Exhibit 10.1
SECOND AMENDED AND RESTATED REVOLVING
CREDIT AND SECURITY AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
(AS LENDER AND AS AGENT)
WITH
COMPUDYNE CORPORATION
COMPUDYNE - PUBLIC SAFETY & JUSTICE, INC.
NORMENT SECURITY GROUP, INC.
NORSHIELD CORPORATION
FIBER SENSYS, LLC
COMPUDYNE - INTEGRATED ELECTRONICS DIVISION, LLC
CORRLOGIC, LLC
XANALYS CORPORATION
(BORROWERS)
December 19, 2005
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I.
DEFINITIONS..............................................................................................1
1.1.
Accounting
Terms................................................................................1
1.2.
General
Terms...................................................................................2
1.3.
Uniform Commercial Code
Terms..................................................................22
1.4.
Certain Matters of
Construction................................................................22
II. ADVANCES,
PAYMENTS......................................................................................23
2.1.
Revolving
Advances.............................................................................23
2.2.
Procedure for Revolving Advances
Borrowing.....................................................25
2.3.
Disbursement of Advance
Proceeds...............................................................27
2.4.
Reserved.......................................................................................27
2.5.
Maximum
Advances...............................................................................27
2.6.
Repayment of
Advances..........................................................................27
2.7.
Repayment of Excess
Advances...................................................................28
2.8.
Statement of
Account...........................................................................28
2.9.
Letters of
Credit..............................................................................28
2.10.
Issuance of Letters of
Credit..................................................................28
2.11.
Requirements For Issuance of Letters of
Credit.................................................29
2.12.
Disbursements,
Reimbursement...................................................................29
2.13.
Repayment of Participation
Advances............................................................30
2.14.
Documentation..................................................................................31
2.15.
Determination to Honor Drawing
Request.........................................................31
2.16.
Nature of Participation and Reimbursement
Obligations..........................................31
2.17.
Indemnity......................................................................................32
2.18.
Liability for Acts and
Omissions...............................................................33
2.19.
Additional
Payments............................................................................34
2.20.
Manner of Borrowing and
Payment................................................................34
2.21.
Mandatory
Prepayments..........................................................................36
2.22. Use
of
Proceeds................................................................................36
2.23.
Defaulting
Lender..............................................................................36
2.24.
Confirmation of Existing
Indebtedness..........................................................37
III. INTEREST AND
FEES.......................................................................................37
3.1.
Interest.......................................................................................37
3.2.
Letter of Credit
Fees..........................................................................38
3.3.
Closing Fee and Facility
Fee...................................................................39
3.4.
Collateral Monitoring Fee, Collateral Evaluation Fee and Fee
Letter............................39
3.5.
Computation of Interest and
Fees...............................................................39
3.6.
Maximum
Charges................................................................................39
3.7.
Increased
Costs................................................................................39
3.8.
Basis For Determining Interest Rate Inadequate or
Unfair.......................................40
3.9.
Capital
Adequacy...............................................................................41
3.10.
Gross Up for
Taxes.............................................................................41
3.11.
Withholding Tax
Exemption......................................................................42
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IV.
COLLATERAL: GENERAL
TERMS..............................................................................43
4.1.
Security Interest in the
Collateral............................................................43
4.2.
Perfection of Security
Interest................................................................43
4.3.
Disposition of
Collateral......................................................................43
4.4.
Preservation of
Collateral.....................................................................43
4.5.
Ownership of
Collateral........................................................................44
4.6.
Defense of Agent's and Lenders'
Interests......................................................44
4.7.
Books and
Records..............................................................................45
4.8.
Financial
Disclosure...........................................................................45
4.9.
Compliance with
Laws...........................................................................45
4.10.
Inspection of
Premises.........................................................................45
4.11.
Insurance......................................................................................46
4.12.
Failure to Pay
Insurance.......................................................................46
4.13.
Payment of
Taxes...............................................................................47
4.14.
Payment of Leasehold
Obligations...............................................................47
4.15.
Receivables....................................................................................47
4.16.
Inventory......................................................................................49
4.17.
Maintenance of
Equipment.......................................................................50
4.18.
Exculpation of
Liability.......................................................................50
4.19.
Environmental
Matters..........................................................................50
4.20.
Financing
Statements...........................................................................52
V.
REPRESENTATIONS AND
WARRANTIES..........................................................................52
5.1.
Authority......................................................................................52
5.2.
Formation and
Qualification....................................................................53
5.3.
Survival of Representations and
Warranties.....................................................53
5.4.
Tax
Returns....................................................................................53
5.5.
Financial
Statements...........................................................................53
5.6.
Entity
Names...................................................................................54
5.7.
O.S.H.A. and Environmental
Compliance..........................................................54
5.8.
Solvency; No Litigation, Violation, Indebtedness or
Default....................................54
5.9.
Patents, Trademarks, Copyrights and
Licenses...................................................55
5.10.
Licenses
and
Permits...........................................................................56
5.11.
Default of
Indebtedness........................................................................56
5.12. No
Default.....................................................................................56
5.13. No
Burdensome
Restrictions.....................................................................56
5.14. No
Labor
Disputes..............................................................................56
5.15.
Margin
Regulations.............................................................................56
5.16.
Investment Company
Act.........................................................................57
5.17.
Disclosure.....................................................................................57
5.18.
Delivery of Subordinated Loan Documentation and IRB
Documentation..............................57
5.19.
Swaps..........................................................................................57
5.20.
Conflicting
Agreements.........................................................................57
5.21. Application of Certain
Laws and
Regulations....................................................57
5.22.
Business and Property of
Borrowers.............................................................57
5.23.
Section 20
Subsidiaries........................................................................57
5.24.
Anti-Terrorism
Laws............................................................................57
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5.25.
Trading with the
Enemy.........................................................................58
5.26.
Federal Securities
Laws........................................................................58
VI.
AFFIRMATIVE
COVENANTS...................................................................................58
6.1.
Payment of
Fees................................................................................59
6.2.
Conduct of Business and Maintenance of Existence and
Assets....................................59
6.3.
Violations.....................................................................................59
6.4.
Government
Receivables.........................................................................59
6.5.
Financial
Covenants............................................................................59
6.6.
Execution of Supplemental
Instruments..........................................................60
6.7.
Payment of
Indebtedness........................................................................60
6.8.
Standards of Financial
Statements..............................................................60
6.9.
Federal Securities
Laws........................................................................60
VII. NEGATIVE
COVENANTS......................................................................................60
7.1.
Merger, Consolidation, Acquisition and Sale of
Assets..........................................60
7.2.
Creation of
Liens..............................................................................60
7.3.
Guarantees.....................................................................................60
7.4.
Investments....................................................................................61
7.5.
Loans..........................................................................................61
7.6.
Capital
Expenditures...........................................................................61
7.7.
Dividends......................................................................................61
7.8.
Indebtedness...................................................................................61
7.9.
Nature of
Business.............................................................................61
7.10.
Transactions with
Affiliates...................................................................61
7.11.
Leases.........................................................................................61
7.12.
Subsidiaries...................................................................................62
7.13.
Fiscal Year and Accounting
Changes.............................................................62
7.14.
Pledge of
Credit...............................................................................62
7.15.
Amendment of Articles of Incorporation,
By-Laws................................................62
7.16.
Compliance with
ERISA..........................................................................62
7.17.
Prepayment of
Indebtedness.....................................................................62
7.18.
Anti-Terrorism
Laws............................................................................63
7.19.
Membership/Partnership
Interests...............................................................63
7.20.
Trading with the Enemy
Act.....................................................................63
7.21.
Subordinated Notes and Industrial Revenue
Bonds................................................63
7.22.
Other
Agreements...............................................................................63
VIII. CONDITIONS
PRECEDENT....................................................................................63
8.1.
Conditions to Initial
Advances.................................................................63
8.2.
Conditions to Each
Advance.....................................................................67
8.3.
Conditions to Revolving
Advances...............................................................68
IX.
INFORMATION AS TO
BORROWERS.............................................................................68
9.1.
Disclosure of Material
Matters.................................................................68
9.2.
Schedules......................................................................................68
9.3.
Environmental
Reports..........................................................................68
9.4.
Litigation.....................................................................................68
9.5.
Material
Occurrences...........................................................................68
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9.6.
Government
Receivables.........................................................................69
9.7.
Annual Financial
Statements....................................................................69
9.8.
Quarterly Financial
Statements.................................................................69
9.9.
Monthly Financial
Statements...................................................................70
9.10.
Other
Reports..................................................................................70
9.11.
Additional
Information.........................................................................70
9.12.
Projected Operating
Budget.....................................................................70
9.13.
Variances From Operating
Budget................................................................70
9.14.
Notice of Suits, Adverse
Events................................................................70
9.15.
ERISA Notices and
Requests.....................................................................71
9.16.
Additional
Documents...........................................................................71
X.
EVENTS OF
DEFAULT.......................................................................................71
10.1.
Nonpayment.....................................................................................71
10.2.
Breach of
Representation.......................................................................72
10.3.
Financial
Information..........................................................................72
10.4.
Judicial
Actions...............................................................................72
10.5.
Noncompliance..................................................................................72
10.6.
Judgments......................................................................................72
10.7.
Bankruptcy.....................................................................................72
10.8.
Inability to
Pay...............................................................................72
10.9.
Intentionally
Omitted..........................................................................72
10.10. Material
Adverse
Effect........................................................................72
10.11. Lien
Priority..................................................................................73
10.12.
Subordinated Loan or IRB
Default...............................................................73
10.13. Cross
Default..................................................................................73
10.14. Breach of
Guaranty.............................................................................73
10.15. Change of
Ownership............................................................................73
10.16.
Invalidity.....................................................................................73
10.17.
Licenses.......................................................................................73
10.18.
Seizures.......................................................................................73
10.19.
Operations.....................................................................................73
10.20. Pension
Plans..................................................................................74
XI. LENDERS'
RIGHTS AND REMEDIES AFTER
DEFAULT..............................................................74
11.1.
Rights and
Remedies............................................................................74
11.2.
Agent's
Discretion.............................................................................76
11.3.
Setoff.........................................................................................76
11.4.
Rights and Remedies not
Exclusive..............................................................76
11.5.
Allocation of Payments After Event of
Default..................................................76
XII. WAIVERS AND
JUDICIAL
PROCEEDINGS........................................................................77
12.1.
Waiver of
Notice...............................................................................77
12.2.
Delay..........................................................................................77
12.3. Jury
Waiver....................................................................................77
XIII. EFFECTIVE DATE AND
TERMINATION..........................................................................77
13.1.
Term...........................................................................................77
13.2.
Termination....................................................................................78
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XIV. REGARDING
AGENT.........................................................................................78
14.1.
Appointment....................................................................................78
14.2.
Nature of
Duties...............................................................................79
14.3. Lack
of Reliance on Agent and
Resignation......................................................79
14.4.
Certain Rights of
Agent........................................................................80
14.5.
Reliance.......................................................................................80
14.6.
Notice of
Default..............................................................................80
14.7.
Indemnification................................................................................80
14.8.
Agent in its Individual
Capacity...............................................................80
14.9.
Delivery of
Documents..........................................................................81
14.10.
Borrowers' Undertaking to
Agent................................................................81
14.11. No
Reliance on Agent's Customer Identification
Program.........................................81
14.12. Other
Agreements...............................................................................81
XV. BORROWING
AGENCY........................................................................................81
15.1.
Borrowing Agency
Provisions....................................................................81
15.2.
Waiver of
Subrogation..........................................................................82
XVI.
MISCELLANEOUS...........................................................................................82
16.1.
Governing
Law..................................................................................82
16.2.
Entire
Understanding...........................................................................83
16.3.
Successors and Assigns; Participations; New
Lenders............................................85
16.4.
Application of
Payments........................................................................86
16.5.
Indemnity......................................................................................87
16.6.
Notice.........................................................................................87
16.7.
Survival.......................................................................................89
16.8.
Severability...................................................................................89
16.9.
Expenses.......................................................................................89
16.10.
Injunctive
Relief..............................................................................89
16.11.
Consequential
Damages..........................................................................89
16.12.
Captions.......................................................................................90
16.13.
Counterparts; Facsimile
Signatures.............................................................90
16.14.
Construction...................................................................................90
16.15.
Confidentiality; Sharing
Information...........................................................90
16.16.
Publicity......................................................................................90
16.17.
Certifications From Banks and Participants; USA PATRIOT
Act....................................91
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SECOND AMENDED AND RESTATED REVOLVING
CREDIT AND SECURITY AGREEMENT
Second Amendment and
Restated Revolving Credit and Security Agreement dated
as of December 19, 2005 among COMPUDYNE
CORPORATION, a Nevada corporation
("CompuDyne"), COMPUDYNE - PUBLIC SAFETY
& JUSTICE, INC., a Virginia corporation
(CompuDyne Safety"), NORMENT SECURITY
GROUP, INC., a Delaware corporation
("Norment"), NORSHIELD CORPORATION, an
Alabama corporation ("Norshield"), FIBER
SENSYS, LLC, a Delaware limited liability
company ("Fiber"), COMPUDYNE -
INTEGRATED ELECTRONICS DIVISION, LLC, a
Delaware limited liability company
("CompuDyne Integrated"), CORRLOGIC, LLC, a
Delaware limited liability company
("CorrLogic") and Xanalys Corporation, a
Delaware corporation ("Xanalys")
(CompuDyne, CompuDyne Safety, Norment,
Norshield, Fiber, CompuDyne Integrated
and CorrLogic and Xanalys, 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
----------
A. On or about
November 16, 2001, PNC Bank, National Association ("PNC NA")
the banks and financial institutions party
to the Original PNC Loan Agreement
(as herein defined) and CompuDyne entered
into a certain Credit Agreement (as
heretofore amended, restated, supplemented
or replaced from time to time, the
"Original PNC Loan Agreement") and certain
related agreements, instruments and
documents to evidence the obligation of
CompuDyne to repay an original maximum
amount of $25,000,000 thereunder.
B. On or about
March 31, 2004, CompuDyne and PNC NA and the banks and
financial institutions party to the
Restated Credit Agreement (as therein
defined) entered into a certain Amended and
Restated Credit and Security
Agreement (as heretofore amended, restated,
supplemented or replaced from time
to time, the "Restated Loan Agreement") and
certain related agreements,
instruments and documents (collectively
with the Restated Loan Agreement, the
"Existing Loan Documents") to evidence the
obligations of CompuDyne to repay an
original maximum amount of $25,000,000
thereunder pursuant to which such parties
amended and restated the Original PNC Loan
Agreement.
C. The parties
have agreed to amend and restate the Restated Loan Agreement
on the terms and conditions set forth
herein, and in connection therewith
Borrowers wish, from time to time, to
obtain Advances from Lenders up to the
Maximum Revolving Advance Amount. Lenders
are willing to continue to make loans
and grant extensions of credit to Borrowers
under the terms and provisions
hereinafter set forth.
IN CONSIDERATION
of the mutual covenants and undertakings herein contained,
Borrowers, Lenders and Agent hereby agree
as follows:
I. DEFINITIONS.
1.1. Accounting
Terms. As used in this Agreement, the Other Documents or
any certificate, report or other document
made or delivered pursuant to this
Agreement, accounting terms not defined in
Section 1.2 or elsewhere in this
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Agreement and accounting terms partly
defined in Section 1.2 to the extent not
defined, shall have the respective meanings
given to them under GAAP; provided,
however, whenever such accounting terms are
used for the purposes of determining
compliance with financial covenants in this
Agreement, such accounting terms
shall be defined in accordance with GAAP as
applied in preparation of the
audited financial statements of Borrowers
for the fiscal year ended December 31,
2004.
1.2. General
Terms. For purposes of this Agreement the following terms
shall have the following meanings:
"Accountants"
shall have the meaning set forth in Section 9.7 hereof.
"Advance Rates"
shall have the meaning set forth in Section 2.1(a)(y)(vii).
"Advances" shall
mean and include the Revolving Advances and Letters of
Credit.
"Affiliate" of
any Person shall mean (a) any Person which, directly or
indirectly, is in control of, is controlled
by, or is under common control with
such Person, or (b) any Person who is a
director, managing member, general
partner or officer (i) of such Person, (ii)
of any Subsidiary of such Person or
(iii) of any Person described in clause (a)
above. For purposes of this
definition, control of a Person shall mean
the power, direct or indirect, (x) to
vote 10% or more of the Equity Interests
having ordinary voting power for the
election of directors of such Person or
other Persons performing similar
functions for any such Person, or (y) to
direct or cause the direction of the
management and policies of such Person
whether by ownership of Equity Interests,
contract or otherwise.
"Agent" shall
have the meaning set forth in the preamble to this Agreement
and shall include its successors and
assigns.
"Agreement"
shall mean this Revolving Credit and Security Agreement, as the
same may be amended, restated, supplemented
or otherwise modified from time to
time.
"Alternate Base
Rate" shall mean, for any day, a rate per annum equal to
the higher of (i) the Base Rate in effect
on such day and (ii) the Federal Funds
Open Rate in effect on such day plus 1/2 of
1%.
"Anti-Terrorism
Laws" shall mean any Applicable Laws relating to terrorism
or money laundering, including Executive
Order No. 13224, the USA PATRIOT Act,
the Applicable Laws comprising or
implementing the Bank Secrecy Act, and the
Applicable Laws administered by the United
States Treasury Department's Office
of Foreign Asset Control (as any of the
foregoing Applicable Laws may from time
to time be amended, renewed, extended, or
replaced).
"Applicable Law"
shall mean all laws, rules and regulations applicable to
the Person, conduct, transaction, covenant,
Other Documents or contract in
question, including all applicable common
law and equitable principles; all
provisions of all applicable state, federal
and foreign constitutions, statutes,
rules, regulations and orders of any
Governmental Body, and all orders,
judgments and decrees of all courts and
arbitrators.
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"Authority"
shall have the meaning set forth in Section 4.19(d).
"Base Rate"
shall mean the base commercial lending rate of PNC as publicly
announced to be in effect from time to
time, such rate to be adjusted
automatically, without notice, on the
effective date of any change in such rate.
This rate of interest is determined from
time to time by PNC as a means of
pricing some loans to its customers and is
neither tied to any external rate of
interest or index nor does it necessarily
reflect the lowest rate of interest
actually charged by PNC to any particular
class or category of customers of PNC.
"Billings in
Excess of Costs" shall mean, as of the date of any
determination, the amount billed by a
Borrower to a particular Customer on a
contract which is in excess of the revenue
earned by such Borrower under such
contract with the Customer, as determined
in accordance with GAAP and as set
forth in Borrowers' most recently delivered
balance sheet.
"Blocked
Accounts" shall have the meaning set forth in Section 4.15(h).
"Blocked Account
Bank" shall have the meaning set forth in Section 4.15(h).
"Blocked Person"
shall have the meaning set forth in Section 5.24(b)
hereof.
"Bonded
Receivables" shall mean any Receivable arising from a Customer
pursuant to contract for which a Borrower
has posted a performance bond to
secure such Borrower's performance
thereunder.
"Borrower" or
"Borrowers" shall have the meaning set forth in the preamble
to this Agreement and shall extend to all
permitted successors and assigns of
such Persons.
"Borrowers on a
Consolidated Basis" shall mean the consolidation in
accordance with GAAP of the accounts or
other items of the Borrowers and their
respective Subsidiaries.
"Borrowers'
Account" shall have the meaning set forth in Section 2.8.
"Borrowing
Agent" shall mean CompuDyne.
"Borrowing Base
Certificate" shall mean a certificate in substantially the
form of Exhibit 1.2 duly executed by the
President, Chief Financial Officer or
Controller of the Borrowing Agent and
delivered to the Agent, appropriately
completed, by which such officer shall
certify to Agent the Formula Amount and
calculation thereof as of the date of such
certificate.
"Business Day"
shall mean any day other than Saturday or Sunday or a legal
holiday on which commercial banks are
authorized or required by law to be closed
for business in East Brunswick, New Jersey
and, if the applicable Business Day
relates to any Eurodollar Rate Loans, such
day must also be a day on which
dealings are carried on in the London
interbank market.
"Capital
Expenditures" shall mean expenditures made or liabilities
incurred
for the acquisition of any fixed assets or
improvements, replacements,
substitutions or additions thereto which
have a useful life of more than one
year, including the total principal portion
of Capitalized Lease Obligations,
which, in accordance with GAAP, would be
classified as capital expenditures.
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"Capitalized
Lease Obligation" shall mean any Indebtedness of any Borrower
represented by obligations under a lease
that is required to be capitalized for
financial reporting purposes in accordance
with GAAP.
"CERCLA" shall
mean the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42
U.S.C. ss.ss.9601 et seq.
"Change of
Ownership" shall mean (a) 100% of the Equity Interests of any
direct or indirect Subsidiary of CompuDyne
is no longer owned directly or
indirectly (on a fully diluted basis) by
CompuDyne, (b) (i) any person or group
of persons (within the meaning of Sections
13(d) or 14(a) of the Security
Exchange Act of 1934, as amended) shall
have acquired beneficial ownership of
(within the meaning of Rule 13d-3
promulgated by the Securities and Exchange
Commission under Act) 50% or more of the
voting Equity Interest of CompuDyne; or
(ii) from and after the date hereof,
individuals who on the date hereof
constitute the board of directors of
CompuDyne (together with any new directors
whose election by such Board of Directors
or whose nomination for election by
the shareholders of CompuDyne was approved
by a vote of a majority of the
directors then still in office who were
either directors on the date hereof or
whose election or nomination for election
was previously approved) cease for any
reason to constitute a majority of the
board of directors of CompuDyne then in
office; or (c) any merger, consolidation or
sale of substantially all of the
property or assets of any Borrower or any
direct or indirect Subsidiary of any
Borrower except as permitted by Section
7.1.
"Charges" shall
mean all taxes, charges, fees, imposts, levies or other
assessments, including all net income,
gross income, gross receipts, sales, use,
ad valorem, value added, transfer,
franchise, profits, inventory, capital stock,
license, withholding, payroll, employment,
social security, unemployment,
excise, severance, stamp, occupation and
property taxes, custom duties, fees,
assessments, liens, claims and charges of
any kind whatsoever, together with any
interest and any penalties, additions to
tax or additional amounts, imposed by
any taxing or other authority, domestic or
foreign (including the Pension
Benefit Guaranty Corporation or any
environmental agency or superfund), upon the
Collateral, any Borrower or any of its
Affiliates.
"Closing Date"
shall mean December 19, 2005 or such other date as may be
agreed to by the parties hereto.
"Code" shall
mean the Internal Revenue Code of 1986, as the same may be
amended or supplemented from time to time,
and any successor statute of similar
import, and the rules and regulations
thereunder, as from time to time in
effect.
"Collateral"
shall mean and include:
a. all
Receivables;
b. all
Equipment;
c. all General
Intangibles;
d. all
Inventory;
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e. all
Investment Property;
f. all Real
Property;
g. all
Subsidiary Stock;
h. all of each
Borrower's right, title and interest in and to, whether now
owned or hereafter acquired and wherever
located, (i) its respective goods and
other property including, but not limited
to, all merchandise returned or
rejected by Customers, relating to or
securing any of the Receivables; (ii) all
of each Borrower's rights as a consignor, a
consignee, an unpaid vendor,
mechanic, artisan, or other lienor,
including stoppage in transit, setoff,
detinue, replevin, reclamation and
repurchase; (iii) all additional amounts due
to any Borrower from any Customer relating
to the Receivables; (iv) other
property, including warranty claims,
relating to any goods securing the
Obligations; (v) all of each Borrower's
contract rights, rights of payment which
have been earned under a contract right,
instruments (including promissory
notes), documents, chattel paper (including
electronic chattel paper), warehouse
receipts, deposit accounts, letters of
credit and money; (vi) all commercial
tort claims (whether now existing or
hereafter arising); (vii) all insurance
claims and settlement claims; (viii) if and
when obtained by any Borrower, all
real and personal property of third parties
in which such Borrower has been
granted a lien or security interest as
security for the payment or enforcement
of Receivables; (ix) all letter of credit
rights (whether or not the respective
letter of credit is evidenced by a
writing); (x) all supporting obligations; and
(xi) any other goods, personal property or
real property now owned or hereafter
acquired in which any Borrower has
expressly granted a security interest or may
in the future grant a security interest to
Agent hereunder, or in any amendment
or supplement hereto or thereto, or under
any other agreement between Agent and
any Borrower;
i. all of each
Borrower's ledger sheets, ledger cards, files,
correspondence, records, books of account,
business papers, computers, computer
software (owned by any Borrower or in which
it has an interest), computer
programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f),
(g) or (h) of this Paragraph; and
j. all proceeds
and products of (a), (b), (c), (d), (e), (f), (g), (h) and
(i) in whatever form, including, but not
limited to: cash, deposit accounts
(whether or not comprised solely of
proceeds), certificates of deposit,
insurance proceeds (including hazard, flood
and credit insurance), negotiable
instruments and other instruments for the
payment of money, chattel paper,
security agreements, documents, eminent
domain proceeds, condemnation proceeds
and tort claim proceeds.
"Commitment
Percentage" of any Lender shall mean the percentage set forth
below such Lender's name on the signature
page hereof as same may be adjusted
upon any assignment by a Lender pursuant to
Section 16.3(b) hereof.
"Commitment
Transfer Supplement" shall mean a document in the form of
Exhibit 16.3 hereto, properly completed and
otherwise in form and substance
satisfactory to Agent by which the
Purchasing Lender purchases and assumes a
portion of the obligation of Lenders to
make Advances under this Agreement.
"Compliance
Certificate" shall mean a compliance certificate to be signed
by the Chief Financial Officer or
Controller of Borrowing Agent, which shall
state that, based on an examination
sufficient to permit such officer to make an
informed statement, no Default or Event of
Default exists, or if such is not the
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<PAGE>
case, specifying such Default or Event of
Default, its nature, when it occurred,
whether it is continuing and the steps
being taken by Borrowers with respect to
such default and, such certificate shall
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.
"Consents" shall
mean all filings and all licenses, permits, consents,
approvals, authorizations, qualifications
and orders of Governmental Bodies and
other third parties, domestic or foreign,
necessary to carry on any Borrower's
business or necessary (including to avoid a
conflict or breach under any
agreement, instrument, other document,
license, permit or other authorization)
for the execution, delivery or performance
of this Agreement, the Other
Documents, the Subordinated Loan
Documentation, the IRB Documentation, including
any Consents required under all applicable
federal, state or other Applicable
Law.
"Consigned
Inventory" shall mean Inventory of any Borrower that is in the
possession of another Person on a
consignment, sale or return, or other basis
that does not constitute a final sale and
acceptance of such Inventory.
"Controlled
Group" shall mean, at any time, each Borrower and all members
of a controlled group of corporations and
all trades or businesses (whether or
not incorporated) under common control and
all other entities which, together
with any Borrower, are treated as a single
employer under Section 414 of the
Code.
"Costs in Excess
Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(iii) hereof.
Costs in Excess
of Billings" shall mean, as of the date of any
determination, the amount of revenue earned
by a Borrower from a Customer
pursuant to a contract, which is in excess
of the amount billed by a Borrower to
such Customer under such contract, as
determined in accordance with GAAP and as
set forth in Borrowers' most recently
delivered balance sheet.
"Current Value
of Marketable Securities" shall mean, as of the date of any
determination, the aggregate market value
of securities issued by Federal Home
Loan Bank, Fannie Mae, Freddie Mac and
Ginnie Mae, which have been pledged to
Agent for the benefit of Lenders pursuant
to the Securities Pledge Agreement and
in which Agent has a first priority
security interest, as determined by
reference to the closing market price
existing on the immediately preceding
Business Day.
"Customer" shall
mean and include the account debtor with respect to any
Receivable and/or the prospective purchaser
of goods, services or both with
respect to any contract or contract right,
and/or any party who enters into or
proposes to enter into any contract or
other arrangement with any Borrower,
pursuant to which such Borrower is to
deliver any personal property or perform
any services.
"Debt Payment"
shall mean and include all cash expended or required by any
Borrower to make (a) interest payments, or
interest accrued but unpaid, on the
Advances hereunder, plus (b) payments for
all Letter of Credit Fees, plus (c)
payments with respect to any Indebtedness
for borrowed money, plus (d) payments
made with respect to Capitalized Lease
Obligations.
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<PAGE>
"Default" shall
mean an event, circumstance or condition which, with the
giving of notice or passage of time or
both, would constitute an Event of
Default.
"Default Rate"
shall have the meaning set forth in Section 3.1 hereof.
"Defaulting
Lender" shall have the meaning set forth in Section 2.23(a)
hereof.
"Deferred
Revenue" shall mean revenue that is received, and to be
treated,
by a Borrower as "deferred revenue"
pursuant to and in accordance with GAAP.
"Depository
Accounts" shall have the meaning set forth in Section 4.15(h)
hereof.
"Documents"
shall have the meaning set forth in Section 8.1(c) hereof.
"Dollar" and the
sign "$" shall mean lawful money of the United States of
America.
"Domestic Rate
Loan" shall mean any Advance that bears interest based upon
the Alternate Base Rate.
"Drawing Date"
shall have the meaning set forth in Section 2.12(b) hereof.
"Early
Termination Date" shall have the meaning set forth in Section
13.1
hereof.
"Earnings Before
Interest and Taxes" shall mean for any period the sum of
(i) net income (or loss) of Borrowers on a
Consolidated Basis for such period
(excluding extraordinary gains and losses),
plus (ii) all interest expense of
Borrowers on a Consolidated Basis for such
period, plus (iii) all Letter of
Credit Fees expense of Borrowers on a
Consolidated Basis for such period, plus
(iv) all charges against income of
Borrowers on a Consolidated Basis for such
period for federal, state and local taxes
actually paid.
"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) 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).
"Eligible
Government Receivables" shall mean Receivables which meet all
requirements of Eligible Receivables other
than the condition set forth in
subsection (i) of the definition of
Eligible Receivables.
"Eligible
Inventory" shall mean and include Inventory that consists of
raw
materials and finished goods, with respect
to each Borrower, valued at the lower
of cost or market value, determined on a
first-in-first-out basis, which is not,
in Agent's opinion, obsolete, slow moving
or unmerchantable and which Agent, in
its Permitted Discretion, shall not deem
ineligible Inventory, based on such
considerations as Agent may from time to
time deem reasonably appropriate
including whether the Inventory is subject
to a perfected, first priority
security interest in favor of Agent and no
other Lien (other than a Permitted
Encumbrance). In addition, Inventory shall
not be Eligible Inventory if it: (i)
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<PAGE>
does not conform to all standards imposed
by any Governmental Body which has
regulatory authority over such goods or the
use or sale thereof, (ii) except as
provided below, is in transit, (iii) is
located outside the continental United
States or at a location that is not
otherwise in compliance with this Agreement,
(iv) constitutes Consigned Inventory, (v)
is the subject of an Intellectual
Property Claim, (vi) is subject to a
License Agreement or other agreement that
limits, conditions or restricts any
Borrower's or Agent's right to sell or
otherwise dispose of such Inventory, unless
Agent is a party to a Licensor/Agent
Agreement with the Licensor under such
License Agreement, or (vii) is situated
at a location not owned by a Borrower
unless the owner or occupier of such
location has executed in favor of Agent a
Lien Waiver Agreement. Eligible
Inventory shall include all Inventory
in-transit for which title has passed to a
Borrower, which is insured to the full
value thereof and for which Agent shall
have in its possession (a) all negotiable
bills of lading properly endorsed and
(b) all non-negotiable bills of lading
issued in Agent's name.
"Eligible
Receivables" shall mean and include with respect to each
Borrower, each Receivable of such Borrower
arising in the Ordinary Course of
Business and which Agent, in its Permitted
Discretion shall deem to be an
Eligible Receivable, based on such
considerations as Agent may from time to time
deem appropriate. A Receivable shall not be
deemed eligible unless such
Receivable is subject to Agent's first
priority perfected security interest and
no other Lien (other than Permitted
Encumbrances), and is evidenced by an
invoice or other documentary evidence
satisfactory to Agent. In addition, no
Receivable shall be an Eligible Receivable
if:
a. it arises out
of a sale made by any Borrower to an Affiliate of any
Borrower or to a Person controlled by an
Affiliate of any Borrower;
b. it is due or
unpaid more than one hundred twenty (120) days after the
original invoice date;
c. fifty percent
(50%) or more of the Receivables from such Customer are
not deemed Eligible Receivables hereunder.
Such percentage may, in (i) Agent's
Permitted Discretion be decreased from time
to time and (ii) Agent's sole
discretion be increased from time to
time;
d. any covenant,
representation or warranty contained in this Agreement
with respect to such Receivable has been
breached;
e. the Customer
shall (i) apply for, suffer, or consent to the appointment
of, or the taking of possession by, a
receiver, custodian, trustee or liquidator
of itself or of all or a substantial part
of its property or call a meeting of
its creditors, (ii) admit in writing its
inability, or be generally unable, to
pay its debts as they become due or cease
operations of its present business,
(iii) make a general assignment for the
benefit of creditors, (iv) commence a
voluntary case under any state or federal
bankruptcy laws (as now or hereafter
in effect), (v) be adjudicated a bankrupt
or insolvent, (vi) file a petition
seeking to take advantage of any other law
providing for the relief of debtors,
(vii) acquiesce to, or fail to have
dismissed, any petition which is filed
against it in any involuntary case under
such bankruptcy laws, or (viii) take
any action for the purpose of effecting any
of the foregoing;
f. the sale is
to a Customer outside the continental United States of
America, unless the sale is on letter of
credit, guaranty or acceptance terms,
in each case acceptable to Agent in its
Permitted Discretion;
8
<PAGE>
g. the sale to
the Customer is on a bill-and-hold, guaranteed sale,
sale-and-return, sale on approval,
consignment or any other repurchase or return
basis or is evidenced by chattel paper;
h. Agent
believes, in its Permitted Discretion, that collection of such
Receivable is insecure or that such
Receivable may not be paid by reason of the
Customer's financial inability to pay;
i. the Customer
is the United States of America, any state or any
department, agency or instrumentality of
any of them, unless the applicable
Borrower assigns its right to payment of
such Receivable to Agent pursuant to
the Assignment of Claims Act of 1940, as
amended (31 U.S.C. Sub-Section 3727 et
seq. and 41 U.S.C. Sub-Section 15 et seq.)
or has otherwise complied with other
applicable statutes or ordinances;
j. the goods
giving rise to such Receivable have not been delivered to and
accepted by the Customer or the services
giving rise to such Receivable have not
been performed by the applicable Borrower
and accepted by the Customer or the
Receivable otherwise does not represent a
final sale;
k. the
Receivables of the Customer exceed a credit limit determined by
Agent, in its Permitted Discretion, to the
extent such Receivable exceeds such
limit;
l. the
Receivable is subject to any offset, deduction, defense, dispute,
or
counterclaim only to the extent of any
offset, deduction, defense, dispute or
counterclaim, the Customer is also a
creditor or supplier of a Borrower or the
Receivable is contingent in any respect or
for any reason;
m. the
applicable Borrower has made any agreement with any Customer for
any
deduction therefrom, except for discounts
or allowances made in the Ordinary
Course of Business for prompt payment, all
of which discounts or allowances are
reflected in the calculation of the face
value of each respective invoice
related thereto;
n. any return,
rejection or repossession of the merchandise has occurred or
the rendition of services has been
disputed;
o. such
Receivable is not payable to a Borrower;
p. such
Receivable constitutes a Bonded Receivable;
q. such
Receivable includes any Retainages, to the extent of any
Retainages;
r. such
Receivable constitutes a Deferred Revenue;
s. such
Receivable includes Billings in Excess of Costs to the extent
such
Receivable exceeds contractually earned
revenues; or
t. such
Receivable is not otherwise satisfactory to Agent as determined
in
good faith by Agent in the exercise of its
Permitted Discretion.
"Environmental
Complaint" shall have the meaning set forth in Section
4.19(d) hereof.
9
<PAGE>
"Environmental
Indemnity Agreement" shall mean the environmental indemnity
agreement executed and delivered by
Borrowers to Agent in form and substance
satisfactory to Agent.
"Environmental
Laws" shall mean all federal, state and local environmental,
land use, zoning, health, chemical use,
safety and sanitation laws, statutes,
ordinances and codes relating to the
protection of the environment and/or
governing the use, storage, treatment,
generation, transportation, processing,
handling, production or disposal of
Hazardous Substances and the rules,
regulations, policies, guidelines,
interpretations, decisions, orders and
directives of federal, state and local
governmental agencies and authorities
with respect thereto.
"Equipment"
shall mean and include as to each Borrower all of such
Borrower's goods (other than Inventory)
whether now owned or hereafter acquired
and wherever located including all
equipment, machinery, apparatus, motor
vehicles, fittings, furniture, furnishings,
fixtures, parts, accessories and all
replacements and substitutions therefor or
accessions thereto.
"Equity
Interests" of any Person shall mean any and all shares, rights
to
purchase, options, warrants, general,
limited or limited liability partnership
interests, member interests, participation
or other equivalents of or interest
in (regardless of how designated) equity of
such Person, whether voting or
nonvoting, including common stock,
preferred stock, convertible securities or
any other "equity security" (as such term
is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated
by the SEC under the Exchange Act).
"ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as
amended from time to time and the rules and
regulations promulgated thereunder.
"Eurodollar
Rate" shall mean for any Eurodollar Rate Loan for the then
current Interest Period relating thereto
the interest rate per annum determined
by Agent by dividing (the resulting
quotient rounded upwards, if necessary, to
the nearest 1/100th of 1% per annum) (i)
the rate of interest determined by
Agent in accordance with its usual
procedures (which determination shall be
conclusive absent manifest error) to be the
average of the London interbank
offered rates for U.S. Dollars quoted by
the British Bankers' Association as set
forth on Moneyline Telerate (or appropriate
successor or, if British Banker's
Association or its successor ceases to
provide such quotes, a comparable
replacement determined by Agent) display
page 3750 (or such other display page
on the Moneyline Telerate system as may
replace display page 3750) two (2)
Business Days prior to the first day of
such Interest Period for an amount
comparable to such Eurodollar Rate Loan and
having a borrowing date and a
maturity comparable to such Interest Period
by (ii) a number equal to 1.00 minus
the Reserve Percentage. The Eurodollar Rate
may also be expressed by the
following formula:
Average of
London interbank offered rates quoted by BBA as shown on
Eurodollar Rate = Moneyline
Telerate Service display page 3750 or appropriate
successor - Reserve Percentage.
The Eurodollar
Rate shall be adjusted with respect to any Eurodollar Rate
Loan that is outstanding on the effective
date of any change in the Reserve
Percentage as of such effective date. The
Agent shall give prompt notice to the
Borrowing Agent of the Eurodollar Rate as
determined or adjusted in accordance
herewith, which determination shall be
conclusive absent manifest error.
10
<PAGE>
"Eurodollar Rate
Loan" shall mean an Advance at any time that bears
interest based on the Eurodollar Rate.
"Event of
Default" shall have the meaning set forth in Article X hereof.
"Exchange Act"
shall have the mean the Securities Exchange Act of 1934, as
amended.
"Executive Order
No. 13224" shall mean the Executive Order No. 13224 on
Terrorist Financing, effective September
24, 2001, as the same has been, or
shall hereafter be, renewed, extended,
amended or replaced.
"Existing
Indebtedness" shall have the meaning set forth in Section 2.24
hereof.
"Existing
Letters of Credit" collectively, the letters of credit existing
on the Closing Date and described on
Schedule I hereto, as each such letter of
credit may be amended, supplemented,
replace or otherwise modified from time to
time.
"Existing Loan
Documents" shall have the meaning set forth in the
Background section hereof.
"Federal Funds
Effective Rate" for any day shall mean the rate per annum
(based on a year of 360 days and actual
days elapsed and rounded upward to the
nearest 1/100 of 1%) announced by the
Federal Reserve Bank of New York (or any
successor) on such day as being the
weighted average of the rates on overnight
federal funds transactions arranged by
federal funds brokers on the previous
trading day, as computed and announced by
such Federal Reserve Bank (or any
successor) in substantially the same manner
as such Federal Reserve Bank
computes and announces the weighted average
it refers to as the "Federal Funds
Effective Rate" as of the date of this
Agreement; provided, if such Federal
Reserve Bank (or its successor) does not
announce such rate on any day, the
"Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective
Rate for the last day on which such rate
was announced.
"Federal Funds
Open Rate" shall mean the rate per annum determined by the
Agent in accordance with its usual
procedures (which determination shall be
conclusive absent manifest error) to be the
"open" rate for federal funds
transactions as of the opening of business
for federal funds transactions among
members of the Federal Reserve System
arranged by federal funds brokers on such
day, as quoted by Garvin Guybutler
Corporation, any successor entity thereto, or
any other broker selected by the Agent, as
set forth on the applicable Telerate
display page; provided, however; that if
such day is not a Business Day, the
Federal Funds Open Rate for such day shall
be the "open" rate on the immediately
preceding Business Day, or if no such rate
shall be quoted by a Federal funds
broker at such time, such other rate as
determined by the Agent in accordance
with its usual procedures.
"Fixed Charge
Coverage Ratio" shall mean and include, with respect to any
fiscal period, the ratio of (a) EBITDA
minus unfinanced capitalized expenditures
made during such period, minus cash taxes
paid during such period to (b) all
Debt Payments made during such period,
calculated on a rolling four quarter
basis; provided, however, that such
calculation for the fiscal quarter ending
June 30, 2006 shall be for the two (2) most
recent fiscal quarterly periods
11
<PAGE>
ending on such date, and such calculation
for the fiscal quarter ending
September 30, 2006 shall be for the three
(3) most recent fiscal quarterly
periods ending on such date.
"FMV of Real
Property" shall mean the appraised fair market value of each
parcel of Borrowers' Real Property as
listed in the appraisal by Loewe-Adler
International, Inc. dated October 20, 2005
("Real Property Appraisal"), which is
not encumbered by a Lien (other than a
Permitted Encumbrance) as determined in
accordance with the Real Property
Appraisal.
"Foreign
Subsidiary" of any Person, shall mean any Subsidiary of such
Person that is not organized or
incorporated in the United States or any State
or territory thereof.
"Formula Amount"
shall have the meaning set forth in Section 2.1(a).
"GAAP" shall
mean generally accepted accounting principles in the United
States of America in effect from time to
time.
"General
Intangibles" shall mean and include as to each Borrower all of
such Borrower's general intangibles,
whether now owned or hereafter acquired,
including all payment intangibles, all
choses in action, causes of action,
corporate or other business records,
inventions, designs, patents, patent
applications, equipment formulations,
manufacturing procedures, quality control
procedures, trademarks, trademark
applications, service marks, trade secrets,
goodwill, copyrights, design rights,
software, computer information, source
codes, codes, records and updates,
registrations, licenses, franchises, customer
lists, tax refunds, tax refund claims,
computer programs, all claims under
guaranties, security interests or other
security held by or granted to such
Borrower to secure payment of any of the
Receivables by a Customer (other than
to the extent covered by Receivables) all
rights of indemnification and all
other intangible property of every kind and
nature (other than Receivables).
"Government
Receivables Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(vii).
"Governmental
Acts" shall have the meaning set forth in Section 2.17.
"Governmental
Body" shall mean any nation or government, any state or other
political subdivision thereof or any
entity, authority, agency, division or
department exercising the legislative,
judicial, regulatory or administrative
functions of or pertaining to a
government.
"Guarantor"
shall mean any Person who may hereafter guarantee payment or
performance of the whole or any part of the
Obligations and "Guarantors" means
collectively all such Persons.
"Guarantor
Security Agreement" shall mean any Security Agreement executed
by any Guarantor in favor of Agent securing
the Guaranty of such Guarantor.
"Guaranty" shall
mean any guaranty of the obligations of Borrowers executed
by a Guarantor in favor of Agent for its
benefit and for the ratable benefit of
Lenders.
"Hazardous
Discharge" shall have the meaning set forth in Section 4.19(d)
hereof.
"Hazardous
Substance" shall mean, without limitation, any flammable
explosives, radon, radioactive materials,
asbestos, urea formaldehyde foam
12
<PAGE>
insulation, polychlorinated biphenyls,
petroleum and petroleum products,
methane, hazardous materials, Hazardous
Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the
Hazardous Materials Transportation
Act, as amended (49 U.S.C. Sections 1801,
et seq.), RCRA, Articles 15 and 27 of
the New York State Environmental
Conservation Law or any other applicable
Environmental Law and in the regulations
adopted pursuant thereto.
"Hazardous
Wastes" shall mean all waste materials subject to regulation
under CERCLA, RCRA or applicable state law,
and any other applicable Federal and
state laws now in force or hereafter
enacted relating to hazardous waste
disposal.
"Hedge
Liabilities" shall have the meaning provided in the definition
of
"Lender-Provided Interest Rate Hedge".
"Indebtedness"
of a Person at a particular date shall mean all obligations
of such Person which in accordance with
GAAP would be classified upon a balance
sheet as liabilities (except capital stock
and surplus earned or otherwise) and
in any event, without limitation by reason
of enumeration, shall include all
indebtedness, debt and other similar
monetary obligations of such Person whether
direct or guaranteed, and all premiums, if
any, due at the required prepayment
dates of such indebtedness, and all
indebtedness secured by a Lien on assets
owned by such Person, whether or not such
indebtedness actually shall have been
created, assumed or incurred by such
Person. Any indebtedness of such Person
resulting from the acquisition by such
Person of any assets subject to any Lien
shall be deemed, for the purposes hereof,
to be the equivalent of the creation,
assumption and incurring of the
indebtedness secured thereby, whether or not
actually so created, assumed or
incurred.
"Indenture
Agreement" shall mean that certain Indenture Agreement among
Subordinated Lender and CompuDyne dated as
of January 15, 2004.
"Indenture
Subordination Agreement" shall mean the Letter Agreement dated
December 19, 2005 among Agent, Borrowers
and Trustee.
"Industrial
Revenue Bonds" shall mean those certain industrial revenue
bonds issued pursuant to the IRB
Documentation.
"Ineligible
Security" shall mean any security which may not be underwritten
or dealt in by member banks of the Federal
Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section
24, Seventh), as amended.
"Intellectual
Property" shall mean property constituting under any
Applicable Law a patent, patent
application, copyright, trademark, service mark,
trade name, mask work, trade secret or
license or other right to use any of the
foregoing.
"Intellectual
Property Claim" shall mean the assertion by any Person of a
claim (whether asserted in writing, by
action, suit or proceeding or otherwise)
that any Borrower's ownership, use,
marketing, sale or distribution of any
Inventory, Equipment, Intellectual Property
or other property or asset is
violative of any ownership of or right to
use any Intellectual Property of such
Person.
"Interest
Period" shall mean the period provided for any Eurodollar Rate
Loan pursuant to Section 2.2(b).
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<PAGE>
"Interest Rate
Hedge" shall mean an interest rate exchange, collar, cap,
swap, adjustable strike cap, adjustable
strike corridor or similar agreements
entered into by any Borrower or its
Subsidiaries in order to provide protection
to, or minimize the impact upon, such
Borrower, any Guarantor and/or their
respective Subsidiaries of increasing
floating rates of interest applicable to
Indebtedness.
"Inventory"
shall mean and include as to each Borrower all of such
Borrower's now owned or hereafter acquired
goods, merchandise and other personal
property, wherever located, to be furnished
under any consignment arrangement,
contract of service or held for sale or
lease, all raw materials, work in
process, finished goods and materials and
supplies of any kind, nature or
description which are or might be used or
consumed in such Borrower's business
or used in selling or furnishing such
goods, merchandise and other personal
property, and all documents of title or
other documents representing them.
"Inventory
Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(ii) hereof.
"Investment
Property" shall mean and include as to each Borrower, all of
such Borrower's now owned or hereafter
acquired securities (whether certificated
or uncertificated), securities
entitlements, securities accounts, commodities
contracts and commodities accounts.
"IRB
Documentation" shall mean, collectively, that certain (i) Trust
Indenture dated as of August 1, 1999,
between The Industrial Development Board
of the City of Montgomery and Regions Bank,
as U.S. Trustee, relating to the
issuance of $2,100,000 Variable/Fixed Rate
Industrial Revenue Bonds (Norment
Industries, Inc. Project Series 1999); and
(ii) Trust Indenture dated as of
April 1, 2002, between The Industrial
Development Board of the City of
Montgomery and Regions Bank, as U.S.
Trustee, relating to the issuance of
$3,500,000 Industrial Revenue Bonds
(Norment Security Group, Inc. Project Series
2002), and and all documents delivered in
connection with each of the foregoing
(other than any credit or loan agreements
superseded by the Original PNC Loan
Agreement, the Restate Loan Agreement or by
this Agreement).
"IRB Letters of
Credit" shall mean, collectively, that certain (i) letter
of credit in the original amount of
$1,847,300 bearing an L/C No. S243626 SCP,
as amended from time to time, issued by PNC
in favor of Municipal Agency, and
(ii) letter of credit in the amount of
$3,547,945 bearing an L/C No. S247779
SCP, as amended from time to time, issued
by PNC in favor of Municipal Agency.
"IRB Offering"
shall mean the issuance of Individual Revenue Bonds.
"Issuer" shall
mean any Person who issues a Letter of Credit and/or accepts
a draft pursuant to the terms hereof.
"Lender" and
"Lenders" shall have the meaning ascribed to such term in the
preamble to this Agreement and shall
include each Person which becomes a
transferee, successor or assign of any
Lender.
"Lender-Provided
Interest Rate Hedge" shall mean an Interest Rate Hedge
which is provided by any Lender and with
respect to which the Agent confirms
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<PAGE>
meets the following requirements: such
Interest Rate Hedge (i) is documented in
a standard International Swap Dealer
Association Agreement, (ii) provides for
the method of calculating the reimbursable
amount of the provider's credit
exposure in a reasonable and customary
manner, and (iii) is entered into for
hedging (rather than speculative) purposes.
The liabilities of any Borrower to
the provider of any Lender-Provided
Interest Rate Hedge (the "Hedge
Liabilities") shall be "Obligations"
hereunder, guaranteed obligations under the
Guaranty and secured obligations under the
Guarantor Security Agreement and
otherwise treated as Obligations for
purposes of each of the Other Documents.
The Liens securing the Hedge Liabilities
shall be pari passu with the Liens
securing all other Obligations under this
Agreement and the Other Documents.
"Letter of
Credit Fees" shall have the meaning set forth in Section 3.2.
"Letter of
Credit Borrowing" shall have the meaning set forth in Section
2.12(d).
"Letter of
Credit Sublimit" shall mean $18,000,000.
"Letters of
Credit" shall mean, collectively, the Existing Letters of
Credit and any letters of credit issued by
Agent under Section 2.9 hereof have
the meaning set forth in Section 2.9.
"License
Agreement" shall mean any agreement between any Borrower and a
Licensor pursuant to which such Borrower is
authorized to use any Intellectual
Property in connection with the
manufacturing, marketing, sale or other
distribution of any Inventory of such
Borrower or otherwise in connection with
such Borrower's business operations.
"Licensor" shall
mean any Person from whom any Borrower obtains the right
to use (whether on an exclusive or
non-exclusive basis) any Intellectual
Property in connection with such Borrower's
manufacture, marketing, sale or
other distribution of any Inventory or
otherwise in connection with such
Borrower's business operations.
"Licensor/Agent
Agreement" shall mean an agreement between Agent and a
Licensor, in form and content satisfactory
to Agent, by which Agent is given the
unqualified right, vis-a-vis such Licensor,
to enforce Agent's Liens with
respect to and to dispose of any Borrower's
Inventory with the benefit of any
Intellectual Property applicable thereto,
irrespective of such Borrower's
default under any License Agreement with
such Licensor.
"Lien" shall
mean any mortgage, deed of trust, pledge, hypothecation,
assignment, security interest, lien
(whether statutory or otherwise), Charge,
claim or encumbrance, or preference,
priority or other security agreement or
preferential arrangement held or asserted
in respect of any asset of any kind or
nature whatsoever including any conditional
sale or other title retention
agreement, any lease having substantially
the same economic effect as any of the
foregoing, and the filing of, or agreement
to give, any financing statement
under the Uniform Commercial Code or
comparable law of any jurisdiction.
"Lien Waiver Agreement" shall mean
an agreement which is executed in favor
of Agent by a Person who owns or occupies
premises at which any Collateral may
be located from time to time and by which
such Person shall waive any Lien that
such Person may ever have with respect to
any of the Collateral and shall
authorize Agent from time to time to enter
upon the premises to inspect or
remove the Collateral from such premises or
to use such premises to store or
dispose of such Inventory.
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<PAGE>
"Marketable
Securities Advance Rate" shall have the meaning set forth in
Section 2.1(a)(y)(vi) hereof.
"Material
Adverse Effect" shall mean a material adverse effect on (a) the
condition (financial or otherwise), results
of operations, assets, business or
properties of any Borrower or any
Guarantor, (b) the Borrowers' ability to duly
and punctually pay or perform the
Obligations in accordance with the terms
thereof, (c) the value of the Collateral,
or Agent's Liens on the Collateral or
the priority of any such Lien or (d) the
practical realization of the benefits
of Agent's and each Lender's rights and
remedies under this Agreement and the
Other Documents.
"Maximum Face
Amount" shall mean, with respect to any outstanding Letter of
Credit, the face amount of such Letter of
Credit including all automatic
increases provided for in such Letter of
Credit, whether or not any such
automatic increase has become
effective.
"Maximum
Revolving Advance Amount" shall mean $20,000,000.
"Maximum Undrawn
Amount" shall mean with respect to any outstanding Letter
of Credit, the amount of such Letter of
Credit that is or may become available
to be drawn, including all automatic
increases provided for in such Letter of
Credit, whether or not any such automatic
increase has become effective.
"Mortgage
Modification Agreement" shall mean collectively those mortgage
modification agreements modifying the
mortgages on the Real Property securing
the Obligations together with all
extensions, renewals, amendments, supplements,
modifications, substitutions and
replacements thereto and thereof.
"Multiemployer
Plan" shall mean a "multiemployer plan" as defined in
Sections 3(37) and 4001(a)(3) of ERISA.
"Multiple
Employer Plan" shall mean a Plan which has two or more
contributing sponsors (including any
Borrower or any member of the Controlled
Group) at least two of whom are not under
common control, as such a plan is
described in Section 4064 of ERISA.
"Municipal
Agency" shall mean Regions Bank, as Trustee under the
applicable
IRB Documentation.
"Note" shall
mean the Revolving Credit Note.
"Obligations"
shall mean and include any and all loans, advances, debts,
liabilities, obligations, covenants and
duties owing by any Borrower to Lenders
or Agent or to any other direct or indirect
subsidiary or affiliate of Agent or
any Lender of any kind or nature, present
or future (including any interest or
other amounts accruing thereon after
maturity, or after the filing of any
petition in bankruptcy, or the commencement
of any insolvency, reorganization or
like proceeding relating to any Borrower,
whether or not a claim for post-filing
or post-petition interest or other amounts
is allowed in such proceeding),
whether or not evidenced by any note,
guaranty or other instrument, whether
arising under any agreement, instrument or
document, (including this Agreement
and the Other Documents) whether or not for
the payment of money, whether
arising by reason of an extension of
credit, opening of a letter of credit,
loan, equipment lease or guarantee, under
any interest or currency swap, future,
16
<PAGE>
option or other similar agreement, or in
any other manner, whether arising out
of overdrafts or deposit or other accounts
or electronic funds transfers
(whether through automated clearing houses
or otherwise) or out of the Agent's
or any Lenders non-receipt of or inability
to collect funds or otherwise not
being made whole in connection with
depository transfer check or other similar
arrangements, whether direct or indirect
(including those acquired by assignment
or participation), absolute or contingent,
joint or several, due or to become
due, now existing or hereafter arising,
contractual or tortious, liquidated or
unliquidated, regardless of how such
indebtedness or liabilities arise or by
what agreement or instrument they may be
evidenced or whether evidenced by any
agreement or instrument, including, but not
limited to, any and all of any
Borrower's Indebtedness and/or liabilities
under this Agreement, the Other
Documents or under any other agreement
between Agent or Lenders and any Borrower
and any amendments, extensions, renewals or
increases and all costs and expenses
of Agent and any Lender incurred in the
documentation, negotiation,
modification, enforcement, collection or
otherwise in connection with any of the
foregoing, including but not limited to
reasonable attorneys' fees and expenses
and all obligations of any Borrower to
Agent or Lenders to perform acts or
refrain from taking any action.
"OLV of M&E"
shall mean the appraised orderly liquidation value of
Borrowers' machinery and Equipment as
listed in the appraisal by DovBid
Valuation Services dated November 3, 2005
("M&E Appraisal"), which is not
encumbered by a Lien (other than a
Permitted Encumbrance), as determined in
accordance with the M&E Appraisal.
"Ordinary Course
of Business" shall mean with respect to any Borrower, the
ordinary course of such Borrower's business
as conducted on the Closing Date.
"Other
Documents" shall mean the Mortgage Modification Agreement, the
Note,
the Perfection Certificate, the
Environmental Indemnity Agreement, any Guarantor
Security Agreement, and any and all other
agreements, instruments and documents,
including guaranties, pledges, powers of
attorney, consents, interest or
currency swap agreements or other similar
agreements and all other writings
heretofore, now or hereafter executed by
any Borrower or any Guarantor and/or
delivered to Agent or any Lender in respect
of the transactions contemplated by
this Agreement.
"Out-of-Formula
Loans" shall have the meaning set forth in Section 16.2(b).
"Parent" of any
Person shall mean a corporation or other entity owning,
directly or indirectly at least 50% of the
shares of stock or other ownership
interests having ordinary voting power to
elect a majority of the directors of
the Person, or other Persons performing
similar functions for any such Person.
"Participant"
shall mean each Person who shall be granted the right by any
Lender to participate in any of the
Advances and who shall have entered into a
participation agreement in form and
substance satisfactory to such Lender.
"Participation
Advance" shall have the meaning set forth in Section
2.12(d).
"Participation
Commitment" shall mean each Lender's obligation to buy a
participation of the Letters of Credit
issued hereunder.
"Payment Office"
shall mean initially Two Tower Center Boulevard, East
Brunswick, New Jersey 08816; thereafter,
such other office of Agent, if any,
which it may designate by notice to
Borrowing Agent and to each Lender to be the
Payment Office.
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<PAGE>
"PBGC" shall
mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA
or any successor.
"Pension Benefit
Plan" shall mean at any time any employee pension benefit
plan (including a Multiple Employer Plan,
but not a Multiemployer Plan) which is
covered by Title IV of ERISA or is subject
to the minimum funding standards
under Section 412 of the Code and either
(i) is maintained by any member of the
Controlled Group for employees of any
member of the Controlled Group; or (ii)
has at any time within the preceding five
years been maintained by any entity
which was at such time a member of the
Controlled Group for employees of any
entity which was at such time a member of
the Controlled Group.
"Perfection
Certificate" shall mean the Perfection Certificate and the
responses thereto provided by Borrowers and
delivered to Agent.
"Permitted
Discretion" means Agent's commercially reasonable credit
judgment from the perspective of an asset
based secured lender made in good
faith and determined on a basis consistent
with its then current credit policies
and procedures.
"Permitted
Encumbrances" shall mean: (a) Liens in favor of Agent for the
benefit of Agent and Lenders; (b) Liens for
taxes, assessments or other
governmental charges not delinquent or
being contested in good faith and by
appropriate proceedings and with respect to
which proper reserves have been
taken by Borrowers; provided, that, the
Lien shall have no effect on the
priority of the Liens in favor of Agent or
the value of the assets in which
Agent has such a Lien and a stay of
enforcement of any such Lien shall be in
effect; (c) Liens disclosed in the
financial statements referred to in Section
5.5, the existence of which Agent has
consented to; (d) deposits or pledges to
secure obligations under worker's
compensation, social security or similar laws,
or under unemployment insurance; (e)
deposits or pledges to secure bids,
tenders, contracts (other than contracts
for the payment of money), leases,
statutory obligations, surety and appeal
bonds and other obligations of like
nature arising in the Ordinary Course of
Business; (f) Liens arising by virtue
of the rendition, entry or issuance against
any Borrower or any Subsidiary, or
any property of any Borrower or any
Subsidiary, of any judgment, writ, order, or
decree for so long as each such Lien (i) is
in existence for less than 20
consecutive days after it first arises or
is being Properly Contested and (ii)
is at all times junior in priority to any
Liens in favor of Agent; (g)
mechanics', workers', materialmen's or
other like Liens arising in the Ordinary
Course of Business with respect to
obligations which are not due or which are
being contested in good faith by the
applicable Borrower; (h) Liens placed upon
fixed assets hereafter acquired to secure a
portion of the purchase price
thereof, provided that (x) any such lien
shall not encumber any other property
of any Borrower and (y) the aggregate
amount of Indebtedness secured by such
Liens incurred as a result of such
purchases during any fiscal year shall not
exceed the amount provided for in Section
7.6; (i) zoning restrictions,
easements, licenses of other restrictions
on the use of Real Property approved
by Agent or other minor irregularities in
title thereto; (j) other Liens
incidental to the conduct of Borrowers'
business or the ownership of its
18
<PAGE>
property and assets which were not incurred
in connection with the borrowing of
money or the obtaining of advances or
credit, and which do not in the aggregate
materially detract from Agent's or Lenders'
rights in and to the Collateral or
the value of Borrowers' property or assets
or which do not materially impair the
use thereof in the operation of Borrowers'
business, and (k) Liens disclosed on
Schedule 1.2.
"Person" shall
mean any individual, sole proprietorship, partnership,
corporation, business trust, joint stock
company, trust, unincorporated
organization, association, limited
liability company, limited liability
partnership, institution, public benefit
corporation, joint venture, entity or
Governmental Body (whether federal, state,
county, city, municipal or otherwise,
including any instrumentality, division,
agency, body or department thereof).
"Plan" shall
mean any employee benefit plan within the meaning of Section
3(3) of ERISA (including a Pension Benefit
Plan), maintained for employees of
any Borrower or any member of the
Controlled Group or any such Plan to which any
Borrower or any member of the Controlled
Group is required to contribute on
behalf of any of its employees.
"PNC" shall have
the meaning set forth in the preamble to this Agreement
and shall extend to all of its successors
and assigns.
"Properly
Contested" shall mean, in the case of any Indebtedness of any
Person (including any taxes) that is not
paid as and when due or payable by
reason of such Person's bona fide dispute
concerning its liability to pay same
or concerning the amount thereof: (i) such
Indebtedness is being properly
contested in good faith by appropriate
proceedings promptly instituted and
diligently conducted; (ii) such Person has
established appropriate reserves as
shall be required in conformity with GAAP;
(iii) the non-payment of such
Indebtedness will not have a Material
Adverse Effect and will not result in the
forfeiture of any assets of such Person;
(iv) no Lien is imposed upon any of
such Person's assets with respect to such
Indebtedness unless such Lien is at
all times junior and subordinate in
priority to the Liens in favor of the Agent
(except only with respect to property taxes
that have priority as a matter of
applicable state law) and enforcement of
such Lien is stayed during the period
prior to the final resolution or
disposition of such dispute; (v) if such
Indebtedness results from, or is determined
by the entry, rendition or issuance
against a Person or any of its assets of a
judgment, writ, order or decree,
enforcement of such judgment, writ, order
or decree is stayed pending a timely
appeal or other judicial review; and (vi)
if such contest is abandoned, settled
or determined adversely (in whole or in
part) to such Person, such Person
forthwith pays such Indebtedness and all
penalties, interest and other amounts
due in connection therewith.
"Purchasing Lender" shall have the
meaning set forth in Section 16.3
hereof.
"RCRA" shall
mean the Resource Conservation and Recovery Act, 42 U.S.C.
ss.ss. 6901 et seq., as same may be amended
from time to time.
"Real Property"
shall mean all of each Borrower's right, title and interest
in and to the owned and leased premises
identified on Schedule 4.19 hereto.
"Receivables"
shall mean and include, as to each Borrower, all of such
Borrower's accounts, contract rights,
instruments (including those evidencing
indebtedness owed to such Borrower by its
Affiliates), documents, chattel paper
(including electronic chattel paper),
general intangibles relating to accounts,
drafts and acceptances, credit card
receivables and all other forms of
obligations owing to such Borrower arising
out of or in connection with the sale
or lease of Inventory or the rendition of
services, all supporting obligations,
guarantees and other security therefor,
whether secured or unsecured, now
existing or hereafter created, and whether
or not specifically sold or assigned
to Agent hereunder.
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<PAGE>
"Receivables
Advance Rate" shall have the meaning set forth in Section
2.1(a)(y)(i) hereof.
"Reimbursement
Obligation" shall have the meaning set forth in Section
2.12(b)hereof.
"Release" shall
have the meaning set forth in Section 5.7(c)(i) hereof.
"Reportable
Event" shall mean a reportable event described in Section
4043(c) of ERISA or the regulations
promulgated thereunder.
"Required
Lenders" shall mean Lenders holding more than fifty percent
(50%)
of the Advances and, if no Advances are
outstanding, shall mean Lenders holding
more than fifty percent (50%) of the
Commitment Percentages; provided, however,
if there are fewer than three (3) Lenders,
Required Lenders shall mean all
Lenders.
"Reserve
Percentage" shall mean as of any day the maximum percentage in
effect on such day as prescribed by the
Board of Governors of the Federal
Reserve System (or any successor) for
determining the reserve requirements
(including supplemental, marginal and
emergency reserve requirements) with
respect to eurocurrency funding (currently
referred to as "Eurocurrency
Liabilities".
"Retainage"
shall mean that portion of a Receivable that a Customer is not
obligated to pay until the end of a
specified period of time or until after the
satisfactory performance of a contract or
agreement.
"Revolving
Advances" shall mean Advances made other than Letters of
Credit.
"Revolving
Credit Note" shall mean the promissory note referred to in
Section 2.1(a) hereof.
"Revolving
Interest Rate" shall mean an interest rate per annum equal to
(a) the Alternate Base Rate with respect to
Domestic Rate Loans and (b) the sum
of the Eurodollar Rate plus two and one
half percent (2.50%) with respect to
Eurodollar Rate Loans.
"SEC" shall mean
the Securities and Exchange Commission or any successor
thereto.
"Section 20
Subsidiary" shall mean the Subsidiary of the bank holding
company controlling PNC, which Subsidiary
has been granted authority by the
Federal Reserve Board to underwrite and
deal in certain Ineligible Securities.
"Securities Act"
shall mean the Securities Act of 1933, as amended.
"Securities
Account Control Agreement" shall mean that certain Letter
Agreement executed by CompuDyne, Legg Mason
Walker, Incorporated, and Agent
dated as of even date herewith.
"Securities
Pledge Agreement" shall mean that certain Collateral Pledge
Agreement, in form and substance
satisfactory to Agent, executed by Borrowers
and delivered to Agent on or prior to the
Closing Date.
20
<PAGE>
"Settlement
Date" shall mean the Closing Date and thereafter Wednesday or
Thursday of each week or more frequently if
Agent deems appropriate unless such
day is not a Business Day in which case it
shall be the next succeeding Business
Day.
"Subordinated
Lenders" shall mean the "note holders" under the Indenture
Agreement.
"Subordinated
Loan" shall mean the loan evidenced by the Subordinated Note.
"Subordinated
Loan Documentation" shall mean the Subordinated Notes and all
other documents, instruments and agreements
executed in connection therewith.
"Subordinated
Notes" shall mean those certain 6.25% Convertible
Subordinated Notes Due 2011 issued by
CompuDyne in favor of Subordinated Lenders
dated January 15, 2004 and any replacements
or substitutes totaling in the
aggregate $40,250,000.
"Subordination
Agreement" shall mean the Indenture Subordination Agreement.
"Subsidiary" of
any Person shall mean a corporation or other entity of
whose Equity Interests having ordinary
voting power (other than Equity Interests
having such power only by reason of the
happening of a contingency) to elect a
majority of the directors of such
corporation, or other Persons performing
similar functions for such entity, are
owned, directly or indirectly, by such
Person.
"Subsidiary
Stock" shall mean all of the issued and outstanding Equity
Interests of any Subsidiary owned by any
Borrower.
"Term" shall
have the meaning set forth in Section 13.1 hereof.
"Termination
Event" shall mean (i) a Reportable Event with respect to any
Plan or Multiemployer Plan; (ii) the
withdrawal of any Borrower or any member of
the Controlled Group from a Plan or
Multiemployer Plan during a plan year in
which such entity was a "substantial
employer" as defined in Section 4001(a)(2)
of ERISA; (iii) the providing of notice of
intent to terminate a Plan in a
distress termination described in Section
4041(c) of ERISA; (iv) the institution
by the PBGC of proceedings to terminate a
Plan or Multiemployer Plan; (v) any
event or condition (a) which might
constitute grounds under Section 4042 of
ERISA for the termination of, or the
appointment of a trustee to administer, any
Plan or Multiemployer Plan, or (b) that may
result in termination of a
Multiemployer Plan pursuant to Section
4041A of ERISA; or (vi) the partial or
complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of
any Borrower or any member of the
Controlled Group from a Multiemployer Plan.
"Toxic
Substance" shall mean and include any material present on the
Real
Property or the Leasehold Interests which
has been shown to have significant
adverse effect on human health or which is
subject to regulation under the Toxic
Substances Control Act (TSCA), 15 U.S.C.
ss.ss. 2601 et seq., applicable state
law, or any other applicable Federal or
state laws now in force or hereafter
enacted relating to toxic substances.
"Toxic Substance" includes but is not
limited to asbestos, polychlorinated
biphenyls (PCBs) and lead-based paints.
21
<PAGE>
"Trading with
the Enemy Act" shall mean the foreign assets control
regulations of the United States Treasury
Department (31 CFR, Subtitle B,
Chapter V, as amended) and any enabling
legislation or executive order relating
thereto.
"Transferee"
shall have the meaning set forth in Section 16.3(c) hereof.
"Trustee" shall
mean Wachovia Bank of Delaware, National Association.
"Undrawn
Availability" at a particular date shall mean an amount equal
to
(a) the lesser of (i) the Formula Amount
and (ii) the Maximum Revolving Advance
Amount, minus (b) the sum of (i) the
outstanding amount of Advances plus (ii)
all amounts due and owing to any Borrower's
trade creditors which are
outstanding 60 or more days beyond the
original due date and not otherwise
extended on formal terms which have been
approved by Agent, plus (iii) fees and
expenses of the Borrowers hereunder which
are due and payable but which have not
been paid or charged to Borrowers'
Account.
"Uniform
Commercial Code" shall have the meaning set forth in Section
1.3
hereof.
"Unrestricted
Undrawn Borrowing Base Availability" at a particular date
shall mean an amount equal to (a) the
Formula Amount minus (b) the sum of (i)
the outstanding amount of Advances plus
(ii) all amounts due and owing to any
Borrower's trade creditors which are
outstanding 60 or more days beyond the
original due date and not otherwise
extended on formal terms which have been
approved by Agent, plus (iii) fees and
expenses of the Borrowers hereunder which
are due and payable but which have not been
paid or charged to Borrowers'
Account.
"USA PATRIOT
Act" shall mean the Uniting and Strengthening America by
Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56, as the same has
been, or shall hereafter be, renewed,
extended, amended or replaced.
"Week" shall
mean the time period commencing with the opening of business
on a Wednesday and ending on the end of
business the following Tuesday.
1.3. Uniform
Commercial Code Terms. All terms used herein and defined in
the Uniform Commercial Code as adopted in
the Commonwealth of Pennsylvania from
time to time (the "Uniform Commercial
Code") shall have the meaning given
therein unless otherwise defined herein.
Without limiting the foregoing, the
terms "accounts", "chattel paper",
"instruments", "general intangibles",
"payment intangibles", "supporting
obligations", "securities", "investment
property", "documents", "deposit accounts",
"software", "letter of credit
rights", "inventory", "equipment" and
"fixtures", as and when used in the
description of Collateral shall have the
meanings given to such terms in
Articles 8 or 9 of the Uniform Commercial
Code. To the extent the definition of
any category or type of collateral is
expanded by any amendment, modification or
revision to the Uniform Commercial Code,
such expanded definition will apply
automatically as of the date of such
amendment, modification or revision.
1.4. Certain
Matters of Construction. The terms "herein", "hereof" and
"hereunder" and other words of similar
import refer to this Agreement as a whole
and not to any particular section,
paragraph or subdivision. All references
22
<PAGE>
herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer
to Articles and Sections of, and Exhibits
and Schedules to, this Agreement. Any
pronoun used shall be deemed to cover all
genders. Wherever appropriate in the
context, terms used herein in the singular
also include the plural and vice
versa. All references to statutes and
related regulations shall include any
amendments of same and any successor
statutes and regulations. Unless otherwise
provided, all references to any instruments
or agreements to which Agent is a
party, including references to any of the
Other Documents, shall include any and
all modifications or amendments thereto and
any and all extensions or renewals
thereof. All references herein to the time
of day shall mean the time in New
York, New York. Unless otherwise provided,
all financial calculations shall be
performed with Inventory valued on a
first-in, first-out basis. Whenever the
words "including" or "include" shall be
used, such words shall be understood to
mean "including, without limitation" or
"include, without limitation". A Default
or Event of Default shall be deemed to
exist at all times during the period
commencing on the date that such Default or
Event of Default occurs to the date
on which such Default or Event of Default
is waived in writing pursuant to this
Agreement or, in the case of a Default, is
cured within any period of cure
expressly provided for in this Agreement;
and an Event of Default shall
"continue" or be "continuing" until such
Event of Default has been waived in
writing by the Required Lenders. Any Lien
referred to in this Agreement or any
of the Other Documents as having been
created in favor of Agent, any agreement
entered into by Agent pursuant to this
Agreement or any of the Other Documents,
any payment made by or to or funds received
by Agent pursuant to or as
contemplated by this Agreement or any of
the Other Documents, or any act taken
or omitted to be taken by Agent, shall,
unless otherwise expressly provided, be
created, entered into, made or received, or
taken or omitted, for the benefit or
account of Agent and Lenders. Wherever the
phrase "to the best of Borrowers'
knowledge" or words of similar import
relating to the knowledge or the awareness
of any Borrower are used in this Agreement
or Other Documents, such phrase shall
mean and refer to (i) the actual knowledge
of a senior officer of any Borrower
or (ii) the knowledge that a senior officer
would have obtained if he had
engaged in good faith and diligent
performance of his duties, including the
making of such reasonably specific
inquiries as may be necessary of the
employees or agents of such Borrower and a
good faith attempt to ascertain the
existence or accuracy of the matter to
which such phrase relates. All covenants
hereunder shall be given independent effect
so that if a particular action or
condition is not permitted by any of such
covenants, the fact that it would be
permitted by an exception to, or otherwise
within the limitations of, another
covenant shall not avoid the occurrence of
a default if such action is taken or
condition exists. In addition, all
representations and warranties hereunder
shall be given independent effect so that
if a particular representation or
warranty proves to be incorrect or is
breached, the fact that another
representation or warranty concerning the
same or similar subject matter is
correct or is not breached will not affect
the incorrectness of a breach of a
representation or warranty hereunder.
II. ADVANCES, PAYMENTS.
2.1. Revolving
Advances.
a. Amount of
Revolving Advances. Subject to the terms and conditions set
forth in this Agreement including Section
2.1(b), each Lender, severally and not
jointly, will make Revolving Advances to
Borrowers in aggregate amounts
outstanding at any time equal to such
Lender's Commitment Percentage of the
lesser of (x) the Maximum Revolving Advance
Amount less the aggregate Maximum
Undrawn Amount of all outstanding Letters
of Credit and (y) an amount equal to
the sum of:
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(i) up to 80%,
subject to the provisions of Section 2.1(b) hereof
("Receivables Advance Rate"), of Eligible
Receivables, plus
(ii) up to the
lesser of (A) 50%, subject to the provisions of Section
2.1(b) hereof, of the value of the Eligible
Inventory ("Inventory Advance Rate")
and (B) $3,000,000 in the aggregate at any
one time, plus
(iii) up to the
lesser of (A) 50%, subject to the provisions of Sections
2.1(b) and 2.1(c) hereof, of the value of
Costs in Excess of Billings ("Costs in
Excess Advance Rate") and (B) $5,000,000 in
the aggregate at any one time, plus
(iv) $1,487,500,
which represents 70% of the FMV of Real Property provided
that the amount set forth in this Section
2.1(a)(y)(iv) shall be reduced (but
not below zero) by $12,395.83 on the first
day of each month, commencing on
February 1, 2006, plus
(v) $1,288,560,
which represents 80% of the OLV of M&E provided that the
amount set forth in this Section
2.1(a)(y)(v) shall be reduced (but not below
zero) by $21,476 on the first day of each
month, commencing on February 1, 2006,
plus
(vi) 90%,
subject to the provisions of Section 2.1(b) hereof, of the
Current Value of Marketable Securities
("Marketable Securities Advance Rate"),
plus
(vii) up to the
lesser of (A) 80%, subject to the provisions of Section
2.1(b) hereof, of the value of Eligible
Government Receivables ("Government
Receivables Advance Rate" and together with
the Receivables Advance Rate,
Inventory Advance Rate, the Costs in Excess
Advance Rate and the Marketable
Securities Advance Rate, collectively, the
"Advance Rates") and or (B)
$1,000,000 in the aggregate at any one
time, minus
(viii) the
aggregate Maximum Undrawn Amount of all outstanding Letters of
Credit, including without limitation, the
Existing Letters of Credit, minus
(ix) such
reserves as Agent may reasonably deem proper and necessary in
its
Permitted Discretion from time to time.
The amount
derived from the sum of (x) Sections 2.1(a)(y)(i), (ii) (iii),
(iv), (v), (vi) and (vii) minus (y) Section
2.1 (a)(y)(viii) and (ix) at any
time and from time to time shall be
referred to as the "Formula Amount". The
Revolving Advances shall be evidenced by
one or more secured promissory notes
(collectively, the "Revolving Credit Note")
substantially in the form attached
hereto as Exhibit 2.1(a).
b. Discretionary
Rights. The Advance Rates may be (i) decreased by Agent at
any time and from time to time in the
exercise of its Permitted Discretion or
(ii) increased by Agent at any time and
from time to time in the exercise of its
sole discretion. Each Borrower consents to
any such increases or decreases and
acknowledges that decreasing the Advance
Rates or increasing or imposing
reserves may limit or restrict Advances
requested by Borrowing Agent. The rights
of Agents under this subsection are subject
to the provisions of Section
16.2(b).
c. Sublimit for
Revolving Advances Against Costs in Excess of Billings. The
aggregate outstanding amount of Revolving
Advances made as of any date of
determination to Borrowers against Costs in
Excess of Billings shall not exceed,
as a percentage of the Formula Amount,
50%.
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2.2. Procedure for Revolving Advances
Borrowing.
a. Borrowing
Agent on behalf of any Borrower may notify Agent prior to
10:00 a.m. on a Business Day of a
Borrower's request to incur, on that day, a
Revolving Advance hereunder. Should any
amount required to be paid as interest
hereunder, or as fees or other charges
under this Agreement or any other
agreement with Agent or Lenders, or with
respect to any other Obligation, become
due, same shall be deemed a request for a
Revolving Advance as of the date such
payment is due, in the amount required to
pay in full such interest, fee, charge
or Obligation under this Agreement or any
other agreement with Agent or Lenders,
and such request shall be irrevocable.
b.
Notwithstanding the provisions of subsection (a) above, in the
event any
Borrower desires to obtain a Eurodollar
Rate Loan, Borrowing Agent shall give
Agent written notice by no later than 10:00
a.m. on the day which is three (3)
Business Days prior to the date such
Eurodollar Rate Loan is to be borrowed,
specifying (i) the date of the proposed
borrowing (which shall be a Business
Day), (ii) the type of borrowing and the
amount on the date of such Advance to
be borrowed, which amount shall be an
integral multiple of $1,000,000, and (iii)
the duration of the first Interest Period
therefor. Interest Periods for
Eurodollar Rate Loans shall be for one, two
or three months; provided, if an
Interest Period would end on a day that is
not a Business Day, it shall end on
the next succeeding Business Day unless
such day falls in the next succeeding
calendar month in which case the Interest
Period shall end on the next preceding
Business Day. No Eurodollar Rate Loan shall
be made available to any Borrower
during the continuance of a Default or an
Event of Default. After giving effect
to each requested Eurodollar Rate Loan,
including those which are converted from
a Domestic Rate Loan under Section 2.2(d),
there shall not be outstanding more
than three (3) Eurodollar Rate Loans, in
the aggregate.
c. Each Interest
Period of a Eurodollar Rate Loan shall commence on the
date such Eurodollar Rate Loan is made and
shall end on such date as Borrowing
Agent may elect as set forth in subsection
(b)(iii) above provided that the
exact length of each Interest Period shall
be determined in accordance with the
practice of the interbank market for
offshore Dollar deposits and no Interest
Period shall end after the last day of the
Term.
Borrowing Agent
shall elect the initial Interest Period applicable to a
Eurodollar Rate Loan by its notice of
borrowing given to Agent pursuant to
Section 2.2(b) or by its notice of
conversion given to Agent pursuant to Section
2.2(d), as the case may be. Borrowing Agent
shall elect the duration of each
succeeding Interest Period by giving
irrevocable written notice to Agent of such
duration not later than 10:00 a.m. on the
day which is three (3) Business Days
prior to the last day of the then current
Interest Period applicable to such
Eurodollar Rate Loan. If Agent does not
receive timely notice of the Interest
Period elected by Borrowing Agent,
Borrowing Agent shall be deemed to have
elected to convert to a Domestic Rate Loan
subject to Section 2.2(d) herein
below.
d. Provided that
no Event of Default shall have occurred and be continuing,
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Borrowing Agent may, on the last Business
Day of the then current Interest
Period applicable to any outstanding
Eurodollar Rate Loan, or on any Business
Day with respect to Domestic Rate Loans,
convert any such loan into a loan of
another type in the same aggregate
principal amount provided that any conversion
of a Eurodollar Rate Loan shall be made
only on the last Business Day of the
then current Interest Period applicable to
such Eurodollar Rate Loan. If
Borrowing Agent desires to convert a loan,
Borrowing Agent shall give Agent
written notice by no later than 10:00 a.m.
(i) on the day which is three (3)
Business Days' prior to the date on which
such conversion is to occur with
respect to a conversion from a Domestic
Rate Loan to a Eurodollar Rate Loan, or
(ii) on the day which is one (1) Business
Day prior to the date on which such
conversion is to occur with respect to a
conversion from a Eurodollar Rate Loan
to a Domestic Rate Loan, specifying, in
each case, the date of such conversion,
the loans to be converted and if the
conversion is from a Domestic Rate Loan to
any other type of loan, the duration of the
first Interest Period therefor.
e. At its option
and upon written notice given prior to 10:00 a.m. (New
York time) at least three (3) Business
Days' prior to the date of such
prepayment, any Borrower may prepay the
Eurodollar Rate Loans in whole at any
time or in part from time to time with
accrued interest on the principal being
prepaid to the date of such repayment. Such
Borrower shall specify the date of
prepayment of Advances which are Eurodollar
Rate Loans and the amount of such
prepayment. In the event that any
prepayment of a Eurodollar Rate Loan is
required or permitted on a date other than
the last Business Day of the then
current Interest Period with respect
thereto, such Borrower shall indemnify
Agent and Lenders therefor in accordance
with Section 2.2(f) hereof.
f. Each Borrower
shall indemnify Agent and Lenders and hold Agent and
Lenders harmless from and against any and
all losses or expenses that Agent and
Lenders may sustain or incur as a
consequence of any prepayment, conversion of
or any default by any Borrower in the
payment of the principal of or interest on
any Eurodollar Rate Loan or failure by any
Borrower to complete a borrowing of,
a prepayment of or conversion of or to a
Eurodollar Rate Loan after notice
thereof has been given, including, but not
limited to, any interest payable by
Agent or Lenders to lenders of funds
obtained by it in order to make or maintain
its Eurodollar Rate Loans hereunder. A
certificate as to any additional amounts
payable pursuant to the foregoing sentence
submitted by Agent or any Lender to
Borrowing Agent shall be conclusive absent
manifest error.
g.
Notwithstanding any other provision hereof, if any Applicable
Law,
treaty, regulation or directive, or any
change therein or in the interpretation
or application thereof, shall make it
unlawful for any Lender (for purposes of
this subsection (g), the term "Lender"
shall include any Lender and the office
or branch where any Lender or any
corporation or bank controlling such Lender
makes or maintains any Eurodollar Rate
Loans) to make or maintain its Eurodollar
Rate Loans, the obligation of Lenders to
make Eurodollar Rate Loans hereunder
shall forthwith be cancelled and Borrowers
shall, if any affected Eurodollar
Rate Loans are then outstanding, promptly
upon request from Agent, either pay
all such affected Eurodollar Rate Loans or
convert such affected Eurodollar Rate
Loans into loans of another type. If any
such payment or conversion of any
Eurodollar Rate Loan is made on a day that
is not the last day of the Interest
Period applicable to such Eurodollar Rate
Loan, Borrowers shall pay Agent, upon
Agent's request, such amount or amounts as
may be necessary to compensate
Lenders for any loss or expense sustained
or incurred by Lenders in respect of
such Eurodollar Rate Loan as a result of
such payment or conversion, including
(but not limited to) any interest or other
amounts payable by Lenders to lenders
26
<PAGE>
of funds obtained by Lenders in order to
make or maintain such Eurodollar Rate
Loan. A certificate as to any additional
amounts payable pursuant to the
foregoing sentence submitted by Lenders to
Borrowing Agent shall be conclusive
absent manifest error.
2.3.
Disbursement of Advance Proceeds. All Advances shall be disbursed
from
whichever office or other place Agent may
designate from time to time and,
together with any and all other Obligations
of Borrowers to Agent or Lenders,
shall be charged to Borrowers' Account on
Agent's books. During the Term,
Borrowers may use the Revolving Advances by
borrowing, prepaying and
reborrowing, all in accordance with the
terms and conditions hereof. The
proceeds of each Revolving Advance
requested by Borrowing Agent on behalf of any
Borrower or deemed to have been requested
by any Borrower under Section 2.2(a)
hereof shall, with respect to requested
Revolving Advances to the extent Lenders
make such Revolving Advances, be made
available to the applicable Borrower on
the day so requested by way of credit to
such Borrower's operating account at
PNC, or such other bank as Borrowing Agent
may designate following notification
to Agent, in immediately available federal
funds or other immediately available
funds or, with respect to Revolving
Advances deemed to have been requested by
any Borrower, be disbursed to Agent to be
applied to the outstanding Obligations
giving rise to such deemed request.
2.4.
Reserved.
2.5. Maximum
Advances. The aggregate balance of Advances outstanding at any
time shall not exceed the lesser of (a) the
Maximum Revolving Advance Amount and
(b) the Formula Amount.
2.6. Repayment
of Advances.
a. The Advances
shall be due and payable in full on the last day of the
Term subject to earlier prepayment as
herein provided.
b. Each Borrower
recognizes that the amounts evidenced by checks, notes,
drafts or any other items of payment
relating to and/or proceeds of Collateral
may not be collectible by Agent on the date
received. In consideration of
Agent's agreement to conditionally credit
Borrowers' Account as of the Business
Day on which Agent receives those items of
payment, each Borrower agrees that,
in computing the charges under this
Agreement, all items of payment shall be
deemed applied by Agent on account of the
Obligations one (1) Business Day after
(i) the Business Day Agent receives such
payments via wire transfer or
electronic depository check or (ii) in the
case of payments received by Agent in
any other form, the Business Day such
payment constitutes good funds in Agent's
account. Agent is not, however, required to
credit Borrowers' Account for the
amount of any item of payment which is
unsatisfactory to Agent and Agent may
charge Borrowers' Account for the amount of
any item of payment which is
returned to Agent unpaid.
c. All payments
of principal, interest and other amounts payable hereunder,
or under any of the Other Documents shall
be made to Agent at the Payment Office
not later than 2:00 P.M. (New York time) on
the due date therefor in lawful
money of the United States of America in
federal funds or other funds
immediately available to Agent. Agent shall
have the right to effectuate payment
on any and all Obligations due and owing
hereunder by charging Borrowers'
Account or by making Advances as provided
in Section 2.2 hereof.
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<PAGE>
d. Borrowers
shall pay principal, interest, and all other amounts payable
hereunder, or under any related agreement,
without any deduction whatsoever,
including, but not limited to, any
deduction for any setoff or counterclaim.
2.7. Repayment
of Excess Advances. The aggregate balance of Advances
outstanding at any time in excess of the
maximum amount of Advances permitted
hereunder shall be immediately due and
payable without the necessity of any
demand, at the Payment Office, whether or
not a Default or Event of Default has
occurred.
2.8. Statement
of Account. Agent shall maintain, in accordance with its
customary procedures, a loan account
("Borrowers' Account") in the name of
Borrowers in which shall be recorded the
date and amount of each Advance made by
Agent and the date and amount of each
payment in respect thereof; provided,
however, the failure by Agent to record the
date and amount of any Advance shall
not adversely affect Agent or any Lender.
Each month, Agent shall send to
Borrowing Agent a statement showing the
accounting for the Advances made,
payments made or credited in respect
thereof, and other transactions between
Agent and Borrowers during such month. The
monthly statements shall be deemed
correct and binding upon Borrowers in the
absence of manifest error and shall
constitute an account stated between
Lenders and Borrowers unless Agent receives
a written statement of Borrowers' specific
exceptions thereto within thirty (30)
days after such statement is received by
Borrowing Agent. The records of Agent
with respect to the loan account shall be
conclusive evidence absent manifest
error of the amounts of Advances and other
charges thereto and of payments
applicable thereto.
2.9. Letters of
Credit. Subject to the terms and conditions hereof, Agent
shall issue or cause the issuance of
standby and/or trade Letters of Credit for
the account of any Borrower; provided,
however, that Agent will not be required
to issue or cause to be issued any Letters
of Credit to the extent that the
issuance thereof would then cause the sum
of (i) the outstanding Revolving
Advances plus (ii) the Maximum Undrawn
Amount of all outstanding Letters of
Credit to exceed the lesser of (x) the
Maximum Revolving Advance Amount and (y)
the Formula Amount. The Maximum Undrawn
Amount of outstanding Letters of Credit
shall not exceed in the aggregate at any
time the Letter of Credit Sublimit. All
disbursements or payments related to
Letters of Credit shall be deemed to be
Domestic Rate Loans consisting of Revolving
Advances and shall bear interest at
the Revolving Interest Rate for Domestic
Rate Loans. Letters of Credit that have
not been drawn upon shall not bear
interest.
2.10. Issuance
of Letters of Credit.
a. Borrowing
Agent, on behalf of Borrowers, may request Agent to issue or
cause the issuance of a Letter of Credit by
delivering to Agent at the Payment
Office, prior to 10:00 a.m. (New York
time), at least five (5) Business Days'
prior to the proposed date of issuance,
Agent's form of Letter of Credit
Application (the "Letter of Credit
Application") completed to the satisfaction
of Agent; and, such other certificates,
documents and other papers and
information as Agent may reasonably
request. Borrowing Agent, on behalf of
Borrowers, also has the right to give
instructions and make agreements with
respect to any application, any applicable
letter of credit and security
agreement, any applicable letter of credit
reimbursement agreement and/or any
other applicable agreement, any letter of
credit and the disposition of
documents, disposition of any unutilized
funds, and to agree with Agent upon any
amendment, extension or renewal of any
Letter of Credit.
28
<PAGE>
b. Each Letter
of Credit shall, among other things, (i) provide for the
payment of sight drafts, other written
demands for payment, or acceptances of
usance drafts when presented for honor
thereunder in accordance with the terms
thereof and when accompanied by the
documents described therein and (ii) have an
expiry date not later than twelve (12)
months after such Letter of Credit's date
of issuance other than the IRB Letters of
Credit [and the $467,000 issued in
favor of Raffles - to be discussed] and in
no event later than the last day of
the Term. Each standby Letter of Credit
shall be subject either to the Uniform
Customs and Practice for Documentary
Credits (1993 Revision), International
Chamber of Commerce Publication No. 500,
and any amendments or revision thereof
adhered to by the Issuer ("UCP 500") or the
International Standby Practices
(ISP98-International Chamber of Commerce
Publication Number 590) (the "ISP98
Rules"), as determined by Agent, and each
trade Letter of Credit shall be
subject to UCP 500.
c. Agent shall
use its reasonable efforts to notify Lenders of the request
by Borrowing Agent for a Letter of Credit
hereunder.
2.11.
Requirements For Issuance of Letters of Credit. Borrowing Agent
shall
authorize and direct any Issuer to name the
applicable Borrower as the
"Applicant" or "Account Party" of each
Letter of Credit. If Agent is not the
Issuer of any Letter of Credit, Borrowing
Agent shall authorize and direct the
Issuer to deliver to Agent all instruments,
documents, and other writings and
property received by the Issuer pursuant to
the Letter of Credit and to accept
and rely upon Agent's instructions and
agreements with respect to all matters
arising in connection with the Letter of
Credit, and the application therefor.
2.12.
Disbursements, Reimbursement.
a. Immediately
upon the issuance of each Letter of Credit, each Lender
shall be deemed to, and hereby irrevocably
and unconditionally agrees to,
purchase from Agent a participation in such
Letter of Credit and each drawing
thereunder in an amount equal to such
Lender's Commitment Percentage of the
Maximum Face Amount of such Letter of
Credit and the amount of such drawing,
respectively.
b. In the event
of any request for a drawing under a Letter of Credit
(including Existing Letters of Credit which
shall be deemed to have been issued
hereunder) by the beneficiary or transferee
thereof, Agent will promptly notify
Borrowing Agent. Provided that Borrowing
Agent shall have received such notice,
the Borrowers shall reimburse (such
obligation to reimburse Agent shall
sometimes be referred to as a
"Reimbursement Obligation") Agent prior to 12:00
Noon, New York time on each date that an
amount is paid by Agent under any
Letter of Credit (each such date, a
"Drawing Date") in an amount equal to the
amount so paid by Agent. In the event
Borrowers fail to reimburse Agent for the
full amount of any drawing under any Letter
of Credit by 12:00 Noon, New York
time, on the Drawing Date, Agent will
promptly notify each Lender thereof, and
Borrowers shall be deemed to have requested
that a Domestic Rate Loan be made by
the Lenders to be disbursed on the Drawing
Date under such Letter of Credit,
subject to the amount of the unutilized
portion of the lesser of Maximum
Revolving Advance Amount or the Formula
Amount and subject to Section 8.2
hereof. Any notice given by Agent pursuant
to this Section 2.12(b) may be oral
if immediately confirmed in writing;
provided that the lack of such an immediate
confirmation shall not affect the
conclusiveness or binding effect of such
notice.
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c. Each Lender
shall upon any notice pursuant to Section 2.12(b) make
available to Agent an amount in immediately
available funds equal to its
Commitment Percentage of the amount of the
drawing, whereupon the participating
Lenders shall (subject to Section 2.12(d))
each be deemed to have made a
Domestic Rate Loan to Borrowers in that
amount. If any Lender so notified fails
to make available to Agent the amount of
such Lender's Commitment Percentage of
such amount by no later than 2:00 p.m., New
York time on the Drawing Date, then
interest shall accrue on such Lender's
obligation to make such payment, from the
Drawing Date to the date on which such
Lender makes such payment (i) at a rate
per annum equal to the Federal Funds Rate
during the first three days following
the Drawing Date and (ii) at a rate per
annum equal to the rate applicable to
Domestic Rate Loans on and after the fourth
day following the Drawing Date.
Agent will promptly give notice of the
occurrence of the Drawing Date, but
failure of Agent to give any such notice on
the Drawing Date or in sufficient
time to enable any Lender to effect such
payment on such date shall not relieve
such Lender from its obligation under this
Section 2.12(c), provided that such
Lender shall not be obligated to pay
interest as provided in Section 2.12(c) (i)
and (ii) until and commencing from the date
of receipt of notice from Agent of a
drawing.
d. With respect
to any unreimbursed drawing that is not converted into a
Domestic Rate Loan to Borrowers, in whole
or in part, as contemplated by Section
2.12(b), because of Borrowers' failure to
satisfy the conditions set forth in
Section 8.2 (other than any notice
requirements) or for any other reason,
Borrowers shall be deemed to have incurred
from Agent a borrowing (each a
"Letter of Credit Borrowing") in the amount
of such drawing. Such Letter of
Credit Borrowing shall be due and payable
on demand (together with interest) and
shall bear interest at the rate per annum
applicable to a Domestic Rate Loan.
Each Lender's payment to Agent pursuant to
Section 2.12(c) shall be deemed to be
a payment in respect of its participation
in such Letter of Credit Borrowing and
shall constitute a "Participation Advance"
from such Lender in satisfaction of
its Participation Commitment under this
Section 2.12.
e. Each Lender's
Participation Commitment shall continue until the last to
occur of any of the following events: (x)
Agent ceases to be obligated to issue
or cause to be issued Letters of Credit
hereunder; (y) no Letter of Credit
issued or created hereunder remains
outstanding and un-cancelled and (z) all
Persons (other than the Borrowers) have
been fully reimbursed for all payments
made under or relating to Letters of
Credit.
2.13. Repayment
of Participation Advances.
a. Upon (and
only upon) receipt by Agent for its account of immediately
available funds from Borrowers (i) in
reimbursement of any payment made by the
Agent under the Letter of Credit with
respect to which any Lender has made a
Participation Advance to Agent, or (ii) in
payment of interest on such a payment
made by Agent under such a Letter of
Credit, Agent will pay to each Lender, in
the same funds as those received by Agent,
the amount of such Lender's
Commitment Percentage of such funds, except
Agent shall retain the amount of the
Commitment Percentage of such funds of any
Lender that did not make a
Participation Advance in respect of such
payment by Agent.
b. If Agent is
required at any time to return to any Borrower, or to a
trustee, receiver, liquidator, custodian,
or any official in any insolvency
30
<PAGE>
proceeding, any portion of the payments
made by Borrowers to Agent pursuant to
Section 2.13(a) in reimbursement of a
payment made under the Letter of Credit or
interest or fee thereon, each Lender shall,
on demand of Agent, forthwith return
to Agent the amount of its Commitment
Percentage of any amounts so returned by
Agent plus interest at the Federal Funds
Effective Rate.
2.14.
Documentation. Each Borrower agrees to be bound by the terms of
the
Letter of Credit Application and by Agent's
interpretations of any Letter of
Credit issued on behalf of such Borrower
and by Agent's written regulations and
customary practices relating to letters of
credit, though Agent's
interpretations may be different from such
Borrower's own. In the event of a
conflict between the Letter of Credit
Application and this Agreement, this
Agreement shall govern. It is understood
and agreed that, except in the case of
gross negligence or willful misconduct (as
determined by a court of competent
jurisdiction in a final non-appealable
judgment), Agent shall not be liable for
any error, negligence and/or mistakes,
whether of omission or commission, in
following the Borrowing Agent's or any
Borrower's instructions or those
contained in the Letters of Credit or any
modifications, amendments or
supplements thereto.
2.15.
Determination to Honor Drawing Request. In determining whether
to
honor any request for drawing under any
Letter of Credit by the beneficiary
thereof, Agent shall be responsible only to
determine that the documents and
certificates required to be delivered under
such Letter of Credit have been
delivered and that they comply on their
face with the requirements of such
Letter of Credit and that any other drawing
condition appearing on the face of
such Letter of Credit has been satisfied in
the manner so set forth.
2.16. Nature of
Participation and Reimbursement Obligations. Each Lender's
obligation in accordance with this
Agreement to make the Revolving Advances or
Participation Advances as a result of a
drawing under a Letter of Credit, and
the obligations of Borrowers to reimburse
Agent upon a draw under a Letter of
Credit, shall be absolute, unconditional
and irrevocable, and shall be performed
strictly in accordance with the terms of
this Section 2.16 under all
circumstances, including the following
circumstances:
(i) any set-off,
counterclaim, recoupment, defense or other right which
such Lender may have against Agent, any
Borrower or any other Person for any
reason whatsoever;
(ii) the failure
of any Borrower or any other Person to comply, in
connection with a Letter of Credit
Borrowing, with the conditions set forth in
this Agreement for the making of a
Revolving Advance, it being acknowledged that
such conditions are not required for the
making of a Letter of Credit Borrowing
and the obligation of the Lenders to make
Participation Advances under Section
2.12;
(iii) any lack
of validity or enforceability of any Letter of Credit;
(iv) any claim
of breach of warranty that might be made by Borrower or any
Lender against the beneficiary of a Letter
of Credit, or the existence of any
claim, set-off, recoupment, counterclaim,
crossclaim, defense or other right
which any Borrower or any Lender may have
at any time against a beneficiary, any
successor beneficiary or any transferee of
any Letter of Credit or the proceeds
thereof (or any Persons for whom any such
transferee may be acting), Agent or
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any Lender or any other Person, whether in
connection with this Agreement, the
transactions contemplated herein or any
unrelated transaction (including any
underlying transaction between any Borrower
or any Subsidiaries of such Borrower
and the beneficiary for which any Letter of
Credit was procured);
(v) the lack of
power or authority of any signer of (or any defect in or
forgery of any signature or endorsement on)
or the form of or lack of validity,
sufficiency, accuracy, enforceability or
genuineness of any draft, demand,
instrument, certificate or other document
presented under or in connection with
any Letter of Credit, or any fraud or
alleged fraud in connection with any
Letter of Credit, or the transport of any
property or provisions of services
relating to a Letter of Credit, in each
case even if Agent or any of Agent's
Affiliates has been notified thereof;
(vi) payment by
Agent under any Letter of Credit against presentation of a
demand, draft or certificate or other
document which does not comply with the
terms of such Letter of Credit;
(vii) the
solvency of, or any acts or omissions by, any beneficiary of
any
Letter of Credit, or any other Person
having a role in any transaction or
obligation relating to a Letter of Credit,
or the existence, nature, quality,
quantity, condition, value or other
characteristic of any property or services
relating to a Letter of Credit;
(viii) any
failure by the Agent or any of Agent's Affiliates to issue any
Letter of Credit in the form requested by
Borrowing Agent, unless the Agent has
received written notice from Borrowing
Agent of such failure within three (3)
Business Days after the Agent shall have
furnished Borrowing Agent a copy of
such Letter of Credit and such error is
material and no drawing has been made
thereon prior to receipt of such
notice;
(ix) any
Material Adverse Effect on any Borrower or any Guarantor;
(x) any breach
of this Agreement or any Other Document by any party
thereto;
(xi) the
occurrence or continuance of an insolvency proceeding with
respect
to any Borrower or any Guarantor;
(xii) the fact
that a Default or Event of Default shall have occurred and
be continuing;
(xiii) the fact
that the Term shall have expired or this Agreement or the
Obligations hereunder shall have been
terminated; and
(xiv) any other
circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
2.17. Indemnity.
In addition to amounts payable as provided in Section
16.5, each Borrower hereby agrees to
protect, indemnify, pay and save harmless
Agent and any of Agent's Affiliates that
have issued a Letter of Credit from and
against any and all claims, demands,
liabilities, damages, taxes, penalties,
interest, judgments, losses, costs, charges
and expenses (including reasonable
fees, expenses and disbursements of counsel
and allocated costs of internal
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counsel) which the Agent or any of Agent's
Affiliates may incur or be subject to
as a consequence, direct or indirect, of
the issuance of any Letter of Credit,
other than as a result of (A) the gross
negligence or willful misconduct of the
Agent as determined by a final and
non-appealable judgment of a court of
competent jurisdiction or (b) the wrongful
dishonor by the Agent or any of
Agent's Affiliates of a proper demand for
payment made under any Letter of
Credit, except if such dishonor resulted
from any act or omission, whether
rightful or wrongful, of any present or
future de jure or de facto Governmental
Body (all such acts or omissions herein
called "Governmental Acts").
2.18. Liability
for Acts and Omissions. As between Borrowers and Agent and
Lenders, each Borrower assumes all risks of
the acts and omissions of, or misuse
of the Letters of Credit by, the respective
beneficiaries of such Letters of
Credit. In furtherance and not in
limitation of the respective foregoing, Agent
shall not be responsible for: (i) the form,
validity, sufficiency, accuracy,
genuineness or legal effect of any document
submitted by any party in connection
with the application for an issuance of any
such Letter of Credit, even if it
should in fact prove to be in any or all
respects invalid, insufficient,
inaccurate, fraudulent or forged (even if
Agent shall have been notified
thereof); (ii) the validity or sufficiency
of any instrument transferring or
assigning or purporting to transfer or
assign any such Letter of Credit or the
rights or benefits thereunder or proceeds
thereof, in whole or in part, which
may prove to be invalid or ineffective for
any reason; (iii) the failure of the
beneficiary of any such Letter of Credit,
or any other party to which such
Letter of Credit may be transferred, to
comply fully with any conditions
required in order to draw upon such Letter
of Credit or any other claim of any
Borrower against any beneficiary of such
Letter of Credit, or any such
transferee, or any dispute between or among
any Borrower and any beneficiary of
any Letter of Credit or any such
transferee; (iv) errors, omissions,
interruptions or delays in transmission or
delivery of any messages, by mail,
cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v)
errors in interpretation of technical
terms; (vi) any loss or delay in the
transmission or otherwise of any document
required in order to make a drawing
under any such Letter of Credit or of the
proceeds thereof; (vii) the
misapplication by the beneficiary of any
such Letter of Credit of the proceeds
of any drawing under such Letter of Credit;
or (viii) any consequences arising
from causes beyond the control of Agent,
including any governmental acts, and
none of the above shall affect or impair,
or prevent the vesting of, any of
Agent's rights or powers hereunder. Nothing
in the preceding sentence shall
relieve Agent from liability for Agent's
gross negligence or willful misconduct
(as determined by a court of competent
jurisdiction in a final non-appealable
judgment) in connection with actions or
omissions described in such clauses (i)
through (viii) of such sentence. In no
event shall Agent or Agent's Affiliates
be liable to any Borrower for any indirect,
consequential, incidental, punitive,
exemplary or special damages or expenses
(including without limitation
attorneys' fees), or for any damages
resulting from any change in the value of
any property relating to a Letter of
Credit.
Without limiting
the generality of the foregoing, Agent and each of its
Affiliates (i) may rely on any oral or
other communication believed in good
faith by Agent or such Affiliate to have
been authorized or given by or on
behalf of the applicant for a Letter of
Credit, (ii) may honor any presentation
if the documents presented appear on their
face substantially to comply with the
terms and conditions of the relevant Letter
of Credit; (iii) may honor a
previously dishonored presentation under a
Letter of Credit, whether such
dishonor was pursuant to a court order, to
settle or compromise any claim of
wrongful dishonor, or otherwise, and shall
be entitled to reimbursement to the
same extent as if such presentation had
initially been honored, together with
any interest paid by Agent or its
Affiliates; (iv) may honor any drawing that is
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payable upon presentation of a statement
advising negotiation or payment, upon
receipt of such statement (even if such
statement indicates that a draft or
other document is being delivered
separately), and shall not be liable for any
failure of any such draft or other document
to arrive, or to conform in any way
with the relevant Letter of Credit; (v) may
pay any paying or negotiating bank
claiming that it rightfully honored under
the laws or practices of the place
where such bank is located; and (vi) may
settle or adjust any claim or demand
made on Agent or its Affiliate in any way
related to any order issued at the
applicant's request to an air carrier, a
letter of guarantee or of indemnity
issued to a carrier or any similar document
(each an "Order") and honor any
drawing in connection with any Letter of
Credit that is the subject of such
Order, notwithstanding that any drafts or
other documents presented in
connection with such Letter of Credit fail
to conform in any way with such
Letter of Credit.
In furtherance
and extension and not in limitation of the specific
provisions set forth above, any action
taken or omitted by Agent under or in
connection with the Letters of Credit
issued by it or any documents and
certificates delivered thereunder, if taken
or omitted in good faith and without
gross negligence (as determined by a court
of competent jurisdiction in a final
non-appealable judgment), shall not put
Agent under any resulting liability to
any Borrower or any Lender.
2.19. Additional
Payments. Any sums expended by Agent or any Lender due to
any Borrower's failure to perform or comply
with its obligations under this
Agreement or any Other Document including
any Borrower's obligations under
Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1
hereof, may be charged to Borrowers'
Account as a Revolving Advance and added to
the Obligations.
2.20. Manner of
Borrowing and Payment.
a. Each
borrowing of Revolving Advances shall be advanced according to
the
applicable Commitment Percentages of
Lenders.
b. Each payment
(including each prepayment) by any Borrower on account of
the principal of and interest on the
Revolving Advances, shall be applied to the
Revolving Advances pro rata according to
the applicable Commitment Percentages
of Lenders. Except as expressly provided
herein, all payments (including
prepayments) to be made by any Borrower on
account of principal, interest and
fees shall be made without set off or
counterclaim and shall be made to Agent on
behalf of the Lenders to the Payment
Office, in each case on or prior to 1:00
P.M., New York time, in Dollars and in
immediately available funds.
(i)
Notwithstanding anything to the contrary contained in Sections
2.20(a)
and (b) hereof, commencing with the first
Business Day following the Closing
Date, each borrowing of Revolving Advances
shall be advanced by Agent and each
payment by any Borrower on account of
Revolving Advances shall be applied first
to those Revolving Advances advanced by
Agent. On or before 1:00 P.M., New York
time, on each Settlement Date commencing
with the first Settlement Date
following the Closing Date, Agent and
Lenders shall make certain payments as
follows: (I) if the aggregate amount of new
Revolving Advances made by Agent
during the preceding Week (if any) exceeds
the aggregate amount of repayments
applied to outstanding Revolving Advances
during such preceding Week, then each
Lender shall provide Agent with funds in an
amount equal to its applicable
Commitment Percentage of the difference
between (w) such Revolving Advances and
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(x) such repayments and (II) if the
aggregate amount of repayments applied to
outstanding Revolving Advances during such
Week exceeds the aggregate amount of
new Revolving Advances made during such
Week, then Agent shall provide each
Lender with funds in an amount equal to its
applicable Commitment Percentage of
the difference between (y) such repayments
and (z) such Revolving Advances.
(ii) Each Lender
shall be entitled to earn interest at the applicable
Revolving Interest Rate on outstanding
Advances which it has funded.
(iii) Promptly
following each Settlement Date, Agent shall submit to each
Lender a certificate with respect to
payments received and Advances made during
the Week immediately preceding such
Settlement Date. Such certificate of Agent
shall be conclusive in the absence of
manifest error.
c. If any Lender
or Participant (a "benefited Lender") shall at any time
receive any payment of all or part of its
Advances, or interest thereon, or
receive any Collateral in respect thereof
(whether voluntarily or involuntarily
or by set-off) in a greater proportion than
any such payment to and Collateral
received by any other Lender, if any, in
respect of such other Lender's
Advances, or interest thereon, and such
greater proportionate payment or receipt
of Collateral is not expressly permitted
hereunder, such benefited Lender shall
purchase for cash from the other Lenders a
participation in such portion of each
such other Lender's Advances, or shall
provide such other Lender with the
benefits of any such Collateral, or the
proceeds thereof, as shall be necessary
to cause such benefited Lender to share the
excess payment or benefits of such
Collateral or proceeds ratably with
