<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended:
MARCH 31, 2000
or
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File Number: 0-9463
ULTRAK, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2626358
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Waters Ridge Drive,
Lewisville, Texas 75057
(Address of principal executive offices) (Zip Code)
(972) 353-6651
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 2000: 11,679,355 shares of $.01 par value common
stock.
<PAGE> 2
ULTRAK, INC. AND SUBSIDIARIES
QUARTER ENDED MARCH 31, 2000
INDEX
<TABLE>
<CAPTION>
Part I: Financial Information Page No.
--------
<S> <C>
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II: Other Information 12
Signatures 13
</TABLE>
2
<PAGE> 3
ULTRAK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 2000 1999
--------------- ---------------
(unaudited)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 3,343,191 4,757,512
Investments 955,636 600,033
Trade Accounts Receivable, less Allowance for Doubtful Accounts 43,874,425 41,337,442
Inventories, net 48,039,379 49,097,433
Advances for Inventory Purchases 2,764,238 1,943,617
Prepaid Expenses and Other Current Assets 4,490,572 4,230,732
Deferred Income Taxes 3,959,604 3,959,604
Net Assets of Discontinued operations 1,830,415 1,905,831
--------------- ---------------
Total Current Assets 109,257,460 107,832,204
--------------- ---------------
Property, Plant and Equipment, at cost 27,762,133 26,879,627
Less accumulated depreciation and amortization (9,847,175) (9,016,169)
--------------- ---------------
17,914,958 17,863,458
--------------- ---------------
Goodwill, net of Accumulated Amortization 55,850,619 56,337,690
Investment in Detection Systems, Inc. 13,356,413 13,354,019
Software Development Costs, net of Accumulated Amortization 3,317,689 2,973,764
Other Assets 2,647,416 1,989,373
--------------- ---------------
Total Assets $ 202,344,555 200,350,508
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable-Trade $ 17,127,929 15,739,200
Accrued Expenses 5,336,175 5,916,432
Accrued Restructuring Costs 1,022,892 1,749,073
Other Current Liabilities 6,122,025 4,713,081
--------------- ---------------
Total Current Liabilities 29,609,021 28,117,786
--------------- ---------------
Line of Credit 37,953,366 37,000,000
Deferred Income Taxes 2,690,775 2,569,870
Commitments and Contingencies -- --
Stockholders' Equity:
Preferred Stock, $5 par value, issuable in series; 2,000,000 shares
authorized; Series A, 12% cumulative convertible, 195,351 shares
authorized, issued and outstanding 976,755 976,755
Common Stock, $.01 par value; 20,000,000 shares authorized; 15,121,605 and
14,981,471 shares issued and outstanding at March 31, 2000 and December
31, 1999, respectively 151,216 149,815
Additional Paid in Capital 157,542,621 156,708,110
Retained Earnings 17,121,383 17,578,720
Accumulated Other Comprehensive Loss (5,017,471) (4,067,437)
Treasury Stock, at cost (3,442,250 common shares at March 31, 2000 and
December 31, 1999, respectively) (38,683,111) (38,683,111)
--------------- ---------------
Total Stockholders' Equity 132,091,393 132,662,852
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 202,344,555 200,350,508
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
ULTRAK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
------------------ -------------------
(unaudited) (unaudited)
<S> <C> <C>
Net sales $ 52,134,341 48,668,384
Cost of sales 35,947,413 32,771,544
--------------- ---------------
Gross profit 16,186,928 15,896,840
Gross profit % 31.0% 32.7%
Other operating costs:
Marketing and sales 8,886,154 8,200,442
General and administrative 5,547,548 4,957,350
Depreciation and goodwill amortization 1,603,651 1,353,028
Special charges -- 750,000
--------------- ---------------
16,037,353 15,260,820
--------------- ---------------
Operating profit 149,575 636,020
Other (expense) income:
Interest expense, net (856,496) (716,038)
Equity in income of Detection Systems, Inc. -- 400,000
Other, net (44,015) 273,294
--------------- ---------------
(900,511) (42,744)
--------------- ---------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (750,936) 593,276
BEFORE INCOME TAXES
Income taxes 322,902 (255,109)
--------------- ---------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (428,034) 338,167
NET INCOME (LOSS) (428,034) 338,167
Dividend requirements on
preferred stock (29,302) (29,302)
--------------- ---------------
Net income (loss) allocable to
common stockholders $ (457,336) 308,865
=============== ===============
Income (Loss) per share - Continuing Operations before
Special Charges:
Basic $ (0.04) $ 0.06
=============== ===============
Diluted $ (0.04) $ 0.06
=============== ===============
Net income (loss) per share:
Basic $ (0.04) $ 0.03
=============== ===============
Diluted $ (0.04) $ 0.03
=============== ===============
Number of common shares used in computations:
Basic 11,618,156 11,655,637
=============== ===============
Diluted 11,618,156 12,645,217
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
ULTRAK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (428,034) 338,167
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 1,450,170 1,353,028
Provision for losses on accounts receivable 162,518 139,138
Provision for inventory obsolescence 88,809 (278,144)
Changes in operating assets and liabilities:
Accounts and notes receivable (2,790,483) (2,169,928)
Inventories 1,085,643 4,108,109
Advances for inventory purchases (820,621) (1,258,890)
Prepaid expenses and other current assets (140,840) 1,519,511
Noncurrent notes and other assets (777,043) 1,117,397
Accounts and notes payable 1,388,729 (1,260,092)
Accrued and other current liabilities 102,506 (1,385,755)
Decrease in net assets of discontinued operations -- 523,448
--------------- ---------------
Net cash provided by (used in) operating activities (678,646) 2,745,989
--------------- ---------------
Cash flows from investing activities:
Proceeds of investments, net (237,092) 1,918,023
Purchases of property and equipment (1,498,204) (2,020,675)
Proceeds from sale of property and equipment 159,593 --
Acquisitions, net of cash acquired (19,913) (1,703,179)
--------------- ---------------
Net cash used in investing activities (1,595,616) (1,805,831)
--------------- ---------------
Cash flows from financing activities:
Net borrowings on revolving line of credit 953,366 6,424,621
Issuance of common stock, net of issuance costs 835,912 1,754,280
Purchase of treasury stock -- (1,563,563)
Payment of preferred stock dividends (29,303) (29,302)
--------------- ---------------
Net cash provided by financing activities 1,759,975 6,586,036
--------------- ---------------
Effect of exchange rate changes on cash (900,034) (1,073,037)
Net increase (decrease) in cash and cash equivalents (1,414,321) 6,453,157
--------------- ---------------
Cash and cash equivalents at beginning of the period 4,757,512 4,480,721
--------------- ---------------
Cash and cash equivalents at end of the period $ 3,343,191 10,933,878
=============== ===============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
ULTRAK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited interim consolidated financial statements include the
accounts of Ultrak, Inc. and its subsidiaries ("Ultrak" or "the Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
The interim financial statements are prepared on an unaudited basis and do not
include all of the information and disclosures required by generally accepted
accounting principles for complete financial statements. All adjustments which
are, in the opinion of management, necessary for a fair presentation of the
results of operations for the interim periods have been made and are of a
recurring nature unless otherwise disclosed herein. The results of operations
for such interim periods are not necessarily indicative of results of operations
for a full year. For further information, refer to the consolidated financial
statements and notes to the consolidated financial statements for the year ended
December 31, 1999 included in the Ultrak Annual Report on Form 10-K.
2. Earnings Per Share:
The Company computes basic earnings per share based on the weighted average
number of common shares outstanding. Diluted earnings per share is computed
based on the weighted average number of shares outstanding, plus the number of
additional common shares that would have been outstanding if dilutive potential
common shares had been issued.
Following is a reconciliation of basic and diluted earnings (loss) per share:
<TABLE>
<CAPTION>
For the Quarter Ended March 31, 2000 For the Quarter Ended March 31, 1999
---------------------------------------- ----------------------------------------
Net Per Share Net Per Share
Income Shares Amount Income Shares Amount
------------ -------------- ------------ ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Basis earnings per share:
Income (loss) allocable to common
stockholders $ (457,336) 11,618,156 $ (.04) $ 308,865 11,655,637 $ .03
============ ==========
Effect of Dilutive Securities:
Contingently issuable shares -- 395,093
Put options -- 11,997
Stock options -- 175,509
Convertible preferred stock -- -- 29,302 406,981
------------ -------------- ------------- -------------
Diluted earnings (loss) per share $ (457,336) 11,618,156 $ (.04) $ 338,167 12,645,217 $ .03
============ ============== ============ ============= ============= ==========
</TABLE>
6
<PAGE> 7
ULTRAK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
3. Note Payable to Bank:
On March 22, 2000 the Company entered into a new two-year credit facility. The
credit facility provides for combined borrowings of up to $45.0 million under a
revolving line of credit based upon available collateral. Interest for the
credit facility is payable quarterly at prime plus a range of 0% to .25% or
LIBOR plus a range of 2.25% to 2.75%, depending on the leverage ratio, as
defined, for the quarter. The credit facility contains certain restrictive
financial and operational covenants and conditions, including a maximum leverage
ratio, a maximum debt service and minimum net worth amounts. The Company pays a
quarterly unused facility fee of .375% per annum.
4. Segment Disclosure and Foreign Operations:
The Company has four business segments: United States-Professional Security
Group (US-PSG), United States-Diversified Sales Group (US-DSG),
International-Professional Security Group (Int'l-PSG), and Supply. The segments
are differentiated by the customers serviced as follows:
US-PSG
This segment consists of sales in the United States to professional
security dealers, distributors, installers and certain large-end users of
professional security products.
US-DSG
This segment sells video and security products to industrial markets and
consumers in the United States.
International-PSG
This segment sells to professional security dealers, distributors,
installers and certain large-end users of professional security products
outside the United States.
Supply
This segment sells products and systems manufactured by the Company's Ohio
and California facilities to the US-PSG and International-PSG segments.
7
<PAGE> 8
ULTRAK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
4. Segment Disclosure and Foreign Operations, continued:
The Company's underlying accounting records are maintained on a legal entity
basis for government and public reporting requirements. Segment disclosures are
on a performance basis consistent with internal management reporting. The
Company evaluates performance based on earnings from continuing operations
before income taxes and other income and expense. The Corporate column includes
corporate overhead-related items.
The following tables provide financial data by segment for the periods noted:
<TABLE>
<CAPTION>
Three months ended March 31, 2000 US-PSG US-DSG Int'l-PSG Supply Corporate Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $ 22,682,951 $ 15,301,745 $ 23,109,882 $ 5,441,341 $ 5,565 $ 66,541,484
Intersegment revenue (113,479) -- (8,852,323) (5,441,341) -- (14,407,143)
------------ ------------ ------------ ------------ ------------ ------------
Revenue from external customers $ 22,569,472 $ 15,301,745 $ 14,257,559 -- $ 5,565 $ 52,134,341
============ ============ ============ ============ ============ ============
Operating profit (loss) $ 1,900,527 $ 2,762,350 $ (144,510) $ (386,980) $ (3,981,812) $ 149,575
Depreciation and amortization expense 169,141 59,170 212,683 25,290 1,137,367 1,603,651
</TABLE>
<TABLE>
<CAPTION>
Three months ended March 31, 2000 US-PSG US-DSG Int'l-PSG Supply Corporate Total
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenue $ 19,062,479 $ 15,506,557 $ 16,015,119 $ 4,884,762 -- $ 55,468,917
Intersegment revenue (343,188) -- (1,572,583) (4,884,762) -- (6,800,533)
------------ ------------ ------------ ------------ ------------ ------------
Revenue from external customers $ 18,719,291 $ 15,506,557 $ 14,442,536 -- -- $ 48,668,384
============ ============ ============ ============ ============ ============
Operating profit (loss) $ 1,227,754 $ 3,659,667 $ 139,610 $ (75,035) $ (4,315,976) $ 636,020
Depreciation and amortization expense 114,273 63,859 192,239 1,958 980,699 1,353,028
</TABLE>
Financial information relating to the Company's Corporate segment is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Sales and marketing expenses $ 324,873 $ 463,339
Engineering and other corporate expenses 1,007,136 788,331
General and administrative expenses 1,518,001 1,333,607
Depreciation and amortization 1,137,367 980,699
Special charges -- 750,000
--------------- ---------------
Operating loss $ 3,981,812 $ 4,315,976
=============== ===============
</TABLE>
Sales by geographic area were as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
United States $ 37,876,782 $ 32,653,265
Europe 12,531,817 14,450,051
Other 1,725,742 1,565,068
--------------- ---------------
Total revenues $ 52,134,341 $ 48,668,384
=============== ===============
</TABLE>
8
<PAGE> 9
ULTRAK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
5. Comprehensive Income (Loss):
Total comprehensive income (loss) is as follows:
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
--------------- ---------------
<S> <C> <C>
Net income (loss) $ (428,034) 338,167
Other Comprehensive Income (Expense):
Currency Translation Adjustment (1,356,606) (1,244,911)
Unrealized Gain (Loss) on Investments 406,572 171,874
--------------- ---------------
Total Comprehensive Loss (1,378,068) (734,870)
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
ACCUMULATED
FOREIGN UNREALIZED OTHER
CURRENCY GAIN (LOSS) ON COMPREHENSIVE
The activity during the quarter related to the following: ITEMS INVESTMENTS LOSS
--------------------------------------------------
<S> <C> <C> <C>
Beginning Balance $(3,499,563) $ (567,874) $(4,067,437)
Current Period Change (1,356,606) 406,572 (950,034)
--------------------------------------------------
Ending Balance $(4,856,169) $ (161,302) $(5,017,471)
==================================================
</TABLE>
9
<PAGE> 10
ULTRAK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three Months ended March 31, 2000 compared to the
Three Months ended March 31, 1999
Results of Operations
For the three months ended March 31, 2000, net sales were $52,134,341, an
increase of $3,456,957 (7%) over the same period in 1999. This was primarily due
to internal growth from sales of standard products and the effect of
acquisitions completed during the last three quarters of 1999, offset by adverse
impacts of the Euro decline and lower sales of systems due to delays in release
of the new Enterprise Security Solutions ("ESS") hardware platform.
Cost of sales were $35,947,413 for the three months ended March 31, 2000, an
increase of $3,175,869 (10%) over the same period in 1999. Gross profit margins
decreased to 31.0% for the three months ended March 31, 2000 from 32.7% for the
same period in 1999. This decrease in gross profit margin was due primarily to
lower system sales due to delays in release of the ESS hardware platform and,
accordingly, increased manufacturing costs at the Company's California facility
due to overhead allocations resulting from lower systems' volume.
Marketing and sales expenses were $8,886,154 for the three months ended March
31, 2000, an increase of $685,712 (8%) over the same period in 1999. Marketing
and sales expenses for the three months ended March 31, 2000 were 17.0% of net
sales, up from 16.8% for the same period in 1999. This net increase was due to
the effect of hiring additional sales, sales support and marketing personnel in
anticipation of new product introductions and resulting sales activities, as
well as the increased travel, printing, product literature, advertising and
promotional costs associated with the planned introduction of new products.
General and administrative expenses were $5,547,548 for the three months ended
March 31, 2000, an increase of $590,198 (12%) over the same period in 1999.
General and administrative expenses for the three months ended March 31, 2000
were 10.6% of net sales, up from 10.2% for the same period in 1999. This net
increase resulted from an increase in research and development costs associated
with new products being developed by the Company and the effect of acquisitions
completed in the last three quarters of 1999.
Depreciation and amortization expenses were $1,603,651 for the three months
ended March 31, 2000, an increase of $250,623 (19%) over the same period in
1999. Depreciation and amortization expenses for the three months ended March
31, 2000 were 3.1% of net sales, up from 2.8% for the same period in 1999. This
net increase was due to additional goodwill amortization generated by
acquisitions completed during the last three quarters of 1999 and amortization
of software development costs.
Special charges totaled $750,000 for the three months ended March 31, 1999 for
severance obligations incurred by the Company related to the separation of two
former officers.
10
<PAGE> 11
ULTRAK, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS, CONTINUED
For the Three Months ended March 31, 2000 compared to the
Three Months ended March 31, 1999
Results of Operations, continued
Other expense was $900,511 for the three months ended March 31, 2000, a net
increase in expense of $857,767 from the same period in 1999. This increase
resulted primarily from a reduction of equity in the earnings of Detection
Systems, Inc. ("DETC") by $450,000. The Company did not record equity income in
DETC for the three months ended March 31, 2000 based on DETC estimated quarterly
earnings of zero. The increase in expense was also due to an increase in
interest rates paid by the Company on its credit facility.
Liquidity and Capital Resources
The Company had a net decrease in cash and cash equivalents for the three months
ended March 31, 2000 of approximately $1.4 million. Net cash used in operating
activities for the period was approximately $679,000. The cash used consisted of
decreases in inventories and increases in accounts and notes payable and accrued
and other current liabilities, offset by increases in accounts and notes
receivable, advances for inventory purchases, and noncurrent notes and other
assets. Net cash used in investing activities was approximately $1.6 million,
consisting of purchases of property and equipment, primarily related to the
Company's worldwide computer implementation, offset partially by proceeds from
the sales of property and equipment. Net cash provided by financing activities
was approximately $1.8 million, consisting primarily of borrowings on its bank
credit facility and the issuance of common stock pursuant to exercises of stock
options, offset by the payment of dividends on the Company's outstanding Series
A Preferred Stock.
As of March 31, 2000, the Company had unused available revolving lines of credit
under its bank facility totaling $7.0 million. The Company is in compliance with
all of its covenants with its lender as of the date of this report.
The Company believes that internally-generated funds, available borrowings under
the new credit facility, and current amounts of cash will be sufficient to meet
its presently anticipated needs for working capital, capital expenditures and
acquisitions, if any, for at least the next twelve months.
Quantitative and Qualitative Disclosures about Market Risk
There has been no material change in the Company's market risk exposure since
the filing of the 1999 Annual Report on Form 10-K.
11
<PAGE> 12
ULTRAK, INC. AND SUBSIDIARIES
QUARTER ENDED MARCH 31, 2000
<TABLE>
<S> <C> <C>
Part II: Other Information
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report:
Exhibit 10.25: Amended and Restated Credit Agreement between
Ultrak Operating, L.P., American National Bank and Trust Company
of Chicago and Certain Lenders, dated March 22, 2000.
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K.
None filed during the quarter ended March 31, 2000.
</TABLE>
12
<PAGE> 13
ULTRAK, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ULTRAK, INC.
(Registrant)
Date: May 10, 2000 By: /s/ Tim D. Torno
-----------------
Tim D. Torno, Vice President-Finance
Principal Financial and
Accounting Officer
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.25: Amended and Restated Credit Agreement between Ultrak Operating,
L.P., American National Bank and Trust Company of Chicago and
Certain Lenders, dated March 22, 2000.
27: Financial Data Schedule
</TABLE>
<PAGE> 1
================================================================================
AMENDED AND RESTATED
CREDIT AGREEMENT
among
ULTRAK OPERATING, L.P.
Borrower
ULTRAK, INC.
Parent of Borrower
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
Administrative Agent and Lender
MARCH 22, 2000
$45,000,000
SECURED REVOLVING CREDIT FACILITY
================================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ULTRAK OPERATING, L.P.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
SECTION 1. DEFINITIONS AND TERMS........................................................................Page 2
1.1 Definitions..................................................................................Page 2
1.2 Time References..............................................................................Page 21
1.3 Other References.............................................................................Page 21
1.4 Accounting Principles........................................................................Page 22
SECTION 2. COMMITMENT...................................................................................Page 22
2.1 Revolving Facility...........................................................................Page 22
2.2 Emergency Advance Facility...................................................................Page 23
2.3 Borrower's Loan Account......................................................................Page 23
(a) Statements; Telephonic Notice.......................................................Page 23
2.4 Borrowing Procedure..........................................................................Page 24
2.5 Letters of Credit............................................................................Page 25
2.6 Borrowing Requests and LC Requests...........................................................Page 27
2.7 Termination..................................................................................Page 28
SECTION 3. TERMS OF PAYMENT.............................................................................Page 28
3.1 Notes and Payments...........................................................................Page 28
3.2 Interest and Principal Payments..............................................................Page 30
3.3 Interest Options.............................................................................Page 31
3.4 Collection of Accounts and Payments..........................................................Page 31
3.5 Appointment of Administrative Agent as Borrower's Attorney-in-Fact...........................Page 32
3.6 Instruments and Chattel Paper................................................................Page 32
3.7 Notice to Account Debtors....................................................................Page 32
3.8 Quotation of Rates...........................................................................Page 32
3.9 Default Rate.................................................................................Page 32
3.10 Interest Recapture...........................................................................Page 33
3.11 Interest Calculations........................................................................Page 33
3.12 Maximum Rate.................................................................................Page 33
3.13 Interest Periods.............................................................................Page 34
3.14 Conversions..................................................................................Page 34
3.15 Order of Application.........................................................................Page 35
3.16 Sharing of Payments, Etc.....................................................................Page 35
3.17 Offset.......................................................................................Page 35
3.18 Booking Borrowings...........................................................................Page 35
3.19 Basis Unavailable or Inadequate for LIBOR Rate or Eurocurrency Rate..........................Page 35
3.20 Additional Costs.............................................................................Page 36
3.21 Change in Laws...............................................................................Page 37
3.22 Funding Loss.................................................................................Page 37
3.23 Foreign Lenders, Participants, and Assignees.................................................Page 37
SECTION 4. FEES.........................................................................................Page 38
4.1 Treatment of Fees............................................................................Page 38
4.2 Arrangement and Underwriting Fees............................................................Page 38
4.3 Unused Facility Fee..........................................................................Page 38
4.4 LC Fees......................................................................................Page 38
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK i ULTRAK OPERATING, L.P.
<PAGE> 3
<TABLE>
<S> <C> <C> <C>
4.5 Agency Fee...................................................................................Page 39
4.6 Prepayment Fee...............................................................................Page 39
SECTION 5. SECURITY.....................................................................................Page 39
5.1 Guaranties...................................................................................Page 39
5.2 Collateral...................................................................................Page 39
5.3 Creation of Liens and Further Assurances.....................................................Page 40
5.4 Change in Tax Laws...........................................................................Page 40
5.5 Release of Collateral........................................................................Page 40
SECTION 6. CONDITIONS PRECEDENT.........................................................................Page 40
6.1 Initial Advances.............................................................................Page 40
6.2 All Borrowings...............................................................................Page 41
SECTION 7. REPRESENTATIONS AND WARRANTIES...............................................................Page 42
7.1 Purpose and Regulation U.....................................................................Page 42
7.2 Corporate Existence, Good Standing, Authority and Locations..................................Page 42
7.3 Subsidiaries and Names.......................................................................Page 43
7.4 Authorization and Contravention..............................................................Page 43
7.5 Binding Effect...............................................................................Page 43
7.6 Financials...................................................................................Page 43
7.7 Solvency.....................................................................................Page 43
7.8 Litigation...................................................................................Page 44
7.9 Taxes........................................................................................Page 44
7.10 Environmental Matters........................................................................Page 44
7.11 Employee Plans...............................................................................Page 44
7.12 Properties; Liens............................................................................Page 44
7.13 Government Regulations.......................................................................Page 45
7.14 Transactions with Affiliates.................................................................Page 45
7.15 Debt.........................................................................................Page 45
7.16 Leases.......................................................................................Page 45
7.17 Labor Matters................................................................................Page 45
7.18 Intellectual Property........................................................................Page 45
7.19 Insurance....................................................................................Page 45
7.20 Inventory....................................................................................Page 45
7.21 Full Disclosure..............................................................................Page 45
SECTION 8. AFFIRMATIVE COVENANTS........................................................................Page 45
8.1 Monthly Reports and Collateral Reports.......................................................Page 46
8.2 Certain Other Items Furnished................................................................Page 48
8.3 Use of Credit................................................................................Page 49
8.4 Books and Records............................................................................Page 49
8.5 Inspections..................................................................................Page 49
8.6 Taxes........................................................................................Page 50
8.7 Payment of Obligation........................................................................Page 50
8.8 Expenses.....................................................................................Page 50
8.9 Maintenance of Existence, Assets and Business................................................Page 50
8.10 Insurance....................................................................................Page 50
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ii ULTRAK OPERATING, L.P.
<PAGE> 4
<TABLE>
<S> <C> <C> <C>
8.11 Compliance with Laws.........................................................................Page 51
8.12 Subsidiary Guaranties and Pledges............................................................Page 51
8.13 Indemnification..............................................................................Page 51
8.14 Post-Closing Covenants.......................................................................Page 53
SECTION 9. NEGATIVE COVENANTS...........................................................................Page 53
9.1 Payroll Taxes................................................................................Page 53
9.2 Debt.........................................................................................Page 54
9.3 Liens........................................................................................Page 55
9.4 Employee Plans...............................................................................Page 57
9.5 Transactions with Affiliates.................................................................Page 57
9.6 Compliance with Laws and Documents...........................................................Page 57
9.7 Investments..................................................................................Page 57
9.8 Distributions; Other Payments................................................................Page 58
9.8 Disposition of Assets........................................................................Page 59
9.9 Mergers, Consolidations, Acquisitions, Dispositions and Dissolutions.........................Page 59
9.10 Assignment...................................................................................Page 59
9.12 Fiscal Year and Accounting Methods...........................................................Page 59
9.13 New Businesses...............................................................................Page 59
9.14 Government Regulations.......................................................................Page 59
9.15 Strict Compliance............................................................................Page 60
SECTION 10. FINANCIAL COVENANTS..........................................................................Page 60
10.1 Leverage Ratio...............................................................................Page 60
10.2 Debt Service Coverage Ratio..................................................................Page 60
10.3 Minimum Tangible Net Worth...................................................................Page 60
10.4 Capital Expenditures.........................................................................Page 60
10.5 Minimum Excess Availability..................................................................Page 60
SECTION 11. EVENT OF DEFAULT.............................................................................Page 60
11.1 Payment of Obligation........................................................................Page 60
11.2 Covenants....................................................................................Page 60
11.3 Debtor Relief................................................................................Page 61
11.4 Judgments and Attachments....................................................................Page 61
11.5 Government Action............................................................................Page 61
11.6 Misrepresentation............................................................................Page 61
11.7 Ownership of Other Companies.................................................................Page 61
11.8 Change of Control of Borrower or Parent......................................................Page 61
11.9 Change in Management.........................................................................Page 62
11.10 Other Funded Debt............................................................................Page 62
11.11 Validity and Enforceability..................................................................Page 62
11.12 Material Agreement Default or Cancellation...................................................Page 62
11.13 LCs..........................................................................................Page 62
SECTION 12. RIGHTS AND REMEDIES..........................................................................Page 63
12.1 Remedies Upon Event of Default...............................................................Page 63
12.2 Company Waivers..............................................................................Page 63
12.3 Performance by Administrative Agent..........................................................Page 63
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK iii ULTRAK OPERATING, L.P.
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
12.4 Not in Control...............................................................................Page 64
12.5 Course of Dealing............................................................................Page 64
12.6 Cumulative Rights............................................................................Page 64
12.7 Application of Proceeds......................................................................Page 64
12.8 Certain Proceedings..........................................................................Page 64
12.9 Expenditures by Administrative Agent or Lenders..............................................Page 64
12.10 Diminution in Value of Collateral............................................................Page 65
SECTION 13. ADMINISTRATIVE AGENT AND LENDERS.............................................................Page 65
13.1 Administrative Agent.........................................................................Page 65
13.2 Expenses.....................................................................................Page 66
13.3 Proportionate Absorption of Losses...........................................................Page 66
13.4 Delegation of Duties; Reliance...............................................................Page 67
13.5 Limitation of Administrative Agent's Liability...............................................Page 67
13.6 Event of Default.............................................................................Page 68
13.7 Collateral Matters...........................................................................Page 68
13.8 Limitation of Liability......................................................................Page 69
13.9 Relationship of Lenders......................................................................Page 69
13.10 American National Bank Option To Purchase Lender Position....................................Page 69
13.11 Benefits of Agreement........................................................................Page 69
SECTION 14. MISCELLANEOUS................................................................................Page 69
14.1 Nonbusiness Days.............................................................................Page 69
14.2 Communications...............................................................................Page 69
14.3 Form and Number of Documents.................................................................Page 70
14.4 Exceptions to Covenants......................................................................Page 70
14.5 Survival.....................................................................................Page 70
14.6 Governing Laws...............................................................................Page 70
14.7 Invalid Provisions...........................................................................Page 70
14.8 Conflicts Between Credit Documents...........................................................Page 70
14.9 Discharge and Certain Reinstatement..........................................................Page 71
14.10 Amendments, Consents, Conflicts, and Waivers.................................................Page 71
14.11 Multiple Counterparts........................................................................Page 71
14.12 Parties; Participations; Assignments.........................................................Page 71
14.13 Venue, Service of Process, and Jury Trial....................................................Page 73
14.14 Arbitration of Disputes......................................................................Page 74
14.15 Restatement of Existing Agreement............................................................Page 75
14.16 Entirety.....................................................................................Page 75
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK iv ULTRAK OPERATING, L.P.
<PAGE> 6
SCHEDULES
Schedule 2 - Lenders and Commitments
Schedule 6.1(m) - Borrowing Base as of February 29, 2000
Schedule 7.3 - Information Regarding Companies
Schedule 7.6-A - Contingent Liabilities
Schedule 7.6-B - Consolidated Financial Statements for year ended 12/31/99
Schedule 7.6-C - Financial Projections
Schedule 7.8 - Litigation
Schedule 7.20 - Inventory locations
EXHIBITS
Exhibit A - Note
Exhibit B - Amended and Restated Guaranty Agreement
Exhibit C - Amended and Restated Security Agreement
Exhibit D - Borrowing Request
Exhibit E - Conversion Notice
Exhibit F - LC Request
Exhibit G - Borrowing Base Report
Exhibit H - Compliance Certificate
Exhibit I - Contribution and Indemnification Agreement
Exhibit J - Assignment and Assumption Agreement
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK vii ULTRAK OPERATING, L.P.
<PAGE> 7
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT") is
entered into as of March 22, 2000 among ULTRAK OPERATING, L.P., a Texas limited
partnership ("BORROWER"), ULTRAK, INC., a Delaware corporation ("PARENT"),
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as LENDER (defined below),
and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as ADMINISTRATIVE AGENT
(defined herein) for itself and future Lenders.
PRELIMINARY STATEMENT
A. Parent is a U.S.-based multinational corporation with domestic and
foreign subsidiaries that design, manufacture, market, sell and service
electronic products and systems for use in security and surveillance, industrial
and medical video and professional audio markets worldwide. Ultrak Operating,
L.P., the "Borrower" under this Agreement, is the principal domestic operating
subsidiary of Parent.
B. Parent (as borrower), Bank One, Texas, N.A. ("BANK ONE") (as agent
and lender) and Wells Fargo Bank (Texas), National Association ("WELLS FARGO")
(as lender) (Bank One and Wells Fargo being herein called the "PRIOR LENDERS")
were parties to the Prior Credit Agreement (defined herein) whereby Prior
Lenders extended credit to Parent to provide for, among other things, (i) a term
loan facility in the aggregate principal amount of Twenty Million Dollars
($20,000,000), and (ii) a revolving loan and standby letter of credit facility
in the aggregate principal amount of up to Thirty Million Dollars ($30,000,000).
C. The "Obligation", as defined in the Prior Credit Agreement, is
herein called the "PRIOR OBLIGATION". Immediately prior to the Closing Time
under this Agreement, Parent will pay to Prior Lenders all non-principal amounts
due and owing on the Prior Obligation, leaving a "Principal Debt" due and owing
under the Prior Credit Agreement at the Closing Time of no more than the lesser
of (i) Forty Five Million Dollars ($45,000,000) or (ii) the Borrowing Base
(herein defined), all of which constituted "Base Rate Borrowings" under the
Prior Credit Agreement. Immediately after such paydown, Lender will purchase
from Prior Lenders, at par, all of the Prior Obligations, and Lender hereunder
will receive from each Prior Lender an assignment, without recourse,
representation or warranty (the "PRIOR LENDER ASSIGNMENTS"), of (A) the Prior
Obligations, (B) all Liens securing payment and performance of the Prior
Obligations or any part thereof and all guaranties, security agreements,
mortgages, pledges, assignments, deeds of trust and documents and agreements
related thereto and all Rights of Prior Lenders thereunder, (C) the Prior Credit
Agreement and all of Rights of Prior Lenders thereunder and (D) the "Credit
Documents", as defined in the Prior Credit Agreement, and all Rights of Prior
Lenders thereunder.
D. The Prior Obligations (i) are guaranteed, pursuant to the Prior
Credit Agreement, by unlimited guaranties from Ultrak Operating, L.P. and each
of Parent's other Domestic Subsidiaries (defined herein), (ii) are secured by
Liens (defined herein) on all of the assets of the Domestic Companies (defined
herein) and (iii) are secured by Liens on a certain percentage of the capital
stock of Parent's directly-owned Foreign Subsidiaries (defined herein) and by a
pledge of all notes receivable now or in the future executed by any Foreign
Subsidiary in favor of Parent or any other Domestic Company.
E. Parent, Borrower, Lender and Administrative Agent have agreed that,
effective as of the Closing Time, (i) the Prior Credit Agreement should be
amended, modified and restated in its entirety in the form of this Agreement,
(ii) that Ultrak Operating, L.P., which jointly and severally guaranteed payment
and performance
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 1 ULTRAK OPERATING, L.P.
<PAGE> 8
of the Prior Obligations and received the most significant benefits from the
Prior Credit Agreement, should assume primary liability and responsibility and
become the Borrower hereunder, and that (iii) Parent should become a Guarantor
of the Obligations.
ACCORDINGLY, in consideration of the premises, and for other good, fair
and valuable consideration, the receipt, adequacy and reasonable equivalency of
which are hereby acknowledged, Borrower, Parent, Lender and Administrative Agent
agree that the Prior Credit Agreement should be, and it is hereby, amended and
restated in its entirety to read as follows, effective as of the Closing Time:
SECTION 1. DEFINITIONS AND TERMS.
1.1 Definitions. As used in the Credit Documents:
"ACCOUNT DEBTOR" means the party who is obligated on or under an
Account.
"ACCOUNTS" means all present and future rights of Borrower or any
Guarantor to payment for goods sold or leased or for services rendered, which
are not evidenced by instruments or chattel paper, and whether or not they have
been earned by performance.
"ACQUISITION" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the acquisition
by any Company of a significant part of the assets of a Person or of any
business or division of a Person, (b) the acquisition by any Company of fifty
percent (50%) or more of any class of Voting Stock (or similar ownership
interests) of any Person (provided that, formation or organization of any entity
shall not constitute an "Acquisition" to the extent that the amount of the loan,
advance, investment, or capital contribution in such entity constitutes a
permitted investment under Section 9.7), or (c) a merger, consolidation,
amalgamation, or other combination by any Company with another Person.
"ADMINISTRATIVE AGENT" means, at any time, American National Bank and
Trust Company of Chicago (or its successor appointed under Section 13), acting
as administrative, managing, syndication and collateral agent for Lenders under
the Credit Documents. References to Administrative Agent in respect of LCs are
to that institution in its individual capacity.
"AFFILIATE" of a Person means any other Person who directly or
indirectly controls, is controlled by, or is under common control with that
Person. For purposes of this definition (a) "control," "controlled by," and
"under common control with" mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or other interests, by contract or otherwise) and
(b) the Companies are "Affiliates" of each other.
"AMERICAN NATIONAL" means American National Bank and Trust Company of
Chicago, the initial sole Lender hereunder.
"APPLICABLE MARGIN" means, for any day, the percentage of interest over
the Base Rate, the LIBOR Rate, or the Eurocurrency Rate, as the case may be,
that is applicable when the Base Rate, the LIBOR Rate, or the Eurocurrency Rate,
as applicable, is determined under this Agreement, which margin of interest
shall be determined in accordance with the provisions as follows:
(a) From the Closing Date through the initial EBITDA Rate
Determination Date, the Applicable Margin shall be two and
three-fourths percent (2.75%) for LIBOR Rate Borrowings and
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 2 ULTRAK OPERATING, L.P.
<PAGE> 9
Eurocurrency Borrowings, and one-fourth of one percent (0.025%) for
Base Rate Borrowings. The "EBITDA RATE DETERMINATION DATE" is as of the
last day of each fiscal quarter, beginning September 30, 2000, and any
rate adjustment will be effective as of the first day of the second
month (the "EBITDA RATE ADJUSTMENT EFFECTIVE DATE") following the
applicable EBITDA Rate Determination Date (e.g., if Borrower qualifies
for a rate adjustment based on the calculation as of September 30,
2000, the rate adjustment will become effective on November 1, 2000).
No rate adjustment in Borrower's favor will become effective unless
Administrative Agent has received the quarterly Financials and
Compliance Certificate for the applicable EBITDA Rate Determination
Date, and has therefor received the Financials and Compliance
Certificates for all prior quarters, in each case, the receipt of which
occurred within the time periods prescribed by this Agreement.
(b) If, as of the end of any month ("DETECTION SYSTEMS RATE
DETERMINATION DATE"), (i) all of the interest of Parent in Detection
Systems was sold during such month for cash to a Person who is not an
Affiliate, and (ii) the Net Proceeds were applied in accordance with
Section 3.2(c), and (iii) Borrower had at least Ten Million Dollars of
Excess Availability, without including any amount for the Over-Advance
Availability in the Borrowing Base, for the entire month ending on the
Detection Systems Rate Determination Date, and (iv) the Over-Advance
Availability has been cancelled and terminated at Borrower's written
request and clause (g) has been eliminated from the definition of
"Borrowing Base", and (v) no Potential Default or Event of Default has
occurred and is continuing, then, in such event, the Applicable Margin
will be reduced by one-fourth of one percent (0.25%) on the first day
of the month following Detection Systems Rate Determination Date, which
reduction shall continue in effect until the earlier of (A) the first
EBITDA Rate Adjustment Effective Date on which Borrower is entitled to
a reduction pursuant to paragraph (d) of this definition of "Applicable
Margin" or (B) the last day of a month in which Borrower has less than
Ten Million Dollars of Excess Availability, without including any
amount for the Over-Advance Availability in the Borrowing Base.
(c) No rate adjustment in favor of Borrower will become
effective unless, on the applicable EBITDA Rate Adjustment Effective
Date, (i) the Over-Advance Availability has been cancelled and
terminated at Borrower's written request and clause (g) has been
eliminated from the definition of "Borrowing Base", and (ii) no
Potential Default or Event of Default has occurred and is continuing.
(d) After Administrative Agent's timely receipt of the
Financials and Compliance Certificates referred to in the preceding
clause (a) with respect to any EBITDA Rate Determination Date, if
Operating EBITDA is Ten Million Two Hundred Thousand Dollars
($10,200,000) or more for the nine months ending September 30, 2000
with respect to the initial EBITDA Rate Determination Date or Thirteen
Million Seven Hundred Thousand Dollars ($13,700,000) or more for the
twelve months ending on any subsequent EBITDA Rate Determination Date,
the Applicable Margin in effect for the three-month period beginning on
the applicable EBITDA Rate Adjustment Effective Date shall be adjusted
based on the average daily Excess Availability, without including any
amount for the Over-Advance Availability in the Borrowing Base, during
the quarter ended on the applicable EBITDA Rate Determination Date as
reflected in the table below. The calculations will be determined from
such Financials and related Compliance Certificate; provided, however,
at all times the foregoing shall be subject to the provisions of clause
(e) of this definition.
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 3 ULTRAK OPERATING, L.P.
<PAGE> 10
<TABLE>
<CAPTION>
EXCESS AVAILABILITY (WITHOUT APPLICABLE MARGIN FOR LIBOR
OVER-ADVANCE AVAILABILITY) APPLICABLE MARGIN FOR BASE RATE AND EUROCURRENCY
FOR APPLICABLE QUARTER RATE BORROWINGS BORROWINGS
------------------------------------------ ------------------------------ --------------------------------
<S> <C> <C>
Less than $5,000,000 0.025% 2.750%
------------------------------------------ ------------------------------ --------------------------------
Equal to or greater than $5,000,000 but 0.025% 2.500%
less than $10,000,000
------------------------------------------ ------------------------------ --------------------------------
Equal to or greater than $10,000,000 0.000% 2.250%
------------------------------------------ ------------------------------ --------------------------------
</TABLE>
(e) If Borrower fails to furnish to Administrative Agent any
Financials and related Compliance Certificate within the time periods
and of the nature and scope required by this Agreement, then the
maximum Applicable Margin shall apply for the entirety of the
applicable quarterly period unless Administrative Agent, in its
absolute discretion, otherwise agrees with respect to a particular
quarterly period. Notwithstanding anything to the contrary contained in
any Credit Document, (i) at all times that an Event of Default shall
exist and the Default Rate shall not be in effect, the Applicable
Margin, at Administrative Agent's sole discretion, shall be increased
to the maximum Applicable Margin, and (ii) at all times that the
Default Rate shall be in effect, it shall be in effect in lieu of any
Applicable Margin.
"ASSIGNEE" is defined in Section 14.12(c).
"ASSOCIATED COSTS RATE" means, in relation to each Borrowing, the
percentage rate from time to time determined by Administrative Agent or the
Eurocurrency Lending Installation in accordance with the formula or other
guidance provided by the British Bankers Association from time to time in force,
as reflecting the average (rounded to the nearest one thirty-second of one
percent (0.03125%), of the costs, losses or differences in return which would be
suffered or incurred by each of the Lenders as a result of (i) funding (at the
Eurocurrency Rate and on a match funded basis) any special deposit or cash ratio
deposit required to be placed with the Bank of England (or any other authority
which replaces all or any of its functions), and/or (ii) any charge imposed by
the British Financial Services Authority (or any other authority which replaces
all or any of its functions).
"BANK ONE" means Bank One, Texas, N.A.
"BANK ONE LONDON" means Bank One, N.A.
"BASE EUROCURRENCY RATE" means, with respect to a Eurocurrency
Borrowing for the relevant Interest Period, the applicable London interbank
offered rate for deposits denominated in the Eurocurrency requested in
connection with that Eurocurrency Borrowing appearing on Dow Jones Markets
(Telerate) Page 3750 (or the equivalent Reuters or Bloomberg pages) as of 11:00
a.m. (London time) two Business Days prior to the first day of such Interest
Period (or, alternatively, on the first day of the Interest Period in the case
of Eurocurrency Borrowings denominated in pounds sterling), and having a
maturity equal to such Interest Period, provided that if such rate is not
available from the above-referenced sources, then such rate shall be otherwise
independently determined by the Eurocurrency Lending Installation from an
alternate, substantially similar independent service available to the
Eurocurrency Lending Installation or shall be calculated by the Eurocurrency
Lending Installation by a substantially similar methodology as that theretofore
used to determine the Base Eurocurrency Rate.
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 4 ULTRAK OPERATING, L.P.
<PAGE> 11
"BASE RATE" means the per annum rate of interest announced or published
from time to time by Bank One, N.A. at its principal place of business in
Chicago, Illinois as its base or equivalent rate of interest, which rate is not
necessarily the lowest rate of interest charged by Bank One, N.A. with respect
to commercial loans. Any change in the Base Rate shall be effective as of the
effective date stated in the announcement by Bank One, N.A. of such change.
"BASE RATE BORROWING" means a Domestic Borrowing advanced to Borrower
through Administrative Agent in accordance with Section 2.3, which Borrowing
bears interest at the sum of the Base Rate plus the Applicable Margin.
"BELGIUM FACILITY DEBT" means the indebtedness described in Section
9.2(a)(viii).
"BLOCKED ACCOUNTS" has the meaning stated in Section 3.4.
"BORROWER" is defined in the preamble to this Agreement.
"BORROWING" means any amount disbursed (i) by one or more Lenders to or
on behalf of Borrower under the Credit Documents, either as an original
disbursement of funds or a renewal, extension, modification or continuation of
an amount outstanding, or a payment under an LC, or (ii) by any Lender in
accordance with, and to satisfy a Company's obligations under, any Credit
Document.
"BORROWING BASE" means, at any time, the sum, without duplication, of
(a) up to eighty five percent (85%) of the face amount (less maximum discounts,
credits and allowances which may be taken by or granted to Account Debtors in
connection therewith) then outstanding under existing Eligible Accounts, less
such reserves as Administrative Agent in its sole discretion, exercised in a
commercially reasonable manner, elects to establish, plus (b) the lesser of the
Eligible Inventory Sublimit and an amount equal to up to fifty percent (50%) of
existing Eligible Inventory, valued at average cost, less such reserves as
Administrative Agent in its sole discretion, exercised in a commercially
reasonable manner, elects to establish, plus (c) fifty percent (50%) of the
Market Value of Borrower's Permitted Investment in Detection Systems so long as
Administrative Agent has a first and prior perfected security interest therein,
plus (d) fifty percent (50%) of the Market Value of Borrower's Permitted
Investment in Permitted Public Company Holdings not to exceed Two Million
Dollars ($2,000,000) so long as Administrative Agent has a first and prior
perfected security interest therein, plus (e) the lesser of the Equipment
Sublimit and an amount equal to up to eighty percent (80%) of the value ("FORCED
LIQUIDATION VALUE") of the unencumbered machinery and equipment which is
physically located in the United States and is owned by one of the Domestic
Companies if sold at a forced liquidation sale, as determined by an appraiser
acceptable to Administrative Agent and reflected in an appraisal (which may be
in the form of a "desktop appraisal" acceptable to Administrative Agent) dated
not more than twelve (12) months prior to the date of calculation of the
Borrowing Base in question and in form and content acceptable to Administrative
Agent (a "CURRENT EQUIPMENT APPRAISAL"); plus (f) the lesser of the Real
Property Sublimit and an amount equal to up to sixty percent (60%) of the value
("QUICK SALE VALUE") of the unencumbered Real Property which is physically
located in the United States and the fee title to which is owned by one of the
Domestic Companies if sold in a quick sale, as determined by an appraiser
acceptable to and retained by Administrative Agent and reflected in an appraisal
dated not more than twelve (12) months prior to the date of calculation of the
Borrowing Base in question and in form and content acceptable to Administrative
Agent, including conformance with FIRREA appraisal requirements (a "CURRENT REAL
PROPERTY APPRAISAL"), plus (g) the amount of any Over-Advance Availability.
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 5 ULTRAK OPERATING, L.P.
<PAGE> 12
"BORROWING BASE DEFICIENCY" means the amount by which Principal Debt
outstanding under the Revolving Facility exceeds, for any reason, the limitation
in Section 2.2(c).
"BORROWING BASE REPORT" means a report substantially in the form of
Exhibit G and otherwise in form and scope acceptable to Administrative Agent.
"BORROWING DATE" is defined in Section 2.3(a).
"BORROWING REQUEST" means a request, subject to Section 2.3(a),
substantially in the form of Exhibit D and otherwise in form and scope
acceptable to Administrative Agent.
"BUSINESS DAY" means (i) for purposes of any LIBOR Rate Borrowing, a
day when commercial banks are open for international business in London,
England, (ii) for purposes of any Eurocurrency Borrowing, a TARGET Settlement
Date in the case of Eurocurrency Borrowings denominated in euros or a day on
which commercial banks in both London, England and in the principal financial
center of the country in which the Eurocurrency Borrowing is to be denominated
are both open for substantially all of their business in the case of
Eurocurrency Borrowings denominated in any other Eurocurrency, and (iii) for all
other purposes, any day other than Saturday, Sunday and any other day that
commercial banks are authorized by applicable Laws to be closed in Illinois.
"CAPITAL LEASE" means any capital lease or sublease that is required by
GAAP to be capitalized on a balance sheet.
"CAPITAL EXPENDITURES" shall mean any and all expenditures of the
Companies, on a consolidated basis, without duplication, for fixed or capital
assets, including, without limitation, the incurrence of Capital Lease
obligations, all as determined in accordance with GAAP, and "NET CAPITAL
EXPENDITURES", for any period, means Capital Expenditures net of gains from
sales of fixed or capital assets during such period.
"CASAROTTO" means Casarotto Security, S.p.A., an Italian public
corporation.
"CASH FLOW AVAILABLE FOR DEBT SERVICE" shall mean, for any applicable
computation period for the Companies, on a consolidated basis, and without
duplication, the sum of (i) Operating EBITDA, minus (ii) Net Capital
Expenditures, minus (iii) income tax payments made during such period, plus (iv)
any third party funding for Capital Expenditures which is not prohibited by this
Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq.
"CHANGE DATE" means the date of the first Eurocurrency Borrowing made
in accordance with the procedures set forth in this Agreement.
"CLOSING DATE" and "CLOSING TIME" mean, respectively, the date, not
later than March 31, 2000, and the time of day on which American National pays
to Bank One and Wells Fargo the purchase price for the "Principal Debt" under
the Prior Credit Agreement and the Prior Lender Assignments are executed and
delivered by Bank One and Wells Fargo and become effective as provided therein.
"COLLATERAL" is defined in Section 5.2.
"COLLECTING BANKS" has the meaning stated in Section 3.4.
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 6 ULTRAK OPERATING, L.P.
<PAGE> 13
"COMMITMENT" means, at any time and for any Lender, the amounts stated
beside that Lender's name on the most recently amended Schedule 2 for the
Revolving Facility (which amount is subject to reduction and cancellation as
provided in this Agreement).
"COMMITMENT PERCENTAGE" means, for any Lender, the proportion (stated
as a percentage) that its Commitment bears to the total Commitments of all
Lenders.
"COMPANIES" means at any time, Parent, Borrower and each of their
present and future Subsidiaries, and "COMPANY" means each of them.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit H, and otherwise in form and scope satisfactory to Administrative
Agent, and signed by Borrower's president, chief financial officer or treasurer.
"CONVERSION NOTICE" means a request, subject to Section 3.10,
substantially in the form of Exhibit E and otherwise in form and scope
satisfactory to Administrative Agent.
"CREDIT DOCUMENTS" means (a) this Agreement, certificates and reports
delivered under this Agreement, and exhibits and schedules to this Agreement,
(b) all security agreements, pledges, mortgages, deeds of trust and agreements,
documents and instruments in favor of Administrative Agent or Lenders (or
Administrative Agent on behalf of Lenders) ever delivered under the Prior Credit
Agreement or this Agreement or otherwise delivered in connection with all or any
part of the Obligation, including the Confirmations of Guaranties and
Confirmations of Security Agreements referred to in Section 5.1 and Section 6.1,
(c) all LCs and LC Agreements, and (d) all renewals, extensions, modifications
and restatements of, and amendments and supplements to, any of the foregoing,
which are made in accordance with the provisions of the respective Credit
Documents.
"CURRENT EQUIPMENT APPRAISAL" has the meaning stated in the definition
of "Borrowing Base".
"CURRENT FINANCIALS," unless otherwise specified, (a) means either (i)
the Companies' Consolidated Financials for the year ended December 31, 1998,
together with the Companies' Financials for the nine months ended on September
30, 1999, or (ii) at any time after annual Financials for the year ended
December 31, 1999 are delivered under Section 8.1, the Companies' annual
Financials then most recently delivered to Administrative Agent under Section
8.1(a), together with the Companies' quarterly Financials then most recently
delivered to Administrative Agent under Section 8.1(b); but (b) does not include
the results of operations and cash flows for any Company for the time period
before it becomes a member of Parent's consolidated group.
"CURRENT REAL PROPERTY APPRAISAL" has the meaning stated in the
definition of "Borrowing Base".
"DEBT" means, with respect to any Person on any date of determination
(without duplication), (i) all obligations for borrowed money, (ii) all
obligations evidenced by bonds, debentures, notes or similar instruments, (iii)
all obligations to pay the deferred purchase price of property or services
except trade accounts payable arising in the ordinary course of business which
are paid when due in accordance with ordinary-course payment terms or which are
being contested in good faith in appropriate proceedings, (iv) all obligations
arising under acceptance facilities or facilities for the discount or sale of
accounts receivable, (v) all direct or contingent obligations in respect of
letters of credit, (vi) Capital Lease obligations, (vii) liabilities secured (or
for which the holder of any obligations or liabilities has an existing Right,
contingent or otherwise, to be so secured) by any
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Lien existing on property owned or acquired by that Person, (viii) all
guaranties, endorsements and other contingent obligations for liabilities or
obligations or the maintenance of financial condition of others, including
obligations to repurchase or purchase properties or to maintain or cause to
maintain any financial condition, and (ix) all outstanding obligations of each
of the Companies under, or in respect of, the TROL Financing.
"DEBT SERVICE REQUIREMENTS" means, for any period, the sum of (i) all
scheduled principal payments for Funded Debt (other than the TROL Financing) and
deemed principal payments with respect to Capital Leases, plus (ii) the
Companies' Interest Expense, plus (iii) cash dividends permitted by this
Agreement.
"DEBTOR RELIEF LAWS" means the Bankruptcy Code of the United States and
all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments
or similar Laws affecting creditors' Rights.
"DEFAULT RATE" means, for any day, an annual interest rate equal from
day to day to (i) for amounts owing under or in respect of Eurocurrency
Borrowings, the lesser of either (a) the Eurocurrency Rate plus two and one-half
percent (2.5%) or (b) the Maximum Rate, and (ii) for all other amounts owing
under or in respect of the Credit Documents, the lesser of either (a) the Base
Rate plus two and one-half percent (2.5%) or (b) the Maximum Rate.
"DETECTION SYSTEMS" means Detection Systems, Inc., a New York
corporation, the stock of which is traded on NASDAQ (the automated quotation
system operated by the National Association of Securities Dealers, Inc.) as of
the Closing Date.
"DETECTION SYSTEMS SECURITIES" means the direct or beneficial ownership
interest of Parent (or Security Warranty if a Permitted Security Warranty
Transaction occurs) in securities of Detection Systems in certificated or
uncertificated form.
"DIAMOND" means Diamond Electronics, Inc., an Ohio corporation which is
a wholly owned Subsidiary of Parent.
"DISTRIBUTION" means, with respect to any shares of any common,
preferred or other capital stock or other equity securities of or interest in a
Person (i) the retirement, redemption, purchase, repurchase or other acquisition
for value of those securities, (ii) the declaration or payment of any dividend
on or with respect to those securities, (iii) any loan or advance by that Person
to, or other investment by that Person in, the holder of any of those securities
and (iv) any other payment by that Person with respect to those securities.
"DOLLAR" or "$" means United States Dollars.
"DOLLAR EQUIVALENT" of a Eurocurrency Borrowing means the Dollar
equivalent of the amount of such Eurocurrency Borrowing, determined by
Administrative Agent on the basis of its mean spot rate for the purchase of the
appropriate Eurocurrency with Dollars.
"DOMESTIC BORROWING" means a borrowing of Dollars through a domestic
(United States) office of a Lender.
"DOMESTIC COMPANY" means all Companies other than Foreign Subsidiaries.
"DOMESTIC SUBSIDIARIES" means all Subsidiaries other than Foreign
Subsidiaries.
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"ELIGIBLE ACCOUNTS" means enforceable and outstanding Accounts of the
Domestic Companies which Administrative Agent, in its discretion, exercised in a
commercially reasonable manner, determines are eligible. Without limiting
Administrative Agent's discretion, the following Accounts shall not be Eligible
Accounts: (i) Accounts which remain unpaid one hundred twenty (120) days after
the original date of the applicable invoice; (ii) all Accounts owing by a single
Account Debtor, including a currently scheduled Account, if twenty-five percent
(25%) or more of the balance owing by such Account Debtor to all Companies
remains unpaid one hundred twenty (120) days after the original date of the
applicable invoice or invoices; (iii) Accounts with respect to which the Account
Debtor is a director, officer, employee, Subsidiary or Affiliate of a Company;
(iv) Accounts in excess of an aggregate of Three Million Dollars ($3,000,000)
with respect to which the Account Debtor is the United States or any department,
agency or instrumentality thereof, unless with respect to any such Account,
Borrower has complied to Agent's satisfaction with the provisions of the Federal
Assignment of Claims Act of 1940, including, without limitation, executing and
delivering to Agent all statements of assignment and/or notification which are
in form and substance acceptable to Agent and which are deemed necessary by
Agent to effectuate the assignment to Agent of such Accounts; (v) Accounts with
respect to which the Account Debtor is not an Entity domiciled in and whose
principal place of business is in the United States, unless the Account Debtor
has supplied the Company which owns the Account with an irrevocable letter of
credit or a policy of credit insurance, issued by a financial institution
satisfactory to Administrative Agent, sufficient to cover such Account in form
and substance satisfactory to Administrative Agent; (vi) Accounts in excess of
an aggregate of One Million Dollars ($1,000,000) with respect to which the
Account Debtor is not an Entity domiciled in and whose principal place of
business is in the United States and no letter of credit or credit insurance has
been supplied which would satisfy clause (v) preceding; (vii) Accounts with
respect to which the Account Debtor has asserted a counterclaim or has a right
of setoff; (viii) Accounts for which the prospect of payment or performance by
the Account Debtor is or may be impaired as determined by Administrative Agent
in its sole, commercially reasonable discretion, each of which will be
eliminated as an Eligible Account on the fifteenth (15th) day after
Administrative Agent has given written notice to Borrower with respect thereto;
(ix) Accounts with respect to which Agent does not have a first and valid fully
perfected security interest; (x) Accounts with respect to which the Account
Debtor is the subject of proceedings under any Debtor Relief Laws or has made an
assignment for the benefit of creditors or whose assets have been conveyed to a
receiver or trustee; (xi) Accounts with respect to which the Account Debtor's
obligation to pay the Account is conditional upon the Account Debtor's approval
or is otherwise subject to any repurchase obligation or return right, as with
sales made on a bill-and-hold, guaranteed sale, sale-or-return, sale on approval
or consignment basis; (xii) Accounts to the extent that the Account Debtor's
indebtedness to a Company exceeds a credit limit determined by Administrative
Agent in Administrative Agent's sole discretion, exercised in a commercially
reasonable manner, with any elimination as an Eligible Account to become
effective on the fifteenth (15th) day after Administrative Agent has given
written notice to Borrower with respect thereto; (xiii) Accounts with respect to
which the Account Debtor is located in any state denying creditors access to its
courts in the absence of a notice of business activities report or similar
filing, unless Borrower has either qualified as a foreign corporation to do
business in such state or has filed such notice of business activities report or
similar filing with the applicable state agency for the current year; and (xiv)
Accounts with respect to which the goods giving rise thereto have not been
shipped and delivered to and accepted as satisfactory by the Account Debtor
thereof or with respect to which the services performed giving rise thereto have
not been completed and accepted as satisfactory by the Account Debtor thereof.
In the event that a previously scheduled Eligible Account ceases to be an
Eligible Account under the above described criteria, Borrower shall notify the
Administrative Agent thereof immediately after Borrower has obtained knowledge
thereof.
"ELIGIBLE INVENTORY" means Inventory of the Domestic Companies which
Administrative Agent, in its discretion, exercised in a commercially reasonable
manner, determines to be eligible. Without limiting
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Administrative Agent's discretion, the following Inventory shall not be Eligible
Inventory: (i) Inventory which is obsolete, not in good condition, or not either
currently usable or currently salable in the ordinary course of the business of
the Companies; (ii) Inventory which Administrative Agent determines, in the
exercise of Administrative Agent's sole discretion, exercised in a commercially
reasonable manner, and in accordance with Administrative Agent's customary
business practices, to be unacceptable due to age, type, category and/or
quantity; (iii) Inventory which is not subject to internal control and
management procedures acceptable to Administrative Agent, in Administrative
Agent's sole discretion, which will be eliminated as Eligible Inventory on the
fifteenth (15th) day after Administrative Agent has given written notice to
Borrower with respect thereto, unless Administrative Agent determines that a
significant change from existing internal controls and management procedures has
occurred, in which case the elimination will become effectively immediately
after notice from Administrative Agent to Borrower; (iv) Inventory with respect
to which Administrative Agent does not have a first and valid fully perfected
security interest; (v) Inventory which is stored or placed with a bailee,
consignee, warehouseman, supplier, lessor or similar party; (vi) Inventory
delivered to a Company on consignment; (vii) Inventory owned by a Foreign
Company or which is not physically located in the United States; and (viii)
Inventory which is not physically located in the United States at one of the
locations designated on Schedule 7.20. In the event that previously scheduled
Inventory ceases to be Eligible Inventory under the above-described criteria,
Borrower shall notify Administrative Agent thereof immediately after Borrower
has obtained knowledge thereof.
"ELIGIBLE INVENTORY SUBLIMIT" means Fifteen Million Dollars
($15,000,000).
"EMPLOYEE PLAN" means any employee-pension-benefit plan (i) covered by
Title IV of ERISA and established or maintained by a Company or any ERISA
Affiliate (other than a Multiemployer Plan) or (ii) established or maintained by
a Company or any ERISA Affiliate or to which a Company or any ERISA Affiliate
contributes, under the Laws of any foreign country.
"ENTITY" means a corporation, limited liability company, association,
partnership of any kind, organization, trust, joint venture or other entity or a
Governmental Authority.
"ENVIRONMENTAL INVESTIGATION" means any health, safety or environmental
site assessment, investigation, study, review, audit, compliance audit or
compliance review conducted at any time or from time to time (whether at the
request of Administrative Agent or any Lender, upon the order or request of any
Governmental Authority, at the voluntary instigation of any Company or Affiliate
of any Company or otherwise) concerning any Real Property or the business
operations or activities of any Company or Affiliate of any Company, including
(i) air, soil, groundwater or surface-water sampling and monitoring, (ii)
repair, cleanup, remediation, or detoxification, (iii) preparation and
implementation of any closure, remedial, spill, emergency or other plans, and
(iv) any health, safety, or environmental compliance audit or review.
"ENVIRONMENTAL LAW" means any applicable Law that relates to (a) the
condition of air, ground or surface water, soil, or other environmental media,
(b) the environment or natural resources, (c) safety or health, (d) the
regulation of any contaminants, wastes, and Hazardous Substances, including
CERCLA, OSHA, the Hazardous Materials Transportation Act (49 U.S.C. Section 1801
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et
seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act
(42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide
Act (7 U.S.C. Section 136 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. Section 11001 et seq.), the Safe Drinking Water Act
(42 U.S.C. Section 201 and Section 300f et seq.), the Rivers and Harbors Act (33
U.S.C. Section 401 et seq.), the Oil Pollution Act (33 U.S.C. Section 2701 et
seq.), and state and local Laws, and any future enacted or adopted Laws, in each
case, now existing or hereafter adopted, which are analogous
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<PAGE> 17
to any of the preceding referenced requirements, or (e) the Release or
threatened Release of Hazardous Substances.
"ENVIRONMENTAL LIABILITY" means any liability, loss, fine, penalty,
charge, lien, damage, cost or expense of any kind to the extent that it results
directly or indirectly, in whole or in part, (i) from the violation of any
Environmental Law, (ii) from the Release or threatened Release of any Hazardous
Substance, (iii) from removal, remediation, or other actions in response to the
Release or threatened Release of any Hazardous Substance, (iv) from actual or
threatened damages to natural resources, (v) from the imposition of injunctive
relief or other orders, (vi) from personal injury, death, or property damage
which occurs as a result of any Company's use, storage, handling, or the Release
or threatened Release of a Hazardous Substance, or (vii) from any Environmental
Investigation performed at, on, or for any Real Property.
"ENVIRONMENTAL PERMIT" means any permit or license from any Person
defined in clause (i) of the definition of Governmental Authority that is
required under any Environmental Law for the lawful conduct of any business,
process or other activity.
"EONIA" means the Euro Overnight Index Average at or about 9:00 a.m.,
London time for each applicable, as determined by Bank One London.
"EQUIPMENT SUBLIMIT" means a limit established by Administrative Agent
in its sole discretion, exercised in a commercially reasonable manner, for the
amount to be included in the Borrowing Base for machinery and equipment, which
is reasonably expected to be limited to Two Million Dollars ($2,000,000).
"ERISA" means the Employee Retirement Income Security Act of 1974.
"ERISA AFFILIATE" means any Person that, for purposes of Title IV of
ERISA, is a member of Parent's controlled group or is under common control with
Parent or Borrower within the meaning of Section 414 of the IRC (which
provisions are deemed by this Agreement to apply to Foreign Persons).
"EUROCURRENCY" means any currency (other than Dollars) which is freely
transferable and convertible into Dollars and which is available in the London
interbank market.
"EUROCURRENCY BORROWING" means a Borrowing under the Revolving Facility
advanced to Borrower through the Eurocurrency Lending Installation in accordance
with Section 2.3, which Borrowing is denominated in a Eurocurrency and bears
interest at the Eurocurrency Rate.
"EUROCURRENCY LENDING INSTALLATION" means Administrative Agent's
Lending Installation in London, England (or such other Lending Installation as
may be designated by Administrative Agent from time to time) that manages
fundings and payments under the Eurocurrency Sublimit.
"EUROCURRENCY RATE" means, with respect to a Eurocurrency Borrowing for
the relevant Interest Period, the sum of (i) the quotient of (a) the Base
Eurocurrency Rate applicable to such Interest Period, divided by (b) one minus
the Reserve Requirement (expressed as a decimal) applicable to such Interest
Period, plus (ii) the Applicable Margin, plus (iii) in the case of Eurocurrency
Borrowings denominated in pounds sterling, the Associated Costs Rate.
"EUROCURRENCY SUBLIMIT" means Twenty Two Million Dollars ($22,000,000),
until such time as (i) a different limit is established by Administrative Agent
in its sole discretion, exercised in a commercially
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<PAGE> 18
reasonable manner, or (ii) Administrative Agent terminates and cancels any right
to make Eurocurrency Borrowings pursuant to Section 2.1(f).
"EVENT OF DEFAULT" is defined in Section 11.
"EXCESS AVAILABILITY", for any day, means the amount, if any, by which
the lesser of (i) the Borrowing Base (less any reserves established by
Administrative Agent) or (ii) the Commitment exceeds the Principal Debt.
"FED FUNDS RATE" means, for any day, the annual rate (rounded upwards,
if necessary, to the nearest one-hundredth of one percent (0.01%)) determined by
Administrative Agent (which determination is conclusive and binding, absent
manifest error) to be equal to (i) the weighted average of the rates on
overnight federal-funds transactions with member banks of the Federal Reserve
System arranged by federal-funds brokers on that day, as published by the
Federal Reserve Bank of New York on the next Business Day or (ii) if the rates
referred to in the preceding clause (i) are not published for any day, the
average of the quotations at approximately 10:00 a.m. received by Administrative
Agent from three federal-funds brokers of recognized standing selected by
Administrative Agent in its sole discretion.
"FINANCIALS" of a Person means balance sheets, profit and loss
statements, and statements of cash flow prepared (i) according to GAAP (subject
to year-end audit adjustments with respect to interim Financials) and (ii)
except as stated in Section 1.4, in comparative form to prior year-end figures
or corresponding periods of the preceding fiscal year or other relevant period,
as applicable. The term "Financials" shall also include the reconciliations of
capital and surplus included as part of the Companies' annual financial
statements.
"FORCED LIQUIDATION VALUE" has the meaning stated in the definition of
"Borrowing Base".
"FOREIGN" means, in respect of any Person, a Person organized under the
Laws of a jurisdiction other than, or domiciled outside of, the United States or
one of its states, territories, commonwealths, or possessions.
"FOREIGN SUBSIDIARIES" means all Subsidiaries of Parent or Borrower
that are Foreign.
"FUNDED DEBT" means, with respect to any Person on any date of
determination (without duplication), the sum of all outstanding (direct or
contingent) Debt of such Person which is described by any of clauses (i), (ii),
(iv), (v), (vi) or (ix) of the definition of the term "Debt".
"FUNDING LOSS" means any loss, expense or reduction in yield (but not
any Applicable Margin) that any Lender reasonably incurs because (i) Borrower
fails or refuses (for any reason whatsoever other than a default by
Administrative Agent or the Lender claiming that loss, expense or reduction in
yield) to take any Borrowing that it has requested under this Agreement or (ii)
Borrower prepays or pays any Borrowing or converts any Borrowing to a Borrowing
of another Type, in each case, other than on the last day of the applicable
Interest Period.
"F/X CONTRACT" means, for any Person, any present or future agreement,
device or arrangement providing for payments related to fluctuations of currency
exchange rates, including forward currency exchange agreements and forward rate
currency options.
"GAAP" means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time
for SEC-reporting companies in the United States.
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"GOVERNMENTAL AUTHORITY" means any (i) local, state, territorial,
federal or foreign judicial, executive, regulatory, administrative, legislative
or governmental agency, board, bureau, commission, department or other
instrumentality, (ii) private arbitration board or panel or (iii) central bank.
"GUARANTY" means a guaranty agreement substantially in the form of
Exhibit B and otherwise in form and scope acceptable to Administrative Agent.
"GUARANTOR" means each Person that executes a Guaranty as required by
the terms of this Agreement.
"HAZARDOUS SUBSTANCE" means (a) any substance that is reasonably
expected to require removal, remediation, or other response under any
Environmental Law, (b) any substance that is designated, defined or classified
as a hazardous waste, hazardous material, pollutant, contaminant, explosive,
corrosive, flammable, infectious, carcinogenic, mutagenic, radioactive,
dangerous, or toxic or hazardous substance under any Environmental Law,
including any hazardous substance within the meaning of Section 101(14) of
CERCLA, (c) petroleum, oil, gasoline, natural gas, fuel oil, motor oil, waste
oil, diesel fuel, jet fuel, and other petroleum hydrocarbons, (d) asbestos and
asbestos-containing materials in any form, (e) polychlorinated biphenyls, (f)
urea formaldehyde foam, or (g) any substance the presence of which on any Real
Property either (i) poses or threatens to pose a hazard to the health or safety
of persons or to the environment, or (ii) could reasonably be expected to
constitute a health or safety hazard to persons or the environment if emanated
or migrated from the Real Property.
"HEDGING AGREEMENT" means, for any Person, any present or future,
whether master or single, agreement, document or instrument providing for or
constituting an agreement to enter into interest rate swaps, floors, caps or
collars, forward-rate agreements or other similar transactions.
"INTEREST EXPENSE" means, with respect to any Person and for any period
(without duplication), all interest on that Person's Debt, whether paid in cash
or accrued as a liability and payable in cash during any subsequent period
(including the interest component of Capital Leases), as determined by GAAP.
"INTEREST PERIOD" is determined in accordance with Section 3.13.
"INVENTORY" means any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by a Company, which are held for sale or lease, furnished under any contract of
service or held as raw materials, work in process or supplies, and all materials
used or consumed in the business of the Companies, and shall include such
property the sale or other disposition of which has given rise to Accounts and
which has been returned to or repossessed or stopped in transit by a Company.
"INVESTMENT" means, in respect of any Person, any loan, advance,
extension of credit or capital contribution to that Person, any investment in
that Person, or any purchase or commitment to purchase any equity securities or
Debt issued by that Person or a significant part of the assets or a division or
other business unit of that Person.
"IRC" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder.
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"LAWS" means all applicable statutes, laws, treaties, ordinances,
rules, regulations, orders, writs, injunctions, decrees, judgments, opinions and
interpretations of any Governmental Authority.
"LC" means a standby letter of credit issued by Administrative Agent
under this Agreement pursuant to an LC Agreement.
"LC AGREEMENT" means a standby letter of credit application and
agreement (in form and substance satisfactory to Administrative Agent) submitted
by Borrower to Administrative Agent for an LC for its own account (and for its
benefit or the benefit of any other Company).
"LC EXPOSURE" means, at any time and without duplication, the sum of
(a) the aggregate face amount of all undrawn and uncancelled LCs plus (b) the
aggregate unpaid reimbursement obligations of Borrower under drawings under any
LC.
"LC REQUEST" means a request substantially in the form of Exhibit F.
"LC SUBFACILITY" means a subfacility of the Revolving Facility for the
issuance of LCs, as described in Section 2.4, under which the LC Exposure may
never exceed Five Million Dollars ($5,000,000) in the aggregate. For the
avoidance of doubt, LCs may only be requested, issued and denominated in United
States Dollars as a subfacility under the Domestic Borrowing feature of the
Revolving Facility, and all communications from Borrower in respect of LCs shall
be with Administrative Agent.
"LENDER LIEN" means any present or future first-priority Lien securing
the Obligation and assigned, conveyed, or granted to or created in favor of
Administrative Agent or a Lender for the benefit of Lenders.
"LENDERS" means each present and future financial institution
(including Administrative Agent in respect of its share of Borrowings and LCs)
named on Schedule 2 or on the most recently amended Schedule 2, if any,
delivered by Administrative Agent to Borrower under this Agreement, and, subject
to this Agreement, their respective successors and assigns (but not any
Participant who is not otherwise a party to this Agreement).
"LENDING INSTALLATION" means any office or branch of any Lender or
Administrative Agent (or any of their respective Affiliates).
"LIBOR RATE" means, for a LIBOR Rate Borrowing and for the relevant
Interest Period, the annual interest rate (rounded upward, if necessary, to the
nearest one-hundredth of one percent (0.01%)) equal to the quotient obtained by
dividing (i) the rate that deposits in United States dollars are offered to
Administrative Agent in the London interbank market at approximately 11:00 a.m.
London, England time two Business Days before the first day of that Interest
Period as shown on the display designated as "British Bankers Assoc. Interest
Settlement Rates" on the Telerate System ("Telerate"), Page 3750 or Page 3740,
or such other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate (provided that if such rate is not available on
Telerate then such offered rate shall be otherwise independently determined by
Administrative Agent from an alternate, substantially similar independent
service available to Administrative Agent or shall be calculated by
Administrative Agent by a substantially similar methodology as that theretofore
used to determine such offered rate in Telerate) in an amount comparable to that
LIBOR Rate Borrowing and having a maturity approximately equal to that Interest
Period by (ii) one minus the Reserve Requirement (expressed as a decimal)
applicable to the relevant Interest Period.
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"LIBOR RATE BORROWING" means a Domestic Borrowing advanced to Borrower
through Administrative Agent in accordance with Section 2.3, which Borrowing
bears interest at the sum of the LIBOR Rate plus the Applicable Margin.
"LIEN" means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of unsecured creditors or the owners (other than title of the
lessor under an operating lease).
"LITIGATION" means any action, proceeding, investigation or hearing by
or before any Governmental Authority.
"LOAN ACCOUNT" has the meaning stated in Section 2.3.
"LOCK BOX ACCOUNTS" has the meaning stated in Section 3.4.
"MARKET VALUE" means, at any time, a market value for a security based
upon the then-most recent quotation on a nationally recognized securities market
or over-the-counter trading market; provided, however, if such security is not
publicly traded or if trading has been suspended, then the "Market Value" for
such security shall be deemed to be zero ($0).
"MATERIAL ADVERSE EVENT" means any circumstance or event that,
individually or collectively, is reasonably expected to result (at any time
before the Commitments are fully cancelled or terminated and the Obligation is
fully paid and performed) in any (i) material impairment of (a) the ability of
Borrower or any other Company to perform any of its payment or other material
obligations under any Credit Document or (b) the ability of Administrative Agent
or any Lender to enforce any of those obligations or any of its Rights under the
Credit Documents, (ii) material and adverse effect on the business, management
or financial condition of Borrower or of the Companies as a whole, as
represented to Lenders in the Financials then most recently received by it or
(iii) Event of Default or Potential Default.
"MAXIMUM AMOUNT" and "MAXIMUM RATE" respectively mean, for a Lender,
the maximum non-usurious amount and the maximum non-usurious rate of interest
that, under applicable Laws of the State of Texas or federal laws of the United
States (as applicable), that Lender is permitted to contract for, charge, take,
reserve or receive on the Obligation.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Sections
3(37) or 4001(a)(3) of ERISA or Section 414(f) of the IRC (or any similar type
of plan established or regulated under the Laws of any foreign country) to which
Parent or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
"NET INCOME" of any Person means that Person's profit or loss
determined in accordance with GAAP.
"NET PROCEEDS" means the aggregate cash proceeds received by a Company
in respect of any Permitted Asset Sale (including any cash received upon the
sale or other disposition of any non-cash consideration received in any
Permitted Asset Sale), net of the direct costs relating to such Permitted Asset
Sale (including legal, accounting and investment banking fees, and sales
commissions), any relocation expenses incurred as a result thereof, taxes paid
or payable as a result thereof (after taking into account any available tax
credits or deductions
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<PAGE> 22
and any tax sharing arrangements), and any reserve for adjustment in respect of
the sale price of such asset or assets established in accordance with GAAP.
"NOTE" means each promissory note executed and delivered to a Lender by
Borrower pursuant to this Agreement substantially in the form of Exhibit A and
otherwise in form and scope acceptable to Administrative Agent.
"NOTE AND LIEN ASSIGNMENT" is defined in Section 14.12(c).
"OBLIGATION" means all present and future (i) Debts, liabilities and
obligations of any Company to Administrative Agent or any Lender and related to
any Credit Document, whether principal, interest, fees, costs, attorneys' fees
or otherwise, (ii) all Debts, liabilities, or obligations, contingent or
otherwise, of any Company which arises under or in connection with a Rate
Management Transction with Administrative or one of its Affiliates, (iii) Debts,
liabilities, or obligations owed by any Company to Administrative Agent or one
of its Affiliates under any Hedging Agreement (including, without limitation,
with respect to any "Transaction" [as defined in any Hedging Agreement] entered
into pursuant to any Hedging Agreement, all present and future amounts due and
payable by any Company, whether such amounts are due and payable on the date(s)
scheduled therefor, on the occurrence of an "Early Termination Date" [as defined
in any Hedging Agreement], or otherwise) to the extent relating to interest
payable under this agreement, (iv) any of the foregoing amounts that would
become due but for the operation of 11 U.S.C. Section 502 and 503 or any other
provision of Title 11 of the United States Code, (v) pre- and post-maturity
interest on any of the foregoing, including all post-petition interest if any
Company voluntarily or involuntarily files for protection under any Debtor
Relief Law and (vi) renewals, extensions, rearrangements and modifications of
any character whatsoever of any the foregoing.
"OPERATING EBITDA" means, with respect to any Person and for any period
(without duplication) the amount equal to (i) Net Income plus (ii) to the extent
deducted in calculating such Net Income, the sum of (a) Interest Expense plus
(b) Tax expense plus (c) depreciation and amortization from its continuing
operations, plus (iii) reserves booked in a period for losses expected to be
incurred in connection with discontinued operations, not to exceed Five Hundred
Thousand Dollars ($500,000) in the aggregate during the term of this Agreement,
minus (iv) to the extent included in calculating such Net Income, any gains or
losses from investments, any income or loss of Detection Systems or of any
Entity whose stock is held as a Permitted Public Company Holding which is
reported by Parent as income or loss in its financial statements, any gains or
losses from foreign currency conversion rates or translations, any gains that
are extraordinary items, any insurance proceeds included in Net Income and any
LIFO inventory changes.
"ORGANIZATIONAL DOCUMENTS" means, for any Person, the documents for its
formation and organization, which, for example, (i) for a corporation are its
corporate charter and bylaws, (ii) for a partnership are its certificate of
partnership (if applicable) and partnership agreement, (iii) for a limited
liability company are its certificate of organization and limited liability
company agreement (regulations) and (iv) for a trust is the trust agreement or
indenture under which it is created.
"OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C.
Section 651 et seq., as amended.
"OVER-ADVANCE AVAILABILITY" means Six Million Dollars ($6,000,000) on
the Closing Date, which shall be automatically and permanently reduced by (i)
Five Hundred Thousand Dollars ($500,000) on each of June 30, July 31and August
31, 2000, (ii) One Million Five Hundred Thousand Dollars on each of September 30
and December 31, 2000 and March 31, 2001, and (iii the amount of each addition
to the Borrowing Base for machinery, equipment and Real Property pursuant to
clause (d) or (e) of the definition of "Borrowing Base" at
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<PAGE> 23
the time Administrative Agent notifies Borrower of each addition. In the event
of a reduction or partial termination ("NON-SCHEDULED REDUCTION") of the
Over-Advance Availability other than as a result of the operation of clauses (i)
and (ii) preceding, the amounts of future scheduled reductions stated in clauses
(i) and (ii) shall be reduced pro rata, in the same proportion as the amount of
the Non-Scheduled Reduction bears to the Over-Advance Availability immediately
prior to the Non-Scheduled Reduction.
"PARENT" means Ultrak, Inc., a Delaware corporation, which is the
parent of Borrower and of Ultrak Holdings.
"PARTICIPANT" is defined in Section 14.12(b).
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED ASSET SALE" means (i) any sale and disposition of inventory
in the ordinary course of business for fair and adequate consideration, (ii) any
sale of assets which are obsolete or are no longer in use and which are not
significant to the continuation of the business of the Companies, (iii) upon
prior written notice to, and completion of all actions necessary to confirm,
reaffirm or re-establish Lender Liens to the satisfaction of Administrative
Agent, any sale and disposition from any Company to any other Company provided,
in all respects, such sale and disposition is otherwise subject to and complies
with Section 9.5, (iv) any disposition of assets (other than stock or other
equity securities of a Company) where substantially similar assets have been or
are being acquired, (v) any sale of assets relating to mergers and
consolidations permitted under this Agreement, (vi) any other sales and
dispositions which, when added to the market value of all other assets sold
pursuant to this clause (vi) during the period from the date hereof through the
entire term of this Agreement, have an aggregate market value of Five Hundred
Thousand Dollars ($500,000) or less, (vii) a Permitted Security Warranty
Transaction, (viii) any sale of all of Parent's interest (or Security Warranty's
interest if a Permitted Security Warranty Transaction has occurred) in Detection
Systems, provided the Net Proceeds are applied as required by Section 3.2 and
(ix) any other sales and dispositions approved in advance by Administrative
Agent.
"PERMITTED DEBT" is defined in Section 9.2.
"PERMITTED INTERCOMPANY ADVANCES" means loans, advances or extensions
of credit by Parent or Borrower to Foreign Subsidiaries from funds loaned to
Borrower under the Eurocurrency Sublimit. For the avoidance of doubt, no loans,
advances or extensions of credit may be made by Borrower or any other Company to
any Foreign Subsidiary except for loans made with the proceeds of Eurocurrency
Borrowings.
"PERMITTED INTERCOMPANY GUARANTY" means guaranties or assurances of
payment of loans, advances or extensions of credit by Borrower to Foreign
Subsidiaries from funds loaned to Borrower as Eurocurrency Borrowings. For the
avoidance of doubt, no guaranties or assurances of payment of loans, advances or
extensions of credit may be made by Borrower or any other Company on behalf of
any Foreign Subsidiary except for guaranties of loans made with the proceeds of
Eurocurrency Borrowings.
"PERMITTED INVESTMENT" is defined in Section 9.7.
"PERMITTED LIENS" is defined in Section 9.3.
"PERMITTED PUBLIC COMPANY HOLDINGS" means (i) securities of companies
("PORTFOLIO COMPANIES") approved in advance by Administrative Agent as being
eligible for inclusion as "Permitted Public Company Holdings", (ii) amounts in a
money market account associated with any brokerage account with a substantial
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<PAGE> 24
and reputable brokerage firm acceptable to Administrative Agent in which
Permitted Public Company Holdings are held or (iii) securities that meet all of
the following criteria:
(a such securities are traded on a nationally-recognized stock
exchange or are securities as to which bids and offer quotations are
reported in the automated quotation system operated by the National
Association of Securities Dealers, Inc.;
(b the sale or other transfer of such securities is not
restricted in any way (other than restrictions imposed by applicable
securities laws);
(c the market capitalization of each Portfolio Company that
has issued such securities must equal or exceed $1,000,000,000 (except
that Southwest Securities is exempted from the requirements of this
CLAUSE (c));
(d each Portfolio Company must have been in existence with
substantial operations for a period of at least five (5) years;
(e at the time of purchase of the securities of a Portfolio
Company, the ratio of the market price at the time of purchase to the
Net Income of the Portfolio Company for the most recently completed
fiscal year must be less than 50 to 1; and
(f such agreements and documents as Administrative Agent in
its sole discretion deems appropriate have been executed by necessary
parties, pursuant to which Administrative Agent has a perfected first
and prior Lender Lien in and to the securities.
"PERMITTED SECURITY WARRANTY TRANSACTION" means a transfer to Security
Warranty by Parent of all of Parent's Detection Systems Securities, if, but only
if, (a) Parent gives at least twenty (20) days prior written notice to
Administrative Agent of its intent to make a transfer, (b) such agreements and
documents are executed by Borrower, Parent, Administrative Agent, Security
Warranty and other necessary parties as Administrative Agent in its sole
discretion deems appropriate, pursuant to which Administrative Agent will have a
perfected first and prior Lender Lien in and to the Detection Systems
Securities, and (c) Administrative Agent has a perfected first and prior Lender
Lien in and to all stock of Security Warranty pursuant to such duly executed
agreements and documents as Administrative Agent in its sole discretion deems
appropriate.
"PERMITTED TROL GUARANTIES" means unsecured guaranties by Parent and
the Domestic Subsidiaries of the obligations of Parent and Borrower with respect
to the TROL Financing.
"PERSON" means any individual or Entity.
"POTENTIAL DEFAULT" means any event, occurrence or circumstance the
existence of which, upon any required notice, time lapse, or both, could
reasonably be expected to become an Event of Default.
"PRINCIPAL DEBT" means, at any time, the unpaid principal balance of
all Borrowings.
"PRIOR CREDIT AGREEMENT" means that certain First Amended and Restated
Credit Agreement dated as of August 12, 1999, among Parent, Bank One and Wells
Fargo, as renewed, extended and amended, including the First Amendment dated as
of November 12, 1999, the Second Amendment dated as of January 31, 2000 and the
Third Amendment dated as of February 29, 2000.
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<PAGE> 25
"PRIOR LENDERS" means Bank One and Wells Fargo.
"PRIOR NOTES" means the Term Notes and the Revolving Notes evidencing
the borrowings under the Prior Credit Agreement.
"PRIOR OBLIGATION" means the "Obligation" as defined in the Prior
Credit Agreement.
"PRO RATA PART" mean, at any time and for any Lender, the proportion
(stated as a percentage) that the Principal Debt owed to it bears to the total
Principal Debt owed to all Lenders.
"RATE MANAGEMENT TRANSACTION" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered into between
any Company and Administrative Agent or one of its Affiliates which is a rate
swap, basis swap, forward rate transaction, commodity swap, commodity option,
equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, forward transaction, currency swap transaction,
cross-currency rate swap transaction, currency option or any other similar
transaction (including any option with respect to any of these transactions) or
any combination thereof, whether linked to one or more interest rates, foreign
currencies, commodity prices, equity prices or other financial measures.
"REAL PROPERTY" means any land, buildings, fixtures and other
improvements to land now or in the future directly or indirectly owned by any
Company, leased to or otherwise operated by any Company or subleased by any
Company to any other Person.
"REAL PROPERTY SUBLIMIT" means a limit established by Administrative
Agent in its sole discretion, exercised in a commercially reasonable manner, for
the amount to be included in the Borrowing Base for unencumbered Real Property
located in the United States and owned by a Domestic Company, which is
reasonably expected to be limited to Two Million Dollars ($2,000,000).
"RELEASE" has its usual meaning and also means any "release" as defined
under any Environmental Law.
"REPRESENTATIVES" means, with respect to a Person, its representatives,
officers, directors, employees, contractors, consultants, accountants,
attorneys, insurers, shareholders and agents.
"REQUIRED LENDERS" means, at any time, any combination of Lenders
holding (directly or indirectly) at least either (i) sixty six and two-thirds
percent (66 2/3%) of the total Commitments while there is no Principal Debt or
LC Exposure or (ii) sixty six and two-thirds percent (66 2/3%) of the Principal
Debt plus the LC Exposure while there is any Principal Debt or LC Exposure.
"RESERVE REQUIREMENT" means, for any LIBOR Rate Borrowing or
Eurocurrency Borrowing, and for the relevant Interest Period, the total reserve
requirements (including all basic, supplemental, emergency, special, marginal
and other reserves required by applicable Laws) applicable to eurocurrency
fundings or liabilities as of the first day of that Interest Period in amount
and maturity of such Borrowing.
"RESPONSIBLE OFFICER" means Borrower's chairman, president, chief
executive officer, chief financial officer or treasurer.
"REVOLVING FACILITY" means the revolving line of credit facility
described in Section 22.
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<PAGE> 26
"REVOLVING FACILITY TERMINATION DATE" means the earlier of (i) March
31, 2002 and (ii) the date on which the commitments to lend and issue LCs under
this Agreement are fully cancelled or terminated.
"RIGHTS" means rights, remedies, powers, privileges and benefits.
"SEC" means the Securities and Exchange Commission or any successor
thereto.
"SECURITY AGREEMENT" means a security agreement substantially in the
form of Exhibit C and otherwise in form and scope acceptable to Administrative
Agent.
"SECURITY WARRANTY" means Security Warranty, Inc., a Texas corporation
and a wholly owned Subsidiary of Parent.
"SOLVENT" means, as to any Person, that (i) the aggregate fair market
value of such Person's assets exceeds its liabilities (whether contingent,
subordinated, unmatured, unliquidated, or otherwise), (ii) such Person has
sufficient cash flow to enable it to pay its debts as they mature and (iii) such
Person does not have unreasonably small capital to conduct its businesses.
"SUBSIDIARY" of any Person means any other Person of which (i) more
than fifty percent (50%) (in number of votes) of the stock (or equivalent
interests) is owned of record or beneficially, directly or indirectly, by that
Person or (ii) such Person serves as a general partner or a similar capacity.
Unless otherwise specified or the context otherwise requires, "Subsidiary"
refers to a Subsidiary of Parent or Borrower.
"TANGIBLE NET WORTH" means, as of any date, the total shareholders'
equity (including common stock and preferred stock (other than mandatorily
redeemable stock) at stated value, additional paid-in capital and retained
earnings after deducting treasury stock) which appears on a consolidated balance
sheet of the Companies prepared as of such date in accordance with GAAP, minus
the sum of the following which are booked for dates or periods after December
31, 1999: (i) unrealized gains or losses from investments, (ii) income or losses
of Detection Systems or other Entities in which a Company has a minority
interest to the extent such income or losses are recorded on the books of a
Company but do not represent receipt of cash by the Companies, (iii goodwill,
experimental expenses, intellectual property, patents, trademarks, licenses,
software and other assets which are classified as intangible assets on a balance
sheet of such Person, prepared in accordance with GAAP, and (iv any accumulated
gains or losses from foreign currency conversion rates or translations.
"TARGET SETTLEMENT DATE" means any day on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer (TARGET) System is open.
"TAXES" means, for any Person, taxes, assessments or other governmental
charges or levies imposed upon it, its income or any of its properties,
franchises or assets.
"TROL FACILITY" means all of the real estate and improvements at 1301
Waters Ridge Dr., Lewisville, Texas 75057 which are the subject of the TROL
Financing.
"TROL FINANCING" means the Tax Retention Operating Lease Financing
arrangements dated as of March 31, 1997, originally provided in favor of Parent
and Borrower by NationsBank of Texas, N.A., with Bank One and Wells Fargo having
been substituted for NationsBank of Texas, N.A., as such financing arrangements
have been heretofore amended and may be amended contemporaneously with or after
the execution and delivery of this Agreement on terms and conditions and with
documentation acceptable to Administrative Agent to the
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<PAGE> 27
extent such approval is required hereunder. "TROL FINANCING" also means and
includes any refinancing of the existing TROL Financing so long as the terms of
any such refinancing do not increase the outstanding principal amount of the
TROL Financing at the time of the refinancing and do not create annual debt
service requirements greater than the present debt service requirements of the
TROL Financing.
"TYPE" means any type of Borrowing determined with respect to the
applicable interest option.
"UCC" means the Uniform Commercial Code as enacted in Texas or other
applicable jurisdictions.
"ULTRAK HOLDINGS" means Ultrak Holdings Limited, a United Kingdom
company, which is a wholly-owned subsidiary of Parent and is the parent of all
Foreign Subsidiaries except Ultrak Europe N.V. (which is owned ninety nine
percent (99%) by Parent and one percent (1%) by Ultrak Holdings).
"ULTRAK GP" means Ultrak GP, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent.
"ULTRAK LP" means Ultrak LP, Inc., a Delaware corporation and
wholly-owned subsidiary of Parent.
"UNITED STATES" means the United States of America.
"VIDEOSYS" means Videosys Limited, a United Kingdom private limited
liability company.
"VOTING STOCK" means securities (as such term is defined in Section
2(1) of the Securities Act of 1933, as amended) of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the corporate directors (or Persons performing similar
functions).
"WELLS FARGO" means Wells Fargo Bank (Texas), National Association.
1.2 Time References. Unless otherwise specified, in the Credit
Documents (i) time references (e.g., 10:00 a.m.) are to time in Chicago,
Illinois, and (ii) in calculating a period from one date to another, the word
"from" means "from and including" and the word "to" or "until" means "to but
excluding."
1.3 Other References. Unless otherwise specified, in the Credit
Documents (i) where appropriate, the singular includes the plural and vice
versa, and words of any gender include each other gender, (ii) heading and
caption references may not be construed in interpreting provisions, (iii)
monetary references are to currency of the United States, (iv) section,
paragraph, annex, schedule, exhibit and similar references are to the particular
Credit Document in which they are used, (v) references to "telecopy," "telefax,"
"facsimile," "fax" or similar terms are to facsimile or telecopy transmissions,
(vi) the term "including" (or "included" or "includes") shall be deemed to be
followed by the phrase "without limitation", (vii) references to "day" and
"month" are references to a calendar day or calendar month unless the defined
term "Business Day" is used, (viii) the rule of construction that references to
general items that follow references to specific items are limited to the same
type or character of those specific items is not applicable in the Credit
Documents, (ix) references to any Person include that Person's heirs, personal
representatives, successors, trustees, receivers and permitted assigns, (x)
references to any Law include every amendment or supplement to it, rule and
regulation adopted under it, and successor or replacement for it and (xi)
references to any Credit Document or other document include every renewal and
extension of it, amendment, modification and supplement to it, and replacement
or substitution for it, as each is made in accordance with the applicable
provisions of such Credit Document.
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<PAGE> 28
1.4 Accounting Principles. Unless otherwise specified, in the Credit
Documents (i) GAAP determines all accounting and financial terms and compliance
with financial covenants, (ii) GAAP in effect on the date of this Agreement
determines compliance with financial covenants, (iii) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period and (iv) while
the Financials for the Companies are on a consolidated basis, (a) all accounting
and financial terms and compliance with reporting covenants must be on a
consolidated basis, as applicable and (b) compliance with financial covenants
must be on a consolidated basis.
SECTION 2. COMMITMENT. Subject to the provisions in the Credit Documents, each
Lender severally but not jointly agrees to extend credit to Borrower under the
Term Loan and under the Revolving Facility in accordance with the following
provisions.
2.1 Revolving Facility. Each Lender severally but not jointly agrees to
lend to Borrower from time to time on a revolving credit basis that Lender's
Commitment Percentage of Borrowings under the Revolving Facility which Borrower
may borrow, repay and reborrow under this Agreement subject further to the
following conditions:
(a) Each Borrowing may only occur on a Business Day on or after the
Closing Date and before the Revolving Facility Termination Date.
(b) Each Borrowing may only be in an amount (i) equal to Five Hundred
Thousand Dollars ($500,000) or a greater integral multiple of Five Hundred
Thousand Dollars ($500,000) if a LIBOR Rate Borrowing, or (ii) equal to or
greater than the Dollar Equivalent of Five Hundred Thousand Dollars ($500,000)
if a Eurocurrency Borrowing. The procedures for Base Rate Borrowings and
collections are included in Section 2.3 and Section 3.4.
(c) The sum at any time of (i) the outstanding Principal Debt
evidencing Base Rate Borrowings and LIBOR Rate Borrowings, plus (ii) one hundred
ten percent (110%) of the outstanding Principal Debt evidencing Eurocurrency
Borrowings, plus (iii) the LC Exposure may never exceed the lesser of (A) the
total Commitments of all Lenders and (B) the Borrowing Base.
(d) The sum at any time of (i) the outstanding Principal Debt
evidencing Base Rate Borrowings and LIBOR Rate Borrowings owed to any Lender,
plus (ii) one hundred ten percent (110%) of the outstanding Principal Debt
evidencing Eurocurrency Borrowings owed to such Lender, plus (iii) the LC
Exposure of such Lender may never exceed such Lender's Commitment.
(e) If, at the time of any potential advance, the Market Value of
securities included within clause (c) or clause (d) of the definition of
"Borrowing Base" has declined by more than Five Hundred Thousand Dollars
($500,000) since the last Borrowing Base Report delivered by Borrower to
Administrative Agent, then Administrative Agent may reduce the Borrowing Base
prior to making such advance by marking such securities to Market Value, and
Borrower shall deliver a Borrowing Base Report which is not more than ten (10)
days old.
(f) The sum of all Eurocurrency Borrowings that are outstanding at any
one time may not exceed the Eurocurrency Sublimit.
(g) Administrative Agent reserves the right, in its sole and absolute
discretion, to terminate the obligation and commitment of Lenders to make future
Eurocurrency Borrowings available to Borrower, to permit future renewals of
Borrowings as Eurocurrency Borrowings and to permit future conversions of
Domestic Borrowings to Eurocurrency Borrowings, upon ten (10) days prior written
notice to Borrower. After any such
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<PAGE> 29
termination, each outstanding Eurocurrency Borrowing tranche will be converted
to a Base Rate Borrowing at the end of the Interest Period therefor.
(h) Borrower may not have outstanding more than five (5) outstanding
LIBOR Rate Borrowing tranches at any time.
2.2 Emergency Advance Facility. If at any time, and from time to time,
the sum of (i) the outstanding Principal Debt evidencing Base Rate Borrowings
and LIBOR Rate Borrowings, plus (ii) one hundred ten percent (110%) of the
outstanding Principal Debt evidencing Eurocurrency Borrowings, plus (iii) the LC
Exposure exceeds the Borrowing Base but does not exceed the total Commitments of
all Lenders, and if Administrative Agent deems it to be in the best interests of
the Lenders, Administrative Agent may instruct each Lender to make a Base Rate
Borrowing to Borrower, and each Lender severally but not jointly agrees to lend
to Borrower, that Lender's Commitment Percentage of up to an aggregate of One
Million Dollars ($1,000,000) at any time outstanding under this Section 2.2,
with a maturity of not more than forty-five (45) days.
2.3 Borrower's Loan Account. Administrative Agent shall maintain a loan
account (the "LOAN ACCOUNT") on its internal data control systems in which shall
be recorded (i) all loans and advances made by Lenders, or by Administrative
Agent for the account of Lenders, to Borrower pursuant to this Agreement, (ii)
all payments made by Borrower on all such loans and advances (including debits
and credits pursuant to Section 3.4 (Lock-Box Account) and (iii) all other
appropriate debits and credits as provided in this Agreement, including, without
limitation, all interest, unused facility fees, agency fees, LC fees and
prepayment fees, but Borrower will be entitled to fifteen (15) days written
notice prior to any debit with respect to appraisal fees, audit fees, attorneys
fees and other miscellaneous charges and expenses for which Borrower is
responsible hereunder. All entries in Borrower's Loan Account shall be made in
accordance with Administrative Agent's customary accounting practices as in
effect from time to time. Borrower promises to pay to Administrative Agent and
Lenders the amount reflected as owing by it under its Loan Account and all of
its other obligations hereunder and under any of the other Credit Documents as
such amounts become due or are declared due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise) pursuant to the terms of
this Agreement and the other Credit Documents.
(a) Statements; Telephonic Notice.
(i) All advances and other financial accommodations to
Borrower, and all other debits and credits provided for in this
Agreement, may be evidenced by entries made by Administrative Agent in
its internal data control systems showing the date, amount and reason
for each such debit or credit. Until such time as Administrative Agent
shall have rendered to Borrower written statements of account as
provided herein, the balance in Borrower's Loan Account, as set forth
on Administrative Agent's most recent printout, shall be rebuttably
presumptive evidence of the amounts due and owing to Administrative
Agent and Lenders by Borrower. Not more than twenty (20) days after the
last day of each calendar month, Administrative Agent shall render to
Borrower a statement setting forth the balance of Borrower's Loan
Account, including principal, interest, expenses and fees. Each such
statement shall be subject to subsequent adjustment by Administrative
Agent but shall, absent manifest errors or omissions, be presumed
correct and binding upon Borrower and shall constitute an account
stated unless, within thirty (30) days after receipt of any statement
from Administrative Agent, Borrower shall deliver to Administrative
Agent written objection thereto specifying the error or errors, if any,
contained in such statement.
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(ii) Borrower hereby authorizes Administrative Agent and each
Lender to extend advances under the Revolving Facility and to transfer
funds based on telephonic notices made by any Person or Persons
Administrative Agent in good faith believes to be acting on behalf of
Borrower, and all of such advances shall be Base Rate Borrowings
(compliance with the procedures set forth in Section 2.4 and elsewhere
herein being required for LIBOR Rate Borrowings and Eurocurrency
Borrowings). Borrower agrees to deliver promptly to Administrative
Agent a written confirmation, if such confirmation is requested by
Administrative Agent, of each telephonic notice signed by an Authorized
Officer. If the written confirmation differs in any material respect
from the action taken by Administrative Agent, the records of
Administrative Agent shall govern absent manifest error.
2.4 Borrowing Procedure. The following procedures apply to all
Borrowings other than Base Rate Borrowings pursuant to Section 2.3:
(a) Borrowing Request. Borrower may request a Borrowing only by making
or delivering a Borrowing Request to Administrative Agent (or, alternatively, to
the Eurocurrency Lending Installation in the case of Eurocurrency Borrowings),
which is irrevocable and binding on Borrower, stating the Type, amount and
Interest Period for each Borrowing and which must be received by Administrative
Agent (or, alternatively, the Eurocurrency Lending Installation in the case of
Eurocurrency Borrowings) no later than (i) 12:00 noon on the third Business Day
before the date on which funds are requested (the "BORROWING DATE") for any
LIBOR Rate Borrowing, (ii) 10:00 a.m. (London time) on the fourth Business Day
before the Borrowing Date for any Eurocurrency Borrowing, or (iii) 12:00 noon on
the Borrowing Date for any Base Rate Borrowing. If the Borrowing Request for a
Eurocurrency Borrowing delivered pursuant to the immediately-preceding sentence
is sent by facsimile, Borrower shall promptly deliver the originally-executed
Borrowing Request to the Eurocurrency Lending Installation. Administrative Agent
(or, alternatively, the Eurocurrency Lending Installation in the case of
Eurocurrency Borrowings) shall promptly notify each Lender (or any Lending
Installation designated in writing by such Lender to make Eurocurrency
Borrowings on behalf of such Lender) of any Borrowing Request.
(b) Funding. Each Lender (or its applicable Lending Installation) shall
remit its Commitment Percentage of each requested Borrowing to Administrative
Agent's principal office in Chicago, Illinois (or, alternatively, at the
Eurocurrency Lending Installation in the case of Eurocurrency Borrowings), in
funds that are available for immediate use by Administrative Agent or the
Eurocurrency Lending Installation, as the case may be, by 2:00 p.m. (local time)
on the applicable Borrowing Date. Subject to receipt of those funds,
Administrative Agent or the Eurocurrency Lending Installation, as the case may
be, shall (unless to its actual knowledge any of the applicable conditions
precedent have not been satisfied by Borrower or waived by the requisite Lenders
under Section 14.10) make those funds available to Borrower by (at Borrower's
option) (i) wiring the funds to or for the account of Borrower at the direction
of Borrower or (ii) depositing the funds in one of Borrower's accounts with
Administrative Agent or, in the case of Eurocurrency Borrowings, the
Eurocurrency Lending Installation.
(c) Funding Assumed. Absent contrary written notice from a Lender,
Administrative Agent or the Eurocurrency Lending Installation, as the case may
be, may assume that each Lender has made its Commitment Percentage of the
requested Borrowing available to Administrative Agent or the Eurocurrency
Lending Installation, as the case may be, on the applicable Borrowing Date, and
Administrative Agent or the Eurocurrency Lending Installation, as the case may
be, may, in reliance upon such assumption (but shall not be required to), make
available to Borrower a corresponding amount. If a Lender fails to make its
Commitment Percentage of any requested Borrowing available to Administrative
Agent or the Eurocurrency
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Lending Installation, as the case may be, on the applicable Borrowing Date,
Administrative Agent or the Eurocurrency Lending Installation, as the case may
be, may recover the applicable amount on demand, (i) from that Lender together
with interest, commencing on the Borrowing Date and ending on (but excluding)
the date Administrative Agent or the Eurocurrency Lending Installation, as the
case may be, recovers the amount from that Lender, at an annual interest rate
equal to the Fed Funds Rate (or, alternatively, in the case of Eurocurrency
Borrowings, the Eurocurrency Lending Installation's cost of funds for that
amount and for the period stated above), or (ii) if that Lender fails to pay its
amount upon demand, then from Borrower. No Lender is responsible for the failure
of any other Lender to make its Commitment Percentage of any Borrowing; however,
failure of any Lender to make its Commitment Percentage of any Borrowing does
not excuse any other Lender from making its Commitment Percentage of any
Borrowing.
2.5 Letters of Credit.
(a) Conditions. Subject to the terms and conditions of this Agreement
and applicable Laws, Administrative Agent (itself or through one of its
Affiliates, and references in this Section 2.4 to "Administrative Agent" include
those Affiliates) agrees, if requested by Borrower, to issue LCs upon Borrower's
making or delivering an LC Request and delivering an LC Agreement, both of which
must be received by Administrative Agent no later than the fifth Business Day
before the Business Day on which the requested LC is to be issued, so long as
(i) no LC may have an expiration date more than one year from its date of
issuance, (ii) no LC may expire after a date 30 Business Days before the
Revolving Facility Termination Date, (iii) the LC Exposure does not exceed Five
Million Dollars ($5,000,000), (iv) the limitations in Section 2.2 are not
exceeded, and (v) each LC will be denominated in Dollars.
(b) Participation. Immediately upon Administrative Agent's issuance of
any LC, Administrative Agent shall be deemed to have sold and transferred to
each other Lender, and each other Lender shall be deemed irrevocably and
unconditionally to have purchased and received from Administrative Agent,
without recourse or warranty, an undivided interest and participation to the
extent of such Lender's Commitment Percentage under the Revolving Facility in
the LC and all applicable Rights of Administrative Agent in the LC (other than
Rights to receive certain fees provided in Section 4.4 to be for Administrative
Agent's sole account).
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(c) Reimbursement Obligation. To induce Administrative Agent to issue
and maintain LCs, and to induce Lenders to participate in issued LCs, Borrower
agrees to pay or reimburse Administrative Agent (i) on the date when any draft
or draw request is presented under any LC, the amount paid or to be paid by
Administrative Agent and (ii) promptly, upon demand, the amount of any
additional fees Administrative Agent customarily charges for the application and
issuance of an LC, for amending LC Agreements, for honoring drafts and draw
requests, and for taking similar action in connection with letters of credit. If
Borrower has not reimbursed Administrative Agent for any drafts or draws paid or
to be paid by the date of Administrative Agent's demand for reimbursement,
Administrative Agent is irrevocably authorized to fund Borrower's reimbursement
obligations as a Base Rate Borrowing under the Revolving Facility if proceeds
are available under the Revolving Facility and if the conditions in this
Agreement for such a Borrowing (other than any notice requirements or minimum
funding amounts) have, to Administrative Agent's knowledge, been satisfied. The
proceeds of that Borrowing shall be advanced directly to Administrative Agent to
pay Borrower's unpaid reimbursement obligations. If funds cannot be advanced
under the Revolving Facility, then Borrower's reimbursement obligation shall
constitute a demand obligation. Borrower's obligations under this Section are
part of the Obligation and are absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim, or defense to
payment that Borrower may have at any time against Administrative Agent or any
other Person. From Administrative Agent's demand for reimbursement to the date
paid (including any payment from proceeds of a Base Rate Borrowing), unpaid
reimbursement amounts accrue interest that is payable on demand at the Default
Rate thereafter.
(d) General. Administrative Agent shall promptly notify Borrower of the
date and amount of any draft or draw request presented for honor under any LC
(but failure to give notice will not affect Borrower's obligations under this
Agreement). Administrative Agent shall pay the requested amount upon presentment
of a draft or draw request unless presentment on its face does not comply with
the terms of the applicable LC. When making payment, Administrative Agent may
disregard (i) any default or potential default that exists under any other
agreement and (ii) obligations under any other agreement that have or have not
been performed by the beneficiary or any other Person (and Administrative Agent
is not liable for any of those obligations). Borrower's reimbursement
obligations to Administrative Agent and Lenders, and each Lender's obligations
to Administrative Agent, under this section are absolute and unconditional
irrespective of, and Administrative Agent is not responsible for, (i) the
validity, enforceability, sufficiency, accuracy, or genuineness of documents or
endorsements (even if they are in any respect invalid, unenforceable,
insufficient, inaccurate, fraudulent, or forged), (ii) any dispute by any
Company with or any Company's claims, setoffs, defenses, counterclaims, or other
Rights against Administrative Agent, any Lender, or any other Person, or (iii)
the occurrence of any Potential Default or Event of Default. However, nothing in
this Agreement constitutes a waiver of Borrower's Rights to assert any claim or
defense based upon the gross negligence or willful misconduct of Administrative
Agent or any Lender. Administrative Agent shall promptly distribute
reimbursement payments received from Borrower to all Lenders according to their
Pro Rata Part of the Revolving Facility.
(e) Obligation of Lenders. If Borrower fails to reimburse
Administrative Agent as provided in Section 2.4(c) within 24 hours after
Administrative Agent's demand for reimbursement, and funds cannot be advanced
under the Revolving Facility to satisfy the reimbursement obligations,
Administrative Agent shall promptly notify each Lender of Borrower's failure, of
the date and amount paid, and of each Lender's Commitment Percentage of the
unreimbursed amount. Each Lender shall promptly and unconditionally make
available to Administrative Agent in immediately available funds its Commitment
Percentage of the unpaid reimbursement obligation, subject to the limitations of
Section 2.2(d). Funds are due and payable to Administrative Agent before the
close of business on the Business Day when Administrative Agent gives notice to
each Lender of Borrower's reimbursement failure (if notice is given before 1:00
p.m.) or on the next succeeding Business Day (if notice is given after 1:00
p.m.). All amounts payable by any Lender accrue interest
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after the due date, and each Lender shall pay to Administrative Agent on demand
interest, at the Fed Funds Rate from the day the applicable draft or draw is
paid by Administrative Agent to (but not including) the date the amount is paid
by the Lender to Administrative Agent.
(f) Duties of Administrative Agent. Administrative Agent agrees with
each Lender that it will exercise and give the same care and attention to each
LC as it gives to its other letters of credit. Each Lender and Borrower agree
that, in paying any draft or draw under any LC, Administrative Agent has no
responsibility to obtain any document (other than any documents expressly
required by the respective LC) or to ascertain or inquire as to any document's
validity, enforceability, sufficiency, accuracy, or genuineness or the authority
of any Person delivering it. Neither Administrative Agent nor its
Representatives will be liable to any Lender or any Company for any LC's use or
for any beneficiary's acts or omissions. Any action, inaction, error, delay, or
omission taken or suffered by Administrative Agent or any of its Representatives
in connection with any LC, applicable draws, drafts or documents, or the
transmission, dispatch, or delivery of any related message or advice, if in good
faith and in conformity with applicable Laws and in accordance with the
standards of care specified in the Uniform Customs and Practices for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500
(as amended or modified), is binding upon the Companies and Lenders and does not
place Administrative Agent or any of its Representatives under any resulting
liability to any Company or any Lender. Administrative Agent is not liable to
any Company or any Lender for any action taken or omitted, in the absence of
gross negligence or willful misconduct, by Administrative Agent or its
Representatives in connection with any LC.
(g) Cash Collateral. On the Revolving Facility Termination Date, and if
requested by Required Lenders while an Event of Default or Potential Default
exists, Borrower shall provide Administrative Agent, for the benefit of Lenders,
cash collateral in an amount to equal the then-existing LC Exposure. After the
expiration of ninety (90) days from the date on which all existing Events of
Default and Potential Defaults have been cured, Administrative Agent will, upon
request of Borrower, release the cash collateral if no Events of Default or
Potential Defaults exist at the time of the release.
(h) INDEMNIFICATION. BORROWER AND PARENT, JOINTLY AND SEVERALLY, SHALL,
AND HEREBY AGREE TO, PROTECT, INDEMNIFY, PAY, AND SAVE ADMINISTRATIVE AGENT,
EACH LENDER, AND THEIR RESPECTIVE REPRESENTATIVES HARMLESS FROM AND AGAINST ANY
AND ALL CLAIMS, DEMANDS, LIABILITIES, DAMAGES, LOSSES, COSTS, CHARGES, AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR OR
BE SUBJECT TO AS A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT,
OR THE FAILURE OF ADMINISTRATIVE AGENT TO HONOR A DRAFT OR DRAW REQUEST UNDER
ANY LC AS A RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY
PRESENT OR FUTURE GOVERNMENTAL AUTHORITY. HOWEVER, NO PERSON IS ENTITLED TO
INDEMNITY UNDER THE FOREGOING FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
(i) LC Agreements. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not incorporated
into this Agreement in any manner. The fees and other amounts payable with
respect to each LC are as provided in this Agreement, drafts and draws under
each LC are part of the Obligation, only the events specified in this Agreement
as an Event of Default shall constitute a default under any LC, and the terms of
this Agreement control any conflict between the terms of this Agreement and any
LC Agreement.
2.6 Borrowing Requests and LC Requests. Each Borrowing Request and LC
Request constitutes a representation and warranty by Borrower that as of the
Borrowing Date or the date of issuance of the requested LC, as the case may be,
that all of the conditions precedent in SECTION 6 have been satisfied.
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2.7 Termination. Upon giving at least five Business Days prior written
and irrevocable notice to Administrative Agent, Borrower may permanently
terminate all of the unused portion of the Revolving Facility and the Commitment
but may not terminate it in part, except as stated in the next sentence. Upon
the sale of all or a substantial part of the Detection Systems (the Net Proceeds
of which are applied to reduce the Obligation in accordance with Section
3.2(c)(iii)), Borrower may permanently terminate a portion of the Revolving
Facility and reduce the total Commitments to Thirty Five Million Dollars
($35,000,000). Each partial termination must be ratable in accordance with each
Lender's Commitment Percentage. Any partial terminations shall reduce
availability under the Eurocurrency Sublimit on a pro rata basis in the same
proportion which the Eurocurrency Sublimit at the time bears to the total
Commitments. At the time of any termination, Borrower shall pay to
Administrative Agent (or, alternatively, to the Eurocurrency Lending
Installation in the case of Eurocurrency Borrowings), for the account of each
Lender, as applicable, all accrued and unpaid fees under this Agreement, the
interest attributable to the amount of that reduction, and any related Funding
Loss. Any part of the Commitment for the Revolving Facility that is terminated
may not be reinstated.
SECTION 3. TERMS OF PAYMENT.
3.1 Notes and Payments.
(a) Notes. The Term Notes and Revolving Notes under the Prior Credit
Agreement acquired by American National from Bank One and Wells Fargo
immediately before the execution of this Agreement will, at the Closing Time, be
renewed and replaced by a single Note hereunder in the face amount of Forty Five
Million Dollars ($45,000,000), executed by Ultrak Operating, L.P., as Borrower,
payable to the order of American National, as Lender, to evidence the Principal
Debt under the Revolving Facility. If American National subsequently sells a
portion of the Obligation to another Entity which assumes a portion of the
Commitment, or if, thereafter, a Lender sells a portion of the Obligation held
by it to another Entity which assumes a portion of the Commitment, then, each
time, Administrative Agent will prepare a new Schedule 2 reflecting the
post-transfer Commitment of each Lender, which will be executed by all Lenders,
and a copy thereof will be sent by Administrative Agent to Borrower and each
Lender. Administrative Agent will cause to be prepared and delivered to Borrower
replacement Notes for each Lender who made a transfer and each Lender who was
the recipient of a transfer, in the face amount of the Commitment of each such
transferee and recipient, and Borrower will promptly execute and deliver such
replacement Notes to Administrative Agent for delivery to the Lenders who are
payees thereof.
(b) Payment. Except for payment made on Base Rate Borrowings by
appropriate debits to Borrower's Loan Account pursuant to Section 2.3 and
Section 3.4, Borrower must make each payment and prepayment on the Obligation to
Administrative Agent's principal office in Chicago, Illinois (or, alternatively,
at the Eurocurrency Lending Installation in the case of payments and prepayments
made in respect of Eurocurrency Borrowings) in immediately available funds by
1:00 p.m.(local time) on the day due; otherwise, but subject to Section 3.8,
those funds continue to accrue interest as if they were received on the next
Business Day. Administrative Agent or the Eurocurrency Lending Installation, as
applicable, shall promptly pay to each Lender (or a Lending Installation of that
Lender designated in writing to Administrative Agent or the Eurocurrency Lending
Installation, as appropriate) the part of any payment or prepayment to which
that Lender is entitled under this Agreement (in the same type of funds which
the Administrative Agent or the Eurocurrency Lending Installation received) on
the same day Administrative Agent or the Eurocurrency Lending Installation, as
the case may be, receives the funds from Borrower.
(c) Payment Assumed. Unless Administrative Agent (or, alternatively,
the Eurocurrency Lending Installation in the case of Eurocurrency Borrowings)
has received notice from Borrower prior to the date on
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which any payment is due under this Agreement that Borrower will not make that
payment in full, Administrative Agent (or, alternatively, the Eurocurrency
Lending Installation in the case of Eurocurrency Borrowings) may assume that
Borrower has made the full payment due and Administrative Agent (or,
alternatively, the Eurocurrency Lending Installation in the case of Eurocurrency
Borrowings) may, in reliance upon that assumption, cause to be distributed to
each Lender (or a Lending Installation of that Lender designated in writing to
Administrative Agent or the Eurocurrency Lending Installation, as appropriate)
on that date the amount then due to each Lender. If and to the extent Borrower
does not make the full payment due to Administrative Agent (or, alternatively,
the Eurocurrency Lending Installation in the case of Eurocurrency Borrowings),
each Lender shall repay to Administrative Agent (or, alternatively, the
Eurocurrency Lending Installation in the case of Eurocurrency Borrowings) on
demand the amount distributed to that Lender by Administrative Agent (or,
alternatively, the Eurocurrency Lending Installation in the case of Eurocurrency
Borrowings) together with interest for each day from the date that Lender
received payment from Administrative Agent (or, alternatively, the Eurocurrency
Lending Installation in the case of Eurocurrency Borrowings) until the date that
Lender repays Administrative Agent (or, alternatively, the Eurocurrency Lending
Installation in the case of Eurocurrency Borrowings) (unless such repayment is
made on the same day as such distribution), at an interest rate equal to the Fed
Funds Rate (or, alternatively, in the case of Eurocurrency Borrowings, the
Eurocurrency Lending Installation's cost of funds for that amount and for the
period stated above).
(d) Currency of Payment. All payments and prepayments on the Obligation
must be made in the currency borrowed (the "SPECIFIED CURRENCY") and at the
Lending Installation specified by the Administrative Agent (the "SPECIFIED
PLACE"). The payment of the Obligation shall not be discharged by an amount paid
in another currency or in another place, whether pursuant to a judgment or
otherwise, to the extent that the amount so paid on conversion to the Specified
Currency and transfer to the Specified Place under normal banking procedures
does not yield the amount of the Specified Currency at the Specified Place due
hereunder. If, for the purpose of obtaining judgment in any court, it is
necessary to convert a sum due hereunder in the Specified Currency into another
currency (the "SECOND CURRENCY"), the rate of exchange which shall be applied
shall be that at which in accordance with normal banking procedures the
Administrative Agent could purchase the Specified Currency with the Second
Currency on the Business Day next preceding that on which such judgment is
rendered. The obligation of Borrower in respect of any such sum due from it to
the Administrative Agent or any Lender hereunder (an "ENTITLED PERSON") shall,
notwithstanding the rate of exchange actually applied in rendering such
judgment, be discharged only to the extent that on the Business Day following
receipt by such Entitled Person of any sum adjudged to be due hereunder or under
the other Credit Documents in the Second Currency, such Entitled Person may in
accordance with normal banking procedures purchase and transfer to the Specified
Place the Specified Currency with the amount of the Second Currency so adjudged
to be due; and Borrower hereby, as a separate part of the Obligation and
notwithstanding such judgment, agrees to indemnify such Entitled Person against,
and to pay such Entitled Person on demand, in the Specified Currency, any
difference between the sum originally due to such Entitled Person in the
Specified Currency and the amount of the Specified Currency so purchased and
transferred.
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3.2 Interest and Principal Payments.
(a) Interest. Accrued interest on each LIBOR Rate Borrowing is due and
payable on the first day of each month, commencing on the first day of the month
following the Closing Date, and on the last day of its respective Interest
Period. Accrued interest on each Base Rate Borrowing is due and payable on the
first day of each month, commencing on the first day of the month following the
Closing Date. Accrued interest on each Eurocurrency Borrowing is due and payable
on the last day of its respective Interest Period (provided that accrued
interest on any Eurocurrency Borrowing having an Interest Period longer than
three months shall also be payable on the last day of each three-month interval
during such Interest Period) and on any date that the Eurocurrency Borrowing is
prepaid, whether by acceleration or otherwise. Accrued interest is also due and
payable (irrespective of the Type of Borrowing) on the Revolving Facility
Termination Date.
(b) Revolving Facility Principal. The Principal Debt is due and payable
on the Revolving Facility Termination Date. Before that date, Borrower may at
any time prepay, without penalty (except as provided in this Agreement) and in
whole or in part, the Principal Debt, so long as (i) each voluntary partial
prepayment must be in a principal amount not less than Five Hundred Thousand
($500,000) (or its Dollar Equivalent) in the case or prepayments of Eurocurrency
Borrowings or LIBOR Rate Borrowings, (ii) Borrower shall pay any related Funding
Loss upon demand, and (iii) in the case of prepayments of Eurocurrency
Borrowings, Borrower has given the Eurocurrency Lending Installation five days'
advance notice of its intention to make such prepayment. Conversions under
Section 3.14 are not prepayments.
(c) Mandatory Prepayments.
(i) At any time a Borrowing Base Deficiency exists, Borrower
shall immediately make a prepayment to Administrative Agent or the
Eurocurrency Lending Installation (with any related Funding Loss) under
the Revolving Facility so that a Borrowing Base Deficiency no longer
exists; provided that, notwithstanding the foregoing, Borrower may take
up to five (5) Business Days to cure a Borrowing Base Deficiency after
becoming aware of same so long as the amount of the Borrowing Base
Deficiency does not exceed five percent (5%) of the total Borrowing
Base.
(ii) Immediately upon a sale, lease or other disposition of
assets by any Company other than a Permitted Asset Sale, Borrower shall
make a mandatory prepayment to Administrative Agent or the Eurocurrency
Lending Installation (with any related Funding Loss) under the
Revolving Facility in an amount equal to one hundred percent (100%) of
the Net Proceeds of such sale, lease or other disposition.
(iii) Immediately upon the sale or other disposition of any of
Borrower's investment or interest in Detection Systems, Borrower shall
make a mandatory prepayment on the Obligation to Administrative Agent
or the Eurocurrency Lending Installation (with any related Funding
Loss) equal to all of the Net Proceeds of such sale(s) until such time
as the aggregate of all of such Net Proceeds from Detection Systems
sales paid hereunder equals Thirteen Million Dollars ($13,000,000).
With respect to any Net Proceeds in excess of Thirteen Million Dollars
($13,000,000), the required mandatory prepayment will be the amount
included within clause (c) of the Borrowing Base immediately prior to
the sale or other disposition in question.
(iv) If the aggregate principal amount of Eurocurrency
Borrowings outstanding (after converting each Eurocurrency to its
Dollar Equivalent) at any time exceeds the Eurocurrency Sublimit, then,
upon five Business Days' written notice from the Eurocurrency Lending
Installation, Administrative Agent or any Lender, Borrower shall prepay
an aggregate principal amount of
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Eurocurrency Borrowings sufficient to bring the aggregate of the
Eurocurrency Borrowings outstanding within the Eurocurrency Sublimit.
3.3 Interest Options. Except that the LIBOR Rate and the Eurocurrency
Rate may not be selected when an Event of Default or Potential Default exists,
and except as otherwise provided in this Agreement, Borrowings bear interest at
an annual rate equal to the lesser of (a) the Base Rate plus the Applicable
Margin and (b) the Maximum Rate, unless Borrower has elected to make a LIBOR
Rate Borrowing or a Eurocurrency Borrowing or has elected to convert a portion
of the Base Rate Borrowings to a LIBOR Rate Borrowing or a Eurocurrency
Borrowing. LIBOR Rate Borrowings will bear interest at an annual rate equal to
the lesser of (i) the LIBOR Rate plus the Applicable Margin and (ii) the Maximum
Rate. Eurocurrency Borrowings will bear interest at an annual rate equal to the
lesser of (A) the Eurocurrency Rate plus the Applicable Margin and (B) the
Maximum Rate. Each change in the Base Rate, LIBOR Rate, Eurocurrency Rate, or
Maximum Rate is effective, without notice to Borrower or any other Person, upon
the effective date of change.
3.4 Collection of Accounts and Payments. Borrower shall establish lock
box accounts ("LOCK BOX ACCOUNTS") and blocked accounts (the "BLOCKED ACCOUNTS")
with Administrative Agent and with such banks as are acceptable to
Administrative Agent (collectively, the "COLLECTING BANKS") to which all Account
Debtors shall directly remit all payments on Accounts and in which Borrower and
each other Company will immediately deposit all cash and other payments made for
Inventory and other payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash or check. The
Collecting Banks shall acknowledge and agree, in a manner satisfactory to
Administrative Agent, that all payments made to the Blocked Accounts are the
sole and exclusive property of Administrative Agent, for the benefit of Lenders,
that the Collecting Banks have no right to setoff against the Blocked Accounts
and that the Collecting Banks will wire or otherwise transfer immediately
available funds in a manner satisfactory to Administrative Agent, funds
deposited into the Blocked Accounts to Administrative Agent on a daily basis as
soon as such funds are collected. Borrower hereby agrees that all payments made
to the Lock Box Accounts, Blocked Accounts or otherwise received by the
Collecting Banks or Administrative Agent or any Lender, whether on the Accounts
or as proceeds of Borrower's other Collateral or otherwise will be the sole and
exclusive property of Administrative Agent, for the ratable benefit of Lenders,
and will be applied on account of Borrower's Liabilities as follows: (i) when
the funds have become available, for collection of checks and other instruments
(including automatic clearing house electronic funds transfers and depository
transfer checks) received by Administrative Agent at its offices in Chicago,
Illinois, Administrative Agent will credit (conditional upon final collection)
all such payments to Borrower's Loan Account and (ii) all cash payments received
by Administrative Agent at its offices in Chicago, Illinois, including, without
limitation, payments made by wire transfer of immediately available funds
received by Administrative Agent in time for posting to the account of
Administrative Agent, for the ratable benefit of Lenders (and, in any event, not
later than 4:00 p.m. Chicago time) on the date received, will be credited to
Borrower's Loan Account immediately upon receipt. Borrower and each of its
Affiliates, Subsidiaries, members, managers, officers, employees, agents or
those Persons acting for or in concert with Borrower shall, acting as trustee
for Administrative Agent, receive, as the sole and exclusive property of
Administrative Agent, any monies, checks, notes, drafts or any other payment
relating to and/or proceeds of Borrower's Accounts or other Collateral which
come into the possession or under the control of Borrower or any of its
Affiliates, Subsidiaries, shareholders, members, managers, employees, agents or
those Persons acting for or in concert with Borrower and immediately upon
receipt thereof, Borrower shall remit the same or cause the same to be remitted,
in kind, to Administrative Agent, at Administrative Agent's address set forth
below. Borrower agrees to pay to Administrative Agent any and all fees, costs
and expenses which Administrative Agent incurs in connection with opening and
maintaining Borrower's Lock Box Accounts and Blocked Accounts and depositing for
collection by Administrative Agent any check or item of payment received and/or
delivered to any Collecting Bank or Administrative Agent, respectively, on
account of the Liabilities and Borrower further
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agrees to reimburse Administrative Agent and Lenders for any claims asserted by
the Collecting Banks in connection with Borrower's Blocked Accounts and any
amounts paid to any Collecting Bank arising out of Administrative Agent's or
Lenders' indemnification of such Collecting Bank against damages incurred by the
Collecting Bank in the operation of any Blocked Account.
3.5 Appointment of Administrative Agent as Borrower's Attorney-in-Fact.
Borrower hereby irrevocably designates, makes, constitutes and appoints
Administrative Agent (and all officers, employees, agents and other Persons
designated by Administrative Agent) as Borrower's true and lawful
attorney-in-fact, and authorizes Administrative Agent, in Borrower's or
Administrative Agent's name, to: (a) following the occurrence and during the
continuance of a Default (i) demand payment of Accounts; (ii) enforce payment of
Accounts by legal proceedings or otherwise; (iii) exercise all of Borrower's
rights and remedies with respect to proceedings brought to collect an Account;
(iv) sell or assign any Account upon such terms, for such amount and at such
time or times as Administrative Agent deems advisable; (v) settle, adjust,
compromise, extend or renew any Account; (vi) discharge and release any Account;
(vii) prepare, file and sign Borrower's name on any proof of claim in bankruptcy
or other similar document against an Account Debtor; (viii) notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Administrative Agent, and open and deal with all mail
addressed to Borrower; and (ix) do all acts and things which are necessary, in
Administrative Agent's sole discretion, to fulfill Borrower's obligations under
this Agreement; and (b) at any time (i) take control in any manner of any item
of payment or proceeds thereof; (ii) have access to any lockbox or postal box
into which Borrower's mail is deposited; (iii) endorse Borrower's name upon any
items of payment or proceeds thereof and deposit the same in Administrative
Agent's account on account of the Liabilities; (iv) endorse Borrower's name upon
any chattel paper, document, instrument, invoice, or similar document or
agreement relating to any Account or any goods pertaining thereto; and (v) sign
Borrower's name on any verification of Accounts and notices thereof to Account
Debtors.
3.6 Instruments and Chattel Paper. Immediately upon Borrower's receipt
thereof, Borrower shall deliver or cause to be delivered to Administrative
Agent, with appropriate endorsement and assignment to vest title and possession
in Administrative Agent, with full recourse to Borrower, all chattel paper and
instruments which Borrower now owns or may at any time or times hereafter
acquire in order to permit Administrative Agent to perfect its security interest
in such property.
3.7 Notice to Account Debtors. Administrative Agent may, in its sole
discretion, exercised in a commercially reasonable manner, at any time or times
and without prior notice to Borrower if an Event of Default has occurred and is
continuing (or five (5) days prior written notice to Borrower if no Event of
Default has occurred and is continuing), notify any or all Account Debtors that
the Accounts have been assigned to Administrative Agent and that Administrative
Agent has a security interest therein. Administrative Agent may direct any or
all Account Debtors to make all payments upon the Accounts directly to
Administrative Agent. Administrative Agent shall furnish Borrower with a copy of
any such notice.
3.8 Quotation of Rates. Borrower may call Administrative Agent or the
Eurocurrency Lending Installation before delivering a Borrowing Request to
receive an indication of the interest rates then in effect, but the indicated
rates do not bind Administrative Agent, the Eurocurrency Lending Installation or
Lenders or affect the interest rate that is actually in effect when Borrower
makes a Borrowing Request, on the date any rate of interest is determined under
this Agreement, or on the applicable Borrowing Date.
3.9 Default Rate. All past-due Principal Debt and, unless prohibited by
applicable Government Requirements, past-due interest accruing on the Principal
Debt shall, at Administrative Agent's option, bear interest on the amount
thereof from time to time outstanding from the date due (stated or by
acceleration) at the Default Rate until paid, regardless whether payment is made
before or after entry of a judgment.
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3.10 Interest Recapture. If the designated interest rate applicable to
any Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until the
total amount of accrued interest equals the amount of interest that would have
accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Obligation, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent not prohibited by applicable Laws, Borrower shall pay an amount equal to
the difference between (a) the lesser of the amount of interest that would have
accrued if the designated rates had always been in effect and the amount of
interest that would have accrued if the Maximum Rate had always been in effect,
and (b) the amount of interest actually paid or accrued on the Obligation.
3.11 Interest Calculations. Interest on all Borrowings will be
calculated on the basis of actual number of days (including the first day but
excluding the last day) elapsed but computed as if each calendar year consisted
of (a) 360 days in the case of all Borrowings other than Eurocurrency Borrowings
denominated in pounds sterling (unless such calculation would result in the
interest on the Borrowings exceeding the Maximum Rate in which event such
interest shall be calculated on the basis of a year of 365 or 366 days, as the
case may be), and (b) 365 days in the case of Eurocurrency Borrowings
denominated in pounds sterling. All interest rate determinations and
calculations by Administrative Agent are conclusive and binding absent manifest
error.
3.12 Maximum Rate. It is the intent of Administrative Agent, Lenders
and Borrower in the execution and performance of the Credit Documents to remain
in strict compliance with applicable Laws from time to time in effect, including
applicable laws limiting the amount or rate of interest. Administrative Agent,
Lenders and Borrower stipulate and agree that none of the terms and provisions
contained in the Credit Documents shall ever be construed to create a contract
to pay for the use, forbearance or detention of money with interest at a rate or
in an amount in excess of the Maximum Rate or Maximum Amount. For purposes of
the Credit Documents, "interest" shall include the aggregate of all charges
which constitute interest under applicable Laws that are contracted for,
charged, reserved, received or paid under the Credit Documents. Borrower shall
never be required to pay unearned interest and shall never be required to pay
interest at a rate or in an amount in excess of the Maximum Rate or Maximum
Amount, and the provisions of this section shall control over all other
provisions of the Credit Documents, and of any other instrument pertaining to or
securing the Obligation, which may be in actual or apparent conflict herewith.
If the Obligation is prepaid, or if the maturity of the Obligation is
accelerated for any reason, or if under any contingency the effective rate or
amount of interest which would otherwise be payable under the Credit Documents
would exceed the Maximum Rate or Maximum Amount, or in the event any Lender or
any holder of the Obligation shall charge, contract for, take, reserve or
receive monies that are deemed to constitute interest which would, in the
absence of this provision, increase the effective rate or amount of interest
payable under the Credit Documents to a rate or amount in excess of that
permitted to be charged, contracted for, taken, reserved or received under
applicable Laws then in effect, then the principal amount of the Obligation or
the amount of interest which would otherwise be payable on the Obligation or
both shall be reduced to the amount allowed under applicable Laws as now or
hereinafter construed by the courts having jurisdiction, and all such moneys so
charged, contracted for, taken, reserved or received that are deemed to
constitute interest in excess of the Maximum Rate shall immediately be returned
to or credited to the account of Borrower upon such determination.
Administrative Agent, Lenders and Borrower further stipulate and agree that,
without limitation of the foregoing, all calculations of the rate or amount of
interest contracted for, charged, taken, reserved or received under the Credit
Documents which are made for the purpose of determining whether such rate or
amount exceeds the Maximum Rate or Maximum Amount, shall be made to the extent
not prohibited by applicable Laws, by amortizing, prorating, allocating and
spreading during the period of the full stated term of the Obligation, all
interest at any time contracted for, charged, taken, reserved or received from
Borrower or
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otherwise by Lenders or any other holder of the Notes. If the Laws of the State
of Texas are applicable for purposes of determining the "Maximum Rate", such
term shall mean "the "weekly rate ceiling" from time to time in effect under
Chapter 1D., Subtitle 1, Title 79, Revised Civil Statutes of Texas (Article
5069-1D.001 et seq.), as amended, or, if permitted by applicable Law and
effective upon the giving of the notices required by such applicable Law (or
effective upon any other date otherwise specified by applicable Law), the
"monthly ceiling," the "quarterly ceiling," or "annualized ceiling" from time to
time in effect under such applicable Law whichever that the Lenders shall elect
to substitute for the "weekly rate ceiling,"
3.13 Interest Periods. When Borrower requests any LIBOR Rate Borrowing
or any Eurocurrency Borrowing, Borrower may elect the applicable interest period
(each an "INTEREST PERIOD"), which may be, at Borrower's option, one, three or
six months, subject to the following conditions: (i) the initial Interest Period
for a LIBOR Rate Borrowing or a Eurocurrency Borrowing commences on the
applicable Borrowing Date or conversion date, and each subsequent Interest
Period applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (ii) if any Interest Period for a LIBOR Rate
Borrowing or a Eurocurrency Borrowing begins on a day for which no numerically
corresponding Business Day in the calendar month at the end of the Interest
Period exists, then the Interest Period ends on the last Business Day of that
calendar month; (iii) if Borrower is required to pay any portion of a LIBOR Rate
Borrowing or a Eurocurrency Borrowing before the end of its Interest Period in
order to comply with the payment provisions of the Credit Documents, Borrower
shall also pay any related Funding Loss and accrued interest on the prepaid
amount; (iv) no Interest Period for any portion of Principal Debt may extend
beyond the scheduled repayment date for that portion of Principal Debt; and (v)
no more than six Interest Periods may be in effect at one time.
3.14 Conversions.
(a) Domestic Borrowings. Subject to the dollar limits of Section 2.2(b)
and provided that Borrower may not convert to or select a new Interest Period
for a LIBOR Rate Borrowing at any time when an Event of Default exists, Borrower
may (i) convert a LIBOR Rate Borrowing on the last day of the applicable
Interest Period to a Base Rate Borrowing, (ii) convert a Base Rate Borrowing at
any time to a LIBOR Rate Borrowing, and (iii) elect a new Interest Period for a
LIBOR Rate Borrowing. That election may be made by delivering a Conversion
Notice to Administrative Agent no later than 12:00 noon on the Business Day
before the conversion date or the last day of the Interest Period, as the case
may be (for conversion to a LIBOR Rate Borrowing or election of a new Interest
Period), and no later than 12:00 noon on the last day of the Interest Period
(for conversion to a Base Rate Borrowing). If the Conversion Notice for a
Eurocurrency Borrowing delivered pursuant to the immediately-preceding sentence
is delivered by facsimile, Borrower shall promptly deliver the
originally-executed Conversion Notice to the Administrative Agent. Absent
Borrower's request for conversion or election of a new Interest Period or if an
Event of Default exists, then, a LIBOR Rate Borrowing shall be deemed converted
to a Base Rate Borrowing effective when the applicable Interest Period expires.
For the avoidance of doubt, no portion of any Domestic Borrowing may be
converted to a Eurocurrency Borrowing (but, subject to compliance with the other
terms and conditions of this Agreement, a Eurocurrency Borrowing may be made to
pay all or any portion of any Domestic Borrowing).
(b) Eurocurrency Borrowings. Subject to the dollar limits of Section
2.2(b) and provided that Borrower may not convert to or select a new Interest
Period for a Eurocurrency Borrowing at any time when an Event of Default exists,
Borrower may elect a new Interest Period for a Eurocurrency Borrowing. That
election may be made by delivering a Conversion Notice to the Eurocurrency
Lending Installation no later than 10:00 a.m. (London time) on the fourth
Business Day before the last day of the Interest Period. If the Conversion
Notice delivered pursuant to the immediately-preceding sentence is delivered by
facsimile, Borrower shall promptly deliver the originally-executed Conversion
Notice to the Eurocurrency Lending Installation. Absent
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Borrower's request for election of a new Interest Period or if an Event of
Default exists, then a Eurocurrency Borrowing shall be continued for successive
one-month Interest Periods (at the option of Administrative Agent), each
beginning on the date following the last day of the immediately-preceding
Interest Period. For the avoidance of doubt, no portion of any Eurocurrency
Borrowing may be converted to a Base Rate Borrowing or a LIBOR Rate Borrowing
(but, subject to compliance with the other terms and conditions of this
Agreement, a Domestic Borrowing may be made to pay any Eurocurrency Borrowing).
3.15 Order of Application. Any payment or prepayment shall be applied
to the Obligation in such order and manner as Administrative Agent, in its sole
discretion, may elect. Each payment or prepayment shall be distributed to each
Lender in accordance with its Pro Rata Part of that payment or prepayment.
3.16 Sharing of Payments, Etc. If any Lender obtains any payment or
prepayment with respect to the Obligation (whether voluntary, involuntary, or
otherwise, including as a result of exercising its Rights under Section 3.17)
that exceeds the part of that payment or prepayment that it is then entitled to
receive under the Credit Documents, then that Lender shall purchase from the
other Lenders participations that will cause the purchasing Lender to share the
excess payment or prepayment ratably with each other Lender. If all or any
portion of any excess payment or prepayment is subsequently recovered from the
purchasing Lender, then the purchase shall be rescinded and the purchase price
restored to the extent of the recovery. Borrower agrees that any Lender
purchasing a participation from another Lender under this section may, to the
fullest extent permitted by applicable Laws, exercise all of its Rights of
payment (including the Right of offset) with respect to that participation as
fully as if that Lender were the direct creditor of Borrower in the amount of
that participation.
3.17 Offset. If an Event of Default exists, to the extent not
prohibited by applicable Laws, each Lender may exercise (for the benefit of all
Lenders in accordance with Section 3.16) the Rights of offset and banker's Lien
against each and every account and other property, or any interest therein, that
any Company may now or hereafter have with, or which is now or hereafter in the
possession of, that Lender to the extent of the full amount of the Obligation
owed (directly or participated) to it.
3.18 Booking Borrowings. To the extent permitted by applicable Laws,
any Lender may make, carry, or transfer its Borrowings at, to, or for the
account of any of its Lending Installations, and may change such Lending
Installations from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Notes shall be deemed held by each Lender for
the benefit of such Lending Installation. Each Lender may, by written notice to
the Administrative Agent and Borrower, designate a Lending Installation through
which Borrowings are made and for whose account loan payments and prepayments
are to be made. Unless otherwise notified to the contrary, all Eurocurrency
Borrowings shall be made by the Lending Installations of each Lender designated
on Schedule 2.
3.19 Basis Unavailable or Inadequate for LIBOR Rate or Eurocurrency
Rate. If on or before any date when a LIBOR Rate or a Eurocurrency Rate is to be
determined for a Borrowing, Administrative Agent or any Lender determines (and
Required Lenders agree with that determination) that the basis for determining
the applicable rate is not available or that the resulting rate does not
accurately reflect the cost to Lenders of making or converting Borrowings at
that rate for the applicable Interest Period, then Administrative Agent shall
promptly notify Borrower and Lenders of that determination (which is conclusive
and binding on Borrower absent manifest error), and the applicable Borrowing
shall bear interest (i) in the case of Domestic Borrowings, at the sum of the
Base Rate plus the Applicable Margin, and (ii) in the case of Borrowings under
the Eurocurrency Sublimit, at a rate of interest for such period as is
agreed-upon by Administrative Agent, Lenders and Borrower prior to the making of
such Borrowing. Until Administrative Agent notifies Borrower that those
circumstances giving rise to such notice no longer exist, Lenders' commitments
under this Agreement to make, or to convert to, LIBOR Rate Borrowings or
Eurocurrency Borrowings, as the case may be, shall be suspended.
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3.20 Additional Costs. Each Lender severally and not jointly agrees to
notify Administrative Agent, the other Lenders, and Borrower within 180 days
after it has actual knowledge that any circumstances exist that would give rise
to any payment obligation by Borrower under clauses (a) through (c) below.
Although no Lender shall have any liability to Administrative Agent, any other
Lender, or any Company for its failure to give that notice, Borrower is not
obligated to pay any amounts under those clauses that arise, accrue or are
imposed more than 180 days before that notice to the extent it is applicable to
those amounts. To demand payment under this section, any such Lender must
generally be making similar demand for similar additional costs under credit
agreements to which it is party that contain similar provisions to this section.
(a) Reserves. With respect to any LIBOR Rate Borrowing or Eurocurrency
Borrowing (i) if any change in any present Law, any change in the interpretation
or application of any present Law, or any future Law imposes, modifies or deems
applicable (or if compliance by any Lender or any applicable Lending
Installation with any requirement of any Governmental Authority results in) any
requirement that any reserves (including any marginal, emergency, supplemental,
or special reserves) be maintained (other than any reserve included in the
Reserve Requirement) and if (ii) those reserves reduce any sums receivable by
that Lender or any applicable Lending Installation under this Agreement or
increase the costs incurred by Lender or any applicable Lending Installation in
advancing or maintaining any portion of any LIBOR Rate Borrowing or Eurocurrency
Borrowing, then (iii) that Lender (through Administrative Agent) shall deliver
to Borrower a certificate setting forth in reasonable detail the calculation of
the amount necessary to compensate it or the applicable Lending Installation for
its reduction or increase (which certificate is conclusive and binding absent
manifest error), and (iv) Borrower shall pay that amount to that Lender or
applicable Lending Installation within ten Business Days after demand. The
provisions of and undertakings and indemnifications in this clause (a) survive
the satisfaction and payment of the Obligation and termination of this
Agreement.
(b) Capital Adequacy. With respect to any Borrowing or LC, if any
change in any present Law, any change in the interpretation or application of
any present Law, or any future Law regarding capital adequacy, or if compliance
by Administrative Agent (as issuer of LCs) or any Lender with any request,
directive or requirement imposed in the future by any Governmental Authority
regarding capital adequacy, or if any change in its written policies or in the
risk category of this transaction, in any of the foregoing events or
circumstances, reduces the rate of return on its capital as a consequence of its
obligations under this Agreement to a level below that which it otherwise could
have achieved (taking into consideration its policies with respect to capital
adequacy) by an amount deemed by it to be material (and it may, in determining
the amount, utilize reasonable assumptions and allocations of costs and expenses
and use any reasonable averaging or attribution method), then (unless the effect
is already reflected in the rate of interest then applicable under this
Agreement) Administrative Agent or that Lender (through Administrative Agent)
shall notify Borrower and deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to compensate it
(which certificate is conclusive and binding absent manifest error), and
Borrower shall pay that amount to Administrative Agent or that Lender within ten
Business Days after demand. The provisions of and undertakings and
indemnification in this clause (b) shall survive the satisfaction and payment of
the Obligation and termination of this Agreement.
(c) Taxes. Any Taxes payable by Administrative Agent, any Lender, or
any applicable Lending Installation, or ruled by a Governmental Authority to be
payable by Administrative Agent, any Lender, or any applicable Lending
Installation in respect of this Agreement or any other Credit Document shall, if
permitted by applicable Laws, be paid by Borrower, together with interest and
penalties, if any, except for Taxes payable on or measured by the overall net
income of Administrative Agent or that Lender (or any other Person with whom
Administrative Agent or that Lender files a consolidated, combined, unitary, or
similar Tax return) and
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except for interest and penalties incurred as a result of the gross negligence
or willful misconduct of Administrative Agent or that Lender. Administrative
Agent or that Lender (through Administrative Agent) shall notify Borrower and
deliver to Borrower a certificate setting forth in reasonable detail the
calculation of the amount of Taxes payable, which certificate is conclusive and
binding (absent manifest error), and Borrower shall pay that amount to
Administrative Agent for its account or the account of that Lender or the
applicable Lending Installation, as the case may be, within ten Business Days
after demand. If Administrative Agent, that Lender or the applicable Lending
Installation subsequently receives a refund of the Taxes paid to it by Borrower,
then the recipient shall promptly pay the refund to Borrower.
3.21 Change in Laws.
(a) Domestic Borrowings. If any Law makes it unlawful for any Lender to
make or maintain LIBOR Rate Borrowings, then that Lender shall promptly notify
Borrower and Administrative Agent, and (i) as to undisbursed funds, that
requested Borrowing shall be made as a Base Rate Borrowing and (ii) as to any
outstanding Borrowing (a) if maintaining the Borrowing until the last day of the
applicable Interest Period is unlawful, the Borrowing shall be converted to a
Base Rate Borrowing as of the date of notice, in which event Borrower will not
be required to pay any related Funding Loss or (b) if not prohibited by
applicable Laws, the Borrowing shall be converted to a Base Rate Borrowing as of
the last day of the applicable Interest Period or (c) if any conversion will not
resolve the unlawfulness, Borrower shall promptly prepay the Borrowing, without
penalty but with related Funding Loss.
(b) Eurocurrency Borrowings. If any Law makes it unlawful for any
Lender to make or maintain Eurocurrency Borrowings, then that Lender shall
promptly notify Borrower and Administrative Agent, and (i) as to undisbursed
funds, that requested Borrowing shall be made at a rate of interest for the
applicable Interest Period as is agreed-upon by Administrative Agent, Lenders
and Borrower prior to the making of such Borrowing, and (ii) as to any
outstanding Borrowing (a) if maintaining the Borrowing until the last day of the
applicable Interest Period is unlawful, the Borrowing shall be converted to a
Borrowing at a rate of interest for the applicable Interest Period as is
agreed-upon by Administrative Agent, Lenders and Borrower or (b) if
Administrative Agent, Lenders and Borrower are unable to agree on a new rate of
interest for that Borrowing, Borrower shall promptly prepay the Borrowing,
without penalty but with related Funding Loss.
3.22 Funding Loss. BORROWER AND PARENT, JOINTLY AND SEVERALLY, SHALL,
AND HEREBY AGREE TO, INDEMNIFY EACH LENDER AGAINST, AND PAY TO IT UPON DEMAND,
ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS THAT BORROWER PAY ANY
FUNDING LOSS, THAT LENDER SHALL DELIVER TO BORROWER AND ADMINISTRATIVE AGENT A
CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS FOR IMPOSING THE
FUNDING LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION IS CONCLUSIVE
AND BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND PAYMENT OF THE
OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.23 Foreign Lenders, Participants, and Assignees. Each Lender,
Participant (by accepting a participation interest under this Agreement), and
Assignee (by executing a Note and Lien Assignment) that is not organized under
the Laws of the United States or one of its states (a) represents to
Administrative Agent and Borrower that (i) no Taxes are required to be withheld
by Administrative Agent or Borrower with respect to any payments to be made to
it in respect of the Obligation and (ii) it has furnished to Administrative
Agent and Borrower two duly completed copies of either U.S. Internal Revenue
Service Form 4224, Form 1001, Form W-8, or any other form acceptable to
Administrative Agent and Borrower that entitles it to a complete exemption from
U.S. federal withholding Tax on all interest or fee payments under the Credit
Documents, and (b) covenants to
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(i) provide Administrative Agent and Borrower a new Form 4224, Form 1001, Form
W-8, or other form acceptable to Administrative Agent and Borrower upon the
expiration or obsolescence according to applicable Laws of any previously
delivered form, duly executed and completed by it, entitling it to a complete
exemption from U.S. federal withholding Tax on all interest and fee payments
under the Credit Documents, and (ii) comply from time to time with all
applicable Laws with regard to the withholding Tax exemption. If any of the
foregoing is not true at any time or the applicable forms are not provided, then
Borrower and Administrative Agent (without duplication) may deduct and withhold
from interest and fee payments under the Credit Documents any Tax at the maximum
rate under the IRC or other applicable Law, and amounts so deducted and withheld
shall be treated as paid to that Lender, Participant, or assignee, as the case
may be, for all purposes under the Credit Documents.
SECTION 4. FEES.
4.1 Treatment of Fees. The fees described in this Section 4 (i) are not
compensation for the use, detention or forbearance of money, (ii) are in
addition to, and not in lieu of, interest and expenses otherwise described in
the Credit Documents, (iii) are payable in accordance with Section 3.1, (iv) are
non-refundable, (v) to the fullest extent not prohibited by applicable Laws,
bear interest, if not paid when due, on the amount thereof from time to time
unpaid at the Default Rate and (vi) with respect to the fees referenced in
Sections 4.3 and 4.4, are calculated on the basis of the actual number of days
(including the first day but excluding the last day) elapsed, as if each
calendar year consisted of 360 days, unless such amount is determined to
constitute interest and if so, such computation would result in an interest rate
deemed to exceed (notwithstanding the foregoing) the Maximum Rate in which event
the computation is made on the basis of a year of 365 or 366 days, as the case
may be.
4.2 Arrangement and Underwriting Fees. Borrower shall pay to
Administrative Agent arrangement, structure, management, documentation, due
diligence and custodial fees in amounts and upon such payment terms as may be
separately agreed upon by Borrower and Administrative Agent in writing.
4.3 Unused Facility Fee. Borrower shall pay to Administrative Agent for
the account of each Lender, according to each Lender's Commitment Percentage on
the day the fee is payable, an unused facility fee for the Revolving Facility.
The fee accrues on the last day of each month (the "ACCRUAL MONTH"), commencing
March 31, 2000 and is due and payable in arrears on the first day of the month
following the Accrual Month and on the Revolving Facility Termination Date. The
fee is equal to the product of (i) three-eighths of one percent (0.375%) times
(ii) the amount by which the average-daily total Commitment exceeds the sum of
the average-daily Principal Debt (including the Dollar Equivalent of any
Eurocurrency Borrowings) plus the average-daily LC Exposure, times (iii) a
fraction with the number of days in the applicable Accrual Month or portion of
it as the numerator and 360 as the denominator.
4.4 LC Fees. As a condition precedent to the issuance (including the
extension) of each LC, Borrower shall pay to Administrative Agent:
(a) For the account of each Lender, according to each Lender's
Commitment Percentage on the day the fee is payable, an issuance fee,
payable monthly in arrears, equal to two percent (2%) per annum of the
average, undrawn face amount of that LC during each applicable month;
and
(b) For the account of Administrative Agent, payable on the
date of issuance, a fronting fee of the greater of (A) Three Hundred
Dollars ($300) or (B) one eighth of one percent (0.125%) of the face
amount of each standby LC.
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4.5 Agency Fee. Borrower shall pay an agency fee to Administrative
Agent equal to One Hundred Thousand Dollars ($100,000) for the initial two years
of the Revolving Facility, payable in advance in equal quarterly installments of
Twelve Thousand Five Hundred Dollars ($12,500) each on the Closing Date and on
each July 1, October 1, January 1 and April 1 thereafter. Any unpaid portion of
the $100,000 agency fee shall be due and payable in full if the Obligation is
prepaid in full (other than from the proceeds of a refinancing provided by an
Affiliate of Administrative Agent). Although Administrative Agent and Lenders
have no obligation to extend the Revolving Facility beyond the Revolving
Facility Termination Date, if the Revolving Facility is extended by mutual
agreement of the parties, the agency fee will be $50,000 per year, or portion
thereof, payable in quarterly installments of Twelve Thousand Five Hundred
Dollars ($12,500) in advance.
4.6 Prepayment Fee. If the Obligation is entirely prepaid (at one time
or as part of a series of related transactions) at any time prior to March 31,
2002, Borrower shall pay to Administrative Agent for the account of each Lender,
according to each Lender's Commitment Percentage on the day the fee is payable,
a prepayment fee equal to one percent (1.0%) of the total Commitments of all
Lenders as of the Closing Date, unless the prepayment is the direct and
immediate result of the sale of all of the Companies to a third party who is not
an Affiliate of any of the Companies, in which case the prepayment fee will be
one half of one percent (0.50%) of the total Commitments of all Lenders as of
the Closing Date; provided that if the prepayment represents the proceeds of a
refinancing provided after December 31, 2000 by an Affiliate of Administrative
Agent, no prepayment fee will be payable.
SECTION 5. SECURITY.
5.1 Guaranties. Borrower and Parent shall, and shall cause each present
Subsidiary to, (a) unconditionally reaffirm their existing Guaranties of the
full payment and performance of the Obligation by due execution and delivery on
the Closing Date of an Amended and Restated Guaranty substantially in the form
of Exhibit B (other than any Foreign Subsidiary the execution of a Guaranty by
which would create a material Tax obligation for the Companies that would not
otherwise exist) and (b) unconditionally reaffirm the existing Credit Documents
granting Liens in all Collateral now or hereafter owned by any of the Domestic
Companies, by due execution and delivery on the Closing Date of an Amended and
Restated Security Agreement to Administrative Agent for the benefit of Lenders
substantially in the form of Exhibit C. Parent shall on the Closing Date, and
Parent and Borrower shall cause each future Subsidiary at the time of
organization to, (a) execute and deliver a Guaranty unconditionally guaranteeing
the full payment and performance of the Obligation (other than any Foreign
Subsidiary the execution of a Guaranty by which would create a material Tax
obligation for the Companies that would not otherwise exist) and (b) execute and
deliver a Security Agreement granting Liens in all Collateral now or hereafter
owned by Parent and each future Subsidiary to Administrative Agent for the
benefit of Lenders.
5.2 Collateral. Borrower and Parent shall cause full payment and
performance of the Obligation to be secured, or to continue to be secured, by
first and prior Lender Liens on all of the items and types of property (together
with its proceeds, the "COLLATERAL"), described in the present and future Credit
Documents creating Lender Liens, including:
(a) Present and future accounts receivable, inventory, general
intangibles, contract rights, equipment, fixtures, patents, trademarks, other
intellectual property and all other personal property of each present and future
Domestic Company;
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(b) One hundred percent (100%) of the present and future issued and
outstanding capital stock, partnership interests, and other equity interests of
all present and future Domestic Subsidiaries;
(c) Approximately all (but not less than sixty five percent (65%)) of
the present and future issued and outstanding capital stock, partnership
interests, and other equity interests of all present and future Foreign
Subsidiaries the pledge of which would not create a material Tax obligation for
the Companies that would not otherwise exist; and
(d) All present and future notes receivable executed by a Foreign
Subsidiary in favor of Parent or Borrower.
5.3 Creation of Liens and Further Assurances. Borrower covenants and
agrees that the Lender Liens described in Section 5.2 must be reaffirmed,
created and perfected as a condition to funding any Borrowings or the issuance
of any LC. Furthermore, Borrower shall, and shall cause each other appropriate
Company to, perform the acts, duly authorize, execute, acknowledge, deliver,
file, and record any additional writings, and pay all filing fees and costs as
Administrative Agent or Required Lenders may reasonably deem appropriate or
necessary to perfect and maintain the Lender Liens and their priority and
preserve and protect the Rights of Administrative Agent and Lenders under any
Credit Document.
5.4 Change in Tax Laws. Notwithstanding anything to the contrary set
forth in this Section 5, in the event the Tax laws regarding Foreign
Subsidiaries are changed to remove the creation of a material Tax obligation for
the Companies, each such Foreign Subsidiary may, at Borrower's discretion,
execute a Guaranty in exchange for a release of the pledge of its securities.
5.5 Release of Collateral. Whenever Lenders no longer have any
commitment to extend credit under any Credit Document and the Obligation has
been fully paid and performed, then Administrative Agent and Lenders shall, upon
Borrower's written request and at Borrower's cost and expense, cause the Lender
Liens on all Collateral to be released and all Guaranties to be terminated and
released.
SECTION 6. CONDITIONS PRECEDENT.
6.1 Initial Advances. The obligations of American National to accept
the Note under this Agreement in renewal and replacement for the Prior Notes and
to make the commitments contained herein are subject to the condition precedents
that, at the Closing Time, Administrative Agent and Lenders have received, there
shall have been performed, there shall exist and there shall have been duly
executed and delivered, the documents, actions and other matters set forth
below, each in form, scope and substance, and (as applicable) dated as of a
date, satisfactory to Administrative Agent and Lenders:
(a) Amended and Restated Credit Agreement. This Agreement duly executed
by Parent, Borrower, Administrative Agent and each initial Lender;
(b) Notes. The Notes duly executed and delivered by Borrower;
(c) Amended and Restated Guaranties and Security Agreements. An Amended
and Restated Guaranty substantially in the form of Exhibit B and an Amended and
Restated Security Agreement substantially in the form of Exhibit C, duly
executed and delivered by Parent, Borrower and each Domestic Subsidiary;
(d) Contribution and Indemnification Agreement. A Contribution and
Indemnification Agreement substantially in the form of Exhibit I, duly executed
by Borrower and each Guarantor.
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(e) Account Debtor Notification. Evidence satisfactory to
Administrative Agent that all Account Debtors have been notified to make all
payments on Accounts to a specified Lock Box Account over which Administrative
Agent has sole and complete dominion and control.
(f) Secretary Certificates. A certificate signed by the Secretary or
Assistant Secretary of Borrower, Parent and each Domestic Subsidiary certifying
to (i) resolutions, (ii) incumbency, (iii) articles of incorporation, and (iv)
bylaws;
(g) Payments to the Lender. The payment to Administrative Agent of: (i)
all fees to be received by Administrative Agent pursuant to this Agreement or
any other Credit Documents, and (ii) all third-party costs incurred in
connection with this Agreement, including all reasonable attorneys' fees, costs
and out-of-pocket expenses of Administrative Agent's counsel incurred or
estimated to have been incurred through the Closing Date in connection with the
preparation, execution and delivery of the Credit Documents and the consummation
of the transactions contemplated thereby;
(h) Opinion of Counsel. A favorable opinion addressed to Administrative
Agent and Lenders from Gardere & Wynne, L.L.P., outside legal counsel to the
Companies, in form and substance satisfactory to Administrative Agent;
(i) Amendments to TROL Financing Documents. Amendments to the TROL
Financing Documents in form and substance satisfactory to Borrower,
Administrative Agent, Bank One and Wells Fargo;
(j) Lock Box Accounts. Such agreements and other documents as
Administrative Agent shall deem appropriate to establish the Lock Box Accounts
and Blocked Accounts and implement the requirements of Section 3.4;
(k) Release of Hedging Agreement Collateral. A release of all Liens
created in favor of Wells Fargo and its Affiliate which has entered into a
Hedging Agreement with Borrower.
(l) Representations and Warranties. The representations and warranties
contained in Section 7 and the other Credit Documents are true in all respects
at the Closing Time;
(m) Borrowing Base Report. Administrative Agent shall have received a
Borrowing Base Report revealing at least Two Million Dollars ($2,000,000) of
Excess Availability as of a date which is no more than forty five (45) days
prior to the Closing Date (attached hereto as Schedule 6.1(m) is the completed
Borrowing Base Report as of February 29, 2000); and
(n) Additional Information. Such other documents, instruments, reports,
opinions and information as reasonably required by Administrative Agent, any
Lender and their respective counsel.
6.2 All Borrowings. The obligation of Lenders to extend Borrowings
under this Agreement (including the initial acceptance of the Note in renewal
and replacement of the Prior Notes) is subject to the following conditions
precedent:
(a) No Default or Potential Default. As of the date of the making of
the Borrowing, there exists no Event of Default or Potential Default;
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(b) Compliance with Credit Agreement; Delivery of Reports. Each Company
has performed and complied with all agreements and conditions contained in this
Agreement and each other Credit Document that are required to be performed or
complied with by it before or at the date of the Borrowing, including timely
delivery of all required financial statements, reports, certificates, documents
and agreements;
(c) No Material Adverse Event. As of the date of making the Borrowing,
no Material Adverse Event has occurred and is continuing;
(d) Borrowing Request. Administrative Agent has timely received from
Borrower a properly completed Borrowing Request if it is required pursuant to
Section 2, executed by a Responsible Officer of Borrower;
(e) Availability. The requirements of Section 2.1 are satisfied; and
(f) Representations and Warranties. The representations and warranties
contained in Section 7 and the other Credit Documents are true in all respects
on the date of, and after giving effect to, the Borrowing, with the same force
and effect as though made on and as of that date.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Borrower and Parent, jointly and
severally, represent and warrant to Administrative Agent and Lenders as follows:
7.1 Purpose and Regulation U.
(a) Subject to the other provisions in the Credit Documents, including
clause (b) below, initially, the Note delivered hereunder represents the renewal
and replacement of the Revolving Notes and Term Notes under the Prior Credit
Agreement, and the proceeds of any future borrowings hereunder will be used for
general corporate purposes, working capital uses in the ordinary course of
business and permitted stock repurchases.
(b) None of the proceeds of the Revolving Facility will be used for the
purpose of purchasing or carrying any "margin stock" as defined in Regulation U
of the Board of Governors of the Federal Reserve System (12 C.F.R. Part 221), or
for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry a margin stock or for any other purpose which
might constitute this transaction a "purpose credit" within the meaning of such
Regulation U. No Company is engaged in the business of extending credit for the
purpose of purchasing or carrying margin stocks. No Company, nor any Person
acting on behalf of any Company, has taken or will take any action that might
cause the Notes or any other of the Credit Documents, including this Agreement,
to violate Regulations U or any other regulations of the Board of Governors of
the Federal Reserve System or to violate Section 7 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder, in each case as now in effect
or as the same may hereinafter be in effect. For the avoidance of doubt, no
proceeds of the Revolving Facility or Term Loan may be used to purchase any
securities, including without limitation, any of the Permitted Investments
described in clauses (f) through (h) of Section 9.7.
(c) No portion of any advance or loan made hereunder shall be used
directly or indirectly to purchase ineligible securities, as defined by
applicable regulations of the Federal Reserve Board, underwritten by any
affiliate of Banc One Corporation during the underwriting period and for 30 days
thereafter.
7.2 Corporate Existence, Good Standing, Authority and Locations. Each
Company is duly organized, validly existing and in good standing under the Laws
of its jurisdiction of incorporation or formation, as applicable. Except where
the failure to qualify would not result in a Material Adverse Event, each
Company is duly qualified to transact business and is in good standing as a
foreign corporation or partnership (as
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<PAGE> 49
applicable) in each jurisdiction where the nature and extent of its business and
properties require due qualification and good standing (and each of such
jurisdictions is identified in Schedule 7.3). Each Company possesses all
requisite authority and power to conduct its business as is now being conducted
and as proposed to be conducted (including under the Credit Documents) and to
own and operate its assets as now owned and operated and as proposed to be owned
and operated (including under the Credit Documents). Each Company's chief
executive office and other principal offices are described on Schedule 7.3. The
present location of each Company's books and records concerning accounts and
accounts receivable is at its chief executive office.
7.3 Subsidiaries and Names. Schedule 7.3 describes (i) each Company,
(ii) every name or trade name used by each Company during the five-year period
before the date of this Agreement (or during the period such Company has been a
Subsidiary, if shorter) and (iii) every change of each Company's name during the
four-month period before the date of this Agreement. All of the outstanding
shares of capital stock (or similar voting interests) of each Company are (1)
duly authorized, validly issued, fully paid and nonassessable, (2) owned of
record and beneficially as described in Schedule 7.3, free and clear of any
Liens, except Permitted Liens and (3) not subject to any warrant, option or
other acquisition Right of any Person or subject to any voting, ownership or
transfer restriction except (a) restrictions imposed by securities laws and
general corporate laws and (b) restrictions expressly noted in the certificates
evidencing such shares.
7.4 Authorization and Contravention. The execution and delivery by each
Company of each Credit Document to which it is a party and the performance by it
of its obligations under those Credit Documents (i) are within its corporate or
partnership power (as applicable), (ii) have been duly authorized by all
necessary corporate or partnership action (as applicable), (iii) require no
consent of, action by, or filing with, any Governmental Authority (except any
action or filing that has been taken or made or consent that has been received,
and is completed and in final form and full force and effect, on or before the
Closing Date), (iv) do not violate any provision of its Organizational
Documents, (v) do not violate any provision of any Law applicable to it or
result in any breach of, or default under, any material agreement of the
Companies, or (vi) result in, or requires the imposition of, any Liens on any
property of any Company, other than in favor of Administrative Agent for
Lenders.
7.5 Binding Effect. Upon execution by each Company of each Credit
Document to which it is a party, each such Credit Document will constitute a
legal and binding obligation of each such party, enforceable against each such
party in accordance with that Credit Document's terms except as that
enforceability may be limited by Debtor Relief Laws and general principles of
equity.
7.6 Financials; Contingent Liabilities. The Current Financials were
prepared in accordance with GAAP and present fairly, in all material respects,
the Companies' consolidated (if applicable) financial condition, results of
operations and cash flows as of, and for the portion of the fiscal year ending
on, their dates (subject only to normal year-end adjustments for interim
statements). Except for transactions directly related to, or specifically
contemplated or expressly permitted by, the Credit Documents, no material
adverse changes have occurred in the Companies' consolidated (if applicable)
financial condition from that shown in the Current Financials. All material
contingent liabilities of each Company are described on Schedule 7.6-A. The
Companies' Consolidated Financials for the year ended December 31, 1999 are
attached hereto as Schedule 7.6-B. The financial projections delivered by
Borrower to Administrative Agent in connection with Borrower's application for
the Revolving Credit Facility are attached hereto as Schedule 7.6-C.
7.7 Solvency. On each Borrowing Date, each of Borrower, Parent and each
other Company is, and after giving effect to the requested Borrowing will be,
Solvent.
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7.8 Litigation.
(a) Except as shown on Schedule 7.8, no Company is subject to, or aware
of the threat of, any Litigation involving any Company, or any of their
respective properties, which if adversely determined against any of them,
reasonably could be expected to result in a Material Adverse Event, and
(b) No outstanding and unpaid judgments against any Company exist that
reasonably could be expected to result in a Material Adverse Event.
7.9 Taxes. Except where the non-compliance of any of the following
reasonably could not be expected to result in a Material Adverse Event, (i) all
returns, reports and other information of each Company required to be filed in
respect to a present or future liability for any Taxes have been prepared in
compliance with all requisite Laws, and as so prepared, have been properly filed
(or extensions have been granted) and (ii) all Taxes imposed upon each Company
that are due and payable have been timely and fully paid except as are being
contested as permitted by Section 8.6.
7.10 Environmental Matters.
(a) No Company has received notice from any Governmental Authority that
it has any actual or potential Environmental Liability, and no Company has
knowledge that it has any Environmental Liability, which actual or potential
Environmental Liability in either case reasonably could be expected to
constitute a Material Adverse Event.
(b) No Company has received notice from any Governmental Authority that
any Real Property is affected by, and no Company has knowledge that any Real
Property is affected by, any Release of any Hazardous Substance which reasonably
could be expected to constitute a Material Adverse Event.
7.11 Employee Plans. Except where not a Material Adverse Event (i) no
Employee Plan subject to ERISA has incurred an "accumulated funding deficiency"
(as defined in Section 302 of ERISA or Section 512 of the IRC), (ii) neither any
Company nor any ERISA Affiliate has incurred liability (except for liabilities
for premiums that have been paid or that are not past due) under ERISA to the
PBGC in connection with any Employee Plan, (iii) neither any Company nor any
ERISA Affiliate has withdrawn in whole or in part from participation in a
Multiemployer Plan in a manner that has given rise to a withdrawal liability
under Title IV of ERISA, (iv) neither any Company nor any ERISA Affiliate has
engaged in any "prohibited transaction" (as defined in Section 406 of ERISA or
Section 4975 of the IRC), (v) no "reportable event" (as defined in Section 4043
of ERISA) has occurred excluding events for which the notice requirement is
waived under applicable PBGC regulations, (vi) neither any Company nor any ERISA
Affiliate has any liability, or is subject to any Lien, under ERISA or the IRC
to or on account of any Employee Plan, (vii) each Employee Plan subject to ERISA
and the IRC complies in all material respects, both in form and operation, with
ERISA and the IRC and (viii) no Multiemployer Plan subject to the IRC is in
reorganization within the meaning of Section 418 of the IRC.
7.12 Properties; Liens. Each Company has good and marketable title to
all its property reflected on the Current Financials except for property that is
obsolete or that has been disposed of in the ordinary course of business between
the date of the Current Financials and the date of this Agreement or, after the
date of this Agreement, as permitted by Sections 9.9 or 9.10. No Lien exists on
any property of any Company except Permitted Liens. Except for the Credit
Documents, no Company is party or subject to any agreement, instrument or order
which in any way restricts any Company's ability to allow Liens to exist upon
any of its assets.
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7.13 Government Regulations. No Company is subject to regulation under
the Investment Company Act of 1940, as amended, or the Public Utility Holding
Company Act of 1935, as amended.
7.14 Transactions with Affiliates. Except for transactions with other
Companies as permitted by Section 9.5, no Company is a party to a transaction
(other than of an inconsequential nature) with any of its Affiliates.
7.15 Debt. No Company has any Debt except Permitted Debt.
7.16 Leases. Except where it could not reasonably be expected to result
in a Material Adverse Event, (i) each Company enjoys peaceful and undisturbed
possession under all leases necessary or desirable for the operation of its
properties and assets and (ii) all material leases under which any Company is a
lessee are in full force and effect.
7.17 Labor Matters. Except where it could not reasonably be expected to
result in a Material Adverse Event (i) no actual or threatened strikes, labor
disputes, slow downs, walkouts, work stoppages or other concerted interruptions
of operations that involve any employees employed at any time in connection with
the business activities or operations at any Real Property exist, (ii) hours
worked by and payment made to the employees of any Company have not been in
violation of the Fair Labor Standards Act or any other applicable Laws
pertaining to labor matters, (iii) all payments due from any Company for
employee health and welfare insurance, including workers compensation insurance,
have been paid or accrued as a liability on its books and (iv) the business
activities and operations of each Company are in compliance with OSHA and other
applicable health and safety Laws.
7.18 Intellectual Property. Except where it could not reasonably be
expected to result in a Material Adverse Event, (i) each Company owns or has the
right to use all material licenses, patents, patent applications, copyrights,
service marks, trademarks, trademark applications, trade names, trade secrets
and other intellectual property rights necessary or desirable to continue to
conduct its businesses as presently conducted by it and proposed to be conducted
by it immediately after the date of this Agreement, (ii) each Company is
conducting its business without infringement or claim of infringement of any
license, patent, copyright, service mark, trademark, trade name, trade secret or
other intellectual property right of others and (iii) no infringement or claim
of infringement by others of any material license, patent, copyright, service
mark, trademark, trade name, trade secret or other intellectual property of any
Company exists.
7.19 Insurance. Each Company maintains the insurance required by
Section 8.10.
7.20 Inventory. Inventory owned by the Domestic Subsidiaries is located
at the addresses shown on Schedule 7.20.
7.21 Full Disclosure. All information furnished to Administrative Agent
or Lenders by or on behalf of any Company in connection with the Credit
Documents was, and all information furnished to Administrative Agent or Lenders
in the future by or on behalf of any Company will be, in each case, when so
furnished, true, complete and accurate in all material respects or where
estimates or projections were or will be therein made and so designated, based
on good faith, reasonable estimates or projections on the date the information
is stated or certified.
SECTION 8. AFFIRMATIVE COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this Agreement and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Administrative Agent and
Lenders as follows:
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8.1 Monthly Reports and Collateral Reports.
(a) MONTHLY REPORTS. Borrower shall submit to Agent, not later than the
twentieth (20th) day of each month, a monthly report (the "MONTHLY REPORT"),
accompanied by a certificate in form and substance acceptable to Administrative
Agent, which shall be signed by an Responsible Officer. The Monthly Report shall
include, as of the last Business Day of the preceding month:
(i) an aged trial balance of the Accounts of the Companies
("ACCOUNTS TRIAL Balance") prepared in a manner reasonably acceptable
to Agent;
(ii) a schedule of Inventory owned by the Companies and in
their possession or otherwise, by location, valued at average cost,
accompanied by a separate schedule reflecting adjustments for such
reserves as Administrative Agent has previously indicated to Borrower
are deemed by Administrative Agent, to be appropriate, in its sole,
commercially reasonable determination, and a report of any variances or
other results of inventory counts performed by Borrower since the date
of the last Monthly Report (unless the variances are not greater than
five percent (5%), in which case such variance report will be provided
by Borrower upon request by Administrative Agent);
(iii) a "contra" report prepared in a manner reasonably
acceptable to Administrative Agent and showing the name of each Account
Debtor and each Affiliate of an Account Debtor to whom a payable is due
and the amounts, including an aging thereof, owed by and to such
Account Debtor and its Affiliates, in such form as Administrative Agent
may reasonably request;
(iv) a reconciliation of the Accounts and Inventory of the
Companies between the amount shown on the books and financial
statements of the Companies, the general ledgers and Borrower's
collateral reports delivered to Administrative Agent in form and
substance acceptable to Administrative Agent;
(v) the outstanding principal balance of the Obligation;
(vi) a statement that there exists no Event of Default or
Potential Default, or, if any Event of Default or Potential Default
exists, a specific description of the nature and the period of
existence thereof and the action Borrower has taken and proposes to
take with respect thereto;
(vii) a statement that no machinery, equipment or other fixed
assets have been sold, damaged, destroyed, abandoned, become obsolete
or has otherwise diminished in value (except for (a) ordinary
depreciation and wear and tear and (b) damage to or the destruction or
retirement of Equipment with a book value not in excess of $50,000 in
the aggregate in any one calendar year) since the later of the date of
the last Monthly Report or the schedule of Equipment most recently
delivered to Administrative Agent by Borrower or, if any such events
have occurred, describing the same with such specificity as is
satisfactory to Administrative Agent;
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(viii) a summary of any pending or, to Borrower's knowledge,
threatened strike, work stoppage, material unfair labor practice claim,
or other material labor dispute against or affecting Borrower or its
employees; and
(ix) such other reports or information as Administrative Agent
may from time to time reasonably request.
(b) Collateral Reports. In addition, Borrower shall provide
Administrative Agent with a written report on at least a monthly basis (or on a
weekly basis whenever Excess Availability is less than Three Million Dollars
($3,000,000)) reflecting activity for each month or week, as the case may be,
unless reasonably requested more often by Administrative Agent (the "COLLATERAL
REPORT"), in form and substance, and with such specificity, as is satisfactory
to Administrative Agent:
(i) all Eligible Accounts created or acquired by Borrower
subsequent to the immediately preceding Collateral Report; together
with copies of any other reports or information, in a form and with
such specificity as is satisfactory to Administrative Agent, concerning
Accounts included, described or referred to in the Collateral Reports
and any other documents in connection therewith requested by
Administrative Agent, including, without limitation, but only if
specifically requested by Administrative Agent, copies of all invoices
and bills of lading prepared in connection with such Accounts;
(ii) information in connection with (a) any Account which has
ceased to be an Eligible Account since the most recent Collateral
Report and (b) any other Account with respect to which any setoff,
counterclaim or dispute has been asserted by any Account Debtor or any
allegation of delayed performance or nonperformance has been made by
any Account Debtor accompanied by a statement of any modification,
adjustment or compromise with respect to any such Account which affects
the amount due or the time when payment of such Account is to be made;
(iii) information on all amounts collected by Borrower on
Accounts subsequent to the immediately preceding Collateral Report;
(iv) a calculation of the Borrowing Base, including
information on all sales of or other reductions of and all additions to
Inventory, all returns of Inventory, all credits issued by any Company
and all complaints and claims against any Company; and
(v) such additional information as Administrative Agent shall
require.
(c) Electronic Transmission of Reports. Notwithstanding anything herein
to the contrary, the Monthly Reports, Collateral Reports and other reports with
respect to Collateral delivered by Borrower to Administrative Agent may be sent,
for receipt by Administrative Agent by the time specified or required pursuant
to the terms of this Agreement, by electronic transmission (in lieu of other
written forms), provided that (i) the form of such electronic transmission shall
be reasonably acceptable to Administrative Agent; (ii) the electronic
transmission shall contain the electronically transmitted signature of a
Responsible Officer of Borrower; and (iii) the form of such electronic
transmission shall contain the following legend:
Pursuant to, and in accordance with, the terms and
provisions of that certain Amended and Restated
Credit Agreement (the "Agreement") dated as of March
___, 2000 among Ultrak Operating, L.P.
AMENDED AND RESTATED CREDIT AGREEMENT
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<PAGE> 54
("Borrower"), Ultrak, Inc. ("Parent"), the Lenders
named therein and American National Bank and Trust
Company of Chicago, as Administrative Agent for
Lenders ("Administrative Agent"), Borrower is
executing and delivering by electronic transmission
to Administrative Agent this report accompanied by
supporting data (collectively referred to as the
"Report"). Borrower warrants and represents to
Administrative Agent and Lenders that the Report is
true, correct and based on information contained in
Borrower's own financial accounting records.
Borrower, by the execution of the Report, hereby
ratifies, confirms and affirms all of the terms,
conditions and provisions of the Agreement, and
further certifies on this day of ,
, that Borrower is in compliance with the
Agreement. The Responsible Officer whose name is
written below hereby adopts such written name as his
signature with present intention to authenticate a
writing.
8.2 Certain Other Items Furnished. Borrower shall furnish the following
to each Lender:
(a) Annual Financials, Etc. Promptly after preparation but no later
than ninety (90) days after the last day of each fiscal year of Borrower,
audited Financials showing the Companies' consolidated financial condition and
results of operations as of, and for the year ended on, that last day (with
expenses and obligations related to the TROL Financing clearly indicated),
accompanied by (i) the opinion, without qualification, of a firm of independent
certified public accountants acceptable to Required Lenders (Grant Thornton
L.L.P. and any "Big Five" accounting firm being expressly acceptable to Required
Lenders), based on an audit using generally accepted auditing standards, that
the consolidated portion of those Financials were prepared in accordance with
GAAP and present fairly, in all material respects, the Companies' consolidated
financial condition and results of operations and (ii) with respect to the
period covered by such Financials, a Compliance Certificate. In addition,
Borrower shall furnish to each Lender, promptly after preparation but no later
than 90 days after the last day of each fiscal year of Borrower,
company-prepared consolidating Financials showing the Companies' consolidated
financial condition and results of operations as of, and for the year ended on,
that last day. The consolidating Financials described above will also provide
reasonable detail as to the financial condition and results of operations of the
Domestic Companies as a group and the Foreign Subsidiaries as a group.
(b) Monthly Financials, Etc. Promptly after preparation but no later
than thirty (30) days after the last day of each month, Financials showing the
Companies' consolidated and consolidating financial condition and results of
operations for that month and for the period from the beginning of the current
fiscal year to the last day of that month (with expenses and obligations related
to the TROL Financing clearly indicated), accompanied by a Compliance
Certificate with respect to the period covered by such Financials. The
consolidating Financials described above will also provide reasonable detail as
to the financial condition and results of operations of the Domestic Companies
as a group and the Foreign Subsidiaries as a group.
(c) Annual Business Plans. Promptly after preparation but no later than
30 days after the last day of each fiscal year of Borrower, the annual
consolidated and consolidating business plans for the Companies prepared by
Parent or Borrower, in form reasonably acceptable to Administrative Agent,
setting forth management's projections for the next succeeding fiscal year.
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(d) Other Reports. Promptly after preparation and distribution,
accurate and complete copies of all reports and other communications about
material financial matters or material corporate plans or projections by or for
any Company for distribution to any Governmental Authority or any existing or
potential creditor including (i) each Form 10-K, 10-Q, and S-8 filed with the
Securities and Exchange Commission, and (ii) each interim or special audit
report and management letter issued by the Companies' accountants with respect
to the Companies or their financial records, but excluding (x) credit, trade and
other reports prepared and distributed in the ordinary course of business and
(y) information otherwise furnished to Administrative Agent and Lenders under
this Agreement.
(e) Employee Plans. As soon as possible and within 30 days after
Borrower knows that any event which would constitute a reportable event under
Section 4043(b) of Title IV of ERISA with respect to any Employee Plan subject
to ERISA has occurred, or that the PBGC has instituted or will institute
proceedings under ERISA to terminate that plan, deliver a certificate of a
Responsible Officer of Borrower setting forth details as to that reportable
event and the action which Borrower or an ERISA Affiliate, as the case may be,
proposes to take with respect to it, together with a copy of any notice of that
reportable event which may be required to be filed with the PBGC, or any notice
delivered by the PBGC evidencing its intent to institute those proceedings or
any notice to the PBGC that the plan is to be terminated, as the case may be.
For all purposes of this section, Borrower is deemed to have all knowledge of
all facts attributable to the plan administrator under ERISA.
(f) Other Notices. Promptly after Borrower knows or receives any
notification thereof (whichever shall first occur), notice of (i) the existence
and status of any Litigation or Environmental Liability that if determined
adversely to any Company, could reasonably be expected to result in a Material
Adverse Event, (ii) any change in any fact or circumstance (other than of an
inconsequential nature) represented or warranted by any Company in any Credit
Document, and (iii) an Event of Default, Potential Default or Material Adverse
Event, specifying the nature thereof and what action the Companies have taken,
are taking and propose to take.
(g) Other Information. Promptly when reasonably requested by
Administrative Agent or any Lender, such information (not otherwise required to
be furnished under this Agreement) about any Company's business affairs, assets,
liabilities, results of operation and financial condition (all in form and
substance satisfactory to Administrative Agent or that Lender).
8.3 Use of Credit. Borrower shall use the proceeds of Borrowings only
for the purposes represented in this Agreement.
8.4 Books and Records. Each Domestic Company (including Parent
individually and on a consolidated basis) shall maintain books, records and
accounts necessary to prepare Financials in accordance with GAAP.
8.5 Inspections. Upon reasonable request and at least 5-days' advance
notice (but during the pendency of an Event of Default, no advance notice is
required), each Company shall allow Administrative Agent or any Lender (or their
respective Representatives) to inspect any of that Company's properties, to
review reports, files and other records and to make and take away copies, to
conduct tests or investigations and to discuss any of its affairs, conditions
and finances with the Company's Representatives and with other creditors of the
Company from time to time, during reasonable business hours (but during the
pendency of an Event of Default, at any time). Without limiting the foregoing,
the Companies shall allow Administrative Agent and Lenders to perform field
examinations to test such systems and controls of the Companies as they deem
appropriate, such field examinations at any time prior to an Event of Default to
occur no more frequently
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than once per calendar quarter (provided that such limitation shall not apply
after the occurrence and during the continuation of an Event of Default).
Borrower shall reimburse Administrative Agent at the rate of $750 per day per
auditor and shall reimburse Administrative Agent and each Lender for the
reasonable out-of-pocket expenses incurred in connection with each such field
examination.
8.6 Taxes. Each Company shall promptly pay when due any and all Taxes
except Taxes that are being contested in good faith by lawful proceedings
diligently conducted, against which reserve or other provision required by GAAP
has been made and in respect of which levy and execution of any Lien sufficient
to be enforced has been and continues to be stayed.
8.7 Payment of Obligation. Each Company shall promptly pay (or renew
and extend) all of its obligations as they become due (unless the obligations,
other than the Obligation or any part thereof, are being contested in good faith
by appropriate proceedings).
8.8 Expenses. Within fifteen Business Days after demand accompanied by
an invoice describing the costs, fees and expenses in reasonable detail,
Borrower shall pay (i) all costs, fees and expenses paid or incurred by or on
behalf of Administrative Agent incident to any Credit Document (including the
reasonable fees and expenses of Administrative Agent's counsel in connection
with the negotiation, preparation, delivery and execution of the Credit
Documents and any related amendment, modification, waiver or consent) and (ii)
all reasonable attorneys' fees and court costs and all other reasonable costs
and expenses incurred by Administrative Agent or any Lender in connection with
the enforcement of the obligations of any Company under the Credit Documents or
the exercise of any Rights under the Credit Documents (including reasonable
allocated costs of in-house counsel), all of which are part of the Obligation,
bearing interest (if not paid within fifteen Business Days after demand
accompanied by an invoice describing the costs, fees and expenses in reasonable
detail) on the portion thereof from time to time unpaid at the Default Rate
until paid.
8.9 Maintenance of Existence, Assets and Business. Each Company shall
(i) except as permitted in Section 9.9 and Section 9.10, maintain its corporate
or partnership (as applicable) existence and good standing in its state of
incorporation or formation (as applicable) and (ii) except where the failure to
perform any of the following could not reasonably be expected to result in a
Material Adverse Event (a) maintain its authority to transact business and good
standing in all other states, (b) maintain all licenses, permits and franchises
(including Environmental Permits) necessary or desirable for its business and
(c) keep all of its assets that are useful in and necessary to its business in
good working order and condition (ordinary wear and tear excepted) and make all
necessary repairs and replacements.
8.10 Insurance. Each Company shall, at its cost and expense, maintain
with financially sound, responsible and reputable insurance companies or
associations, or as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates, insurance concerning its properties and businesses against casualties
and contingencies and of types and in amounts (and with co-insurance and
deductibles) as is customary in the case of similar businesses. In addition,
Borrower shall and shall cause each other Company to, (i) name Administrative
Agent as additional insured on all general and comprehensive liability insurance
and as loss payee on all insurance covering any Collateral (or any portion
thereof), (ii) deliver copies of the policies and endorsements for the insurance
required by this Section 8.9 to Administrative Agent promptly after issuance and
renewal of each and (iii) cause each policy of insurance to provide that it will
not be cancelled or modified (as to term, coverage, scope, property or risks
covered, change or addition of loss payee or additional insured or otherwise)
without 30 days prior written notice to Administrative Agent.
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8.11 Compliance with Laws. Each Company shall (i) operate and manage
its businesses and otherwise conduct its affairs in compliance with all Laws
(including without limitation, all Environmental Laws and Environmental Permits)
except to the extent noncompliance reasonably could be expected not to
constitute a Material Adverse Event, (ii) promptly deliver to Administrative
Agent a copy of any notice received from any Governmental Authority alleging
that any Company is not in compliance with any Laws (including any Environmental
Laws or Environmental Permits) if the allegation reasonably could constitute a
Material Adverse Event and (iii) promptly deliver to Administrative Agent a copy
of any notice received from any Governmental Authority alleging that any Company
has any potential Environmental Liability if the allegation reasonably could
constitute a Material Adverse Event.
8.12 Subsidiary Guaranties and Pledges. Borrower shall cause all
present and future Domestic Subsidiaries, whether now existing or in the future
formed or acquired as permitted by the Credit Documents, promptly and fully to
comply with Sections 5.1 and 5.2 and its capital stock or other equity
securities to become subject to first and prior Lender Liens as required by
Section 5.2.
8.13 Indemnification.
(a) AS USED IN THIS SECTION: (i) "INDEMNITOR" MEANS BORROWER AND
(PURSUANT TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY OF, OR CONSENT TO, ANY
OTHER CREDIT DOCUMENT) EACH OTHER COMPANY; (ii) "INDEMNITEE" MEANS
ADMINISTRATIVE AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE OF
ADMINISTRATIVE AGENT AND EACH LENDER, EACH PRESENT AND FUTURE REPRESENTATIVE OF
ADMINISTRATIVE AGENT AND EACH LENDER OR ANY OF THOSE AFFILIATES AND EACH PRESENT
AND FUTURE SUCCESSOR AND ASSIGN OF ADMINISTRATIVE AGENT AND EACH LENDER OR ANY
OF THOSE AFFILIATES OR REPRESENTATIVES; AND (iii) "INDEMNIFIED LIABILITIES"
MEANS ALL PRESENT AND FUTURE, KNOWN AND UNKNOWN, FIXED AND CONTINGENT,
ADMINISTRATIVE, INVESTIGATIVE, JUDICIAL AND OTHER CLAIMS, DEMANDS, ACTIONS,
CAUSES OF ACTION, INVESTIGATIONS, SUITS, PROCEEDINGS, AMOUNTS PAID IN
SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES, COURT COSTS, LIABILITIES AND
OBLIGATIONS, AND ALL PRESENT AND FUTURE COSTS, EXPENSES AND DISBURSEMENTS
(INCLUDING ALL REASONABLE ATTORNEYS' FEES AND EXPENSES WHETHER OR NOT SUIT OR
OTHER PROCEEDING EXISTS OR ANY INDEMNITEE IS PARTY TO ANY SUIT OR OTHER
PROCEEDING) IN ANY WAY RELATED TO ANY OF THE FOREGOING, THAT MAY AT ANY TIME BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST, ANY INDEMNITEE AND IN ANY WAY
RELATING TO OR ARISING OUT OF ANY (1) CREDIT DOCUMENT OR TRANSACTION
CONTEMPLATED BY ANY CREDIT DOCUMENT, (2) ENVIRONMENTAL LIABILITY IN ANY WAY
RELATED TO ANY COMPANY, OR ACT, OMISSION, STATUS, OWNERSHIP, OR OTHER
RELATIONSHIP, CONDITION, OR CIRCUMSTANCE CONTEMPLATED BY, CREATED UNDER, OR
ARISING PURSUANT TO OR IN CONNECTION WITH ANY CREDIT DOCUMENT, OR (3)
INDEMNITEE'S SOLE OR CONCURRENT ORDINARY NEGLIGENCE.
(b) EACH INDEMNITOR AGREES, JOINTLY AND SEVERALLY, TO INDEMNIFY PROTECT
AND DEFEND EACH INDEMNITEE FROM AND AGAINST, HOLD EACH INDEMNITEE HARMLESS FROM
AND AGAINST, AND ON DEMAND PAY OR REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED
LIABILITIES.
(c) THE FOREGOING PROVISIONS (I) ARE NOT LIMITED IN AMOUNT EVEN IF THAT
AMOUNT EXCEEDS THE OBLIGATION, (II) INCLUDE, WITHOUT LIMITATION, REASONABLE FEES
AND EXPENSES OF ATTORNEYS AND OTHER COSTS AND EXPENSES OF LITIGATION OR
PREPARING FOR LITIGATION AND DAMAGES OR INJURY TO PERSONS, PROPERTY, OR NATURAL
RESOURCES ARISING UNDER ANY STATUTORY OR COMMON LAW, PUNITIVE DAMAGES, FINES,
AND OTHER PENALTIES, AND (III) ARE NOT AFFECTED BY THE SOURCE OR ORIGIN OF ANY
HAZARDOUS SUBSTANCE, AND (IV) ARE NOT AFFECTED BY ANY
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INDEMNITEE'S INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE OF DEALING,
OR WAIVER.
(d) However, no Indemnitee is entitled to be indemnified under the
Credit Documents for its own fraud, gross negligence, or wilful misconduct.
(e) Although failure to do so does not reduce or impair any
Indemnitor's obligations under this section, each Indemnitee shall promptly
notify Borrower of any event about which the Indemnitee has received written
notice and that is reasonably likely to result in any Indemnified Liability.
Each Indemnitor may, at its own cost and expense, participate in the defense in
any proceeding involving any Indemnified Liability. If no Event of Default or
Potential Default exists, Indemnitors may assume the defense in that proceeding
on behalf of the applicable Indemnitees, including the employment of counsel if
first approved (which approval may not be unreasonably withheld) by the
applicable Indemnitees. If Indemnitors assume any defense, they shall keep the
applicable Indemnitees fully advised of the status of, and shall consult with,
and receive the concurrence of, those Indemnitees before taking any material
position in respect of, that proceeding. If Indemnitors consent, if an Event of
Default, Potential Default or Material Adverse Event exists or if any Indemnitee
reasonably determines that an actual conflict of interests exists between
Indemnitors and that Indemnitee with respect to the subject matter of the
proceeding or that Indemnitors are not diligently pursuing the defense, then (i)
that Indemnitee may, at Indemnitors' joint and several expense, employ counsel
to represent that Indemnitee that is separate from counsel for Indemnitors or
any other Person in that proceeding and (ii) Indemnitors are no longer entitled
to assume the defense on behalf of that Indemnitee. No Indemnitor may agree to
the settlement of any Indemnified Liability, or any matters or issues material
to or necessary for the resolution of any such liability, without the prior
written consent of the applicable Indemnitees unless, as agreed to in writing by
an Indemnitee, that settlement fully relieves those Indemnitees of any liability
whatsoever for that Indemnified Liability. If an Indemnitee agrees to the
settlement of any Indemnified Liability without the prior written consent of
Indemnitors (which consent may not be unreasonably withheld), then Indemnitors
are no longer obligated for that Indemnified Liability in respect of that
Indemnitee.
(f) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER UNDERTAKINGS UNDER
THIS SECTION SURVIVE THE FORECLOSURE OF ANY LENDER LIEN OR ANY TRANSFER IN LIEU
OF THAT FORECLOSURE, THE SALE OR OTHER TRANSFER OF ANY COLLATERAL OR REAL
PROPERTY TO ANY PERSON, THE SATISFACTION OF THE OBLIGATION, THE TERMINATION OF
THE CREDIT DOCUMENTS AND THE RELEASE OF ANY OR ALL LENDER LIENS.
(g) BORROWER AND EACH OTHER COMPANY ACKNOWLEDGE THAT THE VARIOUS
INDEMNITIES CONTAINED IN THIS AGREEMENT INCLUDE PROVISIONS INDEMNIFYING AND
HOLDING HARMLESS ADMINISTRATIVE AGENT, LENDERS, THEIR AFFILIATES AND THEIR
REPRESENTATIVES FOR, AMONG OTHER THINGS, THE ORDINARY NEGLIGENCE OF THE
INDEMNITEE. BORROWER AND EACH OTHER COMPANY AGREE THAT THE INDEMNITY PROVISIONS
CONTAINED HEREIN ARE HIGHLIGHTED TO CLEARLY IDENTIFY THE INDEMNITY PROVISIONS
AND, THEREFORE, ARE SO CONSPICUOUS THAT BORROWER AND EACH OTHER COMPANY HAVE
FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF SUCH PROVISIONS AND WAIVE ANY RIGHT
THEY MAY HAVE TO CLAIM OTHERWISE.
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8.14 Post-Closing Covenants.
(a) Borrower shall cooperate with Administrative Agent's counsel in a
timely manner to obtain, complete, file or otherwise complete all collateral
documents not obtained on the Closing Date.
(b) Within thirty (30) days after Closing, Borrower will provide to
Administrative Agent a Mortgage in form and substance acceptable to
Administrative Agent (the "OHIO MORTGAGE"), duly executed, acknowledged and
delivered by Diamond, and duly recorded in the appropriate real property
records, creating a first and prior Lender Lien on approximately 9.21 acres of
land and the improvements located thereon, owned in fee simple by Diamond, being
Lots 2, 3 and 5, Greenfield Crossroads Subdivision, Greenfield Township,
Fairfield County, Ohio with addressees of 4460 Columbus Road NW, Carroll, Ohio
43112 and the main plant at 4465 Coonpath Rd, Carroll, Ohio 43112 (the "OHIO
FACILITY") to secure payment and performance of the Obligation, together with
(i) a mortgagee policy of title insurance in an amount acceptable to
Administrative Agent and issued by a title insurance company acceptable to
Administrative Agent insuring that the Lien created by the Ohio Mortgage creates
a valid, first and prior Lien on the Ohio Facility, subject to no prior or equal
Liens (other than easements, building restrictions, liens for taxes not yet due
and payable and other similar encumbrances which are not of a material nature
and do not secure Debt), (ii) a current, ALTA as-built boundary survey of the
real estate and improvements comprising the Ohio Facility reflecting no material
encroachments, and (iii) a Phase I environmental assessment by an environmental
consulting firm acceptable to Administrative Agent, reflecting no material
Environmental Liability; provided that, Borrower may, at its option, elect to
grant a first and prior Lien on the Ohio Facility to secure the TROL Financing
if, by written request of Borrower, all value for or with respect to the Ohio
Facility has been permanently eliminated from the Borrowing Base, in which case
the Lien granted to Administrative Agent pursuant to the preceding provisions of
this Section 8.14(b) will be a second lien, inferior only to the Lien granted to
secure the TROL Financing pursuant to this proviso.
(c) Within thirty (30) days after Closing, Borrower and Parent will
execute, and will cause other necessary parties to execute, a deed of trust and
other documents as may be necessary and appropriate, in the judgment of
Administrative Agent, to grant to Administrative Agent, to secure payment and
performance of the Obligation, a Lien on the TROL Facility which (i) is second
and inferior to the first and prior Liens of Bank One and Wells Fargo pursuant
to the TROL Financing, (ii) does not impede or restrict in any way the ability
of Wells Fargo and Bank One to enforce and realize upon their Rights with
respect to the TROL Facility and (iii) is created by documents acceptable in all
respects to Administrative Agent, Bank One and Wells Fargo. The amendment to the
TROL Financing documents as of the Closing Date will include a covenant that,
within thirty (30) days after Closing, each Domestic Company will execute such
documents as may be necessary and appropriate, in the judgment of Wells Fargo
and Bank One, to grant to Wells Fargo and Bank One, to secure the Obligations of
the Domestic Companies with respect to the TROL Financing, Liens on Collateral
under this Agreement which (A) are second and inferior to the first and prior
Lender Liens hereunder, (B) do not impede or restrict in any way the ability of
Administrative Agent and Lenders to enforce and realize upon the Collateral and
(C) are created by documents acceptable in all respects to Administrative Agent,
Bank One and Wells Fargo.
SECTION 9. NEGATIVE COVENANTS. For so long as any Lender is committed to lend
money or issue LCs under this Agreement and until the Obligation has been fully
paid and performed, Borrower and Parent, jointly and severally, covenant and
agree with Administrative Agent and Lenders as follows:
9.1 Payroll Taxes. No Company may directly or indirectly use any
proceeds of any Borrowing (i) for any purpose other than as represented in this
Agreement, or (ii) for the payment of wages of employees unless a timely payment
to or deposit with the United States of all amounts of Tax required to be
deducted and withheld with respect to such wages is also made.
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9.2 Debt. No Company may:
(a) Create, incur or suffer to exist (directly or indirectly) any
direct, indirect, fixed or contingent liability for any Debt except the
following (the "PERMITTED DEBT"):
(i) the Obligation;
(ii) the TROL Financing;
(iii) Unsecured Debt of any Company not otherwise permitted by
this Section 9.2, so long as
(1) no Event of Default, Potential Default or
Material Adverse Event (y) exists on the date any such Debt is
created, incurred or assumed or (z) arises as a result of, or
after giving effect to, any such Debt incurrence,
(2) the aggregate amount of all such additional Debt
does not exceed at any time an amount equal to One Hundred
Thousand Dollars ($100,000) for any individual Debt and Five
Hundred Thousand Dollars ($500,000) in the aggregate, and
(3) such additional Debt is subordinated to the
Obligation on terms acceptable to Required Lenders;
(iv) the Permitted Intercompany Guaranties;
(v) the Permitted TROL Guaranties;
(vi) the Permitted Intercompany Advances, so long as such
Permitted Intercompany Advances are evidenced by written promissory
notes pledged to Administrative Agent for the benefit of Lenders as
contemplated by the Credit Documents, including Section 5.2(c);
(vii) Up to Two Million Dollars ($2,000,000) of overdraft
facilities for Foreign Subsidiaries, if such facilities have been
reviewed and approved by Administrative Agent;
(viii) Debt incurred by Ultrak Europe, N.V. relating to the
acquisition of land and construction of improvements for Ultrak Europe,
N.V.'s warehouse facility located in Antwerp, Belgium, such Debt to be
limited to (A) Six Hundred Twenty Five Thousand Dollars ($625,000) of
Debt owing under a promissory note dated June 4, 1999, executed by
Ultrak Europe, N.V. in favor of KBC Bank for the acquisition of the
land for such facility, (B) One Million Five Hundred Thousand Dollars
($1,500,000) of Capital Leases executed by Ultrak Europe, N.V., as
lessee, and KBC Lease Belgium, N.V., as lessor, for the construction of
improvements at such facility, (C) Six Hundred Thousand Dollars
($600,000) of Capital Leases executed by Ultrak Europe, N.V., as
lessee, and KBC Lease Belgium, N.V., as lessor, for acquisition and
installation of technology at such facility (collectively, the "BELGIUM
FACILITY DEBT"), (D) One Million Two Hundred Fifty Thousand Dollars
($1,250,000) overdraft facility executed by Ultrak Europe, N.V. with
KBC Bank, (E) Two Hundred Fifty Thousand Dollars ($250,000) bank
guarantee line for use in discounting invoices of
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Foreign Subsidiaries in France, and (F) Five Million Dollars
($5,000,000) facility with KBC Bank for use with F/X Contracts;
(ix) Debt relating to F/X Contracts with a notional amount of
up to One Million Dollars ($1,000,000); and
(x) any Debt relating to Hedging Agreements in existence on
the date hereof with Affiliates of Administrative Agent, entered into
with respect to assets on the Companies' consolidated balance sheet or
with Wells Fargo or one of its Affiliates provided that any Hedging
Agreement with any Entity other than an Affiliate of Administrative
Agent must be unsecured.
(b) Except for the Obligation, prepay, purchase, repurchase, defease or
redeem, or cause to be prepaid, purchased, repurchased, defeased or redeemed,
any principal of, or any premium (if any) or interest on, any of its Debt, or
fund or cause to be funded any sinking or similar fund for any such Debt;
provided that Borrower or Parent may make prepayments with respect to the TROL
Financing (or, in lieu of prepayments, may make payments into cash collateral
accounts with Wells Fargo and Bank One to secure the TROL Financing) so long as
(i) no Event of Default or Potential Default exists on the date of such payment
or prepayment or arises as a result of, or after giving effect to, such payment
or prepayment and (ii) the Over-Advance Availability has been permanently
reduced at Borrower's written request by an amount equal to such payment or
prepayment.
9.3 Liens. No Company may (i) create, incur or suffer or permit to be
created or incurred or to exist any Lien upon any of its properties except a
Permitted Lien or (ii) enter into or permit to exist any arrangement or
agreement that directly or indirectly prohibits any Company from creating or
incurring any Lien on any of its assets or properties except (a) the Credit
Documents, (b) any lease that places a Lien prohibition on only the property
subject to that lease, and (c) arrangements and agreements that apply only to
property subject to Permitted Liens. The following are "PERMITTED LIENS":
(a) Lender Liens;
(b) Liens not otherwise permitted by this Section 9.3, so long as
(i) no Event of Default, Potential Default or Material Adverse
Event (y) exists on the date any such Lien is created or assumed or (z)
arises as a result of, or after giving effect to, any such Lien
incurrence or assumption,
(ii) such Liens are granted on equipment, machinery or Real
Property on which no Lender Lien exists, to secure an aggregate amount
of Debt not exceeding at any time an amount equal to One Hundred
Thousand Dollars ($100,000) for any individual Debt and Five Hundred
Thousand Dollars ($500,000) in the aggregate, and
(iii) the Debt securing such additional Liens is subordinated
to the Obligation on terms acceptable to Required Lenders;
(c) Liens securing the TROL Financing so long as such liens are limited
to (i) the existing first and prior Liens with respect to the Real Property
located at 1301 Waters Ridge Drive, Lewisville, Texas presently securing the
TROL Financing, (ii) a first and prior Lien on the Ohio Facility if, by written
request of Borrower, all value for or with respect to the Ohio Facility has been
permanently eliminated from the
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Borrowing Base, (iii) Liens on other Collateral which (A) are second and
inferior to the first and prior Lender Liens hereunder, (B) do not impede or
restrict in any way the ability of Administrative Agent and Lenders to enforce
and realize upon the Collateral and (C) are created by documents acceptable in
all respects to Administrative Agent, Bank One and Wells Fargo and (iv) a first
and prior Lien on cash collateral accounts permitted by Section 9.2(b);
(d) Any interest or title of a lessor in property being leased under an
operating lease that does not constitute Debt;
(e) Banker's Liens and Rights of setoff or recoupment;
(f) Pledges or deposits made to secure any Company's payment of
workers' compensation, unemployment insurance or other forms of governmental
insurance or benefits or to participate in any fund in connection with workers'
compensation, unemployment insurance, pensions or other social security programs
which (in each case) are not made with any Collateral other than cash proceeds
thereof arising in the ordinary course;
(g) Deposits (i) to secure any Company's performance of bids, trade
contracts (except for the repayment of borrowed money) or leases arising in the
ordinary course of business, which in each case are limited to no more than ten
percent (10%) of the face amount thereof, or (ii) to secure statutory
obligations, surety or appeal bonds, or indemnity, performance or other similar
bonds incurred in the ordinary course of its business which (in each case) are
not made with any Collateral other than cash proceeds thereof arising in the
ordinary course;
(h) Zoning and similar restrictions on the use of, and easements,
restrictions, covenants, title defects and similar encumbrances on, Real
Property that do not impair the use of such Real Property (other than of an
inconsequential nature) and that are not violated by existing or proposed
structures or land use;
(i) If no Lien has been filed in any jurisdiction or agreed to (i)
claims and Liens for Taxes not yet due and payable, (ii) statutory mechanic's
Liens and materialman's Liens for services or materials and similar statutory
Liens incident to construction and maintenance of Real Property, in each case
for which payment is not yet due and payable, (iii) statutory landlord's Liens
for rental not yet due and payable and (iv) statutory Liens of warehousemen and
carriers and similar statutory Liens securing obligations that are not yet due
and payable;
(j) The following if (i) the validity or amount is being contested in
good faith and by appropriate and lawful proceedings diligently conducted, (ii)
reserve or other appropriate provision (if any) required by GAAP has been made,
(iii) levy and execution has not issued or continues to be stayed, (iv) they do
not individually or collectively detract from the value of the property of the
Person in question or impair the use of that property in the operation of its
business (other than, in each case, of an inconsequential nature) and (v) (other
than ad valorem Tax Liens given statutory priority) they are subordinate to the
Lender Liens to the extent that they cover Collateral: (1) Claims and Liens for
Taxes; (2) claims and Liens upon, and defects of title to, real or personal
property, including any attachment of personal or real property or other legal
process before adjudication of a dispute on the merits; (3) claims and Liens of
statutory mechanics, materialmen's, warehousemen's, carriers', landlords' or
other like Liens; (4) Liens incident to construction and maintenance of Real
Property; and (5) adverse judgments, attachments or orders on appeal for the
payment of money; and
(k) Liens securing the Belgium Facility Debt, so long as such Liens are
limited to Ultrak Europe, N.V.'s warehouse facility in Antwerp, Belgium and the
property of Ultrak Europe, N.V. located therein.
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9.4 Employee Plans. No Company may permit any of the events or
circumstances described in Section 7.11 to exist or occur except where the
failure to perform the foregoing could not reasonably be expected to result in a
Material Adverse Event.
9.5 Transactions with Affiliates. No Company may enter into any
transaction with any of its Affiliates except (i) transactions permitted under
Sections 9.7(j) and (k) and Section 9.9 and (ii) transactions (other than
Investments) in the ordinary course of business and upon fair and reasonable
terms not materially less favorable than it could obtain or could become
entitled to in an arm's-length transaction with a Person that was not its
Affiliate.
9.6 Compliance with Laws and Documents. No Company shall (i) violate
the provisions of any Laws (including OSHA and Environmental Laws) applicable to
it or of any material agreement to which it is a party or by which any of its
property is subject or bound if that violation alone, or when aggregated with
all other violations, reasonably could be expected to result in a Material
Adverse Event, (ii) violate any provision of its Organizational Documents or
(iii) repeal, replace or amend any provision of its Organizational Documents if
that action reasonably could be expected to result in a Material Adverse Event.
9.7 Investments. No Company may make or continue to own any Investments
except the following (the "PERMITTED INVESTMENTS"):
(a) (i) Readily marketable, direct, full faith and credit obligations
of the United States or obligations guaranteed by the full faith and credit of
the United States and (ii) readily marketable obligations of an agency or
instrumentality of, or corporation owned, controlled or sponsored by, the United
States that are generally considered in the securities industry to be implicit
obligations of the United States, in each case, due within one year after the
acquisition of it (collectively, "GOVERNMENT SECURITIES");
(b) Readily marketable direct obligations of any state of the United
States given on the date of such investment a credit rating of at least Aa by
Moody's Investors Service, Inc. or AA by Standard & Poor's Corporation, in each
case due within one year from the making of the investment;
(c) Certificates of deposit issued by, bank deposits in, eurodollar
deposits through, bankers' acceptances of, and repurchase agreements covering
Government Securities executed by, (i) any Lender or (ii) any bank incorporated
under the Laws of the United States or any of its states and given on the date
of the investment a short-term certificate of deposit credit rating of at least
P-2 by Moody's Investors Service, Inc., or A-2 by Standard & Poor's Corporation,
in each case due within one year after the date of the making of the investment;
(d) Certificates of deposit issued by, bank deposits in, eurodollar
deposits through, bankers' acceptances of, and repurchase agreements covering
Government Securities executed by, any branch or office located in the United
States of a bank incorporated under the Laws of any jurisdiction outside the
United States having on the date of the investment a short-term certificate of
deposit credit rating of a least P-2 by Moody's Investors Service, Inc., or A-2
by Standard & Poor's Corporation, in each case due within one year after the
date of the making of the investment;
(e) Extensions of trade credit by any Company made in the ordinary
course of its business in a manner consistent with generally accepted industry
practices;
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(f) Parent's investment (or Security Warranty's investment if a
Permitted Security Warranty Transaction occurs) in Detection Systems as of
November 12, 1999, provided that any part of such investment that is sold or
otherwise disposed of may not be subsequently reacquired;
(g) Investments in Permitted Public Company Holdings not exceeding an
aggregate of Two Million Dollars ($2,000,000) (on a cost basis) (including
amounts in the money market account associated with any brokerage account in
which Permitted Public Company Holdings are held) owned at any time;
(h) Customary capital contributions or other similar investments by any
Company for the formation of any other Company (provided that the amount so
contributed for the formation of any Company shall not exceed One Hundred
Thousand Dollars ($100,000) for each such Company formed);
(i) Loans, advances, or extensions of credit by any Domestic Company to
any other Domestic Company; and
(j) The Permitted Intercompany Advances, so long as such Permitted
Intercompany Advances are evidenced by written promissory notes pledged to
Administrative Agent for the benefit of Lenders as contemplated by the Credit
Documents, including Section 5.2(c).
9.8 Distributions; Other Payments. No Company may declare, make or pay
any Distribution except
(a) Distributions paid in the form of additional equity that is not
required to be redeemed or is redeemable at the option of the holder if certain
events or conditions occur or exist or otherwise,
(b) Distributions to Parent or Borrower from any other Company,
(c) Distributions from a Foreign Subsidiary to Ultrak Holdings,
(d) Distributions from Parent or Borrower to Ultrak GP and Ultrak LP,
(e) Distributions of up to One Hundred Seventeen Thousand Two Hundred
Ten Dollars ($117,210) per year representing preferred stock dividends from
Parent to Mr. George K. Broady made in respect of Parent's Series A Preferred
Stock; and
(f) Repurchases of common stock of Parent up to an aggregate during the
term of this Agreement up to an aggregate of One Million Dollars ($1,000,000)
during the term of this Agreement, but only if, (i) Administrative Agent has
received the Financials and other items required by Section 8.2(a) for the year
ended December 31, 1999, (ii) Borrower had at least Ten Million Dollars of
Excess Availability, without including any amount for the Over-Advance
Availability in the Borrowing Base, for the thirty (30) days preceding the day a
particular round of stock repurchases commence and is reasonably projected by
Borrower to have Ten Million Dollars of Excess Availability, without including
any amount for the Over-Advance Availability in the Borrowing Base, for the
thirty (30) days succeeding the day such round of stock repurchases is expected
to be completed, (iii) the Over-Advance Availability has been cancelled and
terminated at Borrower's written request and clause (g) has been eliminated from
the definition of "Borrowing Base", (iv) no Potential Default or Event of
Default has occurred and is continuing and none will arise as a result of such
stock repurchases and (v) the amount of Cash Flow Available for Debt Service
exceeds the Debt Service Requirements for the fiscal year ending December 31,
2000, by at least Four Million Two Hundred Thousand
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Dollars ($$4,200,000), as reflected on the Financials and other items delivered
to Administrative Agent pursuant to Section 8.2(a) for the year ended December
31, 2000.
9.8 Disposition of Assets. No Company may sell, assign, lease, transfer
or otherwise dispose of any of its assets (including equity interests in any
other Company) other than a Permitted Asset Sale. Notwithstanding the foregoing,
Parent may sell its Permitted Investments described in Section 9.7(g) without
being required to prepay the Obligation.
9.9 Mergers, Consolidations, Acquisitions, Dispositions and
Dissolutions. No Company may make or participate in any Acquisition, merge or
consolidate with any other Person, acquire or, in one or a series of related
transactions, dispose (by sale, lease, sale-leaseback or otherwise) of all or
substantially all of its assets and properties or dissolve except:
(a) if no Event of Default, Potential Default or Material Adverse Event
exists or will exist as a result of it, any merger or consolidation between
Companies (so long as (i) if Borrower is involved, it is the survivor, and (ii)
if both Domestic Companies (other than Borrower) and Foreign Subsidiaries are
involved, one or more Domestic Companies that have each previously executed a
Guaranty and a Security Agreement are the survivors);
(b) any disposition (by sale, lease, sale-leaseback or otherwise) of
all or substantially all of the assets and properties of, or any dissolution of,
any Domestic Company (other than Borrower) if substantially all of its assets
and properties are or have been conveyed or assigned to or vested in any other
Domestic Company that has previously executed and delivered a Guaranty and a
Security Agreement;
(c) any disposition (by sale, lease, sale-leaseback or otherwise) of
all or substantially all of the assets and properties of, or any dissolution of,
any Foreign Subsidiary if substantially all of its assets and properties are or
have been conveyed or assigned to or vested in any other Company; and
(d) any Permitted Asset Sale so long as all mandatory prepayments of
the Obligation have been made.
9.10 Assignment. No Company may assign or transfer any of its Rights,
duties or obligations under any of the Credit Documents.
9.11 TROL Financing Amendments. No Company will agree to any amendment
to the TROL Financing and the TROL Financing documents which increases the
amount of the TROL Financing or results in annual debt service requirements
greater than the present debt service requirements of the TROL Financing.
9.12 Fiscal Year and Accounting Methods. No Company may change either
its fiscal year for accounting purposes or any material aspect of its method of
accounting.
9.13 New Businesses. No Company may engage in any business except the
businesses in which it is presently engaged and any other reasonably related
business.
9.14 Government Regulations. No Company may conduct its business in a
way that it becomes regulated under the Investment Company Act of 1940, as
amended, or the Public Utility Holding Company Act of 1935, as amended.
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9.15 Strict Compliance. No Company may indirectly do anything that it
may not directly do under any covenant in any Credit Document.
SECTION 10. FINANCIAL COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this Agreement, and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Administrative Agent and
Lenders as follows:
10.1 Leverage Ratio. The ratio of the sum of the Companies'
consolidated Funded Debt as of the last day of each fiscal quarter ending on or
after June 30, 2000 to the Companies' consolidated Operating EBITDA for the four
fiscal quarters then ended shall at no time exceed 3.75 to 1.00 as of June 30,
2000 or 3.50 to 1.00 as of the end of any fiscal quarter thereafter. The
Operating EBITDA for the two quarters ended June 30, 2000 and the three quarters
ended September 30, 2000 shall be annualized instead of using any 1999 quarters.
10.2 Debt Service Coverage Ratio. The ratio of the Companies'
consolidated Cash Flow Available for Debt Service, measured as of the last day
of each fiscal quarter (the "SUBJECT QUARTER"), for the four fiscal quarters
ending on the last day of the Subject Quarter to the Companies' consolidated
Debt Service Requirements for the same four fiscal quarters shall at all times
exceed 1.15 to 1.00. The Cash Flow Available for Debt Service and the Debt
Service Requirements for the two quarters ended June 30, 2000 and the three
quarters ended September 30, 2000 shall be annualized instead of using any 1999
quarters.
10.3 Minimum Tangible Net Worth. The Companies' consolidated Tangible
Net Worth shall not at any time be less than the sum of (a) Seventy Three
Million Dollars ($73,000,000) plus (b) an amount equal to seventy five percent
(75%) of the Companies' consolidated Net Income (without deduction for losses)
for each fiscal quarter ending after December 31, 1999, and before the date of
determination plus (c) one hundred percent (100%) of the net (i.e., gross less
usual and customary brokerage and after related costs and expenses) proceeds
from the issuance and sale of any equity securities by any Company after
December 31, 1999, other than the proceeds of any issuance and sale of any
capital stock which is required to be redeemed, or is redeemable at the option
of the holder, if certain events or conditions occur or exist or otherwise.
10.4 Capital Expenditures. For any fiscal year of Borrower, Capital
Expenditures for the acquisition, construction, improvement or replacement of
land, buildings, equipment or other fixed or capital assets or leaseholds
(excluding expenditures properly chargeable to repairs or maintenance) for the
Companies shall not exceed (a) Six Million Dollars ($6,000,000) for the fiscal
year ending December 31, 2000, and (b) Four Million Dollars ($4,000,000) for the
fiscal year ending December 31, 2001.
10.5 Minimum Excess Availability. Borrower will at all times maintain
Excess Availability of at least One Million Dollars ($1,000,000).
SECTION 11. EVENT OF DEFAULT. The term "EVENT OF DEFAULT" means the occurrence
of any one or more of the following:
11.1 Payment of Obligation. Borrower's failure or refusal to pay (i)
principal of any Note, or any part thereof, on or before the date when due
(including any required mandatory prepayment when due), or (ii) any other part
of the Obligation on or before five Business Days after the date due.
11.2 Covenants. Any Company's failure or refusal to punctually and
properly perform, observe and comply with any of the covenants in Sections 9 and
10. It shall also constitute an Event of Default if any
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Company fails or refuses to punctually and properly perform, observe and comply
with any covenant or agreement in any Credit Document (other than covenants to
pay the Obligation and covenants set forth in Sections 9 and 10) applicable to
it, and that failure or refusal continues for 10 Business Days after that
Company has, or with the exercise at reasonable diligence should have had,
notice of that failure or refusal.
11.3 Debtor Relief. Any Company (i) is not Solvent, (ii) fails to pay
its debts generally as they become due, (iii) voluntarily seeks, consents to or
acquiesces in the benefit of any Debtor Relief Law or (iv) becomes a party to or
is made the subject of any proceeding provided for by any Debtor Relief Law
(except as a creditor or claimant) that could suspend or otherwise adversely
affect the Rights of Administrative Agent or any Lender under the Credit
Documents (unless, if the proceeding is instituted by a Person other than a
Company, the applicable petition is dismissed within 60 days after its filing).
11.4 Judgments and Attachments. Where the amount in controversy or of
any judgment, as the case may be, against any Company exceeds, individually with
respect to such Company or in the aggregate with respect to all Companies, Five
Hundred Thousand Dollars ($500,000), the Companies (or any of them) fail (i) to
have discharged any attachment, sequestration or similar proceeding against any
properties of any Company prior to the realization on any property of any
Company, and in any event, within 30 days following the commencement of any such
proceedings, (ii) to pay any money judgment against any Company within 30 days
before the date on which any Company's assets may be lawfully sold to satisfy
that judgment or (iii) to pay a judgment in excess of Five Hundred Thousand
Dollars ($500,000) and such judgment remains unpaid and unstayed for more than
30 days.
11.5 Government Action. Unless otherwise covered by any event described
in Section 11.4, (i) the entry or issuance of an order by any Governmental
Authority (including the United States Justice Department) seeking to cause any
Company to divest a significant portion of its assets under any antitrust,
restraint of trade, unfair competition, industry regulation or similar Laws, or
(ii) the commencement of any action or proceeding by any Governmental Authority
(a) for the purpose of condemning, seizing or otherwise appropriating, or taking
custody or control of all or any substantial portion of, any Company's assets or
(b) which assert any material violation by, or material liability against, any
Company based on any Environmental Law.
11.6 Misrepresentation. Any representation or warranty made by any
Company in any Credit Document at any time proves to have been false or
incorrect in any material respect when made.
11.7 Ownership of Other Companies. Except as a result of transactions
permitted by this Agreement, any Company (other than Parent) fails to be a
direct or indirect wholly owned Subsidiary of Parent.
11.8 Change of Control of Borrower or Parent. Upon the occurrence of
any of the following (each a "CHANGE OF CONTROL"): (i) the individuals who, as
of the date of this Agreement, constitute the members of Parent's or Borrower's
board of directors (for purposes of this Section 11.8(i), the "INCUMBENT BOARD")
do not constitute or cease for any reason to constitute at least seventy five
percent (75%) of Parent's or Borrower's, as the case may be, board of directors;
(ii) any "person" (other than Mr. George K. Broady) or "group" (as such terms
are used in Sections 13(d) and 14(d) of the Securities and Exchange Act of 1934,
as amended (the "EXCHANGE ACT")) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person
shall be deemed to have "beneficial ownership" of all securities that such
person has the contractual right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than twenty five percent (25%) of the total voting power of the outstanding
capital stock (having full voting power) of Parent (for the purpose of this
clause (ii), such person shall be deemed to beneficially own any such capital
stock (having full voting power) of a specified
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corporation held by a parent corporation, if such person is the beneficial owner
(as defined in this clause (ii)), directly or indirectly, of more than twenty
five percent (25%) of the total voting power of the capital stock (having full
voting power) of such parent corporation); (iii) the sale, transfer,
sale-leaseback or other disposition, in one or a series of related transactions,
of all or a substantial part of the property of Parent or Borrower, or of the
Companies taken as a whole to any Person other than a Company; (iv) the merger
or consolidation of Parent or Borrower into another Person, where the other
Person is the surviving and continuing entity; or (v) the adoption of a plan
relating to the liquidation or dissolution of Parent or Borrower or of the
Companies taken as a whole. For purposes of clause (i) of this Section 11.8, any
individual who becomes a member of the board of directors or who obtains a
voting interest after the date of this Agreement and whose election, or
nomination for election, was approved by a vote of the individuals comprising at
least seventy five percent (75%) of the incumbent board (other than an election
or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election contest, as those terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed to
be a member of the incumbent board.
11.9 Change in Management. Any material change in the management of
Parent, Borrower or the Companies as a whole, including Mr. George K. Broady no
longer serving as the chairman of the board or chief executive officer of
Borrower.
11.10 Other Funded Debt. In respect of any Funded Debt of any Company
(other than the Obligation) individually or collectively of at least Five
Hundred Thousand Dollars ($500,000) (i) any Company fails to make any payment
when due, (ii) any default or other event or condition occurs or exists beyond
the applicable grace or cure period, the effect of which is to permit any holder
of that Funded Debt to cause (whether or not it elects to cause) any of such
Funded Debt to become due before its stated maturity or regularly scheduled
payment dates, or (iii) any of that Funded Debt is declared to be due and
payable or required to be prepaid by any Company before its stated maturity.
11.11 Validity and Enforceability. This Agreement, any Note, Guaranty
or any other Credit Document ceases to be in full force and effect or is
declared to be null and void, or the validity or enforceability of any Credit
Document or Lender Lien is contested by any Company or any other Person, or any
Company or any other Person asserts the absence of, or denies that it has, any
liability or obligations under any Credit Document to which it is a party except
in accordance with that document's express provisions, or any Lender Lien shall
fail to constitute a valid, perfected-first priority lien in favor of
Administrative Agent for Lenders, except in accordance with the express
provisions of any applicable Credit Document.
11.12 Material Agreement Default or Cancellation. The default under, or
breach or cancellation of, any agreement or other contractual arrangement to
which any Company is a party or beneficiary or by which any of its property is
bound or subject, which reasonably could be expected to result in any (i)
significant impairment of (a) the ability of Borrower or any other Company to
perform any of its payment or other material obligations under any Credit
Document or (b) the ability of Administrative Agent or Lenders to enforce any of
those obligations or any of their respective Rights under the Credit Documents,
(ii) significant and adverse effect on the business, management or financial
condition of the Borrower or of the Companies as a whole, as represented to
Lenders in the Financials then most recently received by them or (iii) event or
circumstance that could result in an Event of Default or Potential Default
pursuant to Sections 11.1 through 11.13 (inclusive) or Section 11.14.
11.13 LCs. Administrative Agent is served with, or becomes subject to,
a court order, injunction, or other process or decree restraining or seeking to
restrain it from paying any amount under any LC and either
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(a) a drawing has occurred under the LC, and Borrower has refused to reimburse
Administrative Agent for payment, or (b) the expiration date of the LC has
occurred, but the Right of the beneficiary to draw under the LC has been
extended past the expiration date in connection with the pendency of the related
court action or proceeding, and Borrower has failed to deposit with
Administrative Agent cash collateral in an amount equal to Administrative
Agent's maximum exposure under the LC.
SECTION 12. RIGHTS AND REMEDIES.
12.1 Remedies Upon Event of Default.
(a) Debtor Relief. If an Event of Default exists under Section 11.3,
the commitment to extend credit under this Agreement automatically terminates
and the entire unpaid principal balance of the Obligation, together with all
interest accrued thereon, and all other amounts then accrued and unpaid,
automatically become and shall be due and payable without any action of any kind
whatsoever.
(b) Other Events of Default. If any Event of Default exists,
Administrative Agent may (with the consent of, and must, upon the request of
Required Lenders), do any one or more of the following: (i) If the maturity of
the Obligation has not already been accelerated under Section 12.1(a), declare
the entire unpaid principal balance of all or any part of the Obligation,
together with all interest accrued thereon, and all other amounts then accrued
and unpaid, immediately due and payable, whereupon it is due and payable; (ii)
terminate the commitments of Lenders to extend credit under this Agreement;
(iii) reduce any claim to judgment; (iv) demand payment of an amount equal to
the LC Exposure then existing and retain as collateral for the LC Exposure any
amounts received from any Company, from any property of any Company, through
offset or otherwise; and (v) exercise any and all other legal or equitable
Rights afforded by the Credit Documents, by applicable Laws or otherwise at law
or in equity.
(c) Offset. If an Event of Default exists, to the extent not
prohibited by applicable Laws, each Lender may exercise the Rights of offset and
banker's lien against each and every account and other property, or any interest
therein, which any Company may now or hereafter have with, or which is now or
hereafter in the possession of, that Lender to the extent of the full amount of
the Obligation owed to that Lender.
12.2 Company Waivers. To the extent not prohibited by applicable Laws,
Borrower and (pursuant to its Guaranty or its execution and delivery of, or
consent to, any other Credit Document) each other Company waives, in respect to
any action taken by Administrative Agent or Lenders at any time and from time to
time pursuant to Section 12.1, presentment, demand for payment, protest,
acceleration, notice of protest and nonpayment, NOTICE OF INTENTION TO
ACCELERATE, NOTICE OF ACCELERATION, and all other notices and acts, and agrees
that its liability with respect to all or any part of the Obligation is not
affected by any renewal or extension in the time of payment of all or any part
of the Obligation, by any indulgence, increase or other modification to, or by
any release or change in any security for the payment of, all or any part of the
Obligation.
12.3 Performance by Administrative Agent. If any Company's covenant,
duty or agreement is not performed in accordance with the terms of the Credit
Documents, Administrative Agent may at its option (but subject to the approval
of Required Lenders), perform or attempt to perform that covenant, duty or
agreement on behalf of that Company, and any amount expended by or on behalf of
Administrative Agent in its performance or attempted performance is payable by
the Companies, jointly and severally, to Administrative Agent on demand, becomes
part of the Obligation, and bears interest on the portion thereof from time to
time unpaid at the Default Rate from the date of Administrative Agent's
expenditure until paid. However, Administrative Agent does not assume and shall
never have, except by its express written consent, any liability or
responsibility for the performance of any Company's covenants, duties or
agreements.
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12.4 Not in Control. Nothing in any Credit Document gives or may be
deemed to give to Administrative Agent or any Lender the Right to exercise
control over any Company's Real Property, other assets, affairs or management or
to preclude or interfere with any Company's compliance with any Law or require
any act or omission by any Company that may be harmful to Persons or property.
Any "Material Adverse Event" or other materiality or substantiality qualifier of
any representation, warranty, covenant, agreement or other provision of any
Credit Document is included for credit documentation purposes only and does not
imply and should not be deemed to mean that Administrative Agent or any Lender
acquiesces in any non-compliance by any Company with any applicable Law,
document, or otherwise or does not expect the Companies to promptly, diligently
and continuously carry out all appropriate removal, remediation, compliance,
closure or other activities required or appropriate in accordance with all
Environmental Laws. Administrative Agent's and Lenders' power is limited to the
Rights provided in, or referred to by, the Credit Documents. All of those Rights
exist solely to preserve and protect the Collateral and to assure payment and
performance of the Obligation in accordance with the terms of the Credit
Documents, and may be exercised in a manner determined to be appropriate by
Administrative Agent or Lenders in their sole respective good faith business
judgment.
12.5 Course of Dealing. The acceptance by Administrative Agent or
Lenders of any partial payment on the Obligation is not a waiver of any Event of
Default then existing. No waiver by Administrative Agent, Required Lenders or
Lenders of any Event of Default is a waiver of any other then-existing or
subsequent Event of Default. No delay or omission by Administrative Agent,
Required Lenders or Lenders in exercising any Right under the Credit Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Credit Documents or
otherwise.
12.6 Cumulative Rights. All Rights available to Administrative Agent,
Required Lenders and Lenders under the Credit Documents are cumulative of and in
addition to all other Rights granted to Administrative Agent, Required Lenders
and Lenders at law or in equity, whether or not the Obligation is due and
payable and whether or not Administrative Agent, Required Lenders or Lenders
have instituted any suit for collection, foreclosure, or other action in
connection with the Credit Documents.
12.7 Application of Proceeds. Any and all proceeds ever received by
Administrative Agent or Lenders from the exercise of any Rights pertaining to
the Obligation shall be applied to the Obligation according to Section 3.
12.8 Certain Proceedings. Borrower shall promptly execute and deliver,
or cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers
Administrative Agent or Required Lenders reasonably request in connection with
the obtaining of any consent, approval, registration (other than securities law
registrations), qualification, permit, license or authorization of any
Governmental Authority or other Person necessary or appropriate for the
effective exercise of any Rights under the Credit Documents. Because Borrower
agrees that Administrative Agent's and Required Lenders' remedies under
applicable Laws for failure of Borrower to comply with the provisions of this
section would be inadequate and that failure would not be adequately compensable
in damages, Borrower agrees that the covenants of this section may be
specifically enforced.
12.9 Expenditures by Administrative Agent or Lenders. Any sums spent by
Administrative Agent or any Lender in the exercise of any Right under any Credit
Document is payable by the Companies to
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Administrative Agent within 15 Business Days of written demand, becomes part of
the Obligation, and bears interest on the portion thereof from time to time
unpaid at the Default Rate from the date spent until the date repaid.
12.10 Diminution in Value of Collateral. Neither Administrative Agent
nor any Lender has any liability or responsibility whatsoever for any diminution
in or loss of value of any collateral now or in the future securing payment or
performance of any of the Obligation (other than diminution in or loss of value
caused by its own gross negligence or willful misconduct).
SECTION 13. ADMINISTRATIVE AGENT AND LENDERS.
13.1 Administrative Agent.
(a) Appointment. Each Lender appoints Administrative Agent (including
each successor Administrative Agent in accordance with this Section 13) as its
nominee and agent to act in its name and on its behalf (and Administrative Agent
and each such successor accepts that appointment): (i) To act as its nominee and
on its behalf in and under all Credit Documents; (ii) to arrange the means
whereby its funds are to be made available to Borrower under the Credit
Documents; (iii) to take any action that it properly requests under the Credit
Documents (subject to the concurrence of other Lenders as may be required under
the Credit Documents); (iv) to receive all documents and items to be furnished
to it under the Credit Documents; (v) to be the secured party, mortgagee,
beneficiary, recipient and similar party in respect of any collateral for the
benefit of Lenders; (vi) to promptly distribute to it all material information,
requests, documents, and items received from Borrower under the Credit
Documents; (vii) to promptly distribute to it its ratable part of each payment
or prepayment (whether voluntary, as proceeds of collateral upon or after
foreclosure, as proceeds of insurance thereon, or otherwise) in accordance with
the terms of the Credit Documents; and (viii) to deliver to the appropriate
Persons requests, demands, approvals, and consents received from it. However,
Administrative Agent may not be required to take any action that exposes it to
personal liability or that is contrary to any Credit Document or applicable
Laws.
(b) Successor. Administrative Agent may assign all of its Rights and
obligations as Administrative Agent under the Credit Documents to any of its
Affiliates, which Affiliate shall then be the successor Administrative Agent
under the Credit Documents. Administrative Agent may also voluntarily resign and
shall resign upon the request of Required Lenders for cause (i.e.,
Administrative Agent is continuing to fail to perform its responsibilities as
Administrative Agent under the Credit Documents). If the initial or any
successor Administrative Agent ever ceases to be a party to this Agreement or if
the initial or any successor Administrative Agent ever resigns (whether
voluntarily or at the request of Required Lenders), then Required Lenders shall
(which, if no Event of Default or Potential Default exists, is subject to
Borrower's approval that may not be unreasonably withheld) appoint the successor
Administrative Agent from among Lenders (other than the resigning Administrative
Agent). If Required Lenders fail to appoint a successor Administrative Agent
within 30 days after the resigning Administrative Agent has given notice of
resignation or Required Lenders have removed the resigning Administrative Agent,
then the resigning Administrative Agent may, on behalf of Lenders, appoint a
successor Administrative Agent, which must be a commercial bank having a
combined capital and surplus of at least One Billion Dollars ($1,000,000,000)
(as shown on its most recently published statement of condition). Upon its
acceptance of appointment as successor Administrative Agent, the successor
Administrative Agent succeeds to and becomes vested with all of the Rights of
the prior Administrative Agent, and the prior Administrative Agent is discharged
from its duties and obligations of Administrative Agent under the Credit
Documents (but, when used in connection with LCs issued and outstanding before
the appointment of the successor Administrative Agent, "Administrative Agent"
shall
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continue to refer solely to the prior Administrative Agent, but any LCs issued
or renewed after the appointment of any successor Administrative Agent shall be
issued or renewed by the successor Administrative Agent), and each Lender shall
execute the documents that any Lender, the resigning or removed Administrative
Agent, or the successor Administrative Agent reasonably request to reflect the
change. After any Administrative Agent's resignation or removal as
Administrative Agent under the Credit Documents, the provisions of this section
inure to its benefit as to any actions taken or not taken by it while it was
Administrative Agent under the Credit Documents.
(c) Rights as Lender. Administrative Agent, in its capacity as a
Lender, has the same Rights under the Credit Documents as any other Lender and
may exercise those Rights as if it were not acting as Administrative Agent. The
term "LENDER", unless the context otherwise indicates, includes Administrative
Agent. Administrative Agent's resignation or removal does not impair or
otherwise affect any Rights that it has or may have in its capacity as an
individual Lender. Each Lender and Borrower agree that Administrative Agent is
not a fiduciary for Lenders or for Borrower but is simply acting in the capacity
described in this Agreement to alleviate administrative burdens for Borrower and
Lenders, that Administrative Agent has no duties or responsibilities to Lenders
or Borrower except those expressly set forth in the Credit Documents, and that
Administrative Agent in its capacity as a Lender has the same Rights as any
other Lender.
(d) Other Activities. Administrative Agent or any Lender may now or in
the future be engaged in one or more loan, letter of credit, leasing, hedging
agreement, or other financing transactions with Borrower or other Companies, act
as trustee or depositary for Borrower or other Companies, or otherwise be
engaged in other transactions with Borrower or other Companies (collectively,
the "OTHER ACTIVITIES") not the subject of the Credit Documents. Without
limiting the Rights of Lenders specifically set forth in the Credit Documents,
neither Administrative Agent nor any Lender is responsible to account to the
other Lenders for those other activities, and no Lender shall have any interest
in any other Lender's activities, any present or future guaranties by or for the
account of Borrower or other Companies that are not contemplated by or included
in the Credit Documents, any present or future offset exercised by
Administrative Agent or any Lender in respect of those other activities, any
present or future property taken as security for any of those other activities,
or any property now or hereafter in Administrative Agent's or any other Lender's
possession or control that may be or become security for the obligations of
Borrower or other Companies arising under the Credit Documents by reason of the
general description of indebtedness secured or of property contained in any
other agreements, documents, or instruments related to any of those other
activities (but, if any payments in respect of those guaranties or that property
or the proceeds thereof is applied by Administrative Agent or any Lender to
reduce the Obligation, then each Lender is entitled to share ratably in the
application as provided in the Credit Documents).
13.2 Expenses. Each Lender shall pay its Pro Rata Part of any
reasonable expenses (including court costs, reasonable attorneys' fees and other
costs of collection) incurred by Administrative Agent (while acting in such
capacity) in connection with any of the Credit Documents if Administrative Agent
is not reimbursed from other sources within 30 days after incurrence. Each
Lender is entitled to receive its Pro Rata Part of any reimbursement that it
makes to Administrative Agent if Administrative Agent is subsequently reimbursed
from other sources.
13.3 Proportionate Absorption of Losses. Except as otherwise provided
in the Credit Documents, nothing in the Credit Documents gives any Lender any
advantage over any other Lender insofar as the Obligation is concerned or
relieves any Lender from ratably absorbing any losses sustained with respect to
the Obligation (except to the extent unilateral actions or inactions by any
Lender result in Borrower or any other Company having any credit, allowance,
setoff, defense, or counterclaim solely with respect to all or any part of that
Lender's Pro Rata Part of the Obligation).
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13.4 Delegation of Duties; Reliance. Lenders may perform any of their
duties or exercise any of their Rights under the Credit Documents by or through
Administrative Agent, and Lenders and Administrative Agent may perform any of
their duties or exercise any of their Rights under the Credit Documents by or
through their respective Representatives. Administrative Agent, Lenders, and
their respective Representatives (a) are entitled to rely upon (and shall be
protected in relying upon) any written or oral statement believed by it or them
to be genuine and correct and to have been signed or made by the proper Person
and, with respect to legal matters, upon opinion of counsel selected by
Administrative Agent or that Lender (but nothing in this clause (a) permits
Administrative Agent to rely on (i) oral statements if a writing is required by
this Agreement or (ii) any other writing if a specific writing is required by
this Agreement), (b) are entitled to deem and treat each Lender as the owner and
holder of its portion of the Obligation for all purposes until, written notice
of the assignment or transfer is given to and received by Administrative Agent
(and any request, authorization, consent, or approval of any Lender is
conclusive and binding on each subsequent holder, assignee, or transferee of or
Participant in that Lender's portion of the Obligation until that notice is
given and received), (c) are not deemed to have notice of the occurrence of an
Event of Default unless a responsible officer of Administrative Agent, who
handles matters associated with the Credit Documents and transactions
thereunder, has actual knowledge or Administrative Agent has been notified by a
Lender or Borrower, and (d) are entitled to consult with legal counsel
(including counsel for Borrower), independent accountants, and other experts
selected by Administrative Agent and are not liable for any action taken or not
taken in good faith by it in accordance with the advice of counsel, accountants,
or experts.
13.5 Limitation of Administrative Agent's Liability.
(a) Exculpation. Neither Administrative Agent nor any of its
Affiliates or Representatives will be liable for any action taken or omitted to
be taken by it or them under the Credit Documents in good faith and believed by
it or them to be within the discretion or power conferred upon it or them by the
Credit Documents or be responsible for the consequences of any error of judgment
(except for fraud, gross negligence, or willful misconduct), and neither
Administrative Agent nor any of its Affiliates or Representatives has a
fiduciary relationship with any Lender by virtue of the Credit Documents (but
nothing in this Agreement negates the obligation of Administrative Agent to
account for funds received by it for the account of any Lender).
(b) Indemnity. Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Administrative Agent may not be compelled to do
any act under the Credit Documents or to take any action toward the execution or
enforcement of the powers thereby created or to prosecute or defend any suit in
respect of the Credit Documents. If Administrative Agent requests instructions
from Lenders, or Required Lenders, as the case may be, with respect to any act
or action in connection with any Credit Document, Administrative Agent is
entitled to refrain (without incurring any liability to any Person by so
refraining) from that act or action unless and until it has received
instructions. In no event, however, may Administrative Agent or any of its
Representatives be required to take any action that it or they determine could
incur for it or them criminal or onerous civil liability. Without limiting the
generality of the foregoing, no Lender has any right of action against
Administrative Agent as a result of Administrative Agent's acting or refraining
from acting under this Agreement in accordance with instructions of Required
Lenders.
(c) Reliance. Administrative Agent is not responsible to any Lender or
any Participant for, and each Lender represents and warrants that it has not
relied upon Administrative Agent in respect of, (i) the creditworthiness of any
Company and the risks involved to that Lender, (ii) the effectiveness,
enforceability,
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genuineness, validity, or the due execution of any Credit Document (except by
Administrative Agent), (iii) any representation, warranty, document,
certificate, report, or statement made therein (except by Administrative Agent)
or furnished thereunder or in connection therewith, (iv) the adequacy of any
collateral now or hereafter securing the Obligation or the existence, priority,
or perfection of any Lien now or hereafter granted or purported to be granted on
the collateral under any Credit Document, or (v) observation of or compliance
with any of the terms, covenants, or conditions of any Credit Document on the
part of any Company. EACH LENDER AGREES TO INDEMNIFY ADMINISTRATIVE AGENT AND
ITS REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST (BUT LIMITED TO SUCH
LENDER'S COMMITMENT PERCENTAGE OF) ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, REASONABLE EXPENSES, AND
REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER THAT MAY BE IMPOSED
ON, ASSERTED AGAINST, OR INCURRED BY THEM IN ANY WAY RELATING TO OR ARISING OUT
OF THE CREDIT DOCUMENTS OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THE CREDIT
DOCUMENTS IF ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES ARE NOT REIMBURSED FOR
SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH ADMINISTRATIVE AGENT AND ITS
REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR
THEIR OWN ORDINARY NEGLIGENCE, ADMINISTRATIVE AGENT AND ITS REPRESENTATIVES DO
NOT HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN
FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT.
13.6 Event of Default. While an Event of Default exists, Lenders agree
to promptly confer in order that Required Lenders or Lenders, as the case may
be, may agree upon a course of action for the enforcement of the Rights of
Lenders. Administrative Agent is entitled to act or refrain from taking any
action (without incurring any liability to any Person for so acting or
refraining) unless and until it has received instructions from Required Lenders.
In actions with respect to any Company's property, Administrative Agent is
acting for the ratable benefit of each Lender.
13.7 Collateral Matters.
(a) General Authorization. Each Lender authorizes and directs
Administrative Agent to enter into the Credit Documents for the Lender Liens and
agrees that any action taken by Administrative Agent concerning any Collateral
(with the consent or at the request of Required Lenders) in accordance with any
Credit Document, that Administrative Agent's exercise (with the consent or at
the request of Required Lenders) of powers concerning the Collateral in any
Credit Document and that all other reasonably incidental powers are authorized
and binding upon all Lenders.
(b) Maintaining Lender Liens. Administrative Agent is authorized on
behalf of all Lenders, without the necessity of any notice to or further consent
from any Lender, from time to time before an Event of Default or Potential
Default, to take any action with respect to any Collateral or Credit Documents
related to Collateral that may be necessary to perfect and maintain perfected
the Lender Liens upon the Collateral.
(c) Limitation of Obligations. Except to use the same standard of care
that it ordinarily uses for collateral for its sole benefit, Administrative
Agent has no obligation whatsoever to any Lender or to any other Person to
assure that the Collateral exists or is owned by any Company or is cared for,
protected, or insured or has been encumbered or that the Lender Liens have been
properly or sufficiently or lawfully created, perfected, protected, or enforced
or are entitled to any particular priority.
(d) Standard of Care. Administrative Agent shall exercise the same care
and prudent judgment with respect to the Collateral and the Credit Documents as
it normally and customarily exercises in respect of similar collateral and
security documents.
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(e) Release of Collateral. Lenders irrevocably authorize Administrative
Agent, at its option and in its discretion, to release any Lender Lien upon any
Collateral (i) upon full payment of the Obligation, (ii) constituting property
being disposed of as permitted under any Credit Document, (iii) constituting
property in which no Company owned any interest at the time the Lender Lien was
granted or at any time after that, (iv) constituting property leased to any
Company under a lease that has expired or been terminated in a transaction
permitted under the Credit Documents or is about to expire and that has not
been, and is not intended by that Company to be, renewed, (v) consisting of an
instrument evidencing Debt pledged to Administrative Agent (for the benefit of
Lenders), if the underlying Debt has been paid in full, or (vi) if approved,
authorized, or ratified in writing by Lenders. Upon request by Administrative
Agent at any time, Lenders shall confirm in writing Administrative Agent's
authority to release particular types or items of Collateral under this clause
(e).
13.8 Limitation of Liability. No Lender or any Participant will incur
any liability to any other Lender or Participant except for acts or omissions in
bad faith, and neither Administrative Agent nor any Lender or Participant will
incur any liability to any other Person for any act or omission of any other
Lender or any Participant.
13.9 Relationship of Lenders. The Credit Documents do not create a
partnership or joint venture among Administrative Agent and Lenders or among
Lenders.
13.10 American National Bank Option To Purchase Lender Position. In the
event Administrative Agent recommends a course of action, amendment,
modification or waiver hereunder, and, if any Lender (a "NON-CONSENTING LENDER")
does not approve such course of action, amendment, modification or waiver within
thirty (30) days after requested to do so by Administrative Agent (the "REQUEST
PERIOD"), then, at any time during the sixty-day period (the "OPTION PERIOD")
after the end of the Request Period, American National shall the absolute right
and option, exercised by notice to the Non-Consenting Lender given on or before
the end of the Option Period, to purchase the Note held by the Non-Consenting
Lender, and all Liens and Rights of the Non-Consenting Lender related thereto,
for an amount equal to principal, interest, fees and expenses due and owing with
respect to the Non-Consenting Lender's Note on the date of purchase. The
consummation of the purchase will be held within ten (10) days after the
exercise notice is sent to the Non-Consenting Lender and will be subject to and
governed by the last sentence of Section 14,12(c), and, at the time of purchase,
the Non-Consenting Lender, as assignor, and American National, as assignee will
execute and deliver a Note and Lien Assignment.
13.11 Benefits of Agreement. None of the provisions of this Section 13
(13.1-13.10, inclusive) inure to the benefit of any Company or any other Person
except Administrative Agent and Lenders. Therefore, no Company or any other
Person is entitled to rely upon, or entitled to raise as a defense, in any
manner whatsoever, the failure of Administrative Agent or any Lender to comply
with these provisions.
SECTION 14. MISCELLANEOUS.
14.1 Nonbusiness Days. Any payment or action that is due under any
Credit Document on a non-Business Day may be delayed until the next-succeeding
Business Day (but interest shall continue to accrue on any applicable payment
until payment is in fact made) unless the payment concerns a LIBOR Rate
Borrowing or a Eurocurrency Borrowing, in which case if the next-succeeding
Business Day is in the next calendar month, then such payment shall be made on
the next-preceding Business Day.
14.2 Communications. Unless otherwise specifically provided, whenever
any Credit Document requires or permits any consent, approval, notice, request
or demand from one party to another, communication
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must be in writing (which may be by telex or fax) to be effective and shall be
deemed to have been given (i) if by telex, when transmitted to the appropriate
telex number and the appropriate answer back is received, (ii) if by fax, when
transmitted to the appropriate fax number (and all communications sent by fax
must be confirmed promptly thereafter by telephone; but any requirement in this
parenthetical shall not affect the date when the fax shall be deemed to have
been delivered), (iii) if by mail, on the third Business Day after it is
enclosed in an envelope and properly addressed, stamped, sealed and deposited in
the appropriate official postal service, or (iv) if by any other means, when
actually delivered. Until changed by notice pursuant to this Agreement, the
address (and fax number) for Administrative Agent, each initial Lender and
Borrower is stated beside their respective signatures to this Agreement. All
borrowing requests and conversion notices relating to Eurocurrency Borrowings
shall be delivered to the address for the Eurocurrency Lending Installation,
with no requirement that they also be delivered to Administrative Agent's
Chicago, Illinois office. All other notices, certificates and other items
required to be delivered under this Agreement or the other Credit Documents
shall be delivered to the address for the Administrative Agent and Lenders as
set forth herein, with no requirement that they also be delivered to the
Eurocurrency Lending Installation. Any required or optional delivery under the
Credit Documents shall only be deemed made if delivered in accordance with the
above-described requirements (i.e. no delivery to the Eurocurrency Lending
Installation of items other than borrowing requests and conversion notices
relating to Eurocurrency Borrowings shall be deemed made in accordance with the
requirements of the Credit Documents, and no delivery to the Administrative
Agent or any Lender of borrowing requests and conversion notices relating to
Eurocurrency Borrowings shall be deemed made in accordance with the requirements
of the Credit Documents). The address (and fax number) for each Lender who
becomes party to this Agreement after the Closing Date shall be stated beside
its name on the then most recently amended Schedule 2.
14.3 Form and Number of Documents. The form, substance and number of
counterparts of each writing to be furnished under this Agreement must be
reasonably satisfactory to Administrative Agent and its counsel.
14.4 Exceptions to Covenants. No Company may take or fail to take any
action that is permitted as an exception to any of the covenants contained in
any Credit Document if that action or omission would result in the breach of any
other covenant contained in any Credit Document.
14.5 Survival. All covenants, agreements, undertakings,
representations, and warranties made in any of the Credit Documents survive all
closings under the Credit Documents and, except as otherwise indicated, are not
affected by any investigation made by any party.
14.6 Governing Laws. Unless otherwise stated in any Credit Document,
the Laws of the State of Texas and of the United States govern the Rights and
duties of the parties to the Credit Documents and the validity, construction,
enforcement, and interpretation of the Credit Documents.
14.7 Invalid Provisions. Any provision in any Credit Document held to
be illegal, invalid or unenforceable is fully severable; the appropriate Credit
Document shall be construed and enforced as if that provision had never been
included; and the remaining provisions shall remain in full force and effect and
shall not be affected by the severed provision. Administrative Agent, Lenders
and each Company party to the affected Credit Document agree to negotiate, in
good faith, the terms of a replacement provision as similar to the severed
provision as may be possible and be legal, valid and enforceable.
14.8 Conflicts Between Credit Documents. The provisions of this
Agreement control if in conflict (i.e., the provisions contradict each other as
opposed to a Credit Document containing additional provisions not in conflict)
with the provisions of any other Credit Document.
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14.9 Discharge and Certain Reinstatement. The obligations of Borrower
and the other Companies under the Credit Documents remain in full force and
effect until Lenders have no commitment to extend credit under the Credit
Documents and the Obligation is fully paid (except for provisions under the
Credit Documents which by their terms expressly survive payment of the
Obligation and termination of the Credit Documents). If any payment under any
Credit Document is ever rescinded or must be restored or returned for any
reason, then all Rights and obligations under the Credit Documents in respect of
that payment are automatically reinstated as though the payment had not been
made when due.
14.10 Amendments, Consents, Conflicts, and Waivers.
(a) Required Lenders. Unless otherwise specifically provided (i) the
provisions of this Agreement may be amended, modified, or waived, only by an
instrument in writing executed by Borrower, Administrative Agent, and Required
Lenders and supplemented only by documents delivered or to be delivered in
accordance with the express terms of this Agreement, and (ii) the other Credit
Documents may only be the subject of an amendment, modification, or waiver that
has been approved by Required Lenders and Borrower.
(b) All Lenders. Any amendment to or consent or waiver under this
Agreement or any Credit Document that purports to accomplish any of the
following must be by an instrument in writing executed by Borrower and
Administrative Agent and executed (or approved, as the case may be) by each
Lender: (i) Extends the due date or decreases the amount of any scheduled
payment or amortization of the Obligation beyond the date specified in the
Credit Documents; (ii) decreases any rate or amount of interest, fees, or other
sums payable to Administrative Agent or Lenders under this Agreement (except
such reductions as are contemplated by this Agreement); (iii) changes the
definition of "COMMITMENT," "COMMITMENT PERCENTAGE," "REQUIRED LENDERS," or "PRO
RATA PART," or the percentages in the definition of "BORROWING BASE"; (iv)
increases any one or more Lenders' Commitment; (v) waives compliance with,
amends, or fully or partially releases -- except as expressly provided in the
Credit Documents or for when a Company merges into another Person or dissolves
when specifically permitted in the Credit Documents -- any Guaranty or
Collateral; or (vi) changes this clause (b) or any other matter specifically
requiring the consent of all Lenders under this Agreement.
(c) Conflicts. Any conflict or ambiguity between the terms and
provisions of this Agreement and terms and provisions in any other Credit
Document is controlled by the terms and provisions of this Agreement.
(d) Waivers. No course of dealing or any failure or delay by
Administrative Agent, any Lender, or any of their respective Representatives
with respect to exercising any Right of Administrative Agent or any Lender under
this Agreement operates as a waiver thereof. A waiver must be in writing and
signed by Administrative Agent and Lenders (or Required Lenders, if permitted
under this Agreement) to be effective, and a waiver will be effective only in
the specific instance and for the specific purpose for which it is given.
14.11 Multiple Counterparts. Any Credit Document may be executed in a
number of identical counterparts, and by each party thereto on separate
counterparts (including, at Administrative Agent's discretion, counterparts or
signature pages executed and transmitted by fax) with the same effect as if all
signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument.
14.12 Parties; Participations; Assignments.
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(a) Parties Bound. Each Credit Document binds and inures to the parties
to it, any intended beneficiary of it, and each of their respective successors
and permitted assigns. No Company may assign or transfer any Rights or
obligations under any Credit Document without first obtaining all Lenders'
consent, and any purported assignment or transfer without such consent is void.
(b) Participations. Any Lender may (subject to the provisions of this
section, in accordance with applicable Laws, in the ordinary course of its
business, and at any time) sell to one or more Persons (each a "PARTICIPANT")
participating interests in its portion of the Obligation. The selling Lender
remains a "Lender" under the Credit Documents, the Participant does not become a
"Lender" under the Credit Documents, and the selling Lender's obligations under
the Credit Documents remain unchanged. The selling Lender remains solely
responsible for the performance of its obligations and remains the holder of its
share of the Principal Debt for all purposes under the Credit Documents.
Borrower and Administrative Agent shall continue to deal solely and directly
with the selling Lender in connection with that Lender's Rights and obligations
under the Credit Documents, and each Lender must retain the sole right and
responsibility to enforce due obligations of the Companies. Participants have no
Rights under the Credit Documents except certain voting rights as provided
below. Subject to the following, each Lender may obtain (on behalf of its
Participants) the benefits of Section 3 with respect to all participations in
its part of the Obligation outstanding from time to time so long as Borrower is
not obligated to pay any amount in excess of the amount that would be due to
that Lender under Section 3 calculated as though no participations have been
made. No Lender may sell any participating interest under which the Participant
has any Rights to approve any amendment, modification, or waiver of any Credit
Document except as to matters in Section 14.10(b)(i) and (ii).
(c) Assignments. Each Lender may make assignments to the Federal
Reserve Bank. Each Lender may also assign to one or more assignees (each an
"ASSIGNEE") all or any part of its Rights and obligations under the Credit
Documents so long as (i) the assignor Lender and Assignee execute and deliver to
Administrative Agent for its consent and acceptance (that may not be
unreasonably withheld in any instance and is not required if the Assignee is an
Affiliate of the assigning Lender) an assignment and assumption agreement in
substantially the form of Exhibit J (a "NOTE AND LIEN ASSIGNMENT") and pays to
Administrative Agent a processing fee of Two Thousand Five Hundred Dollars
($2,500), (ii) the assignment must be for a minimum total Commitment of Five
Million Dollars ($5,000,000) and, if the assigning Lender retains any
Commitment, it must be a minimum total Commitment of Five Million Dollars
($5,000,000), and (iii) the conditions for that assignment set forth in the
applicable Note and Lien Assignment are satisfied. The "Effective Date" in each
Note and Lien Assignment must (unless a shorter period is agreeable to Borrower
and Administrative Agent) be at least five Business Days after it is executed
and delivered by the assignor Lender and the Assignee to Administrative Agent
for acceptance. Once that Note and Lien Assignment is accepted by Administrative
Agent, and subject to all of the following occurring, then, on and after the
"Effective Date" stated in it (i) the Assignee automatically becomes a party to
this Agreement and, to the extent provided in that Note and Lien Assignment, has
the Rights and obligations of a Lender under the Credit Documents, (ii) the
assignor Lender, to the extent provided in that Note and Lien Assignment, is
released from its obligations to fund Borrowings under this Agreement and its
reimbursement obligations under this Agreement and, in the case of a Note and
Lien Assignment covering all of the remaining portion of the assignor Lender's
Rights and obligations under the Credit Documents, that Lender ceases to be a
party to the Credit Documents, (iii) Borrower shall execute and deliver to the
assignor Lender and the Assignee the appropriate Notes in accordance with this
Agreement following the transfer, (iv) upon delivery of the Notes under clause
(iii) preceding, the assignor Lender shall return to Borrower all Notes
previously delivered to that Lender under this Agreement, and (v) Schedule 2 is
automatically deemed to be amended to reflect the name, address, telecopy
number, and Commitment of the Assignee and the remaining Commitment (if any) of
the assignor
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Lender, and Administrative Agent shall prepare and circulate to Borrower and
Lenders an amended Schedule 2 reflecting those changes. By executing and
delivering a Note and Lien Assignment, the Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Note and Lien Assignment,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Loan Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of any Loan Document
or any other instrument or document furnished pursuant hereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of Borrower or the
performance or observance by any of any Company of any of its obligations under
any Loan Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee confirms that it has received a copy of this Agreement,
together with copies of the financial statements referred to in Section 5.1 and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Note and Lien Assignment;
(iv) such assignee will, independently and without reliance upon Administrative
Lender, such assigning Lender or any other Lender and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Loan Documents;
(v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee
appoints and authorizes Administrative Lender to take such action as agent on
its behalf and to exercise such powers under the Loan Documents as are delegated
to Administrative Lender by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender.
14.13 Venue, Service of Process, and Jury Trial. BORROWER AND (PURSUANT
TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY OF, OR CONSENT TO, ANY OTHER
CREDIT DOCUMENT) EACH COMPANY, IN EACH CASE FOR ITSELF AND ITS SUCCESSORS AND
ASSIGNS, IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS IN ILLINOIS, (B) WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAWS, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH ANY
CREDIT DOCUMENT AND THE OBLIGATION BROUGHT IN THE FEDERAL OR STATE COURTS IN
CHICAGO, COOK COUNTY, ILLINOIS, (C) WAIVES ANY CLAIMS THAT ANY LITIGATION
BROUGHT IN ANY OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM, (D) CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THOSE COURTS IN ANY
LITIGATION BY THE MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A
NATIONALLY RECOGNIZED COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE UPON
DELIVERY OF THE LEGAL PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS AGREEMENT, (E)
AGREES THAT ANY LEGAL PROCEEDING AGAINST ANY PARTY TO ANY CREDIT DOCUMENT
ARISING OUT OF OR IN CONNECTION WITH THE CREDIT DOCUMENTS OR THE OBLIGATION MAY
BE BROUGHT IN ONE OF THE FOREGOING COURTS, AND (F) WAIVES TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAWS, ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY CREDIT DOCUMENT. The scope
of each of the foregoing waivers is intended to be all encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including contract claims, tort claims, breach of
duty claims, and all other common law and statutory claims. BORROWER AND
(PURSUANT TO ITS GUARANTY OR ITS EXECUTION AND DELIVERY OF, OR CONSENT TO, ANY
OTHER CREDIT DOCUMENT) EACH OTHER COMPANY ACKNOWLEDGES THAT THESE WAIVERS ARE A
MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT'S AND EACH LENDER'S AGREEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT ADMINISTRATIVE AGENT AND EACH LENDER
HAS ALREADY RELIED ON THESE WAIVERS IN ENTERING INTO THIS AGREEMENT, AND THAT
ADMINISTRATIVE
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 73 ULTRAK OPERATING, L.P.
<PAGE> 80
AGENT AND EACH LENDER WILL CONTINUE TO RELY ON EACH OF THESE WAIVERS IN RELATED
FUTURE DEALINGS. BORROWER AND (PURSUANT TO ITS GUARANTY OR ITS EXECUTION AND
DELIVERY OF, OR CONSENT TO, ANY OTHER CREDIT DOCUMENT) EACH OTHER COMPANY
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THESE WAIVERS WITH ITS
LEGAL COUNSEL, AND THAT IT KNOWINGLY AND VOLUNTARILY AGREES TO EACH WAIVER
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. The waivers in this section are
irrevocable, meaning that they may not be modified either orally or in writing,
and these waivers apply to any future renewals, extensions, amendments,
modifications, or replacements in respect of the applicable Credit Document. In
connection with any Litigation, this Agreement may be filed as a written consent
to a trial by the court.
14.14 Arbitration of Disputes. In the event of a dispute, claim or
controversty arising out of or relating to this Agreement, or relating to any
claim or cause of action which may arise or be asserted under any federal,
state, local or foreign statutory, regulatory or common law, including, without
limitation, claims with respect to breach of contract, tort, obligation of good
faith and fair dealing and fiduciary duties, Administrative Agent, Lenders,
Parent, Borrower and each other Company (by execution of a Credit Document)
agree that upon the written demand of any party, whether made before or after
the institution of any legal proceedings, but prior to the rendering of any
judgment in that proceeding, all and all such disputes, claims and controversies
between them, whether individual, joint, or class in nature, arising from this
Agreement, any of the Credit Documents, or otherwise, shall be resolved by
binding arbitration pursuant to the Commercial Rules of the American Arbitration
Association ("AAA"). Any arbitration proceeding held pursuant to this
arbitration provision shall be conducted in Dallas, Texas, or at any other place
selected by mutual agreement of the parties. No act to take or dispose of any
collateral shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This arbitration provision shall not
limit the right of either party during any dispute, claim or controversy to
seek, use, and employ ancillary, or preliminary rights and/or remedies, judicial
or otherwise, for the purposes of realizing upon, preserving, protecting,
foreclosing upon or proceeding under forcible entry and detainer for possession
of, any real or personal property, and any such action shall not be deemed an
election of remedies. Such remedies include, without limitation, obtaining
injunctive relief or a temporary restraining order, invoking a power of sale
under any deed of trust or mortgage, obtaining a writ of attachment or
imposition of a receivership, or exercising any rights relating to personal
property, including exercising the right of set-off, or taking or disposing of
such property with or without judicial process pursuant to the Uniform
Commercial Code. Any disputes, claims or controversies concerning the lawfulness
or reasonableness of an act, or exercise of any right or remedy concerning any
collateral, including any claim to rescind, reform or otherwise modify any
agreement relating to the collateral, shall also be arbitrated; provided,
however, that no arbitrator shall have the right or the power to enjoin or
restrain any act of either party. No punitive, exemplary or consequential
damages may ever be awarded by the arbitrator or anyone else, and each of the
parties hereby waives any and all rights to make, claim or recover any such
damages. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. The statute of limitations, estoppel, waiver,
laches and similar doctrines which would otherwise be applicable in an action
brought by a party shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the commencement of
any action for these purposes. The Federal Arbitration Act (Title 9 of the
United States Code) shall apply to the construction, interpretation and
enforcement of this arbitration provision.
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 74 ULTRAK OPERATING, L.P.
<PAGE> 81
14.15 Restatement of Existing Agreement. The parties to this Agreement
agree that, at the Closing Time, after all conditions precedent set forth in
Section 6.1 have been satisfied or waived: (a) the Obligations represents, among
other things, the renewal, amendment, extension, consolidation and modification
of the "Obligation" (as defined in the Existing Agreement); (b) this Agreement
is intended to, and does hereby, restate, renew, extend, amend, modify,
consolidate, supersede and replace the Existing Agreement; (c) the Notes
executed pursuant to this Agreement amend, renew, extend, modify, replace,
consolidate, substitute for and supercede in their entirety (but do not
extinguish the Debt arising under) the promissory notes executed pursuant to the
Existing Agreement; and (d) the entering into and performance of their
respective obligations under this Agreement and the transactions contemplated by
the Credit Documents do not constitute a novation.
14.16 Entirety. THE CREDIT DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN BORROWER, THE OTHER COMPANIES, LENDERS, AND ADMINISTRATIVE AGENT AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
DULY EXECUTED AND DELIVERED by each of the signatories hereto as of the
date first stated in this Agreement.
ADDRESS FOR NOTICE ULTRAK OPERATING, L.P., as Borrower
By ULTRAK GP, INC., General Partner
Ultrak Operating, L.P..
1301 Waters Ridge Drive By: /s/ TIM D. TORNO
Lewisville, Texas 75057 ---------------------------------------
Attn: Mr. Tim D. Torno, Tim D. Torno, Vice President - Finance
Vice President - Finance
Fax No.: (972) 353-6679
ADDRESS FOR NOTICE ULTRAK, INC., as Parent
Ultrak, Inc.
1301 Waters Ridge Drive
Lewisville, Texas 75057
Attn: Mr. Tim D. Torno,
Vice President - Finance By: /s/ TIM D. TORNO
Fax No.: (972) 353-6679 ---------------------------------------
Tim D. Torno, Vice President - Finance
ADDRESS FOR NOTICE AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO,
as Administrative Agent and a Lender
American National Bank and Trust
Company of Chicago
120 South LaSalle Street
Chicago, Illinois 60603 By: /s/ RICHARD S. JONSCHER
Attn: Richard S. Jonscher ---------------------------------------
Vice President Richard S. Jonscher, Vice President
Fax No.: (312) 661-6929
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 75 ULTRAK OPERATING, L.P.
<PAGE> 82
================================================================================
To induce Administrative Agent and Lenders to enter into this Amended
and Restated Credit Agreement, each guarantor named below (a) consents and
agrees to this Amended and Restated Credit Agreement's execution and delivery,
(b) ratifies and confirms that all guaranties, assurances, and Liens granted,
conveyed, or assigned to Administrative Agent on behalf of Lenders under the
Credit Documents are not released, diminished, impaired, reduced, or otherwise
adversely affected by this or any prior amendment, and continue to guarantee,
assure, and secure the full payment and performance of all present and future
Obligation, (c) agrees to perform such acts and duly authorize, execute,
acknowledge, deliver, file and record such additional guaranties, assignments,
security agreements, deeds of trust, mortgages, and other agreements, documents,
instruments, and certificates as Administrative Agent may reasonably deem
necessary or appropriate in order to create, perfect, preserve, and protect
those guaranties, assurances, and Liens, and (d) waives notice of acceptance of
this consent and agreement, which consent and agreement binds each of the
undersigned and their respective successors and permitted assigns and inures to
Administrative Agent and Lenders and their respective successors and permitted
assigns.
ULTRAK GP, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
ULTRAK, LP, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
DIAMOND ELECTRONICS, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
MONITOR DYNAMICS, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
ABM DATA SYSTEMS, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
SECURITY WARRANTY, INC.
By: /s/ TIM D. TORNO
-----------------------------------------
Tim D. Torno, Vice President - Finance
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 76 ULTRAK OPERATING, L.P.
<PAGE> 83
SCHEDULE 2
LENDERS AND COMMITMENTS
<TABLE>
<CAPTION>
==========================================================================================================
NAME AND ADDRESS OF LENDER REVOLVING FACILITY
====================================================== ===================================================
<S> <C>
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO
120 SOUTH LASALLE STREET FORTY FIVE MILLION DOLLARS
CHICAGO, ILLINOIS 60603 ($45,000,000)
ATTENTION: RICHARD S. JONSCHER, VICE PRESIDENT
TELEPHONE: 312/661-5736
FACSIMILE: 312/661-6929
LENDING INSTALLATION FOR EUROCURRENCY BORROWINGS
BANK ONE, N.A.
1 TRITON SQUARE
LONDON
NW1 3FN
ATTN: DOT O'FLAHERTY
FAX NO.: 44 171 9034148
- ------------------------------------------------------ ---------------------------------------------------
TOTAL $45,000,000
====================================================== ===================================================
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 1 ULTRAK OPERATING, L.P.
<PAGE> 84
SCHEDULE 7.3
INFORMATION REGARDING COMPANIES
<TABLE>
<CAPTION>
===========================================================================================================================
INFORMATION REGARDING COMPANIES
===========================================================================================================================
STATE OF STATES QUALIFIED STILL USING
NAME/ INCORPORATION/ AS FOREIGN TRADE NAMES USED IN NAME?
OWNERSHIP FORMATION CORP./ENTITY LAST FOUR MONTHS Y/N
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<S> <C> <C> <C> <C>
Ultrak, Inc. Delaware None None Not
applicable
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak Operating, L.P. Texas Nevada International Y
Ultrak GP, Inc. is Business
the 1% General Development
Partner of Ultrak Groupe Bisset USA Y
Operating, L.P. MAXPRO USA Y
Ultrak Special Projects Y
Ultrak LP, Inc. is GPS Standard Y
the 99% Limited Ultrak International; Y
Partner of Ultrak Ultrak OEM Y
Operating, L.P. Ultrak Financial Services Y
Mobile Video Products Y
The Focus Company Y
Smart Choice Y
Exxis Security Y
Closed Circuit Service Y
Industrial Vision Source Y
CCTV Source Y
Loss Prevention Electronics Y
Ultrak - Denver Y
Ultrak Y
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak GP, Inc. Delaware Texas None Not
100% owned by applicable
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<CAPTION>
==============================================================================================
INFORMATION REGARDING COMPANIES
==============================================================================================
NAME/ CHIEF EXECUTIVE
OWNERSHIP OFFICE OTHER PRINCIPAL OFFICES
- ------------------------------ ----------------------------- ---------------------------------
<S> <C> <C>
Ultrak, Inc. 1301 Waters Ridge Dr. None
Lewisville, Texas 75057
- ------------------------------ ----------------------------- ---------------------------------
Ultrak Operating, L.P. 1301 Waters Ridge Dr. 4301 South Cameron
Ultrak GP, Inc. is Lewisville, Texas 75057 Suite 12
the 1% General Las Vegas, Nevada 89103
Partner of Ultrak
Operating, L.P. 6252 West 91st Ave.
Westminster, Colorado 80030
Ultrak LP, Inc. is
the 99% Limited 4101 Ravenwood Rd.
Partner of Ultrak Suite 319
Operating, L.P. Fort Lauderdale, Florida 33312
- ------------------------------ ----------------------------- ---------------------------------
Ultrak GP, Inc. 1301 Waters Ridge Dr. None
100% owned by Lewisville, Texas 75057
Ultrak, Inc.
- ------------------------------ ----------------------------- ---------------------------------
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ULTRAK OPERATING, L.P.
<PAGE> 85
SCHEDULE 7.3
INFORMATION REGARDING COMPANIES
<TABLE>
<CAPTION>
===========================================================================================================================
INFORMATION REGARDING COMPANIES
===========================================================================================================================
STATE OF STATES QUALIFIED STILL USING
NAME/ INCORPORATION/ AS FOREIGN TRADE NAMES USED IN NAME?
OWNERSHIP FORMATION CORP./ENTITY LAST FOUR MONTHS Y/N
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<S> <C> <C> <C> <C>
Ultrak LP, Inc. Delaware None None Not
100% owned by applicable
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Diamond Electronics, Inc. Ohio Texas Diamond Y
100% owned by Diamond Electronics Y
Ultrak, Inc. Ultrak Ohio
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Monitor Dynamics, Inc. California Virginia Monitor Y
100% owned by MDI Y
Ultrak, Inc. Ultrak California
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
ABM Data Systems, Inc. Texas None ABM Data Systems Not
100% owned by Phoenix Software applicable
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Security Warranty, Inc. Texas None SecurityPlus Not
100% owned by applicable
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak Holdings Limited United Kingdom None None Not
100% owned by applicable
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Groupe Bisset, S.A. France None Ultrak France Y
100% owned by Bisset Y
Ultrak Holdings
Limited
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak (Asia Pacific) Pty., Australia None Ultrak Australia Y
Ltd. MAXPRO Y
100% owned by MAXPRO Systems Y
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<CAPTION>
==============================================================================================
INFORMATION REGARDING COMPANIES
==============================================================================================
NAME/ CHIEF EXECUTIVE
OWNERSHIP OFFICE OTHER PRINCIPAL OFFICES
- ------------------------------ ----------------------------- ---------------------------------
<S> <C> <C>
Ultrak LP, Inc. 1105 North Market Street None
100% owned by Suite 1300
Ultrak, Inc. P.O. Box 8985
Wilmington, Delaware 19899
Attn: Phyllis Kudarczuk
- ------------------------------ ----------------------------- ---------------------------------
Diamond Electronics, Inc. 4465 Coonpath Road None
100% owned by Carroll, Ohio 43112
Ultrak, Inc.
- ------------------------------ ----------------------------- ---------------------------------
Monitor Dynamics, Inc. 9518 Ninth Street 11216 Waples Mill Rd.
100% owned by Rancho Cucamonga, CA 91730 Suite 1B
Ultrak, Inc. Fairfax, Virginia 22030
- ------------------------------ ----------------------------- ---------------------------------
ABM Data Systems, Inc. 9020 Capitol of Texas None
100% owned by Highway North
Ultrak, Inc. Suite 540
Austin, Texas 78759
- ------------------------------ ----------------------------- ---------------------------------
Security Warranty, Inc. 1301 Waters Ridge Dr. None
100% owned by Lewisville, Texas 75057
Ultrak, Inc.
- ------------------------------ ----------------------------- ---------------------------------
Ultrak Holdings Limited MSP Secretaries, Ltd. None
100% owned by 22 Melton Street
Ultrak, Inc. London
NW1 2BW
UK
- ------------------------------ ----------------------------- ---------------------------------
Groupe Bisset, S.A. 98 Ter, Boulevard Heloise None
100% owned by F-95103 Argenteuil
Ultrak Holdings CEDEX
Limited France
- ------------------------------ ----------------------------- ---------------------------------
Ultrak (Asia Pacific) Pty., 1/25 Irving Dr. Level 21, 201 Miller Street
Ltd. Malaga, WA 6090 North Sydney, NSW 20060
100% owned by Australia Australia
Ultrak, Inc.
- ------------------------------ ----------------------------- ---------------------------------
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ULTRAK OPERATING, L.P.
<PAGE> 86
<TABLE>
<CAPTION>
===========================================================================================================================
INFORMATION REGARDING COMPANIES
===========================================================================================================================
STATE OF STATES QUALIFIED STILL USING
NAME/ INCORPORATION/ AS FOREIGN TRADE NAMES USED IN NAME?
OWNERSHIP FORMATION CORP./ENTITY LAST FOUR MONTHS Y/N
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<S> <C> <C> <C> <C>
VideV GmbH Germany None Ultrak Germany Y
100% owned by VideV Y
Ultrak Holdings
Limited
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Intervision Express Limited England None Ultrak U.K. Y
100% owned by Intervision Y
Ultrak Holdings Intervision Express Y
Limited
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Casarotto Security S.p.A. Italy None Ultrak Italy Y
100% owned by Casarotto Y
Ultrak Holdings Casarotto Security Y
Limited
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Philtech Electronic Services South Africa None Ultrak South Africa Y
(Proprietary) Limited, aka Philtech Y
Ultrak South Africa Philtech Electronic Y
100% owned by Philtech Electronic Services Y
Ultrak, Inc.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak (Asia) Pte. Ltd. Republic of None Ultrak Asia Y
100% owned by Singapore
Ultrak, Inc.
Security Procurement, B.V. Netherlands None None Not
100% owned by applicable
Groupe Bisset, S.A.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Security Procurement-France France None None Not
applicable
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<CAPTION>
==============================================================================================
INFORMATION REGARDING COMPANIES
==============================================================================================
NAME/ CHIEF EXECUTIVE
OWNERSHIP OFFICE OTHER PRINCIPAL OFFICES
- ------------------------------ ----------------------------- ---------------------------------
<S> <C> <C>
VideV GmbH Gro(beta)enbaumer Weg 10 None
100% owned by D-40472 Dusseldorf
Ultrak Holdings Germany
Limited
- ------------------------------ ----------------------------- ---------------------------------
Intervision Express Limited Unit 445 Oakshot Place None
100% owned by Walton Summit
Ultrak Holdings Preston, England
Limited PR5 8AT
U.K.
- ------------------------------ ----------------------------- ---------------------------------
Casarotto Security S.p.A. Via Treviso 2/4 None
100% owned by I-31020 San Vendemiano
Ultrak Holdings (Treviso)
Limited Italy
- ------------------------------ ----------------------------- ---------------------------------
Philtech Electronic Services Quality House None
(Proprietary) Limited, aka Saint Christopher House
Ultrak South Africa Saint Andrews
100% owned by Bedfordview 2007
Ultrak, Inc. South Africa
- ------------------------------ ----------------------------- ---------------------------------
Ultrak (Asia) Pte. Ltd. 221 Henderson Road None
100% owned by #06-18 Henderson Bldg.
Ultrak, Inc. Singapore 159557
Security Procurement, B.V. Forum Administrations, B.V. None
100% owned by Weena 336
Groupe Bisset, S.A. 3012 NJ Rotterdam
P.O. Box 21850
3001 AW Rotterdam
Netherlands
- ------------------------------ ----------------------------- ---------------------------------
Security Procurement-France 98 Ter, Boulevard Heloise None
F-95103 Argenteuil
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ULTRAK OPERATING, L.P.
<PAGE> 87
<TABLE>
<CAPTION>
===========================================================================================================================
INFORMATION REGARDING COMPANIES
===========================================================================================================================
STATE OF STATES QUALIFIED STILL USING
NAME/ INCORPORATION/ AS FOREIGN TRADE NAMES USED IN NAME?
OWNERSHIP FORMATION CORP./ENTITY LAST FOUR MONTHS Y/N
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
<S> <C> <C> <C> <C>
100% owned by applicable
Groupe Bisset, S.A.
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Videosys Limited United Kingdom None None Not
100% owned by applicable
Ultrak Holdings
Limited
- ------------------------------ ------------------- -------------------- ---------------------------------- ---------------
Ultrak Europe N.V. Belgium None Ultrak Europe Y
99% owned by Ultrak Belgium Y
Ultrak, Inc.
1% owned by Ultrak
Holdings Limited
Multi Concept Systemes, S.A. Switzerland None MCS Y
100% owned by Ultrak Switzerland Y
Ultrak Holdings
Limited
Ultrak Benelux, N.V. Belgium None Ultrak Benelux Y
1% owned by Ultrak
Holdings Limited
99% owned by
Ultrak, Inc.
============================== =================== ==================== ================================== ===============
MACH Security, Sp.z o.o. Poland None MACH Y
100% owned by Mach Security Y
Ultrak Holdings Ultrak Poland Y
Limited
============================== =================== ==================== ================================== ===============
<CAPTION>
==============================================================================================
INFORMATION REGARDING COMPANIES
==============================================================================================
NAME/ CHIEF EXECUTIVE
OWNERSHIP OFFICE OTHER PRINCIPAL OFFICES
- ------------------------------ ----------------------------- ---------------------------------
<S> <C> <C>
100% owned by CEDEX
Groupe Bisset, S.A. France
- ------------------------------ ----------------------------- ---------------------------------
Videosys Limited Mears House None
100% owned by 194-196 Finchley Road
Ultrak Holdings London, UK NW3 6BX
Limited
- ------------------------------ ----------------------------- ---------------------------------
Ultrak Europe N.V. Koralenhoeve 25 B.3 None
99% owned by B 2160 Wommelgem
Ultrak, Inc. Belgium
1% owned by Ultrak
Holdings Limited
Multi Concept Systemes, S.A. Ch.du Closalet 4 None
100% owned by CH-1023 Crissier
Ultrak Holdings Switzerland
Limited
Ultrak Benelux, N.V. Koralenhoeve 25 B.3
1% owned by Ultrak B 2160 Wommelgem
Holdings Limited Belgium
99% owned by
Ultrak, Inc.
============================== ============================= =================================
MACH Security, Sp.z o.o. Al. Wojska Poskiego 70 None
100% owned by 70-479 Szezecin
Ultrak Holdings Poland
Limited
============================== ============================= =================================
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK ULTRAK OPERATING, L.P.
<PAGE> 88
SCHEDULE 7.6-A
CONTINGENT LIABILITIES
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 5 ULTRAK OPERATING, L.P.
<PAGE> 89
SCHEDULE 7.6-B
DECEMBER 31, 1999 FINANCIAL STATEMENTS
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 6 ULTRAK OPERATING, L.P.
<PAGE> 90
SCHEDULE 7.6-C
FINANCIAL PROJECTIONS
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 7 ULTRAK OPERATING, L.P.
<PAGE> 91
SCHEDULE 7.8
LITIGATION
None
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 8 ULTRAK OPERATING, L.P.
<PAGE> 92
SCHEDULE 7.20
INVENTORY LOCATIONS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
<S> <C>
Ultrak, Inc. 1301 Waters Ridge Dr.
Lewisville, Texas 75057
- --------------------------------- -----------------------------------------------------------
Ultrak Operating, L.P. 1301 Waters Ridge Dr.
Lewisville, Texas 75057
4301 South Cameron, Suite 12
Las Vegas, Nevada 89103
4101 Ravenwood Rd., Suite 319
Fort Lauderdale, Florida 33312
- --------------------------------- -----------------------------------------------------------
Diamond Electronics, Inc. 4465 Coonpath Road
Carroll, Ohio 43112
- --------------------------------- -----------------------------------------------------------
Monitor Dynamics, Inc. 9518 Ninth Street
Rancho Cucamonga, CA 91730
- --------------------------------- -----------------------------------------------------------
ABM Data Systems, Inc. 9020 Capitol of Texas Highway North
Suite 540, Austin, Texas 78759
- --------------------------------- -----------------------------------------------------------
</TABLE>
AMENDED AND RESTATED CREDIT AGREEMENT
AMERICAN NATIONAL BANK Page 9 ULTRAK OPERATING, L.P.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,343,191
<SECURITIES> 955,636
<RECEIVABLES> 45,720,592
<ALLOWANCES> (1,846,167)
<INVENTORY> 48,039,379
<CURRENT-ASSETS> 109,257,460
<PP&E> 27,762,133
<DEPRECIATION> (9,847,175)
<TOTAL-ASSETS> 202,344,555
<CURRENT-LIABILITIES> 29,609,021
<BONDS> 0
0
976,755
<COMMON> 151,216
<OTHER-SE> 130,963,422
<TOTAL-LIABILITY-AND-EQUITY> 202,344,555
<SALES> 52,134,341
<TOTAL-REVENUES> 52,134,341
<CGS> 35,947,413
<TOTAL-COSTS> 35,947,413
<OTHER-EXPENSES> 16,037,353
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 856,496
<INCOME-PRETAX> (750,936)
<INCOME-TAX> 322,902
<INCOME-CONTINUING> (428,034)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (428,034)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
