EIGHTH AMENDMENT and WAIVER TO LOAN AGREEMENT
EIGHTH
AMENDMENT and WAIVER
EIGHTH
AMENDMENT,
dated January 17, 2007 (the "Amendment"),
to
the Loan Agreement referred to below, by and among (i) GENERAL DATACOMM
INDUSTRIES, INC., a Delaware corporation, GENERAL DATACOMM, INC., a Delaware
corporation ("GDC"),
GDC
HOLDING COMPANY, LLC, a Delaware limited liability company, GDC NAUGATUCK,
INC.,
a Delaware corporation, GDC FEDERAL SYSTEMS, INC., a Delaware corporation,
GDC
REALTY, INC., a Texas corporation (each,
a
"Borrower"
and
collectively, the "Borrowers"),
(ii) the lenders party thereto from time to time (the "Lenders"),
and
(iii) ABLECO FINANCE LLC, as agent for the Lenders (in such capacity, the
"Agent")
and
(iv) the Debenture Holders as defined in Section 2 of the Amendment.
WHEREAS,
the Borrowers are obligated to repay certain indebtedness owing to the Agent
and
the Lenders under that certain Loan and Security Agreement dated as of August
20, 2002 (as amended, supplemented and otherwise modified from time to time,
the
"Loan
Agreement");
WHEREAS,
the parties have agreed, among other things, (i) to modify the amortization
schedule in respect of the Term Loans, (ii) to extend the Maturity Date until
December 31, 2008, (iii) for certain affiliates of the Lenders defined herein
as
Debenture Holders to sell (or cause to be sold) to the Parent for $1.00 the
Debentures held directly or indirectly by such affiliates (the "Debentures")
and
(iv) to permit ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to make additional Affiliate Loans to the
Borrowers;
WHEREAS,
the parties are willing to agree to the foregoing described in the immediately
preceding paragraph, subject to (i) the execution and delivery of this Amendment
by the Borrowers, and (ii) the other terms and conditions set forth in this
Amendment;
NOW
THEREFORE, in consideration of the premises and other good and valuable
consideration, the parties hereto hereby agree as follows:
1.1. Definitions
in Amendment.
Any
capitalized term used herein and not defined shall have the meaning assigned
to
it in the Loan Agreement.
1.2. Existing
Definitions.
(a) The
definition of the term "Affiliate Loans" in Section
1.1
of the
Loan Agreement is hereby amended in its entirety to read as follows:
"Affiliate
Loans"
means
(i) the loans made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Parent, on
or
about December 30, 2003 in an aggregate principal amount of $600,000, which
loans are evidenced by Promissory Notes issued by the Parent and dated on or
about December 30, 2003, (ii) the loans made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇ to the Parent on or about March 1, 2004 in an aggregate principal amount
of $250,000, which loans are evidenced by Promissory Notes issued by the Parent
and dated on or about ▇▇▇▇▇ ▇, ▇▇▇▇, (▇▇▇) the loans made by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Parent on or about April 1, 2004 in an
aggregate principal amount of $250,000, which loans are evidenced by Promissory
Notes issued by the Parent and dated on or about April 1, 2004, (iv) the loan
made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Parent on or about June 30, 2004 in the
principal amount of $250,000, which loan is evidenced by a Promissory Note
issued by the Parent and dated on or about June 30, 2004, (v) the loan made
by
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the Parent on or about September 30, 2004 in an principal
amount of $250,000, which loan is evidenced by a Promissory Note issued by
the
Parent and dated on or about September 30, 2004, all of which loans described
in
clauses (i) through (v) above were amended and restated on December 9, 2005,
to
extend the maturity of all such loans, including unpaid accrued interest, 50%
of
which is payable one year from original due date and 50% of which is payable
two
years after original due date, (vi) the loan made by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to the
Parent on or about February 17, 2006 in the original principal amount of
$250,000, which loan is evidenced by a Promissory Note issued by Parent and
dated on or about April 20, 2006, and (vii) one or more loans made by ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇ to the Parent after December 31, 2006 in the aggregate principal amount
not to exceed $2,000,000, subject to Section
7.1(g)
hereof."
(b) The
definition of the term "Permitted Liens" in Section
1.1
of the
Loan Agreement is hereby amended by (i) deleting the word "and" immediately
preceding clause (o) therein and (ii) inserting the following immediately
preceding the period at the end of such definition, to read as
follows:
"and
(p)
Liens on the Naugatuck Property for taxes or securing the Indebtedness permitted
under Section
7.1(h)."
1.3. New
Definitions.
Section
1.1
of the
Loan Agreement is hereby amended by inserting the following definitions thereto
in the proper alphabetical order:
"'Extraordinary
Receipts'
means
any cash received by the Parent or any of its Subsidiaries not in the ordinary
course of business, including, without limitation, any such receipts which
are:
(i) foreign, United States, state or local tax refunds, (ii) pension plan
reversions, (iii) proceeds of insurance, (iv) judgments, proceeds of settlements
or other consideration of any kind in connection with any cause of action,
(v) condemnation awards (and payments in lieu thereof), (vi) indemnity
payments, and (vii) proceeds of any Indebtedness received by Parent or any
of
its Subsidiaries pursuant to the transactions described in Section
6.15."
1.4. Term
A
Loan Amortization.
Section
2.4(a)(i)(B)
of the
Loan Agreement is hereby amended in its entirety to read as follows:
"(B) the
Term
A Loan shall be repaid in monthly installments of principal equal to $100,000
on
the 15th day of each month, commencing on January 16, 2007, until the Term
A
Loan has been repaid in full."
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1.5. Term
B
Loan; Acknowledgment.
(a) The
last
sentence of Section
2.4(b)(i)
of the
Loan Agreement, inclusive of subsections (A) through (D) therein, is hereby
amended and restated in its entirety to read as follows:
"If
the
Term A Loan has been repaid in full on or before December 31, 2007, 50% of
the
outstanding principal amount of the Term B Loan, as of the date the Term A
Loan
is so repaid, shall be forgiven, together with all accrued interest on the
principal amount so forgiven; provided
that no
portion of the Term B Loan shall be so forgiven if, after giving effect to
the
Term A Loan repayment and such forgiveness of the Term B Loan, any portion
of
the Term B Loan would remain outstanding."
(b) Section
2.4(b)(ii)
of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:
"(ii) Notwithstanding
anything to the contrary in the Reorganization Plan or any Loan Document, the
Borrowers and Lenders hereby acknowledge and agree that (A) the aggregate amount
of the Term B Loan outstanding as of January 16, 2007 including principal and
accrued or capitalized interest is $3,000,000, and (B) subject to Section
2.4(b)(i),
the
Borrowers are obligated, absolutely and unconditionally, to repay all
Obligations in respect of the Term B Loan pursuant to this Agreement. Upon
the
repayment in full of the Term A Loan, the Borrowers shall commence making
amortization payments in respect of the Term B Loan in monthly installments
of
principal equal to $100,000 on the 15th day of each month, commencing on the
15th day of the month immediately following the repayment in full of the Term
A
Loan, until the Term B Loan is repaid in full."
1.6. Payments
by Borrower.
(a) Section
2.5(a)(iv)
of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:
"(iv) Immediately
upon the receipt by any Borrower or any of its Subsidiaries of any Net Proceeds
from the disposition of the assets of such Borrower or any of its Subsidiaries
(other than Inventory sold in the ordinary course of business), such Borrower
shall prepay the Term A Loan (or, if the Term A Loan has been paid in full,
the
Term B Loan) in an amount equal to 100% of such Net Proceeds. In addition to
the
foregoing, any Net Proceeds received by Borrowers from any life insurance
policies maintained by Borrowers on the life of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be
promptly paid to Agent to prepay the Term Loans."
(b) A
new
Section
2.5(a)(v)
of the
Loan Agreement is hereby inserted immediately succeeding the end of Section
2.5(a)(iv)
of the
Loan Agreement to read as follows:
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"(v) Immediately
upon the receipt by the Parent or any of its Subsidiaries of any Extraordinary
Receipts, the Borrowers shall prepay the outstanding principal of the Term
A
Loan (or, if the Term A Loan has been paid in full, the Term B Loan) in an
amount equal to 100% of such Extraordinary Receipts, net of any reasonable
expenses incurred in collecting such Extraordinary Receipts."
1.7. Interest
Rate.
Section
2.7(a)
of the
Loan Agreement is hereby amended and restated in its entirety to read as
follows:
"(a) Interest
Rate.
Except
as provided in clause (c) below, all Obligations shall bear interest at a per
annum rate of the Reference Rate plus 2.5 percentage points."
1.8. Maturity
Date.
Section
3.4
of the
Loan Agreement is amended by deleting the date "December 31, 2007" from the
first sentence therein and replacing such date with "December 31, 2008".
1.9. Naugatuck
Property.
A new
Section
6.15
is
hereby inserted in the Loan Agreement immediately after the end of Section
6.14
of the
Loan Agreement to read as follows:
"6.15 Mortgage
on / Sale of Naugatuck
Property.
Use its
commercially reasonable efforts to (a) obtain a loan from a Person (other than
an Affiliate of Parent) in an amount approved by the Agent, which loan shall
be
secured solely by a mortgage on the Naugatuck
Property, or (b) sell the Naugatuck Property for cash consideration of no less
than an amount approved by the Agent, in each case subject to the provisions
of
Sections 2.5(a)(iv) and 2.5(a)(v)."
1.10. Indebtedness.
(a) Section
7.1(g)
of the
Loan Agreement is hereby amended in its entirety to read as follows:
"(g) the
Affiliate Loans, provided that (i) the aggregate principal amount of the
Affiliate Loans shall not exceed $3,850,000, (ii) the Borrowers shall not pay
(x) any principal of such Affiliate Loans prior to the repayment in full of
the
Term Loans and all other Obligations hereunder or (y) interest on or any other
amount in respect of such Affiliate Loans if an Event of Default exists or
would
arise after giving effect to any such payment, and (iii) the terms of each
Affiliate Loan made after January 1, 2007 are substantially consistent with
the
terms of each Affiliate Loan made during fiscal year 2006."
(b) Section
7.1
of the
Loan Agreement is hereby amended by (i) replacing the period at the end of
clause (g) therein with "; and" and (ii) inserting a new clause (h) immediately
succeeding the end of such clause (g) to read as follows:
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"(h) Indebtedness
permitted under Section
6.15,
provided
that the
proceeds from such Indebtedness are applied to prepay the Term Loans in
accordance with Section
2.5(a)(v)."
1.11. Minimum
EBITDA.
Section
7.20
of the
Loan Agreement is hereby deleted and amended in its entirety to read as follows:
"[Intentionally
Omitted]"
2. Transfer
of Debentures.
Upon
entry by the Bankruptcy
Court of an order approving the Motion (as defined below),
Affiliates of the Lenders listed on the signature pages hereto (the
"Debenture
Holders"),
in
consideration of the payment of $1.00 by the Parent, hereby agree to sell,
assign, transfer and deliver to Parent the Debentures, including accrued
interest thereon, held by the Debenture Holders, duly endorsed for transfer
to
Parent with such other documentation reasonably required by the Parent and
the
Debenture Trustee.
3. Warrants.
The
Warrants W-1 and W-2 are hereby amended to change all references to "December
31, 2007" therein to "December 31, 2008" to coincide with the new Maturity
Date
of the Term Loans.
4. Conditions.
The
effectiveness of this Amendment is subject to the fulfillment, in a manner
satisfactory to the Agent, of each of the following conditions precedent (the
date such conditions are fulfilled or waived by the Agent is hereinafter
referred to as the "Amendment
Effective Date"):
(a) Representations
and Warranties; No Event of Default.
As of
the Amendment Effective Date, the representations and warranties set forth
in
Section
6
hereof
shall be true and correct.
(b) Delivery
of Documents.
The
Agent shall have received on or before the Amendment Effective Date the
following, each in form and substance satisfactory to the Agent and, unless
indicated otherwise, dated the Amendment Effective Date:
(i) counterparts
of this Amendment duly executed by the Borrowers and the Lenders;
and
(ii) such
other agreements, instruments, approvals, opinions and other documents as the
Agent may reasonably request.
(c) Proceedings.
All
proceedings in connection with the transactions contemplated by this Amendment,
and all documents incidental thereto, shall be satisfactory to the Agent and
its
special counsel, and the Agent and such special counsel shall have received
all
such information and such counterpart
originals or certified copies of documents, and such other agreements,
instruments, approvals, opinions and other documents, as the Agent or such
special counsel may reasonably request.
(d) Fees
and Expenses.
The
Borrowers shall have paid all unpaid legal fees and expenses incurred by Agent
in connection with the administration of, and the preparation, delivery,
execution and modification, of the Loan Agreement (including this Amendment)
and
the other related agreements, instruments and documents.
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5. Rule
9019 Motion.
On or
about the Amendment Effective Date, the Borrowers are filing with the Bankruptcy
Court a motion, pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy
Rule 9019(a), for approval of the compromise with Ableco Finance LLC pertaining
to this Amendment (the "Motion").
All
parties hereto agree to consent to and/or support such Motion. In the event
the
Bankruptcy Court does not enter an order approving the Motion on terms and
conditions acceptable to the Agent, the parties hereto agree that the amendments
and modifications to the Loan Agreement described in Section 1.5 of this
Amendment and the agreements described in Section 2 of this Amendment shall
be
null and void automatically.
6. Borrowers'
Representations and Warranties.
Each
Borrower hereby represents and warrants to the Agent and the Lenders as
follows:
(a) Representations
and Warranties; No Event of Default.
The
representations and warranties
herein,
in Section
5
of the
Loan Agreement and in each other Loan Document and certificate or other writing
delivered to the Agent or any Lender pursuant hereto on or prior to the
Amendment Effective Date are correct on and as of the Amendment Effective Date
as though made on and as of such date, except to the extent that such
representations and warranties (or any schedules related thereto) expressly
relate solely to an earlier date (in which case such representations and
warranties are true and correct on and as of such date); and, except as set
forth in the Compliance Certificates delivered by Borrower to Agent prior to
the
date hereof pursuant to Section
6.2
of the
Loan Agreement, no Default or Event of Default has occurred and is continuing
on
the Amendment Effective Date or would result from this Amendment becoming
effective in accordance with its terms.
(b) Organization,
Good Standing, Etc.
Such
Borrower (i) is a corporation or limited liability company duly organized,
validly
existing
and in good standing under the laws of the state of its organization,
(ii) has all requisite power and authority to execute, deliver and perform
this Amendment and the other Loan Documents to which it is a party being
executed in connection with this Amendment, and to perform the Loan Agreement,
as amended hereby, and (iii) is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary except where the failure to be so qualified reasonably
could not be expected to have a Material Adverse Change.
(c) Authorization,
Etc.
The
execution, delivery and performance by such Borrower of this Amendment and
each
other Loan Document to which it is a party being executed in connection with
this Amendment, and the performance by such Borrower of the Loan Agreement,
as
amended hereby, (i) have been duly authorized by all necessary corporate or
limited liability company action, (ii) do not and will not contravene such
Borrower's charter or by-laws or its limited liability company or operating
agreement, as applicable, any applicable law or any contractual restriction
binding on or otherwise affecting it or any of its properties, (iii) do not
and will not result in or require the creation of any Lien (other than pursuant
to any Loan Document) upon or with respect to any of its properties, and
(iv) do not and will not result in any suspension, revocation, impairment,
forfeiture or nonrenewal of any permit, license, authorization or approval
applicable to its operations or any of its properties.
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7. Debenture
Holders' Representations and Warranties.
Each
Debenture Holder hereby represents and warrants to the Parent that (a) the
principal amount of the Debentures beneficially owned by them aggregate
$2,471,372 plus accrued interest thereon, (b) they beneficially own the
Debentures free and clear of all Liens, and (c) they are duly authorized to
enter into and perform this Amendment and to cause such Debentures to be sold,
assigned, transferred and delivered to Parent free and clear of
Liens.
8. Waiver.
Pursuant to the request by the Borrowers, but subject to the satisfaction of
the
conditions set forth in Section 4 hereof, and in reliance upon (a) the
representations and warranties of the Borrowers set forth herein and in the
Loan
Agreement and (b) the agreements of the Borrowers set forth herein, the Lenders
hereby:
(a) waive
any
Events of Default that have arisen under the Loan Agreement as of the date
hereof by virtue of the failure of the Borrowers to (i) make amortization
payments in respect of the Term A Loan prior to the Amendment Effective Date
and
(ii) satisfy the minimum EBITDA covenant formerly set forth in Section 7.20
of
the Loan Agreement; and
(b) waive
any
Events of Default that have arisen under the Loan Agreement as of the date
hereof by virtue of the equity investment by the Parent or any of its
Subsidiaries in Triplelok, Inc., provided
that the
aggregate amount of such investment did not exceed $600 and no additional
investments are made by any Borrower in Triplelok, Inc. after the date
hereof.
9. Miscellaneous.
(a) Continued
Effectiveness of the Loan Agreement.
Except
as otherwise expressly provided herein, the Loan Agreement and the other Loan
Documents are, and shall continue to be, in full force and effect and are hereby
ratified and confirmed in all respects, except
that on
and
after the Amendment Effective Date (i) all references in the Loan Agreement
to
"this Agreement", "hereto", "hereof", "hereunder" or words of like import
referring to the Loan Agreement shall mean the Loan Agreement as amended by
this
Amendment, and (ii) all references in the other Loan Documents to which any
Borrower is a party to the "Loan Agreement", "thereto", "thereof", "thereunder"
or words of like import referring to the Loan Agreement shall mean the Loan
Agreement as amended by this Amendment. Except as expressly provided herein,
the
execution, delivery and effectiveness of this Amendment shall not operate as
an
amendment of any right, power or remedy of the Lender under the Loan Agreement
or any other Loan Document, nor constitute an amendment of any provision of
the
Loan Agreement or any other Loan Document.
(b) Counterparts.
This
Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.
(c) Headings.
Section
headings herein are included for convenience of reference only and shall not
constitute a part of this Amendment for any other purpose.
(d) Governing
Law.
This
Amendment shall be governed by, and construed in accordance with, the law of
the
State of New York.
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(e) Costs
and Expenses.
The
Borrowers jointly and severally agree to pay on demand all fees, costs and
expenses of the Agent and each Lender in connection with the preparation,
execution and delivery of this Amendment and the other related agreements,
instruments and documents.
(f) Amendment
as Loan Document.
Each
Borrower hereby acknowledges and agrees that this Amendment constitutes a "Loan
Document" under the Loan Agreement. Accordingly, it shall be an Event of Default
under the Loan Agreement if (i) any representation or warranty made by a
Borrower under or in connection with this Amendment shall have been untrue,
false or misleading in any material respect when made, or (ii) a Borrower shall
fail to perform or observe any term, covenant or agreement contained in this
Amendment.
(g) Waiver
of Jury Trial.
EACH
BORROWER, THE AGENT AND THE LENDER EACH HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AMENDMENT OR
THE
ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
[Remainder
of page intentionally left blank.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
and delivered as of the date first above written.
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Borrowers:
GENERAL
DATACOMM INDUSTRIES, INC.,
a
Delaware corporation
By:
_____________________________
Title:
Vice President
GENERAL
DATACOMM, INC.,
a
Delaware corporation
By:
_____________________________
Title:
Vice President
GDC
HOLDING COMPANY, LLC,
a
Delaware limited liability company
By:
_____________________________
Title:
Vice President
GDC
FEDERAL SYSTEMS, INC.,
a
Delaware corporation
By:
_____________________________
Title:
Vice President
GDC
NAUGATUCK, INC.,
a
Delaware corporation
By:
_____________________________
Title:
Vice President
GDC
REALTY, INC.,
a
Texas corporation
By:
_____________________________
Title:
Vice President
|
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Agent
and Lender:
ABLECO
FINANCE LLC,
a
Delaware limited liability company, on behalf
of
itself and its affiliated assigns
By:
_____________________________
Title:
____________________________
Debenture
Holders:
STYX
INTERNATIONAL, LTD.
By:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Overseas Management, LLC,
its
investment manager
By:
_____________________________
Title:
____________________________
STYX
PARTNERS, L.P.
By:
Styx Associates, LLC, its general partner
By:
_____________________________
Title:
____________________________
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