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EXHIBIT 10.73
CONFORMED COPY
AMENDMENT, WAIVER AND CONSENT
TO
CREDIT AGREEMENT
THIS AMENDMENT, WAIVER AND CONSENT TO CREDIT AGREEMENT ("Agreement") is
being executed and delivered as of March 4, 1998 by and among Code-Alarm, Inc.,
a Michigan corporation (the "Borrower"), the other "Credit Parties" from time
to time party to the Credit Agreement referred to below (together with the
Borrower, collectively, the "Credit Parties"), the financial institutions from
time to time party to such Credit Agreement (collectively, the "Lenders", and
each individually, a "Lender"), and General Electric Capital Corporation, as
the "Agent" for the Lenders (the "Agent"). Undefined capitalized terms which
are used herein shall have the meanings ascribed to such terms in the Credit
Agreement.
W I T N E S S E T H:
WHEREAS, the Borrower, the other Credit Parties, the Lenders and the Agent
are parties to that certain Credit Agreement dated as of October 24, 1997 (the
"Credit Agreement"), pursuant to which the Lenders have agreed to provide,
subject to the terms and conditions contained therein, certain loans and other
financial accommodations to the Borrower;
WHEREAS, the Borrower (i) failed to comply with the Cumulative Minimum
EBITDA covenant for November 1997, December 1997 and January 1998, as provided
in paragraph (c) of Annex G of the Credit Agreement, (ii) failed to comply with
the Minimum Fixed Charge Coverage Ratio covenant for its Fiscal Quarter ended
December 31, 1997, as provided in paragraph (b) of Annex G of the Credit
Agreement, (iii) failed to timely deliver certain of the financial information
and related materials required by paragraph (a) of Annex E of the Credit
Agreement with respect to each of its October, November and December 1997 and
January 1998 Fiscal Months, (iv) failed to timely deliver certain of the
financial information and related materials required by Annex F of the Credit
Agreement with respect to each of its October, November and December 1997 and
January 1998 Fiscal Months, (v) failed to disclose on Disclosure Schedule (3.8)
of the Credit Agreement the outstanding warrants pursuant to which Borrower was
a party as of the Closing Date and after giving effect to the Restructuring
Transactions, (vi) described in Exhibit A failed to comply with the provisions
of Annex C of the Credit Agreement with respect to certain bank accounts
heretofore established by the Borrower at First of America Bank and described
in Exhibit A hereto, and with respect to certain bank accounts maintained at
NationsBank which are now closed, (vii) failed to disclose on Disclosure
Schedules (6.2) and (6.4) of the Credit Agreement certain loans made by
Borrower prior to the Closing Date to certain officers of the Borrowers, which
loans remain outstanding as of the date hereof and are described on Exhibit A
hereto, (viii) failed to timely deliver the annual operating plan and related
materials required by paragraph (c) of Annex E of the Credit Agreement for
Borrower's current Fiscal Year, (ix) failed to comply with the provisions of
paragraph (j), clause (iii) of Annex E of the Credit Agreement with respect to
October, November and December 1997 and January 1998, and (x) failed to comply
with the notification requirements of paragraph (f) of
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Annex E of the Credit Agreement with respect to each of the matters described
in clauses (i) through (ix) of this paragraph (hereinafter, collectively, the
"Existing Defaults");
WHEREAS, on or about February 6, 1998, the Borrower received $922,500 of
cash proceeds (net of reasonable costs and expenses paid to non-Affiliates in
connection therewith) from the settlement of certain litigation which was
pending before the United States District Court, Western District of Texas,
Austin Division, and known as Code Alarm, Inc. v. Alpine Electronics, Inc. and
Audio Dimension, Inc., (Case No. A97CA575JN) (the "Settlement Proceeds"),
which, pursuant to the provisions of Section 1.3(b)(v) of the Credit Agreement,
gave rise to Borrower's obligation to prepay the Loans in an amount equal to
fifty percent (50%) of such Settlement Proceeds;
WHEREAS, Borrower requested that the Lenders and Agent agree to permit
Borrower to prepay the Loans in an amount equal to only twenty-five percent
(25%) of the Settlement Proceeds notwithstanding the provisions of Section
1.3(b)(v) of the Credit Agreement and, due to the pending nature of this
Agreement, Borrower did prepay the Loans in such amount and, with Borrower
understanding and agreement, Agent established a Reserve against the Borrowing
Base in an amount equal to an additional twenty-five percent (25%) of the
Settlement Proceeds (hereinafter, the "Alpine Reserve");
WHEREAS, the Borrower has requested that the Lenders, and subject to the
terms and conditions of this Agreement the Lenders are willing to, (i) waive
each of the Existing Defaults, (ii) memorialize the Lenders' agreement to
permit the Borrower to prepay the Loans in an amount equal to only twenty-five
percent (25%) of the Settlement Proceeds, (iii) release the Alpine Reserve and
(iv) amend the Credit Agreement to correct certain errors and omissions, and to
clarify certain ambiguities, contained therein.
WHEREAS, Borrower informed the Lenders and Agent that (i) on February
3, 1998, the Lower Court entered a judgment with respect to the DEI Litigation
in the amount of $10,651,443 plus daily prejudgment interest of $1,992.99 from
January 20, 1998 until February 2, 1998, (ii) Borrower filed a Motion to Alter
or Amend the Judgment with respect to such judgment raising issues regarding
the prejudgment interest and willfulness components of such judgment and
requesting reconsideration of $1,952,684 of such judgment (the "Non-Bonded
Portion"), (iii) Borrower also filed a Motion to Stay Entry Or Execution of a
Final Judgment with respect to the judgment, (iv) the Lower Court entered an
order on February 6, 1998 granting a stay of execution with respect to the
Non-Bonded Portion without security pursuant to Rule 62(b) of the Federal Rules
of Civil Procedure until final disposition of Borrower's Motion to Alter or
Amend the Judgment, (v) pursuant to such order, the Lower Court additionally
denied Borrower's Motion to Stay Entry Or Execution of a Final Judgment with
respect to the remaining portion of such judgment (the "Bonded Portion"), but
granted a stay of execution with respect to the Bonded Portion until the
expiration of 30 days after the February 3, 1998 entry of the judgment to
enable Borrower to appeal the denial of such motion, (vi) upon the expiration
of such 30 day stay period, Borrower would be required, pursuant to the
February 6, 1998 order, to post a supersedeas bond pending appeal pursuant to
Federal Rule of Civil Procedure 62(d) in the amount of $8,698,759, plus
prejudgment interest from January 20, 1998 until February 2, 1998,
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plus a sum equal to sixteen months post-judgment interest, (vii)
Borrower has agreed with the other parties to the DEI Litigation that
Borrower's posting of a supersedeas bond in the amount of $9,341,031 would be
an adequate amount to secure the Bonded Portion;
WHEREAS, Borrower requested that Agent arrange for the issuance, pursuant
to the Credit Agreement and Litigation L/C Agreement, of a Litigation L/C in an
amount equal to $9,341,031 to secure the supersedeas bond to be posted by
Borrower in connection with the stay of execution of the Bonded Portion,
notwithstanding the absence of any commitment on the part of Agent or the
Lenders to arrange for such issuance or for the incurrence of Litigation L/C
Obligations under the circumstances described herein pursuant to the existing
terms of the Credit Agreement and Litigation L/C Agreement; and
WHEREAS, Agent and the Term Lender are willing, subject to the terms and
conditions of this Agreement, to modify the terms of the Credit Agreement (i)
to allow for the issuance of a Litigation L/C, and incurrence of Litigation L/C
Obligations, in the amount of $9,341,031 to secure the Bonded Portion and (ii)
to provide for the Term Lenders' further commitment to arrange for the
amendment or other modification or substitution of such Litigation L/C upon
resolution of all pending motions and other issues before the Lower Court with
respect to the DEI Litigation and the bonding of the Bonded Portion, provided
that the Litigation L/C as so modified to cover all portions of the Lower
Court's judgment would not exceed $12,000,000 and provided that such judgment
is a final and complete judgment of the Lower Court with respect to all matters
relating to the DEI Litigation.
NOW, THEREFORE, in consideration of the foregoing premises, the terms and
conditions stated herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Borrower, the Lenders and
the Agent, such parties hereby agree as follows:
1. Amendment. Subject to Paragraph 4 of this Agreement, and effective as
of the date of this Agreement, the Credit Agreement is hereby amended (a) in
the manner and to the extent provided in the conformed copy of the Credit
Agreement attached hereto as Exhibit B, and (b) to delete the existing
Disclosure Schedules (3.8), (3.19), (6.2), and (6.4) thereto and to replace
such schedules with the corresponding schedules attached as Exhibit A hereto.
2. Waiver. Subject to Paragraph 4 of this Agreement and effective as
of the date of this Agreement, each of the Lenders and the Agent hereby waives
(a) each of the Existing Defaults and (b) the Borrower's compliance with the
provisions of Annex C of the Credit Agreement with respect to the bank accounts
maintained at First of America Bank and described in Exhibit A hereto,
provided, that, at all times from and after the date hereof during which
Borrower maintains such accounts, Borrower shall utilize such accounts solely
for the deposit of amounts sufficient to pay the Borrower's accrued payroll
expenses and the disbursement of such deposits for such purposes, or otherwise
will fully comply with the terms and conditions of such annex with respect to
such bank accounts.
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3. Consent and Release. Subject to Paragraph 4 of this Agreement and
effective as of the date of this Agreement, and notwithstanding the terms of
Section 1.3(b)(v) of the Credit Agreement, each of the Lenders and the Agent
hereby consents to the prepayment with respect to the Settlement Proceeds in an
amount equal to only twenty-five percent (25%) of such Settlement Proceeds and
hereby releases the Alpine Reserve.
4. Effectiveness of this Agreement; Conditions Precedent. The provisions
of Paragraphs 1 through 3 shall be deemed to have become effective as of the
date of this Agreement, but such effectiveness shall be expressly conditioned
upon the Agent's receipt on or before March 5, 1998 of each of the following:
(a) an originally-executed counterpart of this Agreement executed by a
duly authorized officer of the Borrower, each other Credit Party, and each of
the Requisite Lenders;
(b) originally-executed counterparts to a Reaffirmation of Guaranties
duly executed by the Pegasus Funds substantially in the form attached hereto,
together with the calculations referred to in clause (e) thereof, in form and
scope acceptable to the Agent;
(c) an originally-executed certificate of Borrower's chief financial
officer with respect to the anti-dilution adjustments to the GECC Warrants
resulting from the issuance of the "Litigation Warrants" (as defined in the
Series A Preferred Stock Documents) to be issued by Borrower to the Pegasus
Funds simultaneously with the issuance of the initial Litigation L/C
contemplated by this Agreement, together with certified copies of the
fully-executed Litigation Warrants so issued or to be issued; and
(d) an originally-executed certificate of Borrower's chief financial
officer calculating the amounts determined pursuant to clauses (ii) and (iii)
of Section 2.3(I)(a) of the Credit Agreement, and the Net Borrowing
Availability, as of the most recent date on which such information is available
to Borrower's chief financial officer.
5. Request for Incurrence of Litigation L/C Obligations. In accordance
with paragraph (e) of Annex B of the Credit Agreement, Borrower hereby requests
Agent to incur Litigation L/C Obligations in the amount of $9,341,031 by
arranging for the issuance of a Litigation L/C in such amount, naming United
Pacific Insurance Company as beneficiary, and otherwise substantially in the
form and upon the terms attached as Exhibit C hereto. Borrower hereby (a)
represents and warrants that, upon issuance of such Litigation L/C, all of the
conditions set forth in Sections 2.1, 2.3(I) and 2.4 of the Credit Agreement,
as amended by this Agreement, have been, or thereupon will be, satisfied and
(b) reaffirms Borrower's grant to Agent of each of Agent's Liens, on behalf of
itself and Lenders, pursuant to the Collateral Documents and the Litigation
Collateral Documents.
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6. Representations and Warranties. (a) The Borrower and each other
Credit Party hereby represents and warrants that this Agreement constitutes the
legal, valid and binding obligation of the Borrower and such other Credit Party
enforceable against the Borrower and each other Credit Party in accordance with
its terms.
(b) The Borrower and each other Credit Party hereby represents and
warrants that its execution and delivery of this Agreement, and its performance
hereafter of the Credit Agreement as modified by this Agreement, have been duly
authorized by all necessary corporate action, do not violate any provision of
its articles of incorporation, bylaws or other charter documents, will not
violate any law, regulation, court order or writ applicable to it, will not
require the approval or consent of any governmental agency, and do not require
the approval or consent of any third party under the terms of any contract or
agreement to which the Borrower, any other Credit Party, Parent or any
Subsidiary of the Borrower or any other Credit Party is bound.
(c) The Borrower hereby represents and warrants that, after giving effect
to this Agreement, (i) no Default or Event of Default has occurred and is
continuing or will have occurred and be continuing and (ii) all of the
representations and warranties of the Borrower and each other Credit Party
contained in the Credit Agreement (other than representations and warranties
which, in accordance with their express terms, are made only as of a specified
date) are, and will be, true and correct as of the date of the Borrower's and
such other Credit Parties' execution hereof in all material respects as though
made on and as of such date.
(d) Borrower hereby further represents and warrants that, except as set
forth in Disclosure Schedule (3.8) of the Credit Agreement or in Exhibit A
attached hereto, as of the date hereof both before and after giving effect to
the issuance of the "Litigation Warrants" (as defined in the Series A Preferred
Stock Documents) to be issued by Borrower to the Pegasus Funds simultaneously
with the issuance of the initial Litigation L/C contemplated by this Agreement
and the anti-dilution adjustments to the GECC Warrants and any other equity
interests resulting from such issuance, there are no outstanding rights to
purchase, options, warrants or similar rights or agreements pursuant to which
any Credit Party may be required to issue, sell, repurchase or redeem any of
its Stock or other equity securities or any Stock or other equity securities of
its Subsidiaries.
7. Reference to and Effect on Credit Agreement. The Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
Except as is expressly set forth in Paragraphs 2 and 3 of this Agreement,
neither the execution, delivery nor effectiveness of this Agreement shall
operate as a waiver of any right, power or remedy of the Agent or any Lender of
any Default or Event of Default under the Credit Agreement, all of which the
Agent and the Lenders hereby expressly reserve. The Borrower, each other
Credit Party, the Lenders and the Agent agree and acknowledge that this
Agreement constitutes a "Loan Document" under and as defined in the Credit
Agreement.
8. Reaffirmation. Each of the Borrower and the other Credit Parties
hereby (a) ratifies and reaffirms all of its payment and performance
obligations, contingent or otherwise,
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under each Loan Document to which it is a party, (b) agrees and
acknowledges that such ratification and reaffirmation is not a condition to the
continued effectiveness of such Loan Documents and (c) agrees that neither such
ratification and reaffirmation, nor the Agent's and the Lenders' solicitation
of such ratification and reaffirmation, constitutes a course of dealing giving
rise to any obligation or condition requiring a ratification or reaffirmation
of the Borrower's or the other Credit Parties' obligations under the Loan
Documents with respect to any subsequent modifications to the Credit Agreement
or other Loan Documents.
9. Authorized Persons. Borrower hereby notifies Agent that each of Craig
S. Camalo or Teresa Waske, in their respective capacities as officers or
employees of Borrower, have been authorized by Borrower to, either alone or
jointly, make requests for Loans or Advances under the Credit Agreement, each
of which request shall be legally binding upon the Borrower.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws and decisions of the State of Illinois (including
S.H.A. 735 ILCS 105/5-1, et. seq., but without giving effect to any other
conflicts of law provisions).
11. Agent's Expenses. The Borrower hereby agrees to promptly reimburse
the Agent for all of the reasonable out-of-pocket expenses, including, without
limitation, attorneys' and paralegals' fees, it has heretofore or hereafter
incurred or incurs in connection with the preparation, negotiation and
execution of this Agreement.
12. Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original and all of which together shall constitute one
and the same agreement among the parties.
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
CODE-ALARM, INC.
By: /s/ Craig S. Camalo
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Name: Craig S. Camalo
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Title: Vice President
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GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent and Lender
By: /s/ Catharine L. Midkiff
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Name: Catherine L. Midkiff
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Title: Duly Authorized Signatory
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TESSCO GROUP, INC.
By: /s/ Craig S. Camalo
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Name: Craig S. Camalo
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Title: Secretary
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CHAPMAN SECURITY SYSTEMS, INC.
By: /s/ Craig S. Camalo
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Name: Craig S. Camalo
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Title: Secretary
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INTERCEPT SYSTEMS, INC.
By: /s/ Craig S. Camalo
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Name: Craig S. Camalo
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Title: Secretary
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ANES, INC.
By: /s/ Craig S. Camalo
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Name: Craig S. Camalo
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Title: Secretary
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REAFFIRMATION OF GUARANTIES
Reference is hereby made to (i) that certain Limited Supplemental Guaranty
dated as of October 24, 1997 (the "Supplemental Guaranty") among Pegasus
Partners, L.P., a Delaware limited partnership, and Pegasus Related Partners,
L.P., a Delaware limited partnership (collectively, the "Guarantors"), and
General Electric Capital Corporation, a New York corporation, individually and
as agent (the "Agent"), (ii) that certain Limited Litigation Guaranty dated as
of October 24, 1997 (the "Litigation Guaranty") among the Guarantors and the
Agent, (iii) that certain Credit Agreement dated as of October 24, 1997 (the
"Credit Agreement") among Code-Alarm, Inc., a Michigan corporation (the
"Borrower"), certain other "Credit Parties" referred to and as defined therein
(the "Credit Parties"), certain "Lenders" from time to time party thereto (the
"Lenders"), and the Agent, and (iv) that certain Amendment, Waiver and Consent
to Credit Agreement of even date herewith (the "Amendment") among the Borrower,
the Credit Parties, the Lenders and the Agent.
Subject to receipt of the acknowledgment of the Agent provided below, each
of the Guarantors hereby (a) acknowledges having received and reviewed a copy
of the Amendment and hereby expressly consents to its terms and conditions, (b)
subject to clause (c) below, ratifies and reaffirms all of its payment and
performance obligations, contingent or otherwise, under the "Supplemental
Guaranty" (as defined in the Credit Agreement) and the Litigation Guaranty
(collectively, the "Guaranties"), (c) confirms and agrees that, upon the
issuance of the initial Litigation L/C in an original stated amount of
$9,341,031 as contemplated by the Amendment, the "Limitation Amount" as
referred to and defined in the Litigation Guaranty shall equal $9,341,031, (d)
confirms that it has received the Litigation Warrants in sufficient form and
amount and the related Litigation Warrant Opinion, in each case as referred to
in Section 3(b) of the Litigation Guaranty, (e) certifies that together
herewith it has delivered a calculation of the Net Assets and Unpaid Capital
Obligations of each Guarantor as of the date hereof, and a calculation of the
Aggregate Net Capital and Aggregate Portfolio Cash Flow as of the date hereof
(in each case as defined in the Litigation Guaranty), (f) confirms that each of
the representations and warranties set forth in Section 4 of the Litigation
Guaranty are true and correct as of the date hereof, (g) agrees and
acknowledges that, upon the issuance of the initial Litigation L/C referred to
above, each of the Effectiveness Conditions shall be deemed to have been
satisfied and the Effective Date shall be deemed to have occurred (as such
capitalized terms are defined in the Litigation Guaranty), and (h) agrees that,
in the event the Borrower requests that the Agent arrange for a modification,
substitution, supplementation or reissuance of the Litigation L/C which would
have the effect of increasing the stated amount thereof to an aggregate amount
not exceeding $12,000,000 and the Agent shall, pursuant to the terms and
conditions of the Credit Agreement, be obligated to arrange for such
modification, substitution, supplementation or reissuance pursuant to such
terms and conditions (upon the Guarantors' reaffirmation of its Guaranty
obligations), then the Limitation Amount referred to and defined in the
Litigation Guaranty shall be increased to an amount equal to the stated amount
of the Litigation L/C as so increased upon (1) Guarantors' receipt of
additional Litigation Warrants in an amount and with an exercise price
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determined pursuant to Section 5.4 of that certain Unit Purchase Agreement
dated as of October 24, 1997 among the Borrower and the Guarantors, and a
Litigation Warrant Opinion, in each case substantially in the forms of those
being delivered in connection herewith, and (2) the effectiveness of such
modification, substitution or reissuance of the Litigation L/C.
IN WITNESS WHEREOF, this instrument has been executed and delivered as of
this 4th day of March, 1998.
PEGASUS PARTNERS, L.P. PEGASUS RELATED PARTNERS, L.P.
By: PEGASUS INVESTORS, L.P., By: PEGASUS INVESTORS, L.P.,
as Managing General Partner as Managing General Partner
By: PEGASUS INVESTORS GP, INC., By: PEGASUS INVESTORS GP, INC.,
as General Partner as General Partner
By: /s/ Richard Cion By: /s/ Richard Cion
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Name: Richard Cion Name: Richard Cion
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Title: Vice President Title: Vice President
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The undersigned hereby acknowledges receipt of the items required to be
delivered to it pursuant to Section 3 of the Litigation Guaranty and agrees
that the "Limitation Amount" as referred to and defined in the Litigation
Guaranty is $9,341,031 and may not be increased except as provided above.
GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent
By: /s/ Catharine L. Midkiff
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Name: Catharine L. Midkiff
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Title: Duly Authorized Signatory
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