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AMENDMENT NO. 4
TO
THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND SECURITY AGREEMENT
THIS AMENDMENT NO. 4 ("Amendment") is entered into as of October 22,
1996, among GENERAL DATACOMM INDUSTRIES, INC., a corporation organized under the
laws of the State of Delaware, GENERAL DATACOMM, INC., a corporation organized
under the laws of the State of Delaware, GDC REALTY, INC., a corporation
organized under the laws of the State of Texas, GDC NAUGATUCK, INC., a
corporation organized under the laws of the State of Delaware, GENERAL DATACOMM
INTERNATIONAL CORP., a corporation organized under the laws of the State of
Delaware, GDC FEDERAL SYSTEMS, INC. (formerly known as GENERAL DATACOMM SYSTEMS,
INC.), a corporation organized under the laws of the State of Delaware (each a
"Borrower" and jointly and severally, the "Borrowers"), the undersigned
financial institutions (each a "Lender" and collectively, "Lenders") and THE
BANK OF NEW YORK COMMERCIAL CORPORATION ("BNYCC"), a New York corporation, as
agent for Lenders (BNYCC in such capacity, "Agent").
BACKGROUND
Borrowers, Lenders and Agent are parties to a Third Amended and
Restated Revolving Credit and Security Agreement dated as of November 30, 1995
(as amended, supplemented or otherwise modified from time to time, the "Loan
Agreement") pursuant to which Lenders provide Borrowers with certain financial
accommodations.
Borrowers have requested that Lenders amend certain of the financial
covenants contained in the Loan Agreement and Agent and Lenders are willing to
do so on the terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by
Lenders or Agent, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Definitions. All capitalized terms not otherwise defined herein shall
have the meanings given to them in the Loan Agreement.
2. Amendment to Loan Agreement. Subject to satisfaction of the conditions
precedent set forth in Section 3 below, the Loan Agreement is hereby amended as
follows:
(a) Section 6.5 of the Loan Agreement is amended in its entirety to provide
as follows:
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"6.5 Tangible Net Worth. Cause to be maintained at the end of each fiscal
quarter a Tangible Net Worth in an amount not less than the amount set opposite
such fiscal quarter end below:
FISCAL QUARTER ENDING MINIMUM TANGIBLE NET WORTH
--------------------- --------------------------
September 30, 1996 $86,883,000
December 31, 1996 $80,476,000
March 31, 1997 $77,839,000
June 30, 1997 $77,566,000
September 30, 1997 and at the the sum of (i) (a) $77,566,000 if the
end of each fiscal quarter minimum Tangible Net Worth at the end
thereafter of the fiscal quarter ending June 30,
1997 is less than $80,566,000 or (b) an
amount equal to the actual Tangible Net
Worth at the end of the fiscal quarter
ending June 30, 1997 less $3,000,000 if
such actual Tangible Net Worth is equal
to or greater than $80,566,000 plus
(ii) the product of (x) 75% times (y)
Net Income (if positive) during the
fiscal quarter then ended (excluding
net additions to capitalized software)
plus (iii) the product of (x) 75% times
(y) the sum of additional equity
contributed to GDC (excluding stock
options and stock purchase plan
payments) and the amount of
subordinated debt proceeds received by
GDC and its Subsidiaries on a
consolidated basis during such fiscal
quarter."
(b) Section 6.6 of the Loan Agreement is amended in its entirety to provide
as follows:
"6.6 Total Liabilities to Tangible Net Worth. Cause to be maintained as of
the end of each fiscal quarter a ratio of Total Liabilities to Tangible Net
Worth of not greater than the ratio set opposite such fiscal quarter end below:
RATIO OF TOTAL
LIABILITIES
FISCAL QUARTER END TO TANGIBLE NET WORTH
------------------ ---------------------
September 30, 1996 1.2 to 1.0
December 31, 1996 1.1 to 1.0
March 31, 1997 1.1 to 1.0
June 30, 1997 1.1 to 1.0
September 30, 1997 1.1 to 1.0
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December 31, 1997 1.0 to 1.0
March 31, 1998 1.0 to 1.0
June 30, 1998 .95 to 1.0
September 30, 1998 .95 to 1.0"
(c) Section 6.7 of the Loan Agreement is amended in its entirety to provide
as follows:
"6.7 Fixed Charge Coverage Ratio. Cause to be maintained as of
the end of each fiscal quarter a Fixed Charge Coverage Ratio for the immediately
preceding fiscal quarter equal to or greater than the ratio set opposite such
fiscal quarter end below:
FIXED CHARGE
FISCAL QUARTER ENDING COVERAGE RATIO
--------------------- --------------
September 30, 1996 (0.58) to 1.00
December 31, 1996 (2.00) to 1.00
March 31, 1997 (0.75) to 1.00
June 30, 1997 .50 to 1.00
September 30, 1997 1.20 to 1.00
December 31, 1997 1.30 to 1.00
March 31, 1998 1.40 to 1.00
June 30, 1998 1.50 to 1.00
September 30, 1998 1.60 to 1.00"
(d) Section 6.8 of the Loan Agreement is amended in its entirety to provide
as follows:
"6.8 Net Income. Cause Net Income (loss) for each fiscal period set forth
below to be not less than (more than) the amount set opposite such fiscal period
below:
FISCAL PERIOD NET INCOME (LOSS)
------------- -----------------
April 1, 1996 - September 30, 1996 ($16,000,000)
July 1, 1996 - December 31, 1996 ($16,000,000)
October 1, 1996 - March 31, 1997 ($13,500,000)
January 1, 1997 - June 30, 1997 ($ 7,000,000)
October 1, 1996 - September 30, 1997 ($ 9,449,000)
April 1, 1997 - September 30, 1997 ($1 ,000,000)
July 1, 1997 - December 31, 1997 $ -0-
October 1, 1997 - March 31, 1998 $ 1,000,000
January 1, 1998 - June 30, 1998 $ 2,000,000
October 1, 1997 - September 30, 1998 $ 4,000,000
April 1, 1998 - September 30, 1998 $ 3,000,000"
(e) Section 6.9 of the Loan Agreement is amended in its entirety to provide
as follows:
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"6.9 Working Capital. Cause to be maintained as of the end of each fiscal
quarter, Working Capital in an amount not less than the amount set opposite such
fiscal quarter end below.
FISCAL QUARTER END WORKING CAPITAL
------------------ ---------------
September 30, 1996 $61,825,000
December 31, 1996 $49,925,000
March 31, 1997 $47,075,000
June 30, 1997 $47,075,000
September 30, 1997 $50,873,000
December 31, 1997 $53,000,000
March 31, 1998 $55,000,000
June 30, 1998 $57,000,000
September 30, 1998 $60,000,000"
3. Conditions of Effectiveness. This Amendment shall become effective
upon satisfaction of the following conditions precedent: Agent shall have
received (i) four (4) copies of this Amendment executed by Borrowers and
consented and agreed to by Guarantors, (ii) an amendment fee of $10,000, and
(iii) such other certificates, instruments, documents, agreements and opinions
of counsel as may be required by Agent, Lenders or their counsel, each of which
shall be in form and substance satisfactory to Agent, Lenders and their counsel.
4. Representations and Warranties. Each Borrower hereby represents and
warrants as follows:
(a) This Amendment and the Loan Agreement, as amended hereby, constitute
legal, valid and binding obligations of Borrowers and are enforceable against
Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, each Borrower hereby
reaffirms all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is continuing or would
exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset with respect to the
Loan Agreement.
5. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in the
Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of
like import shall mean and be a reference to the Loan Agreement as amended
hereby.
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(b) Except as specifically amended herein, the Loan Agreement, and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of Agent or Lenders, nor
constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
6. Governing Law. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
7. Headings. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
8. Counterparts. This Amendment may be executed by the parties hereto in
one or more counterparts, each of which shall be deemed an original and all of
which when taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
GENERAL DATACOMM INDUSTRIES, INC.
GENERAL DATACOMM, INC.
GDC REALTY, INC.
GDC NAUGATUCK, INC.
GENERAL DATACOMM INTERNATIONAL CORP.
GDC FEDERAL SYSTEMS, INC.
By:________________________________
Xxxxxx X. Xxxxxx, the Vice-
President of each of the
foregoing corporations
THE BANK OF NEW YORK COMMERCIAL
CORPORATION, as Agent and Lender
By:/s/ Xxxxxxx Xxxxxxxxx
Name: Xxxxxxx Xxxxxxxxx
Its: Vice President
CONSENTED AND AGREED TO:
DATACOMM RENTAL CORPORATION
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: V.P. and Treasurer
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GENERAL DATACOMM LTD.
By: /s/Xxxxxx X.Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: V.P. and Treasurer
GENERAL DATACOMM FRANCE S.A.R.L.
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: V.P. and Treasurer
GENERAL DATACOMM DE MEXICO S.A. DE C.V.
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its:V.P. and Treasurer
GENERAL DATACOMM PTY LIMITED
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: V.P. and Treasurer
GENERAL DATACOMM S.A.R.L.
By:/s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Its: V.P. and Treasurer
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