERP Upgrade is
attached as Schedule 10.6; and (b) the Company may spend an additional
amount, during Fiscal Years 1999 and 2000, not to exceed $1,750,000, in
the aggregate, on Capital Expenditures related to the expansion of its
Norshield manufacturing facility located at 0000 Xxxxxx Xxxxxxx,
Xxxxxxxxxx Xxxxxxx (the "Norshield Expansion"). For purposes of
calculating the Fixed Charge Coverage Ratio under this Section 10.6,
Capital Expenditures shall exclude amounts spent on the ERP Upgrade and
the Norshield Expansion.
10.6.5 EBITDA. Not permit EBITDA for any Computation Period to be less
than the applicable amount set forth below for such Computation Period:
Computation
Period EBITDA
1/1/99 - 3/31/99 $1,300,000
1/1/99 - 6/30/99 2,700,000
1/1/99 - 9/30/99 4,200,000
1/1/99 - 12/31/99 6,000,000
10.7 Limitations on Debt. Not, and not permit any Subsidiary to,
create, incur, assume or suffer to exist any Debt, except:
(a) obligations under this Agreement and the other Loan Documents;
(b) Debt secured by Liens permitted by Section 10.8(d), and extensions,
renewals and refinancings thereof; provided that the aggregate amount of
all such Debt at any time outstanding shall not exceed $300,000;
(c) Debt of Subsidiaries to the Company;
(d) unsecured Debt of the Company to Subsidiaries;
(e) Subordinated Debt;
(f) Hedging Obligations incurred for bona fide hedging purposes and not
for speculation;
(g) Debt described on Schedule 10.7 and any extension, renewal or
refinancing thereof so long as the principal amount thereof is not
increased;
(h) the Debt to be Repaid (so long as such Debt is repaid on the Closing
Date with the proceeds of the initial Loans hereunder); and
(i) other Debt, in addition to the Debt listed above, in an aggregate
amount not at any time exceeding $150,000.
10.8 Liens. Not, and not permit any Subsidiary to, create or permit to
exist any Lien on any of its real or personal properties, assets or
rights of whatsoever nature (whether now owned or hereafter acquired),
except:
(a) Liens for taxes or other governmental charges not at the time
delinquent or thereafter payable without penalty or being contested in
good faith by appropriate proceedings and, in each case, for which it
maintains adequate reserves;
(b) Liens arising in the ordinary course of business (such as (i) Liens
of carriers, warehousemen, mechanics and materialmen and other similar
Liens imposed by law and (ii) Liens incurred in connection with worker's
compensation, unemployment compensation and other types of social
security (excluding Liens arising under ERISA) or in connection with
surety bonds, bids, performance bonds and similar obligations) for sums
not overdue or being contested in good faith by appropriate proceedings
and not involving any deposits or advances or borrowed money or the
deferred purchase price of property or services and, in each case, for
which it maintains adequate reserves;
(c) Liens described on Schedule 10.8;
(d) subject to the limitation set forth in Section 10.7(b), (i) Liens
arising in connection with Capital Leases (and attaching only to the
property being leased), (ii) Liens existing on property at the time of
the acquisition thereof by the Company or any Subsidiary (and not created
in contemplation of such acquisition) and (iii) Liens that constitute
purchase money security interests on any property securing debt incurred
for the purpose of financing all or any part of the cost of acquiring
such property, provided that any such Lien attaches to such property
within 60 days of the acquisition thereof and attaches solely to the
property so acquired;
(e) attachments, appeal bonds, judgments and other similar Liens, for
sums not exceeding $300,000 arising in connection with court proceedings,
provided the execution or other enforcement of such Liens is effectively
stayed and the claims secured thereby are being actively contested in
good faith and by appropriate proceedings;
(f) easements, rights of way, restrictions, minor defects or
irregularities in title and other similar Liens not interfering in any
material respect with the ordinary conduct of the business of the Company
or any Subsidiary;
(g) Liens arising under the Loan Documents;
(h) Liens securing Acquired Debt permitted by Section 10.7(i), provided
that such Liens do not extend to any assets other than the property
financed with such Acquired Debt; and
(i) the replacement, extension or renewal of any Lien permitted by
clauses (c) or (h) above upon or in the same property theretofore subject
thereto arising out of the extension, renewal or replacement of the Debt
secured thereby (without increase in the amount thereof).
10.9 Operating Leases. Not permit the aggregate amount of all rental
payments under Operating Leases made (or scheduled to be made) by the
Company and its Subsidiaries (on a consolidated basis) to exceed the sum
of $1,400,000 plus $500,000 in respect of all vehicles leases in any
Fiscal Year.
10.10 Restricted Payments. Not, and not permit any Subsidiary to, (a)
make any distribution to any of its shareholders, (b) purchase or redeem
any of its capital stock or other equity interests or any warrants,
options or other rights in respect thereof, (c) pay any management fees
or similar fees to any of its shareholders or any Affiliate thereof, (d)
make any redemption, prepayment, defeasance or repurchase of any
Subordinated Debt or (e) set aside funds for any of the foregoing.
Notwithstanding the foregoing, (i) any Subsidiary may pay dividends or
make other distributions to the Company or to a Wholly-Owned Subsidiary;
(ii) Compudyne may repurchase up to $150,000, in aggregate, of its
capital stock during the term hereof for the purpose of making resales to
employees under its stock discount plan or matching contributions under
its 401(k) plan; (iii) Compudyne may repurchase up to $150,000, in
aggregate, of its capital stock and may redeem up to $150,000, in
aggregate, of its capital stock owned by employees, in each case, during
the term hereof and in connection with the performance of its obligations
under Compudyne's employee stock option plan; (iv) Compudyne may pay to
Xxxxx the fee payable pursuant to Section 3.10 of the Investment
Agreement and (v) so long as no Event of Default or Unmatured Event of
Default exists or would result therefrom, the Company may make scheduled
payments of interest under the Subordinated Debt Documents to the extent
not otherwise prohibited by the Subordination Agreement.
10.11 Mergers, Consolidations, Sales. Not, and not permit any
Subsidiary to, be a party to any merger or consolidation, or purchase or
otherwise acquire all or substantially all of the assets or any stock of
any class of, or any partnership or joint venture interest in, any other
Person, or, except in the ordinary course of its business, sell,
transfer, convey or lease all or any substantial part of its assets, or
sell or assign with or without recourse any receivables, except for (a)
any such merger, consolidation, sale, transfer, conveyance, lease or
assignment of or by any Wholly-Owned Subsidiary into the Company or into,
with or to any other Wholly-Owned Subsidiary; (b) any such purchase or
other acquisition by the Company or any Wholly-Owned Subsidiary of the
assets or stock of any Wholly-Owned Subsidiary; (c) any Acquisition by
the Company or any Wholly-Owned Subsidiary where (1) the assets acquired
(in the case of an asset purchase) are for use, or the Person acquired
(in the case of any other Acquisition) is engaged, solely in the security
systems and/or fire alarm businesses; (2) immediately before and after
giving effect to such Acquisition, no Event of Default or Unmatured Event
of Default shall exist; (3) the consideration to be paid by the Company
and its Subsidiaries (including any Debt assumed or issued in connection
therewith, the amount thereof to be calculated in accordance with GAAP)
in connection with such Acquisition (or any series of related
Acquisitions) and any other Acquisitions consummated during the same
Fiscal Year is less than $600,000, in aggregate; (4) immediately after
giving effect to such Acquisition, the Company is in pro forma compliance
with all the financial ratios and restrictions set forth in Section 10.6;
(5) in the case of the Acquisition of any Person, the Board of Directors
of such Person has approved such Acquisition; (6) the EBITDA in respect
of the business (in the case of an asset purchase) or Person (in the case
of any other Acquisition) acquired is not less than zero; and (7) the
Company provides ten days prior written notice of such Acquisition to the
Agent; and (d) sales and dispositions of assets (including the stock of
Subsidiaries) for at least fair market value (as determined by the Board
of Directors of the Company) so long as the net book value of all assets
sold or otherwise disposed of in any Fiscal Year does not exceed 10% of
the net book value of the consolidated assets of the Company and its
Subsidiaries as of the last day of the preceding Fiscal Year.
10.12 Modification of Organizational Documents. Not permit the
Certificate or Articles of Incorporation, By-Laws or other organizational
documents of the Company or any Subsidiary to be amended or modified in
any way which might reasonably be expected to materially adversely affect
the interests of the Banks.
10.13 Use of Proceeds. Use the proceeds of the Loans, and the Letters
of Credit, solely to finance the Purchase, for working capital, for
Capital Expenditures and for other general corporate purposes; and not
use or permit any proceeds of any Loan to be used, either directly or
indirectly, for the purpose, whether immediate, incidental or ultimate,
of "purchasing or carrying" any Margin Stock.
10.14 Further Assurances. (a) Take, and cause each Subsidiary to take,
such actions as are necessary or as the Agent or the Required Banks may
reasonably request from time to time (including the execution and
delivery of guaranties, security agreements, pledge agreements,
mortgages, deeds of trust, financing statements and other documents, the
filing or recording of any of the foregoing, and the delivery of stock
certificates and other collateral with respect to which perfection is
obtained by possession) to ensure that (a) the obligations of the Company
hereunder and under the other Loan Documents (i) are secured by
substantially all of the assets of the Company and (ii) guaranteed by all
of its Subsidiaries (including, promptly upon the acquisition or creation
thereof, any Subsidiary acquired or created after the date hereof, unless
the Agent determines, in its discretion, that such Subsidiary should be a
borrower hereunder, in which event, such Subsidiary shall become a party
hereto) by execution of a counterpart of the Guaranty and (b) the
obligations of each Subsidiary under the Guaranty are secured by
substantially all of the assets of such Subsidiary.
(b) Cause all collections from Accounts Receivable to be directed to a
bank account maintained with the Agent.
10.15 Transactions with Affiliates. Not, and not permit any Subsidiary
to, enter into, or cause, suffer or permit to exist any transaction,
arrangement or contract with any of its other Affiliates (other than the
Company and its Subsidiaries) which is on terms which are less favorable
than are obtainable from any Person which is not one of its Affiliates.
10.16 Employee Benefit Plans. Maintain, and cause each Subsidiary to
maintain, each Pension Plan in substantial compliance with all applicable
requirements of law and regulations.
10.17 Environmental Matters. (a) If any Release or Disposal of Hazardous
Substances shall occur or shall have occurred on any real property or any
other assets of the Company or any Subsidiary, the Company shall, or
shall cause the applicable Subsidiary to, cause the prompt containment
and removal of such Hazardous Substances and the remediation of such real
property or other assets as necessary to comply with all Environmental
Laws and to preserve the value of such real property or other assets.
Without limiting the generality of the foregoing, the Company shall, and
shall cause each Subsidiary to, comply with any valid Federal or state
judicial or administrative order requiring the performance at any real
property of the Company or any Subsidiary of activities in response to
the Release or threatened Release of a Hazardous Substance.
(b) To the extent that the transportation of "hazardous waste" as
defined by RCRA is permitted by this Agreement, the Company shall, and
shall cause its Subsidiaries to, dispose of such hazardous waste only at
licensed disposal facilities operating in compliance with Environmental
Laws.
10.18 Unconditional Purchase Obligations. Not, and not permit any
Subsidiary to, enter into or be a party to any contract for the purchase
of materials, supplies or other property or services if such contract
requires that payment be made by it regardless of whether delivery is
ever made of such materials, supplies or other property or services.
10.19 Inconsistent Agreements. Not, and not permit any Subsidiary to,
enter into any agreement containing any provision which would (a) be
violated or breached by any borrowing by the Company hereunder or by the
performance by the Company or any Subsidiary of any of its obligations
hereunder or under any other Loan Document, (b) prohibit the Company or
any Subsidiary from granting to the Agent, for the benefit of the Banks,
a Lien on any of its assets or (c) create or permit to exist or become
effective any encumbrance or restriction on the ability of any Subsidiary
to (i) pay dividends or make other distributions to the Company or any
other applicable Subsidiary, or pay any Debt owed to the Company or any
other Subsidiary, (ii) make loans or advances to the Company or (iii)
transfer any of its assets or properties to the Company.
10.20 Business Activities. Not, and not permit any Subsidiary to,
engage in any line of business other than the businesses engaged in on
the date hereof and businesses reasonably related thereto (including the
fire alarm business).
10.21 Investments. Not, and not permit any Subsidiary to, make or
permit to exist any Investment in any other Person, except (without
duplication) the following:
(a) contributions by the Company to the capital of any of its
Subsidiaries, or by any such Subsidiary to the capital of any of its
Subsidiaries;
(b) in the ordinary course of business, Investments by the Company in
any Subsidiary or by any Subsidiary in the Company, by way of
intercompany loans, advances or guaranties, all to the extent permitted
by Section 10.7;
(c) Suretyship Liabilities permitted by Section 10.7;
(d) Cash Equivalent Investments;
(e) bank deposits in the ordinary course of business, provided that the
aggregate amount of all such deposits which are maintained with any bank
other than a Bank shall not at any time after December 31, 1998 exceed
$100,000 plus collections of accounts which are immediately deposited in
local banks and transferred to the Agent within three Business Days
thereafter);
(f) Investments in securities of account debtors received pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of such account debtors;
(g) Investments to consummate Acquisitions permitted by Section 10.11;
and
(h) Investments listed on Schedule 10.21;
provided that (x) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; (y) no Investment
otherwise permitted by clause (b), (c), or (g) shall be permitted to be
made if, immediately before or after giving effect thereto, any Event of
Default or Unmatured Event of Default exists.
10.22 Restriction of Amendments to Certain Documents. Not amend or
otherwise modify, or waive any rights under, the Purchase Agreement and
the Subordinated Debt Documents.
10.23 Interest Rate Protection. Enter into, not later than 120 days
after the Closing Date, an interest rate protection mechanism with a term
of at least three years on an ISDA standard form with one or more Banks
or Affiliates thereof or with counterparties reasonably acceptable to the
Agent to hedge the interest rate with respect to not less than 50% of the
principal amount of the Term Loans in form and substance reasonably
satisfactory to the Agent.
10.24 Fiscal Year. Not change its Fiscal Year.
10.25 Cancellation of Debt. Not, and not permit any Subsidiary to,
cancel any claim or debt owing to it, except for reasonable consideration
or in the ordinary course of business.
10.26 Certain Documents. Not, and not permit any Subsidiary to, enter
into any contract providing for receipt by the Company or any Subsidiary
of amounts in excess of (i) in the case of any contract in respect of any
domestic project, $15,000,000; (ii) in the case of any contract in
respect of any South African project, $4,000,000; and (iii) in the case
of all contracts entered into in any Fiscal Year, in respect of
international projects (other than in South Africa), $5,000,000, in
aggregate, in each case, without the prior written consent of the Agent,
such consent not to be unreasonably withheld in the exercise of Agent's
reasonable credit judgment.
SECTION 11 EFFECTIVENESS; CONDITIONS OF LENDING, ETC.
The obligation of each Bank to make its Loans and of the Issuing
Bank to issue Letters of Credit is subject to the following conditions
precedent:
11.1 Initial Credit Extension. The obligation of the Banks to make the
initial Loans and the obligation of the Issuing Bank to issue its
initial Letter of Credit (whichever first occurs) is, in addition to the
conditions precedent specified in Section 11.2, subject to the conditions
precedent that (1) all Debt to be Repaid has been (or concurrently with
the initial borrowing will be) paid in full, and that all agreements and
instruments governing the Debt to be Repaid and that all Liens securing
such Debt to be Repaid have been (or concurrently with the initial
borrowing will be) terminated and (2) the Agent shall have received (a)
evidence, reasonably satisfactory to the Agent, that the Company has
received (i) cash equity contributions from Xxxxx in an amount not less
than $3,000,000 and (ii) net cash proceeds of not less than $9,000,000
from the issuance of a senior subordinated term note to Xxxxx, which
shall be satisfactory in all respects to the Agent; (b) evidence,
reasonably satisfactory to the Agent, that the Company has completed, or
concurrently with the initial credit extension hereunder will complete,
the Purchase in accordance with the terms of the Purchase Agreement
(without any amendment thereto or waiver thereunder unless consented to
by the Required Banks, including, without limitation, any supplement or
amendment provided under Section 4.09 of the Purchase Agreement); (c)
evidence, reasonably satisfactory to the Agent, that the funds required
for the Purchase and the refinancing of all existing debt of the Company
shall not exceed $25,500,000 and the aggregate fees and expenses with
respect to the Purchase and the transactions contemplated hereby and
under the Subordinated Debt Documents shall not exceed $1,500,000; and
(d) all of the following, each duly executed and dated the Closing Date
(or such earlier date as shall be satisfactory to the Agent), in form and
substance satisfactory to the Agent (and the date on which all such
conditions precedent have been satisfied or waived in writing by the
Agent and the Required Banks is called the "Closing Date"):
11.1.1 Notes. The Notes.
11.1.2 Resolutions. Certified copies of resolutions of the Board of
Directors of each of the Companies authorizing the execution, delivery
and performance by such Company of this Agreement, the Notes and the
other Loan Documents to which such Company is a party; and certified
copies of resolutions of the Board of Directors of each other Loan Party
authorizing the execution, delivery and performance by such Loan Party of
each Loan Document to which such entity is a party.
11.1.3 Consents, etc. Certified copies of all documents evidencing any
necessary corporate or partnership action, consents and governmental
approvals (if any) required for the execution, delivery and performance
by the Company and each other Loan Party of the documents referred to in
this Section 11.
11.1.4 Incumbency and Signature Certificates. A certificate of the
Secretary or an Assistant Secretary (or other appropriate representative)
of each Loan Party certifying the names of the officer or officers of
such entity authorized to sign the Loan Documents to which such entity is
a party, together with a sample of the true signature of each such
officer (it being understood that the Agent and each Bank may
conclusively rely on each such certificate until formally advised by a
like certificate of any changes therein).
11.1.5 Security Agreement. A counterpart of the Security Agreement
executed by each of the Companies and each Subsidiary.
11.1.6 Pledge Agreements. Pledge Agreements executed by the each of the
Companies, together with all items required to be delivered in connection
therewith.
11.1.7 Real Estate Documents. With respect to each parcel of real
property owned by the Company or any Subsidiary, a duly executed Mortgage
providing for a fully perfected Lien, in favor of the Agent, in all
right, title and interest of the Company or such Subsidiary in such real
property, together with:
(a) an ALTA Loan Title Insurance Policy, issued by an insurer acceptable
to the Agent, insuring the Agent's Lien on such real property and
containing such endorsements as the Agent may reasonably require (it
being understood that the amount of coverage, exceptions to coverage and
status of title set forth in such policy shall be acceptable to the
Agent);
(b) copies of all documents of record concerning such real property as
shown on the commitment for the ALTA Loan Title Insurance Policy referred
to above;
(c) original or certified copies of all insurance policies required to
be maintained with respect to such real property by this Agreement, the
applicable Mortgage or any other Loan Document;
(d) a survey certified to the Agent meeting such standards as the Agent
may reasonably establish and otherwise reasonably satisfactory to the
Agent;
(e) a flood insurance policy concerning such real property, reasonably
satisfactory to the Agent, if required by the Flood Disaster Protection
Act of 1973; and
(f) an environmental audit, in form and substance satisfactory to the
Agent.
Additionally, in the case of leased real property set forth on
Schedule 11.1, a consent, in form and substance satisfactory to the
Agent, from the owner and/or mortgagee waiving any landlord's Lien in
respect of personal property kept at the premises subject to such lease.
11.1.8 Purchase Agreement Assignment. A purchase agreement assignment
substantially in the form of Exhibit F (the "Purchase Agreement
Assignment") executed by Compudyne and Apogee Enterprises, Inc.
11.1.9 Subordination/Intercreditor Agreement. A subordination and
intercreditor agreement substantially in the form of Exhibit K.
11.1.10 Opinions of Counsel. (a) The opinion of Xxxxx Xxxxxx & Xxxxxx,
LLP, special counsel to the Company, substantially in the form of Exhibit
I; and (b) all opinions delivered in connection with the closing of the
Purchase Agreement (which opinions shall state, or be accompanied by
letters which state, that the Agent and the Banks may rely thereon).
11.1.11 Insurance. Evidence satisfactory to the Agent of the existence
of insurance required to be maintained pursuant to Section 10.3(b),
together with evidence that the Agent has been named as a lender's loss
payee and an additional insured on all related insurance policies.
11.1.12 Copies of Documents. Copies, certified by the Secretary of
Compudyne, of the Purchase Agreement and the Subordinated Debt Documents,
including all exhibits and schedules thereto and any side agreements
entered into in connection therewith.
11.1.13 Payment of Fees. Evidence of payment by the Company of all
accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with all Attorney Costs of the
Agent to the extent invoiced prior to the Closing Date, plus such
additional amounts of Attorney Costs as shall constitute the Agent's
reasonable estimate of Attorney Costs incurred or to be incurred by the
Agent through the closing proceedings (provided that such estimate shall
not thereafter preclude final settling of accounts between the Company
and the Agent).
11.1.14 Solvency Certificate. A Solvency Certificate, substantially in
the form of Exhibit J, executed by the Chief Financial Officer of each of
the Companies.
11.1.15 Pro Forma. A consolidated pro forma balance sheet of the Company
as at the Closing Date (which will be based on the balance sheet of
Compudyne as of September 30, 1998, and the balance sheets of Xxxxxxx
and Norshield as of August 31, 1998), adjusted to give effect to the
consummation of the Purchase and the financings contemplated hereby and
under the Subordinated Debt Documents as if such transactions had
occurred on such date, consistent in all material respects with the
sources and uses of cash as previously described to the Banks and the
forecasts previously provided to the Banks.
11.1.16 Search Results; Lien Terminations. Certified copies of Uniform
Commercial Code Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to the Agent, dated
a date reasonably near to the Closing Date, listing all effective
financing statements which name the Companies and each Subsidiary (under
their present names and any previous names) as debtors and which are
filed in the jurisdictions in which filings are to be made pursuant to
the Collateral Documents, together with (i) copies of such financing
statements, (ii) executed copies of proper Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens and
other rights of any Person in any collateral described in the Collateral
Documents previously granted by any Person (other than Liens permitted by
Section 10.8) and (iii) such other Uniform Commercial Code Form UCC-3
termination statements as the Agent may reasonably request.
11.1.17 Filings, Registrations and Recordings. The Agent shall have
received each document (including Uniform Commercial Code financing
statements) required by the Collateral Documents or under law or
reasonably requested by the Agent to be filed, registered or recorded in
order to create in favor of the Agent, for the benefit of the Banks, a
perfected Lien on the collateral described therein, prior and superior to
any other Person, in proper form for filing, registration or recording.
11.1.18 Closing Certificate. A certificate signed by the President of
each of the Companies dated as of the Closing Date, affirming the matters
set forth in Section 11.2.1 as of the Closing Date.
11.1.19 Borrowing Base Certificate. A Borrowing Base Certificate dated
as of the Closing Date.
11.1.20 Purchase Certificate, Consents and Permits. A certificate
executed by the President of the Company on behalf of the Company
certifying the occurrence of the closing of the Purchase and the
financing contemplated by the Subordinated Debt Documents and that such
closings have been consummated in accordance with the terms of the
Purchase Agreement and the Subordinated Debt Documents, respectively,
without waiver of any material condition thereof; together with evidence
satisfactory to the Agent that (i) all necessary governmental,
regulatory, creditor, shareholder, partner and other material consents,
approvals and exemptions required to be obtained by the Company in
connection with the Purchase and the financing contemplated by the
Subordinated Debt Documents have been duly obtained and are in full force
and effect and (ii) all material permits necessary for the operation of
the acquired business have been obtained or will be obtained within a
reasonable time after the Closing and that, as to any material permit not
obtained at Closing ("Unobtained Permits"), the Company may legally
operate in the manner in which it intends to operate until the same is
obtained without impairment or prejudice due to such permit not having
been obtained. The Company agrees to use its best efforts to obtain any
Unobtained Permit as promptly as practicable, and in any event within 60
days, after the Closing Date.
11.1.21 Other. Such other documents as the Agent or any Bank may
reasonably request.
11.2 Conditions. The obligation (a) of each Bank to make each Loan and
(b) of the Issuing Bank to issue each Letter of Credit is subject to the
following further conditions precedent that:
11.2.1 Compliance with Warranties, No Default, etc. Both before and
after giving effect to any borrowing and the issuance of any Letter of
Credit, the following statements shall be true and correct:
(a) the representations and warranties of the Company and each
Subsidiary set forth in this Agreement and the other Loan Documents shall
be true and correct in all material respects with the same effect as if
then made (except to the extent stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct as of such earlier date); and
(b) no Event of Default or Unmatured Event of Default shall have then
occurred and be continuing.
11.2.2 Confirmatory Certificate. If requested by the Agent or any Bank,
the Agent shall have received (in sufficient counterparts to provide one
to each Bank) a certificate dated the date of such requested Loan or
Letter of Credit and signed by a duly authorized representative of the
Company as to the matters set out in Section 11.2.1 (it being understood
that each request by the Company for the making of a Loan or the issuance
of a Letter of Credit shall be deemed to constitute a warranty by the
Company that the conditions precedent set forth in Section 11.2.1 will be
satisfied at the time of the making of such Loan or the issuance of such
Letter of Credit), together with such other documents as the Agent or any
Bank may reasonably request in support thereof.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an Event
of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when due
of the principal of any Loan; or default, and continuance thereof for
five days, in the payment when due of any interest, fee, reimbursement
obligation with respect to any Letter of Credit or other amount payable
by the Company hereunder or under any other Loan Document.
12.1.2 Non-Payment of Other Debt. (a) Any default shall occur under the
terms applicable to any Debt of the Company or any Subsidiary in an
aggregate amount (for all such Debt so affected) exceeding $100,000 and
such default shall (i) consist of the failure to pay such Debt when due,
whether by acceleration or otherwise, or (ii) accelerate the maturity of
such Debt or permit the holder or holders thereof, or any trustee or
agent for such holder or holders, to cause such Debt to become due and
payable (or require the Company or any Subsidiary to purchase or redeem
such Debt) prior to its expressed maturity or (b) any Event of Default
shall occur under the Subordinated Debt Documents or the general
agreement of indemnity among the Company, Liberty Mutual Insurance
Company and certain other parties thereto, as amended from time to time
after the date hereof, and any replacement thereto (the "Bond Document").
12.1.3 Other Material Obligations. Default in the payment when due, or
in the performance or observance of, any material obligation of, or
condition agreed to by, the Company or any Subsidiary with respect to any
material purchase or lease of goods or services where such default,
singly or in the aggregate with all other such defaults, might reasonably
be expected to have a Material Adverse Effect.
12.1.4 Bankruptcy, Insolvency, etc. The Company or any Subsidiary
becomes insolvent or generally fails to pay, or admits in writing its
inability or refusal to pay, debts as they become due; or the Company or
any Subsidiary applies for, consents to, or acquiesces in the appointment
of a trustee, receiver or other custodian for the Company or such
Subsidiary or any property thereof, or makes a general assignment for the
benefit of creditors; or, in the absence of such application, consent or
acquiescence, a trustee, receiver or other custodian is appointed for the
Company or any Subsidiary or for a substantial part of the property of
any thereof and is not discharged within 60 days; or any bankruptcy,
reorganization, debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is commenced in respect of the Company or any Subsidiary, and
if such case or proceeding is not commenced by the Company or such
Subsidiary, it is consented to or acquiesced in by the Company or such
Subsidiary, or remains for 30 days undismissed; or the Company or any
Subsidiary takes any action to authorize, or in furtherance of, any of
the foregoing.
12.1.5 Non-Compliance with Loan Documents. (a) Failure by the Company to
comply with or to perform any covenant set forth in Sections 10.1.5(a),
10.5 through 10.15, and 10.20 through 10.22; or (b) failure by the
Company to comply with or to perform any other provision of this
Agreement or any other Loan Document (and not constituting an Event of
Default under any other provision of this Section 12) and continuance of
such failure described in this clause (b) for 30 days.
12.1.6 Warranties. Any warranty made by the Company or any Subsidiary
herein or any other Loan Document is breached or is false or misleading
in any material respect, or any schedule, certificate, financial
statement, report, notice or other writing furnished by the Company or
any Subsidiary to the Agent or any Bank in connection herewith is false
or misleading in any material respect on the date as of which the facts
therein set forth are stated or certified.
12.1.7 Pension Plans. (i) Institution of any steps by the Company or any
other Person to terminate a Pension Plan if as a result of such
termination the Company could be required to make a contribution to such
Pension Plan, or could incur a liability or obligation to such Pension
Plan, in excess of $100,000; (ii) a contribution failure occurs with
respect to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA; or (iii) there shall occur any withdrawal or
partial withdrawal from a Multiemployer Pension Plan and the withdrawal
liability (without unaccrued interest) to Multiemployer Pension Plans as
a result of such withdrawal (including any outstanding withdrawal
liability that the Company and the Controlled Group have incurred on the
date of such withdrawal) exceeds $100,000.
12.1.8 Judgments. Final judgments which exceed an aggregate of $100,000
shall be rendered against the Company or any Subsidiary and shall not
have been paid, discharged or vacated or had execution thereof stayed
pending appeal within 30 days after entry or filing of such judgments.
12.1.9 Invalidity of Guaranty, etc. The Guaranty shall cease to be in
full force and effect with respect to either of any Subsidiary; or any
Subsidiary (or any Person by, through or on behalf of such Subsidiary)
shall contest in any manner the validity, binding nature or
enforceability of the Guaranty with respect to such Subsidiary.
12.1.10 Invalidity of Collateral Documents, etc. Any Collateral
Document shall cease to be in full force and effect; or the Company or
any Subsidiary (or any Person by, through or on behalf of the Company or
any Subsidiary) shall contest in any manner the validity, binding nature
or enforceability of any Collateral Document.
12.1.11 Invalidity of Subordination Provisions, etc. Any subordination
provision in any document or instrument governing Subordinated Debt
(including the Subordinated Debt Documents), or any subordination
provision in any guaranty by any Subsidiary of any Subordinated Debt,
shall cease to be in full force and effect, or the Company or any other
Person (including the holder of any applicable Subordinated Debt) shall
contest in any manner the validity, binding nature or enforceability of
any such provision.
12.1.12 Change of Control. (a) Any Person (other than Xxxxx) or group
of Persons (within the meaning of Section 13 or 14 of the Securities
Exchange Act of 1934) shall acquire beneficial ownership (within the
meaning of Rule 13d-3 promulgated under such Act) of more than 20% of the
outstanding securities (on a fully diluted basis and taking into account
any securities or contract rights exercisable, exchangeable or
convertible into equity securities) of the Company having voting rights
in the election of directors under normal circumstances; or (b) a
majority of the members of the Board of Directors of the Company shall
cease to be Continuing Members; or (c) a period of 30 consecutive days
shall have elapsed during which any two of the individuals named in
Schedule 12.1.12 shall have ceased to hold executive offices with the
Company at least equal in seniority and responsibility to such
individuals' present offices, as set out in such Schedule 12.1.12,
excluding any such individual who has been replaced by another individual
or individuals reasonably satisfactory to the Required Banks (it being
understood that any such replacement individual shall be deemed added to
Schedule 12.1.12 on the date of approval thereof by the Required Banks)
or (d) Xxxxx or Affiliates thereof shall cease to own and control at
least 5%, or Xxxxx Xxxxxxx shall cease to own and control at least 15%,
of the outstanding voting stock of the Company or shall cease to serve as
Compudyne's Chairman. For purposes of the foregoing, "Continuing Member"
means a member of the Board of Directors of the Company who either (i)
was a member of the Company's Board of Directors on the day before the
Closing Date and has been such continuously thereafter or (ii) became a
member of such Board of Directors after the day before the Closing Date
and whose election or nomination for election was approved by a vote of
the majority of the Continuing Members then members of the Company's
Board of Directors.
12.1.13 Material Adverse Effect. The occurrence of any event having a
Material Adverse Effect.
12.2 Effect of Event of Default. If any Event of Default described in
Section 12.1.4 shall occur, the Commitments (if they have not theretofore
terminated) shall immediately terminate and the Loans and all other
obligations hereunder shall become immediately due and payable and the
Company shall become immediately obligated to Cash Collateralize all
Letters of Credit, all without presentment, demand, protest or notice of
any kind; and, if any other Event of Default shall occur and be
continuing, the Agent (upon written request of the Required Banks) shall
declare the Commitments (if they have not theretofore terminated) to be
terminated and/or declare all Loans and all other obligations hereunder
to be due and payable and/or demand that the Company immediately Cash
Collateralize all Letters of Credit, whereupon the Commitments (if they
have not theretofore terminated) shall immediately terminate and/or all
Loans and all other obligations hereunder shall become immediately due
and payable and/or the Company shall immediately become obligated to Cash
Collateralize all Letters of Credit, all without presentment, demand,
protest or notice of any kind. The Agent shall promptly advise the
Company of any such declaration, but failure to do so shall not impair
the effect of such declaration. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1 or
Section 12.1.4 may be waived by the written concurrence of all of the
Banks, and the effect as an Event of Default of any other event described
in this Section 12 may be waived by the written concurrence of the
Required Banks. Any cash collateral delivered hereunder shall be held by
the Agent (without liability for interest thereon) and applied to
obligations arising in connection with any drawing under a Letter of
Credit. After the expiration or termination of all Letters of Credit,
such cash collateral shall be applied by the Agent to any remaining
obligations hereunder and any excess shall be delivered to the Company or
as a court of competent jurisdiction may elect.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization. (a) Each Bank hereby irrevocably
(subject to Section 13.9) appoints, designates and authorizes the Agent
to take such action on its behalf under the provisions of this Agreement
and each other Loan Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the
Agent shall not have any duty or responsibility except those expressly
set forth herein, nor shall the Agent have or be deemed to have any
fiduciary relationship with any Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Agreement or any other Loan Document or otherwise exist
against the Agent.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit issued by it and the documents associated
therewith. The Issuing Bank shall have all of the benefits and
immunities (i) provided to the Agent in this Section 13 with respect to
any acts taken or omissions suffered by the Issuing Bank in connection
with Letters of Credit issued by it or proposed to be issued by it and
the applications and agreements for letters of credit pertaining to such
Letters of Credit as fully as if the term "Agent", as used in this
Section 13, included the Issuing Bank with respect to such acts or
omissions and (ii) as additionally provided in this Agreement with
respect to the Issuing Bank.
13.2 Delegation of Duties. The Agent may execute any of its duties under
this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
13.3 Liability of Agent. None of the Agent nor any of its directors,
officers, employees or agents shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or
(ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate,
report, statement or other document referred to or provided for in, or
received by the Agent under or in connection with, this Agreement or any
other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any
Loan Document to perform its obligations hereunder or thereunder. The
Agent shall not be under any obligation to any Bank to ascertain or to
inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Company
or any of the Company's Subsidiaries or Affiliates.
13.4 Reliance by Agent. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex or
telephone message, statement or other document or conversation believed
by it to be genuine and correct and to have been signed, sent or made by
the proper Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent accountants and
other experts selected by the Agent. The Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or
concurrence of the Required Banks as it deems appropriate and, if it so
requests, confirmation from the Banks of their obligation to indemnify
the Agent against any and all liability and expense which may be incurred
by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in
accordance with a request or consent of the Required Banks and such
request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Banks.
13.5 Notice of Default. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Event of Default or Unmatured Event of
Default except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Agent for the account of the
Banks, unless the Agent shall have received written notice from a Bank or
the Company referring to this Agreement, describing such Event of Default
or Unmatured Event of Default and stating that such notice is a "notice
of default". The Agent will notify the Banks of its receipt of any such
notice. The Agent shall take such action with respect to such Event of
Default or Unmatured Event of Default as may be requested by the Required
Banks in accordance with Section 12; provided that unless and until the
Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Event of Default or Unmatured Event of Default as it
shall deem advisable or in the best interest of the Banks.
13.6 Credit Decision. Each Bank acknowledges that the Agent has not
made any representation or warranty to it, and that no act by the Agent
hereafter taken, including any review of the affairs of the Company and
its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent to any Bank. Each Bank represents to the Agent
that it has, independently and without reliance upon the Agent and based
on such documents and information as it has deemed appropriate, made its
own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness
of the Company and its Subsidiaries, and made its own decision to enter
into this Agreement and to extend credit to the Company hereunder. Each
Bank also represents that it will, independently and without reliance
upon the Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this
Agreement and the other Loan Documents, and to make such investigations
as it deems necessary to inform itself as to the business, prospects,
operations, property, financial and other condition and creditworthiness
of the Company. Except for notices, reports and other documents
expressly herein required to be furnished to the Banks by the Agent, the
Agent shall not have any duty or responsibility to provide any Bank with
any credit or other information concerning the business, prospects,
operations, property, financial or other condition or creditworthiness of
the Company which may come into the possession of the Agent.
13.7 Indemnification. Whether or not the transactions contemplated
hereby are consummated, the Banks shall indemnify upon demand the Agent
and its directors, officers, employees and agents (to the extent not
reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), pro rata, from and against any and
all Indemnified Liabilities; provided that no Bank shall be liable for
any payment to any such Person of any portion of the Indemnified
Liabilities resulting from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of rights
or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
the Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive repayment of the
Loans, cancellation of the Notes, expiration or termination of the
Letters of Credit, any foreclosure under, or modification, release or
discharge of, any or all of the Collateral Documents, termination of this
Agreement and the resignation or replacement of the Agent.
13.8 Agent in Individual Capacity. LaSalle and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with
the Company and its Subsidiaries and Affiliates as though LaSalle were
not the Agent or the Issuing Bank hereunder and without notice to or
consent of the Banks. The Banks acknowledge that, pursuant to such
activities, LaSalle or its Affiliates may receive information regarding
the Company or its Affiliates (including information that may be subject
to confidentiality obligations in favor of the Company or such Affiliate)
and acknowledge that the Agent shall be under no obligation to provide
such information to them. With respect to their Loans (if any), LaSalle
and its Affiliates shall have the same rights and powers under this
Agreement as any other Bank and may exercise the same as though LaSalle
were not the Agent and the Issuing Bank, and the terms "Bank" and "Banks"
include LaSalle and its Affiliates, to the extent applicable, in their
individual capacities.
13.9 Successor Agent. The Agent may resign as Agent upon 30 days'
notice to the Banks. If the Agent resigns under this Agreement, the
Required Banks shall, with (so long as no Event of Default exists) the
consent of the Company (which shall not be unreasonably withheld or
delayed), appoint from among the Banks a successor agent for the Banks.
If no successor agent is appointed prior to the effective date of the
resignation of the Agent, the Agent may appoint, after consulting with
the Banks and the Company, a successor agent from among the Banks. Upon
the acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and duties of the
retiring Agent and the term "Agent" shall mean such successor agent, and
the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent,
the provisions of this Section 13 and Sections 14.6 and 14.13 shall inure
to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring
Agent's notice of resignation, the retiring Agent's resignation shall
nevertheless thereupon become effective and the Banks shall perform all
of the duties of the Agent hereunder until such time, if any, as the
Required Banks appoint a successor agent as provided for above.
13.10 Collateral Matters. The Banks irrevocably authorize the Agent, at
its option and in its discretion, (a) to release any Lien granted to or
held by the Agent under any Collateral Document (i) upon termination of
the Commitments and payment in full of all Loans and all other
obligations of the Company hereunder and the expiration or termination of
all Letters of Credit; (ii) constituting property sold or to be sold or
disposed of as part of or in connection with any disposition permitted
hereunder; or (iii) subject to Section 14.1, if approved, authorized or
ratified in writing by the Required Banks; or (b) to subordinate its
interest in any collateral to any holder of a Lien on such collateral
which is permitted by clause (d)(i) or (d)(iii) of Section 10.8 (it being
understood that the Agent may conclusively rely on a certificate from the
Company in determining whether the Debt secured by any such Lien is
permitted by Section 10.7(b)). Upon request by the Agent at any time,
the Banks will confirm in writing the Agent's authority to release, or
subordinate its interest in, particular types or items of collateral
pursuant to this Section 13.10.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any Bank
in the exercise of any right, power or remedy shall operate as a waiver
thereof, nor shall any single or partial exercise by any of them of any
right, power or remedy preclude other or further exercise thereof, or the
exercise of any other right, power or remedy. No amendment, modification
or waiver of, or consent with respect to, any provision of this Agreement
or the Notes shall in any event be effective unless the same shall be in
writing and signed and delivered by Banks having an aggregate Pro Rata
Share of not less than the aggregate Pro Rata Share expressly designated
herein with respect thereto or, in the absence of such designation as to
any provision of this Agreement or the Notes, by the Required Banks, and
then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given. No amendment, modification, waiver or consent shall change
the Pro Rata Share of any Bank without the consent of such Bank. No
amendment, modification, waiver or consent shall (i) increase the
Revolving Commitment Amount, (ii) extend the date for payment of any
principal of or interest on the Loans or any fees payable hereunder,
(iii) reduce the principal amount of any Loan, the rate of interest
thereon or any fees payable hereunder, (iv) release the Guaranty or all
or any substantial part of the collateral granted under the Collateral
Documents or (v) reduce the aggregate Pro Rata Share required to effect
an amendment, modification, waiver or consent without, in each case, the
consent of all Banks. No provision of Section 13 or other provision of
this Agreement affecting the Agent in its capacity as such shall be
amended, modified or waived without the consent of the Agent. No
provision of this Agreement relating to the rights or duties of the
Issuing Bank in its capacity as such shall be amended, modified or waived
without the consent of the Issuing Bank.
14.2 Confirmations. The Company and each holder of a Note agree from
time to time, upon written request received by it from the other, to
confirm to the other in writing (with a copy of each such confirmation to
the Agent) the aggregate unpaid principal amount of the Loans then
outstanding under such Note.
14.3 Notices. Except as otherwise provided in Sections 2.2.2 and 2.2.3,
all notices hereunder shall be in writing (including facsimile
transmission) and shall be sent to the applicable party at its address
shown on Schedule 14.3 or at such other address as such party may, by
written notice received by the other parties, have designated as its
address for such purpose. Notices sent by facsimile transmission shall
be deemed to have been given when sent; notices sent by mail shall be
deemed to have been given three Business Days after the date when sent by
registered or certified mail, postage prepaid; and notices sent by hand
delivery or overnight courier service shall be deemed to have been given
when received. For purposes of Sections 2.2.2 and 2.2.3, the Agent shall
be entitled to rely on telephonic instructions from any person that the
Agent in good faith believes is an authorized officer or employee of the
Company, and the Company shall hold the Agent and each other Bank
harmless from any loss, cost or expense resulting from any such reliance.
14.4 Computations. Where the character or amount of any asset or
liability or item of income or expense is required to be determined, or
any consolidation or other accounting computation is required to be made,
for the purpose of this Agreement, such determination or calculation
shall, to the extent applicable and except as otherwise specified in this
Agreement, be made in accordance with GAAP, consistently applied;
provided that if the Company notifies the Agent that the Company wishes
to amend any covenant in Section 10 to eliminate or to take into account
the effect of any change in GAAP on the operation of such covenant (or if
the Agent notifies the Company that the Required Banks wish to amend
Section 10 for such purpose), then the Company's compliance with such
covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such
notice is withdrawn or such covenant is amended in a manner satisfactory
to the Company and the Required Banks.
14.5 Regulation U. Each Bank represents that it in good faith is not
relying, either directly or indirectly, upon any Margin Stock as
collateral security for the extension or maintenance by it of any credit
provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on demand all
reasonable out-of-pocket costs and expenses of the Agent (including
Attorney Costs) in connection with the preparation, execution,
syndication, delivery and administration of this Agreement, the other
Loan Documents and all other documents provided for herein or delivered
or to be delivered hereunder or in connection herewith (including any
amendment, supplement or waiver to any Loan Document), and all reasonable
out-of-pocket costs and expenses (including Attorney Costs) incurred by
the Agent and each Bank after an Event of Default in connection with the
enforcement of this Agreement, the other Loan Documents or any such other
documents. In addition, the Company agrees to pay, and to save the Agent
and the Banks harmless from all liability for, (a) any stamp or other
taxes (excluding income taxes and franchise taxes based on net income)
which may be payable in connection with the execution and delivery of
this Agreement, the borrowings hereunder, the issuance of the Notes or
the execution and delivery of any other Loan Document or any other
document provided for herein or delivered or to be delivered hereunder or
in connection herewith and (b) any fees of the Company's auditors in
connection with any reasonable exercise by the Agent and the Banks of
their rights pursuant to Section 10.2. All obligations provided for in
this Section 14.6 shall survive repayment of the Loans, cancellation of
the Notes, expiration or termination of the Letters of Credit and
termination of this Agreement.
14.7 Subsidiary References. The provisions of this Agreement relating
to Subsidiaries shall apply only during such times as the Company has one
or more Subsidiaries.
14.8 Captions. Section captions used in this Agreement are for
convenience only and shall not affect the construction of this Agreement.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Bank may, with the prior written consents of
the Issuing Bank and the Agent and (so long as no Event of Default
exists) the Company (which consents shall not be unreasonably delayed or
withheld and, in any event, shall not be required for an assignment by a
Bank to one of its Affiliates), at any time assign and delegate to one or
more commercial banks or other Persons (any Person to whom such an
assignment and delegation is to be made being herein called an
"Assignee") all or any fraction of such Bank's Loans and Commitment
(which assignment and delegation shall be of a constant, and not a
varying, percentage of all the assigning Bank's Loans and Commitment) in
a minimum aggregate amount equal to the lesser of (i) the amount of the
assigning Bank's Pro Rata Share of the Revolving Commitment Amount plus
the unpaid amount of such Bank's Term Loan and (ii) $5,000,000; provided
that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be
obligated to pay any greater amount under Section 7.6 or Section 8 to the
Assignee than the Company is then obligated to pay to the assigning Bank
under such Sections (and if any assignment is made in violation of the
foregoing, the Company will not be required to pay the incremental
amounts) and (b) the Company and the Agent shall be entitled to continue
to deal solely and directly with such Bank in connection with the
interests so assigned and delegated to an Assignee until the date when
all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the Agent and
the assigning Bank shall agree) shall have passed after written notice of
such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee, shall
have been given to the Company and the Agent by such assigning Bank and
the Assignee,
(y) the assigning Bank and the Assignee shall have executed and
delivered to the Company and the Agent an assignment agreement in form
and substance satifactory to the Agent (an "Assignment Agreement"),
together with any documents required to be delivered thereunder, which
Assignment Agreement shall have been accepted by the Agent, and
(z) except in the case of an assignment by a Bank to one of its
Affiliates, the assigning Bank or the Assignee shall have paid the Agent
a processing fee of $3,500.
From and after the date on which the conditions described above have been
met, (x) such Assignee shall be deemed automatically to have become a
party hereto and, to the extent that rights and obligations hereunder
have been assigned and delegated to such Assignee pursuant to such
Assignment Agreement, shall have the rights and obligations of a Bank
hereunder and (y) the assigning Bank, to the extent that rights and
obligations hereunder have been assigned and delegated by it pursuant to
such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any
assignment and delegation, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a
new Note in the principal amount of the Assignee's Pro Rata Share of the
Revolving Commitment Amount plus the principal amount of the Assignee's
Term Loan and, if the assigning Bank has retained a Commitment hereunder,
a replacement Note in the principal amount of the Pro Rata Share of the
Revolving Commitment Amount retained by the assigning Bank plus the
principal amount of the Term Loan retained by the assigning Bank (such
Note to be in exchange for, but not in payment of, the predecessor Note
held by such assigning Bank). Each such Note shall be dated the
effective date of such assignment. The assigning Bank shall xxxx the
predecessor Note "exchanged" and deliver it to the Company. Accrued
interest on that part of the predecessor Note being assigned shall be
paid as provided in the Assignment Agreement. Accrued interest and fees
on that part of the predecessor Note not being assigned shall be paid to
the assigning Bank. Accrued interest and accrued fees shall be paid at
the same time or times provided in the predecessor Note and in this
Agreement. Any attempted assignment and delegation not made in
accordance with this Section 14.9.1 shall be null and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or any
other provision of this Agreement, any Bank may at any time assign all or
any portion of its Loans and its Note to a Federal Reserve Bank (but no
such assignment shall release any Bank from any of its obligations
hereunder).
14.9.2 Participations. Any Bank may at any time sell to one or more
commercial banks or other Persons participating interests in any Loan
owing to such Bank, the Note held by such Bank, the Commitment of such
Bank, the direct or participation interest of such Bank in any Letter of
Credit or any other interest of such Bank hereunder (any Person
purchasing any such participating interest being herein called a
"Participant"). In the event of a sale by a Bank of a participating
interest to a Participant, (x) such Bank shall remain the holder of its
Note for all purposes of this Agreement, (y) the Company and the Agent
shall continue to deal solely and directly with such Bank in connection
with such Bank's rights and obligations hereunder and (z) all amounts
payable by the Company shall be determined as if such Bank had not sold
such participation and shall be paid directly to such Bank. No
Participant shall have any direct or indirect voting rights hereunder
except with respect to any of the events described in the fourth sentence
of Section 14.1. Each Bank agrees to incorporate the requirements of the
preceding sentence into each participation agreement which such Bank
enters into with any Participant. The Company agrees that if amounts
outstanding under this Agreement and the Notes are due and payable (as a
result of acceleration or otherwise), each Participant shall be deemed to
have the right of setoff in respect of its participating interest in
amounts owing under this Agreement, any Note and with respect to any
Letter of Credit to the same extent as if the amount of its participating
interest were owing directly to it as a Bank under this Agreement or such
Note; provided that such right of setoff shall be subject to the
obligation of each Participant to share with the Banks, and the Banks
agree to share with each Participant, as provided in Section 7.5. The
Company also agrees that each Participant shall be entitled to the
benefits of Section 7.6 and Section 8 as if it were a Bank (provided that
no Participant shall receive any greater compensation pursuant to Section
7.6 or Section 8 than would have been paid to the participating Bank if
no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a contract
made under and governed by the internal laws of the State of Illinois
applicable to contracts made and to be performed entirely within such
State. Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this
Agreement. All obligations of the Company and rights of the Agent and
the Banks expressed herein or in any other Loan Document shall be in
addition to and not in limitation of those provided by applicable law.
14.11 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Agreement.
14.12 Successors and Assigns. This Agreement shall be binding upon
the Company, the Banks and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company, the Banks and the
Agent and the successors and assigns of the Banks and the Agent.
14.13 Indemnification by the Company. In consideration of the execution
and delivery of this Agreement by the Agent and the Banks and the
agreement to extend the Commitments provided hereunder, the Company
hereby agrees to indemnify, exonerate and hold the Agent, each Bank and
each of the officers, directors, employees, Affiliates and agents of the
Agent and each Bank (each a "Bank Party") free and harmless from and
against any and all actions, causes of action, suits, losses,
liabilities, damages and expenses, including Attorney Costs
(collectively, the "Indemnified Liabilities"), incurred by the Bank
Parties or any of them as a result of, or arising out of, or relating to
(i) any tender offer, merger, purchase of stock, purchase of assets
(including the Purchase) or other similar transaction financed or
proposed to be financed in whole or in part, directly or indirectly, with
the proceeds of any of the Loans, (ii) the use, handling, release,
emission, discharge, transportation, storage, treatment or disposal of
any hazardous substance at any property owned or leased by the Company or
any Subsidiary, (iii) any violation of any Environmental Laws with
respect to conditions at any property owned or leased by the Company or
any Subsidiary or the operations conducted thereon, (iv) the
investigation, cleanup or remediation of offsite locations at which the
Company or any Subsidiary or their respective predecessors are alleged to
have directly or indirectly disposed of hazardous substances or (v) the
execution, delivery, performance or enforcement of this Agreement or any
other Loan Document by any of the Bank Parties, except for any such
Indemnified Liabilities arising on account of the applicable Bank Party's
gross negligence or willful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. All obligations provided for in this Section 14.13
shall survive repayment of the Loans, cancellation of the Notes,
expiration or termination of the Letters of Credit, any foreclosure
under, or any modification, release or discharge of, any or all of the
Collateral Documents and termination of this Agreement.
14.14 Nonliability of Lenders. The relationship between the Company on
the one hand and the Banks and the Agent on the other hand shall be
solely that of borrower and lender. Neither the Agent nor any Bank shall
have any fiduciary responsibility to the Company. Neither the Agent nor
any Bank undertakes any responsibility to the Company to review or inform
the Company or any matter in connection with any phase of the Company's
business or operations. The Company agrees that neither the Agent nor
any Bank shall have liability to the Company (whether sounding in tort,
contract or otherwise) for losses suffered by the Company in connection
with, arising out of, or in any way related to the transactions
contemplated and the relationship established by the Loan Documents, or
any act, omission or event occurring in connection therewith, unless it
is determined in a final non-appealable judgment by a court of competent
jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither
the Agent nor any Bank shall have any liability with respect to, and the
Company hereby waives, releases and agrees not to xxx for, any special,
indirect or consequential damages suffered by the Company in connection
with, arising out of, or in any way related to the Loan Documents or the
transactions contemplated thereby.
14.15 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, SHALL BE BROUGHT AND MAINTAINED
EXCLUSIVELY IN THE COURTS OF THE STATE OF ILLINOIS OR IN THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS; PROVIDED
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY
JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT
COURT FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH
LITIGATION AS SET FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY
PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE COMPANY
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE
AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
14.16 Waiver of Jury Trial. EACH OF THE COMPANY, THE AGENT AND EACH
BANK HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY
NOTE, ANY OTHER LOAN DOCUMENT AND ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
HEREWITH OR THEREWITH OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING
IN CONNECTION WITH ANY OF THE FOREGOING, AND AGREES THAT ANY SUCH ACTION
OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
Delivered at Chicago, Illinois, as of the day and year first above
written.
COMPUDYNE CORPORATION
By
Title
XXXXXXX INDUSTRIES, INC.
By
Title
NORSHIELD CORPORATION
By
Title
QUANTA SYSTEMS CORPORATION
By
Title
QUANTA SECURSYSTEMS, INC.
By
Title
MICROASSEMBLY SYSTEMS, INC.
By
Title
SYSCO SECURITY SYSTEMS, INC.
By
Title
LASALLE NATIONAL BANK, as Agent
By
Title
LASALLE NATIONAL BANK,
as Issuing Bank and as a Bank
By
Title
PRICING SCHEDULE
The Eurodollar Margin, the Base Rate Margin, the Non-Use Fee Rate
and the LC Fee Rate shall be determined as set forth below.
Initially, the Eurodollar Margin shall be 2.50% per annum, the Base
Rate Margin shall be 1.00% per annum, the Non-Use Fee Rate shall be .50%
per annum and the LC Fee Rate shall be 2.50% per annum.
On and after June 30, 1999, the Eurodollar Margin, the Base Rate
Margin, the Non-Use Fee Rate and the LC Fee Rate shall be equal to the
applicable rate per annum set forth in the table below opposite the
applicable Senior Debt to EBITDA Ratio:
Senior Debt Eurodollar Base Rate Non-Use LC Fee
to EBITBDA Ratio Margin Margin Fee Rate Rate
Greater than or
equal to 2.50:1 2.75% 1.25% .50% 2.75%
Greater than or
equalto 2.00:1
but less than 2.50:1 2.50% 1.00% .50% 2.50%
Greater than or equal
to 1.50:1 but less
than 2.00:1 2.25% .75% .50% 2.25%
Less than 1.50:1 2.00% .50% .50% 2.00%
The Eurodollar Margin, the Base Rate Margin, the Non-Use Fee Rate and the
LC Fee Rate shall be adjusted, to the extent applicable, on the 45th (or,
in the case of the last Fiscal Quarter of each Fiscal Year, 90th) day
after the end of each Fiscal Quarter based on the Senior Debt to EBITDA
Ratio as of the last day of such Fiscal Quarter; it being understood that
if the Company fails to deliver the financial statements required by
Section 10.1.1 or 10.1.2, as applicable, and the related Compliance
Certificate, required by Section 10.1.3 by the 45th day (or, if
applicable, the 90th day) after any Fiscal Quarter, the Eurodollar Margin
shall be 2.75%, the Base Rate Margin shall be 1.25%, the Non-Use Fee Rate
shall be .050% and the LC Fee Rate shall be 2.75% until such financial
statements and Compliance Certificate are delivered. Notwithstanding the
foregoing, no reduction to the foregoing interest rate margins or fee
rates shall become effective at any time when an Event of Default or
Unmatured Event of Default has occurred and is continuing.
SCHEDULE 2.1
BANKS AND PRO RATA SHARES
Pro Rate Share
of Revolving Amount of
Bank Commitment Amount Term Loan Pro Rata Share */
LaSalle
National
Bank $6,500,000 $11,500,000 100%
TOTALS $6,500,000 $11,500,000 100%
*/ Carry out to nine decimal places.
SCHEDULE 3.1
TERM LOAN INSTALLMENTS
Date Amount
June 30, 1999 $375,000
September 30, 1999 $375,000
December 31, 1999 $375,000
March 31, 2000 $375,000
June 30, 2000 $500,000
September 30, 2000 $500,000
December 31, 2000 $500,000
March 31, 2001 $500,000
June 30, 2001 $625,000
September 30, 2001 $625,000
December 31, 2001 $625,000
March 31, 2002 $625,000
June 30, 2002 $625,000
September 30, 2002 $625,000
December 31, 2002 $625,000
March 31, 2003 $625,000
June 30, 2003 $750,000
September 30, 2003 $750,000
December 31, 2003 $750,000
March 31, 2004 $750,000
SCHEDULE 9.4
FINANCIAL STATEMENTS AND PROJECTIONS
SCHEDULE 9.6
LITIGATION AND CONTINGENT LIABILITIES
SCHEDULE 9.8
SUBSIDIARIES
SCHEDULE 9.15
ENVIRONMENTAL MATTERS
SCHEDULE 9.17
INSURANCE
SCHEDULE 9.18
REAL PROPERTY
SCHEDULE 9.22
LABOR MATTERS
SCHEDULE 9.24
PURCHASE AGREEMENT
SCHEDULE 10.7
EXISTING DEBT
SCHEDULE 10.8
EXISTING LIENS
SCHEDULE 10.21
INVESTMENTS
SCHEDULE 11.1
DEBT TO BE REPAID
SCHEDULE 12.1.12
KEY EXECUTIVES
Xxxxxx Xxxxxxx
SCHEDULE 14.3
ADDRESSES FOR NOTICES
COMPUDYNE CORPORATION OR ANY SUBSIDIARY BORROWER
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Chairman and Chief Executive Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
and
QUANTA SECURSYSTEMS, INC.
Parkway Industrial Park
0000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Rock
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Tyler, Xxxxxx & Xxxxxx, LLP
000 Xxxxxx Xxxxxx
City Place, 35th Floor
Hartford, Conn. 06103-3488
Attention: Xxxxxx X. Xxxxxxx
Telephone: (000)000-0000
Facsimile: (000) 000-0000
LASALLE NATIONAL BANK, as Agent, Issuing Bank and a Bank
Notices of Borrowing , Conversion, Continuation and Letter of Credit
Issuance
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000)000-0000
Facsimile: (000)000-0000
All Other Notices
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Seyfarth, Shaw, Xxxxxxxxxxx & Xxxxxxxxx
00 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxxxx III
Telephone: (000) 000-0000
Fax: (000) 000-0000
EXHIBIT A
FORM OF
NOTE
,
$ Chicago, Illinois
Each of the undersigned, for value received, jointly and
severally promises to pay to the order of (the "Bank") at the
principal office of LaSalle National Bank (the "Agent") in Chicago,
Illinois the aggregate unpaid amount of all Loans made to the undersigned
by the Bank pursuant to the Credit Agreement referred to below (as shown
on the schedule attached hereto (and any continuation thereof) or in the
records of the Bank), such principal amount to be payable on the dates
set forth in the Credit Agreement.
The undersigned further jointly and severally promise to pay
interest on the unpaid principal amount of each Loan from the date of
such Loan until such Loan is paid in full, payable at the rate(s) and at
the time(s) set forth in the Credit Agreement. Payments of both
principal and interest are to be made in lawful money of the United
States of America.
This Note evidences indebtedness incurred under, and is
subject to the terms and provisions of, the Credit Agreement, dated as of
November , 1998 (as amended or otherwise modified from time to time,
the "Credit Agreement"; terms not otherwise defined herein are used
herein as defined in the Credit Agreement), among the undersigned,
certain financial institutions (including the Bank) and the Agent, to
which Credit Agreement reference is hereby made for a statement of the
terms and provisions under which this Note may or must be paid prior to
its due date or its due date accelerated.
This Note is made under and governed by the laws of the State
of Illinois applicable to contracts made and to be performed entirely
within such State.
COMPUDYNE CORPORATION
By
Title
XXXXXXX INDUSTRIES, INC.
By
Title
NORSHIELD CORPORATION
By
Title
QUANTA SYSTEMS CORPORATION
By
Title
QUANTA SECURSYSTEMS, INC.
By
Title
MICROASSEMBLY SYSTEMS, INC.
By
Title
SYSCO SECURITY SYSTEMS, INC.
By
Title
Schedule attached to Note dated , of COMPUDYNE CORPORATION
and certain Subsidiary Borrowers payable to the order of
Date and Date and
Amount of Amount of
Loan or of Repayment or of Interest
Conversion from Conversion into Period/ Unpaid
another type of another type of Maturity Principal Notation
Loan Loan Date Balance Made by
1. BASE RATE LOANS
2. EURODOLLAR LOANS
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
To: LaSalle National Bank, as Agent
Please refer to the Credit Agreement dated as of November ,
1998 (as amended or otherwise modified from time to time, the "Credit
Agreement") among Compudyne Corporation and certain Subsidiary Borrowers
(as defined in the Loan Agreement) (the "Company"), various financial
institutions and LaSalle National Bank, as agent. Terms used but not
otherwise defined herein are used herein as defined in the Credit
Agreement.
I. Reports. Enclosed herewith is a copy of the [annual
audited/quarterly/monthly] report of the Company as at , (the
"Computation Date"), which report fairly presents in all material
respects the financial condition and results of operations [(subject to
the absence of footnotes and to normal year-end adjustments)] of the
Company as of the Computation Date and has been prepared in accordance
with GAAP consistently applied.
II. Financial Tests. The Company hereby certifies and warrants to you
that the following is a true and correct computation as at the
Computation Date of the following ratios and/or financial restrictions
contained in the Credit Agreement:
[REVISE AS APPROPRIATE]
A. Section 10.6.1 - Minimum Fixed Charge Coverage Ratio
1. Consolidated Net Income $
2. Plus: Interest Expense $
income tax expense $________
depreciation $
amortization $
3. Total (EBITDA) $________
4. Income taxes paid $
5. Capital Expenditures $________
6. Sum of (4) and (5) $
7. Remainder of (3) minus (6) $________
8. Interest Expense $
9. Required payments of
principal of Funded Debt
(including Term Loans but
excluding Revolving Loans) $
10. Sum of (8) and (9) $________
11. Ratio of (7) to (10) to 1
12. Minimum Required ___ _ to 1
B. Section 10.6.2 - Minimum Interest Coverage Ratio
1. EBITDA $________
(from Item A(3) above)
2. Interest Expense $
3. Ratio of (1) to (2) ____ to 1
4. Minimum required to 1
C. Section 10.6.3 - Maximum Senior Debt to EBITDA Ratio
1. Total Debt $
2. EBITDA $
(from Item A(3) above)
3. Ratio of (1) to (2) to 1
4. Maximum allowed to 1
D. Section 10.6.4 - Capital Expenditures
1. Capital Expenditures for the
Fiscal Year $
2. Maximum Permitted Capital
Expenditures $
E. Section 10.6.5 - Minimum EBITDA
1. EBITDA (from item A(3) above) $
2. Minimum required $
The Company further certifies to you that no Event of Default or
Unmatured Event of Default has occurred and is continuing.
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed and delivered by its duly authorized officer on , .
COMPUDYNE CORPORATION
By
Title
XXXXXXX INDUSTRIES, INC.
By____________________________________________
Title
NORSHIELD CORPORATION
By
Title
QUANTA SYSTEMS CORPORATION
By____________________________________________
Title
QUANTA SECURSYSTEMS, INC.
By____________________________________________
Title
MICROASSEMBLY SYSTEMS, INC.
By
Title
SYSCO SECURITY SYSTEMS, INC.
By____________________________________________
Title
EXHIBIT G
FORM OF BORROWING BASE CERTIFICATE
To: LaSalle National Bank, as Agent
000 X. XxXxxxx Xx.
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Please refer to the Credit Agreement dated as of November ,
1998 (as amended or otherwise modified from time to time, the "Credit
Agreement") among Compudyne Corporation and certain Subsidiary borrowers
(as defined in the Credit Agreement) (the "Company"), various financial
institutions and LaSalle National Bank, as agent. This certificate (this
"Certificate"), together with supporting calculations attached hereto, is
delivered to you pursuant to the terms of the Credit Agreement.
Capitalized terms used but not otherwise defined herein shall have the
same meanings herein as in the Credit Agreement.
The Company hereby certifies and warrants to the Agent and the
Banks that at the close of business on , (the "Calculation Date"),
the Borrowing Base was $ , computed as set forth on the schedule
attached hereto.
IN WITNESS WHEREOF, the Company has caused this Certificate to
be executed and delivered by its officer thereunto duly authorized on
, .
COMPUDYNE CORPORATION
By
Title
XXXXXXX INDUSTRIES, INC.
By
Title
NORSHIELD CORPORATION
By
Title
QUANTA SYSTEMS CORPORATION
By
Title
QUANTA SECURSYSTEMS, INC.
By
Title
MICROASSEMBLY SYSTEMS, INC.
By
Title
SYSCO SECURITY SYSTEMS, INC.
By
Title
SCHEDULE TO BORROWING BASE CERTIFICATE
Dated as of [ ]
1. Gross Accounts Receivable $
2. Less Ineligibles
- Agent's Lien Not Perfected $_________
- Subject to other Lien $
- Subject to Offset, etc. $
- Account Debtor not in U.S.
or Canada $_________
- Sale on Approval, Sale or
Return, Xxxx and Hold or
Consignment $
- Over 90 days past due or
over 120 days past invoice
date $
- Affiliate Receivables $
- Other $
- Total $
3. Eligible Accounts Receivable [Item
1 minus Item 2] $
4. Item 3 times 50% $
5. Gross Inventory $
6. Less Ineligibles
- Agent's Lien Not Perfected $
- Subject to other Lien $_________
- Not Salable $
- Located off-site and no
Collateral Access Agreement or Waiver $_________
- Not located in U.S. $
- Other $
- Total $
7. Eligible Inventory [Item 5 minus Item 6] $
8. Item 7 times 25% $
9. Borrowing Base
[Item 4 plus Item 8] $
10. Lesser of Item 9 and
the Revolving Commitment Amount $
11. Revolving Outstandings $
12. Net Availability
[Excess of Item 10 over Item 11] $_________
13. Required Prepayment
[Excess of Item 11 over Item 10] $
