DEVCON SECURITY HOLDINGS, INC.,
DEVCON SECURITY SERVICES CORP.,
COASTAL SECURITY COMPANY,
COASTAL SECURITY
SYSTEMS, INC.
and CENTRAL ONE, INC.
each as a Borrower,
CAPITALSOURCE FINANCE
LLC,
as Lender
Dated as of November 10,
2005
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Section
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Page
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1.
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CERTAIN
DEFINITIONS
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1
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1.1
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Certain
Definitions.
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1
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1.2
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Construction.
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5
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1.3
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Accounting
Principles.
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5
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2.
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LOANS
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5
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2.1
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Commitment.
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5
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2.2
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Nature of
Lender’s Obligations with Respect to Loan.
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5
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2.3
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Fees.
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5
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2.4
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Bridge Loan
Note and Principal Payment.
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6
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2.5
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Use of
Proceeds.
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6
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2.6
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Single
Loan.
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6
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3.
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INTEREST
RATES
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6
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3.1
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Interest
Rate.
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6
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3.1.1. Rate
Quotations.
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7
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3.1.2. Change
in Interest Rates.
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7
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3.2
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Interest After
Default.
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7
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4.
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PAYMENTS
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7
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4.1
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Payments.
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7
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4.2
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Interest
Payment Dates.
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8
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4.3
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Right to
Prepay.
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8
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4.4
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Additional
Compensation in Certain Circumstances.
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8
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4.4.1. Increased Costs or Reduced Return
Resulting from Taxes, Reserves, Capital Adequacy Requirements,
Expenses, Etc.
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8
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4.4.2.
Indemnity.
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9
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5.
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REPRESENTATIONS
AND WARRANTIES
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10
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5.1
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Representations
and Warranties.
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10
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5.1.1.
Representations and Warranties Under the Credit
Agreement.
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10
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5.1.2. Power
and Authority.
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10
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5.1.3. Validity
and Binding Effect.
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10
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5.1.4. No
Conflict.
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10
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5.1.5. Use of
Proceeds.
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11
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5.1.6. Consents
and Approvals.
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11
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5.1.7. No Event
of Default; Compliance with Instruments.
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11
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6.
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CONDITIONS OF
CLOSING AND LENDING
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11
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- i -
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Section
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Page
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6.1
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Closing
Date.
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11
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6.2
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Borrowing
Date.
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13
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7.
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COVENANTS
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13
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7.1
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Incorporation
of Covenants Under the Credit Agreement.
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13
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7.2
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Reporting
Requirements.
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13
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8.
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DEFAULT
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14
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8.1
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Events of
Default.
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14
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8.1.1. Payments
Under Loan Documents.
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14
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8.1.2.
Incorporation by Reference.
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14
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8.1.3. Loan
Document Unenforceable.
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14
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8.2
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Consequences of
Event of Default.
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14
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9.
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MISCELLANEOUS
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15
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9.1
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Modifications,
Amendments or Waivers.
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15
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9.2
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No Implied
Waivers; Cumulative Remedies; Writing Required.
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15
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9.3
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Reimbursement
and Indemnification of Lender by the Borrowers; Taxes.
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16
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9.4
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Holidays.
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16
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9.5
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Notices.
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17
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9.6
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Severability.
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17
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9.7
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Governing
Law.
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17
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9.8
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Prior
Understanding.
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17
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9.9
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Duration;
Survival.
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17
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9.10
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Successors and
Assigns.
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18
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9.11
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Counterparts.
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18
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9.12
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Lender’s
Consent.
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18
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9.13
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Exceptions.
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18
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9.14
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CONSENT TO
FORUM; WAIVER OF JURY TRIAL.
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18
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- ii -
LIST OF SCHEDULES AND
EXHIBITS
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-
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CONSENTS AND
APPROVALS
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-
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ACCOUNT CONTROL
AGREEMENT
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COLLATERAL
ASSIGNMENT OF TELEPHONE NUMBERS
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GUARANTY
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LOCKBOX
AGREEMENT
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NEGATIVE PLEDGE
AGREEMENT
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NEGATIVE PLEDGE
AGREEMENT
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PLEDGE
AGREEMENT
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PLEDGE
AGREEMENT
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PLEDGE
AGREEMENT
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PLEDGE
AGREEMENT
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SECURITY
AGREEMENT
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-
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NOTICE OF
ADVANCE
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- iii -
THIS BRIDGE LOAN
AGREEMENT (as the same may be amended, restated, modified or
supplemented from time to time, this “ Agreement
”) is dated as of November 10, 2005 and is made by and
among DEVCON SECURITY HOLDINGS, INC., a Florida corporation
(“ Holdings ”), DEVCON SECURITY SERVICES CORP.,
a Delaware corporation (“ Services ”), COASTAL
SECURITY COMPANY, a Delaware corporation (“ Coastal
”), COASTAL SECURITY SYSTEMS, INC., a Delaware corporation
(“ Systems ”), and Central One, Inc., a Florida
corporation (“ Central One ”; together with
Holdings, Services, Coastal and Systems each a “
Borrower ” and collectively, the “
Borrowers ”), and CAPITALSOURCE FINANCE LLC, a
Delaware limited liability company (the “ Lender
”).
WHEREAS, the
Lender, for itself and as Agent (as hereinafter defined), and the
other Lenders (as defined therein) from time to time party to the
Credit Agreement (as hereinafter defined) have provided a credit
facility to the Borrowers pursuant to the Credit Agreement;
and
WHEREAS, the
Borrowers have requested the Lender and the Lender is willing, upon
the terms and conditions hereinafter set forth, to provide a
$8,000,000 bridge loan facility to be used for (i) the purchase and
generation of Alarm Contracts, (ii) Holdings’
acquisition of all of the capital stock of Coastal pursuant to the
Coastal Purchase Agreement as of the date hereof, and
(iii) for any other lawful purpose not prohibited by this
Agreement; and
NOW, THEREFORE,
the parties hereto, in consideration of their mutual covenants and
agreements hereinafter set forth and intending to be legally bound
hereby, covenant and agree as follows:
(a)
Definitions Generally . In addition to words and terms
defined elsewhere in this Agreement, the following words and terms
shall have the following meanings, respectively, unless the context
hereof clearly requires otherwise:
Account Control Agreement shall mean a tri-party account
control agreement in the form of Exhibit 1.1(A) hereto
among a Borrower, the Lender and each Relationship Bank, or such
other form as reasonably is acceptable to Lender.
Adelphia Purchase Agreement shall mean that certain Asset
Purchase Agreement dated January 21, 2005, by and among
Holdings, certain sellers party thereto, and Adelphia
Communications Corporation, a Delaware corporation.
Business Day shall mean any day that is not a Saturday, a
Sunday or a day on which banks are required or permitted to be
closed in the State of Maryland.
- 1 -
Closing Date shall mean the Business Day on which the Loan
shall be made, which shall be on or before November 10,
2006.
Collateral Assignment of Telephone Numbers shall mean that
collateral assignment of telephone lines from Borrowers in
substantially the form of Exhibit 1.1(C)
hereto.
Commitment shall mean the Lender’s commitment to make
the Loan to the Borrower pursuant to Section 2.1 hereof in an
aggregate principal amount up to $8,000,000.
Commitment Fee shall mean the Bridge Loan Agreement
Commitment Fee as described and defined in the Fee
Letter.
Credit Agreement shall mean the Credit Agreement, dated
November ___, 2005, among the Borrowers, the Lender, for itself and
as Agent, and the other Lenders (as defined therein) from time to
time or party thereto, as the same may be amended, restated,
modified or supplemented from time to time.
Default shall mean any event or condition which with notice,
passage of time or a determination by the Lender, or any
combination of the foregoing, would constitute an Event of
Default.
Effective Date shall have the meaning given to such term in
Section 6.1 hereof.
Event of Default shall mean any of the events described in
Section 8.1 hereof and referred to therein as an “
Event of Default .”
Exit Fee shall mean the Exit Fee as described and defined in
the Fee Letter.
Fee Letter shall mean that certain Fee Letter, dated the
date hereof, among Lender and Borrowers, as amended in writing from
time to time.
Guaranty shall mean that certain Guaranty executed by Parent
in favor of Lender substantially in the form of
Exhibit 1.1(G) .
Law shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, opinion, release,
ruling, order, injunction, writ, decree or award of any official
body.
Loan Documents shall mean this Agreement, any Note, any
Account Control Agreement, any Lockbox Agreement, the Collateral
Assignment of Telephone Numbers, the Guaranty, the Mortgage,
Negative Pledge Agreements, the Pledge Agreements, the Security
Agreement, any agreements evidencing the assignment of Material
Contracts, and any other instruments, certificates or documents
delivered or contemplated to be delivered hereunder or thereunder
or in connection herewith or therewith, as the same may be amended,
restated, modified or supplemented from time to time in accordance
herewith or therewith, and Loan Document shall mean any of
the Loan Documents.
Loan shall have the meaning given to such term in
Section 2.1 hereof.
- 2 -
Lockbox Agreement shall mean a tri-party lockbox agreement
in the form of Exhibit 1.1(L) hereto among a Borrower, the
Lender and a Lockbox Bank or such other form as is acceptable to
Lender.
Maturity Date shall mean March 10, 2006.
Mortgage shall mean each of the mortgages, deeds of trust,
leasehold mortgages, leasehold deeds of trust, collateral
assignments of leases or other real estate security documents
delivered by any Borrower to Lender, from time to time, with
respect to any real estate owned or leased by Borrowers, all in
form and substance reasonably satisfactory to Lender.
Negative Pledge Agreement shall mean, collectively, the
following: (i) the Negative Pledge Agreement executed by
Antigua Masonry Products, Ltd. in favor of Lender, in substantially
the form of Exhibit 1.1(N)(1) ; and (ii) the
Negative Pledge Agreement executed by Bahamas Construction &
Development Limited in favor of Lender, in substantially the form
of Exhibit 1.1(N)(2) .
Note shall mean any bridge loan note of the Borrowers issued
pursuant to Section 2.4 hereof evidencing the Loan together
with all amendments, restatements, extensions, renewals,
replacements, refinancings or refunds thereof in whole or in
part.
Notice of Advance shall have the meaning assigned to such
term in Section 2.1 hereof.
notices shall have the meaning assigned to that term in
Section 9.5 hereof.
Obligations shall mean all loans, advances, debts,
liabilities and obligations, for the performance of covenants,
tasks or duties or for payment of monetary amounts (whether or not
such performance is then required or contingent, or such amounts
are liquidated or determinable) owing by any Borrower to the Lender
and all covenants and duties regarding such amounts, of any kind or
nature, present or future, arising under this Agreement or any of
the other Loan Documents. This term includes all principal,
interest (including all interest that accrues after the
commencement of any case or proceeding by or against any Borrower
in bankruptcy, whether or not allowed in such case or proceeding),
the Commitment Fee, the Exit Fee, other Fees, hedging obligations
under swaps, caps and collar arrangements provided by Lender,
expenses, in-house and external attorneys’ fees and any other
sum chargeable to any Borrower under this Agreement, or any of the
other Loan Documents.
Parent shall mean Devcon International Corp., a Florida
corporation.
Pledge Agreements shall mean, collectively, the
following:
(i) the
Pledge Agreement executed by the Borrowers in favor of the Lender,
pledging all Stock of Services and any other Subsidiaries of any
Borrowers, and all Intercompany Notes, if any, owing to or held by
any of them, in substantially the form of
Exhibit 1.1.P(1) ; and
- 3 -
(ii) the
Pledge Agreement executed by Parent in favor of the Lender,
pledging all Stock of Holdings, in substantially the form of
Exhibit 1.1(P)(2) ; and
(iii) the
Pledge Agreement executed by Parent in favor of the Lender,
pledging all Stock of Antigua Masonry Products, Ltd., in
substantially he form of Exhibit 1.1(P)(3) ;
and
(iv) the
Pledge Agreement executed by Parent in favor of Lender, pledging
all of the Stock in Bahamas Construction & Development Limited,
in substantially the form of Exhibit 1.1(P)(4) ;
and
(v) any
other pledge agreement entered into after the Closing Date by any
other Person (as required by this Agreement or any other Loan
Document).
Post Closing Agreement shall have the meaning given to such
term in Section 7.1 .
Prime Rate shall mean for any day, a floating rate equal to
the rate publicly quoted from time to time by The Wall Street
Journal as the “ prime rate ” (or, if The
Wall Street Journal ceases quoting a prime rate, the highest
per annum rate of interest published by the Federal Reserve Board
in Federal Reserve statistical release H.15 (519) entitled
“ Selected Interest Rates ” as the Bank prime
loan rate or its equivalent). Each change in any interest rate
provided for in this Agreement based upon the Prime Rate shall take
effect at the time of such change in the Prime Rate.
Security Agreement shall mean the Security Agreement entered
into by and among the Lender and each Borrower in substantially the
form of Exhibit 1.1(S) .
(b)
Credit Agreement Definitions . Subject to
Section 1.1(c) hereof, in addition to words and terms defined
in this Section 1.1 and elsewhere in this Agreement, the
following words and terms defined in the Credit Agreement are
incorporated herein by reference: “ Affiliate ,”
“ Agent ,” “ Alarm Contracts
,” “ Collateral ,” “ Default
Rate ,” “ Dollars ,” “ $
,” “ Fee Letter ,” “ Fees
,” “ GAAP ,” “ Guaranty
Obligation ,” “ Indebtedness ,”
“ Intercompany Notes ,” Lien ,”
“ Lockbox Bank ,” “ Material Adverse
Effect ,” “ Material Contract ,”
“ Parent ,” “ Permitted Acquisition
,” “ Person ,” “ Relationship
Bank ,” “ Stock ” and “
Subsidiary ”.
(c)
Override of Certain Credit Agreement Definitions . For
purposes of incorporation by reference into this Agreement of
provisions in the Credit Agreement pursuant to Article 7,
Article 8 or otherwise under this Agreement, the following
terms used in the Credit Agreement shall have the following
meanings:
(i)
Corresponding Terms — Different Names . The terms
“ Lenders ,” “ Required Lenders
” and “ Agent ” in the Credit Agreement
shall each refer to the “ Lender ” which is
party to this Agreement; and
(ii)
Corresponding Terms — Same Names . The terms used in
the Credit Agreement which are otherwise defined herein, including
without limitation, “ Account Control Agreement
,” “ Agreement ,” “ Business
Day ,” “ Commitment ,” “
Commitments ,” “ Default
,”
- 4 -
“
Event of Default ,” “ Loan ,”
“ Loans ,” “ Loan Documents
,” “ Lockbox Agreement ,” “
Maturity Date ,” “ Note ,” “
Notes ,” “ Notice of Advance ,”
“ Obligations ,” “ Pledge
Agreements ,” “ Post Closing Agreement
” and “ Security Agreement ,” shall have
the meanings given to such terms in this Agreement.
The
section and other headings contained in this Agreement and the
Table of Contents preceding this Agreement are for reference
purposes only and shall not control or affect the construction of
this Agreement or the interpretation thereof in any respect.
Section, subsection, schedule and exhibit references are to this
Agreement unless otherwise specified. Unless otherwise expressly
stated, the rules of construction set forth in Section 1.1 of
the Credit Agreement apply to this Agreement as if fully set forth
herein.
1.3 Accounting
Principles.
Except
as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all
financial statements to be delivered pursuant to this Agreement
shall be made and prepared in accordance with the accounting terms
and determinations set forth in Section 1.1 of the Credit
Agreement.
Subject
to the terms and conditions hereof, and relying upon the
representations and warranties herein set forth, the Lender agrees
to make a Loan (the “ Loan ”) to the Borrowers
on the Closing Date in such principal amount as the Borrowers shall
request, up to but not exceeding the Lender’s Commitment, on
notice substantially in the form of Exhibit 2.1 (the
“ Notice of Advance ”) by the Borrowers to the
Lender given no later than noon (New York time) on the date which
is two (2) Business Days prior to the proposed Loan in writing
(by telecopy or overnight courier) which Notice of Advance shall
include the Lender’s address and the information and
attachments required in such Exhibit. The Lender’s Commitment
shall automatically terminate on March 10 ,
2006.
2.2 Nature of
Lender’s Obligations with Respect to Loan.
The
obligation of the Lender to make the Loan shall never exceed its
Commitment. The Commitment is not a revolving credit commitment,
and the Borrowers shall not have the right to repay and reborrow
under Section 2.1 hereof.
(a)
Commitment Fee . The Borrowers agree to pay to the Lender
the nonrefundable Commitment Fee, payable on the date of this
Agreement.
- 5 -
(b)
Exit Fee . In addition to the Commitment Fee, the Borrowers
agree to pay to the Lender the nonrefundable Exit Fee on the
Maturity Date, or in the event the Loan is paid in full or the
payment of the Loan is accelerated prior to the Maturity Date, then
payment of the Exit Fee shall be due on such earlier date,
but only if Borrowers use any of the available funds
hereunder.
2.4 Bridge Loan
Note and Principal Payment.
Sections 2.1(b)
and 2.9 of the Credit Agreement is herein incorporated by reference
to the same extent and effect as if such Section were set forth in
full herein, together with all definitions of defined terms
contained therein (except as otherwise provided in Section 1.1
hereof). The principal amount of any Note as provided for therein
shall be due and payable on the Maturity Date.
The
proceeds of the Loan shall be used as set forth in the second
Recital hereof.
The
Loan to any or both of the Borrowers and all of the other
Obligations of the Borrowers arising under this Agreement and the
other Loan Documents, shall constitute one general joint and
several obligation of Borrowers secured by all of the Collateral
until the date on which the Loan has been repaid in full and all
other Obligations, other than residual indemnity that survives
payment in full of the Loan, and this Agreement and the other Loan
Documents have been completely discharged. Without limiting the
generality of the foregoing, Section 2.17 of the Credit
Agreement shall apply to this Agreement and is hereby incorporated
by reference herein to the same extent and effect as if such
Section were set forth in full herein, together with all
definitions of defined terms contained therein (except as otherwise
provided in Section 1.1 hereof).
The
Borrowers shall pay interest in respect of the outstanding unpaid
principal amount of the Loan at the rate per annum equal to the
Prime Rate. All computations of interest based on the Prime Rate
shall be made by the Lender on the basis of a 365/366-day year, in
each case for the actual number of days occurring in the period for
which such interest is payable. The Prime Rate is a floating rate
determined for each day. Each determination by the Lender of
interest rate hereunder shall, absent manifest error, be
presumptive evidence of the correctness of such rate.
Notwithstanding the foregoing in this Section 3.1 or anything
contained in Section 3.2 hereof, Section 2.4(g) of the
Credit Agreement shall apply to this Agreement and is hereby
incorporated by reference herein to the same extent and effect as
if such Section were set forth in full herein, together with all
definitions of defined terms contained therein (except as otherwise
provided in Section 1.1 hereof).
- 6 -
The
Borrowers may call the Lender on or before the date on which the
Notice of Advance is to be delivered to receive an indication of
the Prime Rate then in effect, but it is acknowledged that such
indication shall not be binding on the Lender nor affect the rate
of interest which thereafter is actually in effect when the Notice
of Advance is delivered or the Closing Date occurs.
3.1.2.
Change in Interest Rates.
If
the Prime Rate is increased or reduced with respect to any period
for which the Borrowers have already paid interest, the Lender
shall recalculate the additional interest due from or to the
Borrowers and shall, within fifteen (15) Business Days after
the Borrowers notify the Lender of such increase or decrease, give
the Borrowers notice of such recalculation.
3.1.2.1
Any additional interest due from the Borrowers shall be paid to the
Lender on the next date on which an interest payment is due;
provided , however , that if there is no amount of
the Loan outstanding or if the Loan is due and payable, such
additional interest shall be paid promptly after receipt of written
request for payment from the Lender.
3.1.2.2
Any interest or refund due to the Borrowers shall be credited
against payments otherwise due from the Borrowers on the next
interest payment due date or, if the Loan has been repaid and the
Lender is no longer committed to lend under this Agreement upon
receipt of written request for payment from the Borrowers
containing payment instructions.
3.2 Interest
After Default.
To
the extent permitted by Law, upon the occurrence of an Event of
Default and until such time such Event of Default shall have been
cured or waived, the rate of interest for the Loan and each other
Obligation hereunder if not paid when due shall bear interest at
the Default Rate as determined by and payable pursuant to
Section 2.4(e) of the Credit Agreement which is, together with
all definitions of defined terms contained therein (except as
otherwise provided in Section 1.1 hereof), incorporated by
reference herein to the same extent and effect as if such Section
were set forth in full herein. The Borrower acknowledges that the
increase in rates referred to in this Section 3.2 reflects,
among other things, the fact that the Loan or other amounts have
become a substantially greater risk given their default status and
that the Lender is entitled to additional compensation for such
risk.
All
payments and prepayments to be made in respect of principal,
interest, Commitment Fee, Exit Fee, or other fees or amounts due
from the Borrowers hereunder shall
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