Exhibit 10.1
THIRD AMENDMENT TO SECOND AMENDED AND RESTATED
REVOLVING CREDIT SECURITY AGREEMENT
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This Third Amendment to Second Amended and Restated Revolving Credit
and Security Agreement (the "Amendment") is made this 28 day of March, 2007, by
and among COMPUDYNE CORPORATION, a Nevada corporation ("CompuDyne"), TIBURON,
INC., a Virginia corporation (formerly known as Compudyne - Public Safety &
Justice, Inc., a Virginia corporation) ("Tiburon"), XXXXXXX SECURITY GROUP,
INC., a Delaware corporation ("Xxxxxxx"), NORSHIELD CORPORATION, an Alabama
corporation ("Norshield"), COMPUDYNE - INTEGRATED ELECTRONICS DIVISION, LLC, a
Delaware limited liability company ("CompuDyne Integrated"), CORRLOGIC, LLC, a
Delaware limited liability company ("CorrLogic"), XANALYS CORPORATION, a
Delaware corporation ("Xanalys"), SIGNAMI DCS, LLC, a Delaware limited liability
company ("Signami") FIBER SENSYS, LLC, a Delaware limited liability company
("Fiber") (CompuDyne, Tiburon, Xxxxxxx, Norshield, Fiber, CompuDyne Integrated,
CorrLogic, Xanalys, Signami and Fiber, each a "Borrower", and collectively
"Borrowers"), the financial institutions which are now or which hereafter become
a party hereto (collectively, the "Lenders" and individually a "Lender") and PNC
BANK, NATIONAL ASSOCIATION ("PNC"), as agent for Lenders (PNC, in such capacity,
the "Agent").
BACKGROUND
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A. On December 19, 2005, Borrowers, Lenders and Agent entered into,
inter alia, a certain Second Amended and Restated Revolving Credit and Security
Agreement (as same has been or may be amended, modified, renewed, extended,
replaced, or substituted from time to time, the "Loan Agreement"), to reflect
certain financing arrangements between the parties thereto. The Loan Agreement
and all other documents executed in connection therewith are collectively
referred to as the "Existing Financing Agreements." All capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the Loan
Agreement. In the case of a direct conflict between the provisions of the Loan
Agreement and the provisions of this Amendment, the provisions hereof shall
prevail.
B. The Borrowers have requested and the Agent and the Lenders have
agreed to modify the Loan Agreement, subject to the terms and conditions of this
Amendment.
NOW THEREFORE, with the foregoing background hereinafter deemed
incorporated by reference herein and made part hereof, the parties hereto,
intending to be legally bound, promise and agree as follows:
A. Amendments to Loan Agreement. Upon the Effective Date, the Loan
Agreement shall be amended as follows:
1. Definitions. The definition of EBITDA shall be deleted in its
entirety and replaced with the following:
"EBITDA" shall mean for any period the sum of (i)
Earnings Before Interest and Taxes for such period,
plus (ii) depreciation expenses for such period, plus
(iii) amortization expenses for such period, plus
(iv) to the extent deducted in calculating EBITDA,
any non-cash charges against net income required to
be recognized in connection with the issuance of
Equity Interests to employees or otherwise in
accordance with SFAS 123R "Accounting for Stock Based
Compensation" promulgated by FASB (whether upon lapse
of vesting restrictions, exercise of employee options
or otherwise), plus (v) to the extent deducted in
calculating EBITDA, any non-cash impairment charge
against goodwill and other intangible assets incurred
by Tiburon for the fiscal quarter ended December 31,
2006.
2. Capital Expenditures. As of December 31, 2006, Section 7.6 of the
Loan Agreement is hereby amended and restated in its entirety and replaced with
the following:
7.6. Capital Expenditures. Contract for,
purchase or make any expenditure or
commitments for Capital Expenditures in
any fiscal year in an aggregate amount
for all Borrowers in excess of
$2,500,000.
3. Subordinated Note and Industrial Revenue Bonds. Section 7.21 of the
Loan Agreement is hereby amended and restated in its entirety and replaced with
the following:
7.21 Subordinated Notes and Industrial
Revenue Bonds. At any time, directly or
indirectly, pay, prepay, repurchase,
redeem, retire or otherwise acquire, or
make any payment on account of any
principal of, interest on or premium
payable in connection with the repayment
or redemption of the Subordinated Notes;
provided that (A) if Borrowers'
Unrestricted Undrawn Borrowing Base
Availability plus cash and marketable
securities on hand after giving effect
to such payment is less than Fifteen
Million Dollars ($15,000,000) and no
Default or Event of Default exists or
would exist after giving to any such
payment, Borrowers may pay the regularly
scheduled payments of interest due on
the Subordinated Notes, (B) if
Borrowers' Unrestricted Undrawn
Borrowing Base Availability plus cash
and marketable securities on hand after
giving effect to such payment is equal
to or in excess of Fifteen Million
Dollars ($15,000,000), Borrowers may pay
the regularly scheduled payments of
interest due on the Subordinated Notes
regardless of whether Borrowers are in
compliance with the covenant set forth
in Section 6.5(a) so long as no other
Default or Event of Default exists or
would exist after giving effect to such
payment, and (C) Borrowers may
repurchase or redeem up to a maximum
aggregate amount of $8,000,000 of
Subordinated Notes; provided that, at
the time of, and after giving effect to,
such repurchase or redemption, Borrowers
would be in compliance with the
limitations set forth in Sections
7.21(A) or 7.21(B) above.
4. Annual Financial Statements. Section 9.7 is hereby amended and
restated in its entirety and replaced with the following
Annual Financial Statements. Other than for fiscal
year ending December 31, 2006, which shall be
delivered within one hundred twenty (120) days after
such year end, furnish Agent within ninety (90) days
after the end of each fiscal year of Borrowers,
financial statements of Borrowers on a consolidating
and consolidated basis including, but not limited to,
statements of operations and stockholders' equity and
cash flow from the beginning of the current fiscal
year to the end of such fiscal year and the balance
sheet as at the end of such fiscal year, all prepared
in accordance with GAAP applied on a basis consistent
with prior practices, and in reasonable detail and
reported upon without qualification (except, to the
extent applicable, in the case of any qualifications
in connection with Section 404 of the Xxxxxxxx-Xxxxx
Act of 2002 related to management's assessment of
internal controls) by an Xxxxxxx & Co. (the
"Accountants"). The report of the Accountants shall
be accompanied by a statement of the Accountants
certifying that (i) they have caused this Agreement
to be reviewed, (ii) in making the examination upon
which such report was based either no information
came to their attention which to their knowledge
constituted an Event of Default or a Default under
this Agreement or any related agreement or, if such
information came to their attention, specifying any
such Default or Event of Default, its nature, when it
occurred and whether it is continuing, and such
report shall contain or have appended thereto
calculations which set forth Borrowers' compliance
with the requirements or restrictions imposed by
Sections 6.5, 7.4, 7.5, 7.6, 7.7, 7.8 and 7.11
hereof. In addition, the reports shall be accompanied
by a Compliance Certificate.
5. Projected Operating Budget. Section 9.12 of the Loan Agreement is
hereby amended and restated in its entirety and replaced with the following:
9.12 Projected Operating Budget. Furnish Agent, no
later than thirty (30) days prior to the beginning of
each Borrower's fiscal years commencing with fiscal
year 2007, a quarter by quarter projected operating
budget and cash flow of Borrowers on a consolidated
and consolidating basis for such fiscal year
(including an income statement for each quarter and a
balance sheet as of the end of each fiscal quarter),
such projections to be accompanied by a certificate
signed by the President or Chief Financial Officer of
each Borrower to the effect that such projections
have been prepared on the basis of sound financial
planning practice consistent with past budgets and
financial statements and that such officer has no
reason to question the reasonableness of any material
assumptions on which such projections were prepared.
6. Variance From Operating Budget. Section 9.13 of the Loan Agreement
is hereby amended and restated in its entirety and replaced with the following:
9.13. Variances From Operating Budget. Furnish Agent,
concurrently with the delivery of the financial
statements referred to in Section 9.7 and each
quarterly report, a written report summarizing all
material variances from budgets submitted by
Borrowers pursuant to Section 9.12 and a discussion
and analysis by management with respect to such
variances.
B. Reaffirmation. Each Borrower hereby:
1. reaffirms all representations and warranties made to Agent and
Lenders under the Loan Agreement and all of the other Existing Financing
Agreements and confirms that all are true and correct in all material respects
as of the date hereof (except to the extent any such representations and
warranties specifically relate to a different date, in which case such
representations and warranties shall be true and correct in all material
respects on and as of such other specific date);
2. except to the extent consented to by Agent herein, reaffirms
all of the covenants contained in the Loan Agreement, covenants to abide thereby
until all Advances, Obligations and other liabilities of Borrowers to Agent and
Lenders under the Loan Agreement of whatever nature and whenever incurred, are
satisfied and/or released by Agent and Lenders; and
3. except as modified by the terms hereof, all of the other terms
and conditions of the Loan Agreement, as amended, and all other of the Existing
Financing Agreements are hereby reaffirmed and shall continue in full force and
effect as therein written.
C. Representations and Warranties. Each Borrower hereby:
1. represents and warrants that no Default or Event of Default
has occurred and is continuing under any of the Existing Financing Agreements;
2. except as modified hereby, represents and warrants that it has
the authority and legal right to execute, deliver and carry out the terms of
this Amendment, that such actions were duly authorized by all necessary
corporate or limited liability company action and that the officers executing
this Amendment on its behalf were similarly authorized and empowered, and that
this Amendment does not contravene any provisions of its articles of
incorporation or by-laws, or certificate of formation or operating agreement, as
applicable, or other formation documents, or of any contract or agreement to
which it is a party or by which any of its properties are bound; and
3. represents and warrants that this Amendment and all
assignments, instruments, documents, and agreements executed and delivered in
connection herewith, are valid, binding and enforceable in accordance with their
respective terms.
D. Conditions Precedent/Effectiveness Conditions. This Amendment shall
be effective upon Agent's receipt of this Amendment fully executed by Borrowers
("Effective Date").
E. Further Assurances. Each Borrower hereby agrees to take all such
actions and to execute and/or deliver to Agent and Lenders all such documents,
assignments, financing statements and other documents, as Agent and Lenders may
reasonably require from time to time, to effectuate and implement the purposes
of this Amendment.
F. Release. As further consideration for Agent's and Lender's
agreement to enter into this Amendment, each Borrower hereby waives and releases
and forever discharges Agent, Lender and their officers, directors, attorneys,
agents and employees from any liability, damage, claim, loss or expense of any
kind that such Borrower may now or hereafter have against Agent or Lender
arising out of or relating to the Obligations, the Loan Agreement as amended, or
the other Existing Financing Agreements.
G. Payment of Expenses. Borrowers shall pay or reimburse Agent and
Lenders for its reasonable attorneys' fees and expenses in connection with the
preparation, negotiation and execution of this Amendment and the documents
provided for herein or related hereto.
H. Confirmation of Obligations. Borrowers' confirm and acknowledge
that as of the close of business on February 26, 2007, the outstanding
Obligations consist of (i) $0 of Revolving Advances, (ii) issued and outstanding
Letters of Credit in the Maximum Undrawn Amount equal to $3,169,035.61 and (iii)
all fees, costs and expenses incurred to date in connection with the Loan
Agreement and the Other Loan Documents.
I. Miscellaneous.
1. Third Party Rights. No rights are intended to be created
hereunder for the benefit of any third party donee, creditor, or incidental
beneficiary.
2. Headings. The headings of any paragraph of this Amendment are
for convenience only and shall not be used to interpret any provision hereof.
3. Modifications. No modification hereof or any agreement
referred to herein shall be binding or enforceable unless in writing and signed
on behalf of the party against whom enforcement is sought.
4. Governing Law. The terms and conditions of this Amendment
shall be governed by the laws of the Commonwealth of Pennsylvania.
5. Counterparts. This Amendment may be executed in any number of
counterparts and by facsimile or PDF, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by their duly authorized officers as of the date first
above written.
BORROWERS: COMPUDYNE CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Chief Financial Officer, Treasurer
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TIBURON, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
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NORSHIELD CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
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COMPUDYNE - INTEGRATED ELECTRONICS DIVISION, LLC
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Vice President
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CORRLOGIC, LLC
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
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XXXXXXX SECURITY GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
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[Signature Page 1 of 2 (Third Amendment To Second Amended And
Restated Revolving Credit Security Agreement)]
XANALYS CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
SIGNAMI DCS, LLC
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Vice President
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FIBER SENSYS, LLC
By: /s/ Xxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxx X. Xxxxxxxxxx
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Title: Treasurer, Vice President
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AGENT AND LENDER: PNC BANK, NATIONAL ASSOCIATION,
as Lender and as Agent
By: /s/ Xxxxx X Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx, Vice President
[Signature Page 2 of 2 (Third Amendment To Second Amended And
Restated Revolving Credit Security Agreement)]
