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