LOAN AND SECURITY AGREEMENT
by and among
GENERAL DATACOMM INDUSTRIES, INC.,
GENERAL DATACOMM, INC.
DATACOMM LEASING CORPORATION,
GDC HOLDING COMPANY, LLC,
GDC NAUGATUCK, INC., GDC REALTY, INC.,
GDC FEDERAL SYSTEMS, INC.,
as Borrowers,
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders
and
ABLECO FINANCE LLC,
as the Agent
Dated as of August 20, 2002
TABLE OF CONTENTS
1. DEFINITIONS AND CONSTRUCTION.......................................2
1.1 Definitions...............................................2
1.2 Accounting Terms.........................................17
1.3 Code.....................................................17
1.4 Construction.............................................17
1.5 Schedules and Exhibits...................................17
2. LOAN AND TERMS OF PAYMENT.........................................17
2.1 [Intentionally Omitted]..................................17
2.2 [Intentionally Omitted]..................................17
2.3 [Intentionally Omitted]..................................17
2.4 Term Loans...............................................17
2.5 Payments.................................................20
2.6 Agent Advances...........................................22
2.7 Interest: Rates, Payments, and Calculations.............22
2.8 Collection of Accounts...................................23
2.9 Crediting Payments.......................................24
2.10 [Intentionally Omitted]..................................24
2.11 Maintenance of Loan Account; Statements of Obligations...24
2.12 Joint and Several Liability of the Borrowers.............24
3. DELIVERIES; TERM OF AGREEMENT.....................................26
3.1 Deliveries By Borrower...................................26
3.2 [Intentionally Omitted]..................................28
3.3 [Intentionally Omitted]..................................28
3.4 Term.....................................................28
3.5 Effect of Termination....................................28
3.6 Early Termination by Borrower............................28
4. CREATION OF SECURITY INTEREST.....................................29
4.1 Grant of Security Interest...............................29
4.2 Negotiable Collateral....................................29
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral....................................29
4.4 Filing of Financing Statements; Commercial Tort Claims;
Pledge Amendments; Delivery of Additional
Documentation Required...................................29
4.5 Power of Attorney........................................30
4.6 Right to Inspect.........................................31
4.7 Control Agreements.......................................31
5. REPRESENTATIONS AND WARRANTIES....................................31
5.1 No Encumbrances..........................................31
5.2 [Intentionally Omitted]..................................31
5.3 [Intentionally Omitted]..................................31
5.4 Equipment................................................31
5.5 Location of Inventory and Equipment......................31
5.6 Inventory Records........................................31
5.7 State of Incorporation; Location of Chief Executive
Office; FEIN, Organizational ID Number;
Commercial Tort Claims...................................32
5.8 Due Organization and Qualification; Subsidiaries.........32
5.9 Due Authorization; No Conflict...........................33
5.10 Litigation...............................................33
5.11 Financial Statements; No Material Adverse Change.........34
5.12 [Intentionally Omitted]..................................34
5.13 Employee Benefits........................................34
5.14 Environmental Condition..................................34
5.15 Brokerage Fees...........................................35
5.16 Permits and other Intellectual Property..................35
5.17 Material Contracts; Restrictive Agreements...............35
5.18 Government Contracts.....................................35
6. AFFIRMATIVE COVENANTS.............................................35
6.1 Accounting System........................................35
6.2 Financial Statements, Reports, Certificates..............36
6.3 Tax Returns..............................................37
6.4 [Intentionally Omitted]..................................37
6.5 Returns..................................................37
6.6 Title to Equipment.......................................37
6.7 Maintenance of Equipment.................................37
6.8 Taxes....................................................37
6.9 Insurance................................................38
6.10 No Setoffs or Counterclaims..............................39
6.11 Location of Inventory and Equipment; Segregation of
Inventory................................................39
6.12 Compliance with Laws.....................................39
6.13 Employee Benefits........................................39
6.14 Leases...................................................40
7. NEGATIVE COVENANTS................................................40
7.1 Indebtedness.............................................40
7.2 Liens....................................................41
7.3 Restrictions on Fundamental Changes......................41
7.4 Disposal of Assets.......................................41
7.5 Change Name..............................................42
7.6 Guarantee................................................42
7.7 Nature of Business.......................................42
7.8 Prepayments and Amendments...............................42
7.9 Change of Control........................................42
7.10 Consignments.............................................43
7.11 Distributions............................................43
7.12 Accounting Methods.......................................43
7.13 Investments..............................................43
7.14 Transactions with Affiliates.............................43
7.15 Suspension...............................................43
7.16 [Intentionally Omitted]..................................44
7.17 Use of Proceeds..........................................44
7.18 Change in Location of Chief Executive Office; Inventory
and Equipment with Bailees...............................44
7.19 No Prohibited Transactions Under ERISA...................44
7.20 Financial Covenant.......................................45
7.21 Capital Expenditures.....................................45
7.22 Securities Accounts......................................45
8. EVENTS OF DEFAULT.................................................45
9. LENDER GROUP'S RIGHTS AND REMEDIES................................47
9.1 Rights and Remedies......................................47
9.2 Remedies Cumulative......................................49
10. TAXES AND EXPENSES................................................50
11. WAIVERS; INDEMNIFICATION..........................................50
11.1 Demand; Protest; etc.....................................50
11.2 Lender Group's Liability for Collateral..................50
11.3 Indemnification..........................................50
12. NOTICES...........................................................51
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER........................52
14. DESTRUCTION OF BORROWER'S DOCUMENTS...............................53
15. ISSUANCE OF EQUITY INTERESTS TO ________..........................53
15.1 Authorization and Issuance of Warrants...................53
15.2 Securities Act Matters...................................53
15.3 Certain Taxes............................................54
15.4 Cancellation and Issuance................................54
16. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS........................55
16.1 Assignments and Participations...........................55
16.2 Successors...............................................57
17. AMENDMENTS; WAIVERS...............................................58
17.1 Amendments and Waivers...................................58
17.2 No Waivers; Cumulative Remedies..........................59
18. AGENT; LENDER GROUP...............................................59
18.1 Appointment and Authorization of Agent...................59
18.2 Delegation of Duties.....................................60
18.3 Liability of Agent-Related Persons.......................60
18.4 Reliance by Agent........................................60
18.5 Notice of Default or Event of Default....................61
18.6 Credit Decision..........................................61
18.7 Costs and Expenses; Indemnification......................62
18.8 Agent in Individual Capacity.............................62
18.9 Successor Agent..........................................63
18.10 Withholding Tax..........................................63
18.11 Collateral Matters.......................................65
18.12 Restrictions on Actions by Lenders; Sharing of Payments..66
18.13 Agency for Perfection....................................66
18.14 Payments by Agent to Lenders.............................67
18.15 Concerning the Collateral and Related Loan Documents.....67
18.16 Field Audits and Examination Reports; Confidentiality;
Disclaimers by Lenders; Other Reports and
Information..............................................67
18.17 Several Obligations; No Liability........................68
19. GENERAL PROVISIONS................................................69
19.1 Effectiveness............................................69
19.2 Successors and Assigns...................................69
19.3 Section Headings.........................................69
19.4 Interpretation...........................................69
19.5 Severability of Provisions...............................69
19.6 Amendments in Writing....................................69
19.7 Counterparts; Telefacsimile Execution....................69
19.8 Revival and Reinstatement of Obligations.................69
19.9 Integration..............................................70
19.10 General DataComm as Agent for Borrowers..................70
SCHEDULES AND EXHIBITS
Schedule C-1 Term Loan Commitments
Schedule G-1 Guarantors
Schedule P-1 Permitted Liens
Schedule R-1 Real Property Collateral
Schedule 5.7 Borrowers' Organizational Information
Schedule 5.8 Capital Stock of Parent; Subsidiaries
Schedule 5.10 Litigation
Schedule 5.13 ERISA Benefit Plans
Schedule 5.14 Environmental Matters
Schedule 5.16 Permits and other Intellectual Property
Schedule 5.17 Material Contracts
Schedule 6.11 Location of Inventory and Equipment
Schedule 7.1 Indebtedness
Schedule 7.4 Permitted Dispositions
Schedule 7.6 Guarantees
Schedule 7.13 Investments
Exhibit C-1 Form of Compliance Certificate
Exhibit W-1 Form of Warrants
1.
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT (this "Agreement"), is entered into as
of August 20, 2002, among GENERAL DATACOMM INDUSTRIES, INC., a Delaware
corporation, with its chief executive office located at 0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 ("Parent"), GENERAL DATACOMM, INC., a Delaware
corporation, with its chief executive office located at 0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 ("General DataComm"), DATACOMM LEASING CORPORATION,
a Delaware corporation, with its chief executive office located at 0 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("DataComm Leasing"), GDC FEDERAL SYSTEMS,
INC., a Delaware corporation, with its chief executive office located at 0
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("GDC Federal"), GDC HOLDING
COMPANY, LLC, a Delaware limited liability company formerly known as Vital
Network Services, L.L.C., with its chief executive office located at 0 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000 ("GDC Holding"), GDC REALTY, INC., a Texas
corporation with its mailing address located at 0 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxx 00000 ("GDC Realty"), and GDC NAUGATUCK, INC., a Delaware
corporation, with its chief executive office located at 0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx 00000 ("GDC Naugatuck", and together with the Parent,
General DataComm, DataComm Leasing, GDC Federal, GDC Holding and GDC Realty,
each a "Borrower" and collectively the "Borrowers"), each of the financial
institutions signatories hereto (such financial institutions, together with
their respective successors and assigns, each a "Lender" and collectively, the
"Lenders"), and ABLECO FINANCE LLC, a Delaware limited liability company, with a
place of business located at 000 Xxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Ableco"), as
arranger and administrative agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Agent").
WHEREAS, each of the Debtors (as hereinafter defined) are
parties to that certain Loan and Security Agreement, dated as of May 14, 1999
(as amended to date, the "Pre-Petition Loan Agreement," among the Debtors, the
lenders party thereto from time to time and Foothill Capital Corporation, as
agent for such lenders;
WHEREAS, on November 2, 2001 (the "Filing Date"), each of the
Debtors commenced cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of
the United States Code in the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court");
WHEREAS, the Lenders have filed claims in the Chapter 11 Cases
and the Debtors and Lenders have agreed to the payment of Lenders' allowed claim
as provided in the Reorganization Plan (as hereinafter defined); which claims
aggregate $30,000,000 subject to certain adjustments; and
WHEREAS, Agent and the Lenders have agreed to such repayment
in accordance with the Reorganization Plan subject to the terms and conditions
hereinafter set forth,
NOW, THEREFORE, in consideration of the promises, covenants
and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the following terms shall have the
following definitions:
"Account Debtor" means any Person who is or who may become
obligated under, with respect to, or on account of, an Account, chattel
paper or a General Intangible.
"Accounts" means all currently existing and hereafter
arising accounts, contract rights, and all other
forms of obligations owing to any one of the Borrowers arising out of the sale
or lease of goods or the rendition of services by any one of the Borrowers,
irrespective of whether earned by performance, and any and all credit insurance,
guaranties, or security therefor.
"Administrative Borrower" has the meaning set forth
in Section 19.10.
"Adversary Proceeding" means that certain proceeding in the Bankruptcy
Court captioned Foothill Capital Corporation et. al. v. General DataComm
Industries, Inc. et. al. (In re General DataComm, Inc.),
Adversary Proceeding No. 02-2018.
"Affiliate" means, as applied to any Person, any other Person
who directly or indirectly controls, is controlled by, is under common control
with or is a director or officer of such Person. For purposes of this
definition, "control" means the possession, directly or indirectly,
of the power to vote 15% or more of the securities having ordinary voting
power for the election of directors or other members of
the governing body of a Person or the direct or indirect power to direct the
management and policies of a Person.
"Agent" means Ableco, solely in its capacity as agent for the
Lenders, and shall include any successor agent.
"Agent's Account" means an account maintained by
Agent at a depository selected by Agent.
"Agent Advances" has the meaning set forth in Section
2.6(a).
"Agent's Liens" means the Liens granted by the Borrowers to Agent for
the benefit of the Lender Group under this Agreement or the other
Loan Documents.
"Agent-Related Persons" means the Agent, together with its Affiliates,
and the officers, directors, employees, counsel, agents and attorneys-in-fact
of the Agent and such Affiliates.
"Agreement" has the meaning set forth in the preamble hereto.
"Assignee" has the meaning set forth in Section
16.1(a).
"Assignment and Acceptance" means an assignment and acceptance
agreement in form and substance reasonably acceptable to Agent.
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"Assignment of Claims Act" means the Assignment of
Claims Act of 1940, as amended from time to time,
codified at 31 X.X.X.xx. 3727 and 41 X.X.X.xx. 15, and the
rules and regulations promulgated thereunder.
"Authorized Person" means any officer or other
employee of Administrative Borrower.
"Bankruptcy Code" means the United States Bankruptcy
Code, as in effect from time to time.
"Bankruptcy Court" has the meaning set forth in the
recitals to this Agreement.
"Benefit Plan" means a "defined benefit plan"
(as defined in Section 3(35) of ERISA) for which a Borrower,
any Subsidiary of a Borrower, or any ERISA Affiliate has been an "employer" (as
defined in Section 3(5) of ERISA) within the past six years.
"Books" means each Borrower's now owned or hereafter acquired
books and records (including all of its Records indicating, summarizing,
or evidencing its assets (including the Collateral) or liabilities,
all of its Records relating to its business operations or financial
condition, and all of its goods or General Intangibles related to such
information).
"Borrower" and "Borrowers" has the meaning set forth in the
preamble hereto.
"Business Day" means any day that is not a Saturday, Sunday,
or other day on which national banks are authorized or required to close.
"Change of Control" shall be deemed to have occurred at
such time, other than as provided in the Reorganization Plan, as (i) a
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934) becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of more than 35% of the total voting power of
all classes of stock then outstanding of Parent entitled to vote in the election
of directors, or (ii) the Parent shall cease to, directly or indirectly, of
record and beneficially, own and control 100% of the then outstanding Stock of
each of the Borrowers (other than the Parent).
"Class B Stock" means the Parent's Class B Common
Stock, par value $.01 per share.
"Closing Date" means August 20, 2002.
"Code" means the New York Uniform Commercial Code.
"Collateral" means all of each Borrower's now owned and
hereafter acquired right, title, and interest in and to each of the following:
(a) Accounts,
3
(b) Books,
(c) Equipment,
(d) General Intangibles,
(e) Inventory,
(f) Investment Property,
(g) Negotiable Collateral,
(h) Real Property Collateral,
(i) money or other assets of any Borrower that now or
hereafter come into the possession, custody, or control of any member of the
Lender Group, and
(j) the proceeds and products, whether tangible or
intangible, of any of the foregoing, including proceeds of insurance
covering any or all of the Collateral, and any and all Accounts, Books,
Equipment, General Intangibles, Inventory, Investment Property Negotiable
Collateral, Real Property, money, deposit accounts, or other tangible
or intangible property resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest therein,
and the proceeds thereof.
"Collateral Access Agreement" means a landlord waiver or
consent, mortgagee waiver or consent, bailee letter, or a similar
acknowledgment agreement of any warehouseman, processor, lessor, consignee,
or other Person in possession of, having a Lien upon, or
having rights or interests in the Equipment or Inventory, in each case, in form
and substance satisfactory to Agent.
"Collections" means all cash, checks, notes, instruments,
and other items of payment (including, insurance proceeds, proceeds of cash
sales, rental proceeds, and tax refunds).
"Commercial Tort Claim Assignment" has the meaning
set forth in Section 4.4(b).
"Commitment" means, as to any Lender, the Term A Loan
Commitment of such Lender, and the Term B Loan Commitment of such Lender, as
applicable, and "Commitments" means, collectively, the aggregate amount of the
Commitments of the Lenders.
"Common Stock" shall mean the common stock, par value
$0.01 per share, of the Parent.
"Compliance Certificate" means a certificate substantially
in the form of Exhibit C-1 and delivered by the chief financial officer of
the Parent to Agent.
4
"Confirmation Order" means that certain order of the
Bankruptcy Court, dated August 5, 2003, confirming the
Reorganization Plan, as the same may be amended from time to time with the
written consent of the Agent.
"Control Agreement" means a control agreement, in form and
substance reasonably satisfactory to Agent, between a Borrower, Agent, and
the applicable securities intermediary with
respect to a Securities Account or a bank with respect to a deposit account.
"DataComm Leasing" means DataComm Leasing
Corporation, a Delaware corporation.
"Debentures" means the 10% Adjustable Senior Subordinated
Debentures due 2008 issued to unsecured general creditors of Debtors under
the Indenture and in accordance with the Reorganization Plan.
"Debenture Trustee" means HSBC Bank USA, as the
trustee for the Debentures issued pursuant to the Indenture.
"Debtors" means, collectively, each Borrower, prior
to its reorganization at the Effective Time.
"Default" means an event, condition, or default that, with
the giving of notice, the passage of time, or both, would be an Event of
Default.
"Dollars or $" means United States dollars.
"EBITDA" means, with respect to any fiscal period, Parent's
and its Subsidiaries' consolidated net earnings (or loss), minus extraordinary
gains, plus interest expense, income taxes, and
depreciation and amortization for such period, as determined in accordance with
GAAP.
"Effective Date" shall mean the Effective Date
defined in Section 1.27 of the Reorganization Plan.
"Effective Time" shall mean the time on the Effective Date at
which the Reorganization Plan becomes effective in accordance with its terms.
"Eligible Transferee" means: (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having total
assets in excess of $100,000,000; (b) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country, and
having total assets in excess of $100,000,000; provided that such bank is acting
through a branch or agency located in the United States; (c) a finance company,
insurance company or other financial institution or fund that is engaged in
making, purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having total assets in excess of $50,000,000; (d) any
Affiliate (other than individuals) of a Lender that was party hereto as of the
Closing Date, or any fund, money market account, investment account or other
account managed by a Lender or an Affiliate of such Lender; (e) so long as no
Event of Default has occurred and is continuing, any other Person approved by
Agent; and (f) during the continuation of an Event of Default, any other Person
approved by Agent.
5
"Equipment" means all of each Borrower's now owned or hereafter
acquired right, title, and interest with respect to equipment, machinery,
machine tools, motors, furniture, furnishings, fixtures, vehicles
(including motor vehicles), tools, parts, goods (other than consumer goods,
farm products, or Inventory), wherever located, including all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute thereto.
"ERISA Affiliate" means (a) any Person subject to ERISA whose
employees are treated as employed by the same
employer as the employees of a Borrower under IRC Section 414(b), (b) any trade
or business subject to ERISA whose employees are treated as employed by the same
employer as the employees of a Borrower under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any organization
subject to ERISA that is a member of an affiliated service group of which a
Borrower is a member under IRC Section 414(m), or (d) solely for purposes of
Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA
that is a party to an arrangement with a Borrower and whose employees are
aggregated with the employees of a Borrower under IRC Section 414(o).
"ERISA Event" means (a) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan, (b) the
withdrawal of a Borrower, any of its Subsidiaries or ERISA Affiliates from a
Benefit Plan during a plan year in which it was a "substantial employer" (as
defined in Section 4001(a)(2) of ERISA), (c) the providing of notice of intent
to terminate a Benefit Plan in a distress termination (as described in Section
4041(c) of ERISA), (d) the institution by the PBGC of proceedings to terminate a
Benefit Plan or Multiemployer Plan, (e) any event or condition (i) that provides
a basis under Section 4042(a)(1), (2), or (3) of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan or Multiemployer
Plan, or (ii) that may result in termination of a Multiemployer Plan pursuant to
Section 4041A of ERISA, (f) the partial or complete withdrawal within the
meaning of Sections 4203 and 4205 of ERISA, of a Borrower, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or (g) providing any
security to any Plan under Section 401(a)(29) of the IRC by a Borrower or its
Subsidiaries or any of their ERISA Affiliates.
"Event of Default" has the meaning set forth in
Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute thereto.
"FEIN" means Federal Employer Identification Number.
"Final Order" means an order or judgment of the Bankruptcy
Court as entered on the docket that has not been reversed, stayed, modified or
amended, and as to which the time to appeal, petition for certiorari, or seek
reargument or rehearing has expired and as to which no appeal, reargument,
petition for certiorari, or rehearing is pending or as to which any right to
appeal, reargue, petition for certiorari or seek rehearing has been waived in
writing in a manner reasonably satisfactory to the Agent or, if any appeal,
reargument, petition for certiorari, or rehearing thereof has been sought, the
order or judgment of the Bankruptcy Court has been affirmed by the highest court
to which the order was appealed or from which the reargument or rehearing was
sought, or certiorari has been denied, and the time to take any further appeal
or to seek certiorari or further reargument has expired.
6
"GAAP" means generally accepted accounting principles
as in effect from time to time in the United States,
consistently applied.
"GDC Federal" means GDC Federal Systems, Inc., a Delaware
corporation.
"GDC Holding" means GDC Holding Company, LLC, a
Delaware limited liability company formerly known as Vital
Network Services, L.L.C.
"GDC Naugatuck" means GDC Naugatuck, Inc., an indirect
Subsidiary of the Parent that is organized under the laws of Delaware.
"GDC Realty" means GDC Realty, Inc., a Texas corporation.
"General DataComm" means General DataComm, Inc., a
Delaware corporation.
"General Intangibles" means all of each Borrower's now
owned or hereafter acquired right, title, and interest with respect to general
intangibles (including payment intangibles, contract rights, rights to
payment, rights arising under common law, statutes,
or regulations, choses or things in action, goodwill, patents, trade names,
trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders,
customer lists, monies due or recoverable from pension funds, route lists,
rights to payment and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property other
than goods, Accounts, Investment Property, and Negotiable Collateral.
"Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, by-laws, or other organizational or
governing documents of such Person.
"Governmental Authority" means any nation or government,
any state, province, or other political
subdivision thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through Stock or capital
ownership or otherwise, by any of the foregoing.
7
"Hazardous Materials" means (a) substances that are defined
or listed in, or otherwise classified pursuant
to, any applicable laws or regulations as "hazardous substances," "hazardous
materials," "hazardous wastes," "toxic substances," or any other formulation
intended to define, list, or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or petroleum
derived substances, natural gas, natural gas liquids, synthetic gas, drilling
fluids, produced waters, and other wastes associated with the exploration,
development, or production of crude oil, natural gas, or geothermal resources,
(c) any flammable substances or explosives or any radioactive materials, and (d)
asbestos in any form or electrical equipment that contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of 50 parts per
million.
"Holder" has the meaning set forth in Section 15.1
"Indebtedness" means: (a) all obligations of Borrowers for
borrowed money, (b) all obligations of Borrower evidenced by bonds, debentures,
notes, or other similar instruments and all reimbursement or other obligations
of Borrowers in respect of letters of credit, bankers acceptances, interest rate
swaps, or other financial products, (c) all obligations of Borrowers under
capital leases, (d) all obligations or liabilities of others secured by a Lien
on any property or asset of a Borrower, irrespective of whether such obligation
or liability is assumed, and (e) any obligation of a Borrower guaranteeing or
intended to guarantee (whether guaranteed, endorsed, co-made, discounted, or
sold with recourse to such Borrower) any indebtedness, lease, dividend, letter
of credit, or other obligation of any other Person.
"Indemnified Liabilities" has the meaning set forth
in Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Indenture" means the trust indenture dated as of the
Effective Date between Parent and Debenture Trustee,
as amended, supplemented or otherwise modified from time to time entered into in
connection with the issuance of the Debentures.
"Insolvency Proceeding" means any proceeding commenced by
or against any Person under any provision of the
Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for
the benefit of creditors, formal or informal moratoria, compositions, extensions
generally with creditors, or proceedings seeking reorganization, arrangement, or
other similar relief.
"Intellectual Property" has the meaning set forth in
Section 5.16.
"Inventory" means all present and future inventory in which
any Borrower has any interest, including goods
held for sale or lease or to be furnished under a contract of service and all of
any Borrower's present and future raw materials, work in process, finished
goods, and packing and shipping materials, wherever located.
"Investment Property" means all of each Borrower's now
owned or hereafter acquired right, title, and
interest with respect to "investment property" as that term is defined in the
Code, and any and all supporting obligations in respect thereof.
8
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"IRS" has the meaning set forth in Section 6.4.
"Legal Requirements" means all applicable international,
foreign, federal, state, and local laws, judgments, decrees, orders,
statutes, ordinances, rules, regulations, or Permits.
"Lender" and "Lenders" have the respective meanings set forth
in the preamble hereto, and shall include any
other Person made a party to this Agreement in accordance with the provisions of
Section 16.1.
"Lender Group" means, individually and collectively,
each of the Lenders and the Agent.
"Lender Group Expenses" means all: costs or expenses
(including taxes, and insurance premiums) required to
be paid by Borrowers under any of the Loan Documents that are paid or incurred
by any one or more members of the Lender Group; fees or charges paid or incurred
by any one or more members of the Lender Group in connection with any one or
more members of the Lender Group's transactions with Borrowers, including, fees
or charges for photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien, judgment, and UCC
searches and including searches with the patent and trademark office, the
copyright office, or the department of motor vehicles), filing, recording,
publication, periodic Personal Property Collateral or Real Property Collateral
appraisals, real estate surveys, real estate title policies and endorsements,
and environmental audits; costs and expenses incurred by any one or more members
of the Lender Group in the disbursement of funds to Borrowers (by wire transfer
or otherwise); charges paid or incurred by any one or more members of the Lender
Group resulting from the dishonor of checks; costs and expenses paid or incurred
by any one or more members of the Lender Group to correct any default or enforce
any provision of the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for sale, or
advertising to sell the Personal Property Collateral or the Real Property
Collateral, or any portion thereof, irrespective of whether a sale is
consummated; costs and expenses paid or incurred by any one or more members of
the Lender Group in examining Books; costs and expenses of third party claims or
any other suit paid or incurred by any one or more members of the Lender Group
in enforcing or defending the Loan Documents or in connection with the
transactions contemplated by the Loan Documents or any one or more members of
the Lender Group's relationship with any Borrower or any Guarantor; and any one
or more members of the Lender Group's reasonable attorneys fees and expenses
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a "workout," a "restructuring," or an Insolvency Proceeding
concerning any Borrower or any Guarantor of the Obligations), defending, or
concerning the Loan Documents, irrespective of whether suit is brought. No other
fees or expenses are included in Lender Group Expenses or shall be payable by
Borrowers to Lenders under this Agreement.
9
"Lender-Related Persons" means, with respect to any
Lender, such Lender, together with such Lender's
Affiliates, and the officers, directors, employees, counsel, agents, and
attorneys-in-fact of such Lender and such Lender's Affiliates.
"Lien" means any interest in property securing an obligation
owed to, or a claim by, any Person other than
the owner of the property, whether such interest shall be based on the common
law, statute, or contract, whether such interest shall be recorded or perfected,
and whether such interest shall be contingent upon the occurrence of some future
event or events or the existence of some future circumstance or circumstances,
including the lien or security interest arising from a mortgage, deed of trust,
encumbrance, pledge, hypothecation, assignment, deposit arrangement, security
agreement, adverse claim or charge, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also including
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases, and other title exceptions and encumbrances
affecting Real Property.
"Loan Account" has the meaning set forth in Section 2.11.
"Loan Documents" means this Agreement, the Lockbox Agreements,
each Pledge Agreement, the Patent Security
Agreement, the Trademark Security Agreement, the Mortgages, the Registration
Rights Agreement, the Warrants, any note or notes executed by Borrowers and
payable to any Lender in connection with this Agreement, and any other agreement
entered into, now or in the future, in connection with this Agreement.
"Lockbox Account" shall mean a depository account
established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means those certain Control Agreements,
in form and substance satisfactory to Agent, each of which is among the
applicable Borrower, Agent, and one of the Lockbox Banks.
"Lockbox Banks" means, collectively, The Bank of New
York, American National Bank and Peoples Bank.
"Lockboxes" has the meaning set forth in Section 2.8.
"Material Adverse Change" means (a) a material adverse change
in the business, operations, results of
operations, assets, liabilities or financial condition of the Parent and its
Subsidiaries taken as a whole, (b) the material impairment of the Parent's or
any of its Subsidiaries' ability to perform their material obligations under the
Loan Documents to which they are a party or of Agent or the Lender Group to
enforce the Obligations or realize upon the Collateral, (c) a material adverse
effect on the value of the Collateral or the amount that Agent or the Lender
Group would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral, or (d)
a material impairment of the priority of Agent's or the Lender Group's Liens
with respect to the Collateral.
"Material Contract" means any agreement or contract of any Borrower
or any Subsidiary of a Borrower
10
(excluding subcontracts the costs of which by their terms are paid by such
Borrower's or Subsidiary's customer) which (a) involves consideration to such
Borrower or Subsidiary of $250,000 or more, (b) involves consideration by such
Borrower or Subsidiary of $250,000 or more, (c) imposes financial obligations on
any Borrower or any Subsidiary of a Borrower of $250,000 or more (other than any
agreement that by its terms may be terminated by any Borrower or any Subsidiary
of a Borrower upon sixty (60) days' notice or less) or (d) is otherwise material
(or together with related agreements and contracts, is material) to the
business, operations, financial condition, performance or properties of any
Borrower excluding from clauses (a), (b), (c) and (d), however, customer
purchase orders or purchase orders to any vendor, in each case entered into in
the ordinary course of a Borrower's business.
"Maturity Date" has the meaning set forth in Section 3.4.
"Mortgages" means one or more mortgages, deeds of trust,
or deeds to secure debt, executed by any Borrower
in favor of Agent for the benefit of the Lender Group, the form and substance of
which shall be satisfactory to Agent, that encumber the Real Property Collateral
and the related improvements thereto.
"Multiemployer Plan" means a "multiemployer plan" (as defined
in Section 4001(a)(3) of ERISA) to which a Borrower, any of its Subsidiaries, or
any ERISA Affiliate has contributed, or was obligated to contribute, within the
past six years.
"Naugatuck Property" means that certain Real Property
owned by GDC Naugatuck and located at 0 Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxx 00000.
"Negotiable Collateral" means all of each Borrower's now owned
and hereafter acquired right, title, and interest with respect to letters of
credit, letter of credit rights, instruments, promissory notes, drafts,
Investment Property, security entitlements, securities (including the shares of
stock of subsidiaries of each Borrower), documents, personal property leases,
and chattel paper (including electronic chattel paper and tangible chattel
paper), and any and all supporting obligations in respect thereof.
"Net Proceeds" means: (a) with respect to the sale or other
disposition of any asset (other than any
capital stock or debt security) by any Borrower or any of its Subsidiaries
(including in connection with any sale-leaseback), the excess, if any, of (i)
the aggregate amount received in cash (including any cash received by way of
deferred payment pursuant to a note receivable, other non-cash consideration or
otherwise, but only as and when such cash is so received) in connection with
such sale or other disposition, over (ii) the sum of (A) the principal amount of
any Indebtedness which is secured by any such asset (other than Indebtedness
assumed by the purchaser of such asset) or which is required to be, and is,
repaid in connection with the sale or other disposition thereof (other than
Indebtedness hereunder), (B) the reasonable out-of-pocket expenses and fees
incurred by the such Borrower or its Subsidiaries in connection with such sale
or other disposition (but only to the extent that such out-of-pocket expenses
and fees, if paid to an Affiliate of such Borrower, are approved by the Agent in
its sole discretion exercised reasonably), and provided that all such expenses
and fees are set forth on a certificate provided to the Agent, and (C) federal
and state taxes incurred in connection with such sale or other disposition,
whether payable at such time or thereafter; and (b) with respect to the sale or
other disposition of any capital stock or debt security by any Borrower or any
of its Subsidiaries, excluding any sale or disposition of capital stock of such
Borrower pursuant to employee stock option or purchase plans or warrants of such
11
Borrower, the excess of (i) the aggregate amount received in cash (including any
cash received by way of deferred payment pursuant to a note receivable, other
non-cash consideration or otherwise, but only as and when such cash is so
received) in connection with such sale or other disposition, over (ii) the sum
of (A) the reasonable fees, commissions and other out-of-pocket expenses
incurred by such Borrower or its Subsidiaries in connection with such sale or
other disposition (but only to the extent such fees, commissions and expenses,
if paid to an Affiliate of such Borrower, are approved by the Agent in its sole
discretion exercised reasonably and provided that all such fees, commissions,
discounts and expenses are set forth on a certificate provided to the Agent) and
(B) federal and state taxes incurred in connection with such sale or other
disposition, whether payable at such time or thereafter.
"Obligations" means all loans, Term Loans, debts,
principal (including the Term B PIK Amount), interest
(including any interest that, but for the provisions of the Bankruptcy Code,
would have accrued), liabilities (including all amounts charged to Borrowers'
Loan Account pursuant hereto), obligations, or Lender Group Expenses (including
any fees or expenses that, but for the provisions of the Bankruptcy Code, would
have accrued), lease payments, guaranties, covenants, and duties owing by each
Borrower to the Agent or the Lender Group of any kind and description (whether
pursuant to or evidenced by the Loan Documents or pursuant to any other
agreement between a Borrower and the Agent or the Lender Group, and irrespective
of whether for the payment of money), whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, and
including any debt, liability, or obligation owing from a Borrower to others
that the Agent or the Lender Group may have obtained by assignment or otherwise,
and further including all interest not paid when due and all Lender Group
Expenses that any Borrower is required to pay or reimburse by the Loan
Documents, by law, or otherwise. Any reference in this Agreement or in the Loan
documents to the Obligations shall include all amendments, changes, extensions,
modifications, renewals, replacements, substitutions, and supplements, thereto
and thereof, as applicable.
"Parent" means General DataComm Industries, Inc., a Delaware
corporation.
"Participant" means any Person to which a Lender has sold a
participation interest in its rights under the Loan Documents.
"Patent Security Agreement" means that certain Patent
Security Agreement, dated as of even date herewith,
between Borrowers and Agent, in form and substance satisfactory to Agent.
"PBGC" means the Pension Benefit Guaranty Corporation as defined in
Title IV of ERISA, or any successor thereto.
"Permits" of a Person shall mean all rights, franchises, permits,
authorities, licenses, certificates of
approval or authorizations, including licenses and other authorizations issuable
by a Governmental Authority, which pursuant to applicable Legal Requirements are
necessary to permit such Person lawfully to conduct and operate its business as
currently conducted and to own and use its assets.
12
"Permitted Discretion" means a determination made in good faith and in
the exercise of reasonable (from the perspective of a secured asset-based
lender) business judgment.
"Permitted Liens" means (a) Liens in favor of the Agent for the
benefit of the Lender Group, (b) Liens for
unpaid taxes that either (i) are not yet delinquent or (ii) do not constitute an
Event of Default hereunder and are the subject of Permitted Protests, (c)
subordinated Liens in favor of the Debenture Trustee under the Indenture, (d)
Liens set forth on Schedule P-1, (e) purchase money Liens or the interests of
lessors under capital leases to the extent that such Liens or interests secure
Purchase Money Indebtedness permitted under Section 7.1 hereof and so long as
the Lien attaches only to the assets purchased or acquired and the proceeds
thereof, (f) Liens arising by operation of law in favor of warehousemen,
landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in
the ordinary course of business of each Borrower and not in connection with the
borrowing of money, and which Liens either (i) are for sums not yet due and
payable, or (ii) are the subject of Permitted Protests, (g) Liens arising from
deposits made in connection with obtaining worker's compensation or other
unemployment insurance, (h) Liens or deposits to secure performance of bids,
tenders, or leases (to the extent permitted under this Agreement), incurred in
the ordinary course of business of each Borrower and not in connection with the
borrowing of money, (i) Liens arising by reason of security for surety or appeal
bonds in the ordinary course of business of each Borrower, (j) Liens resulting
from any judgment or award that would not have a Material Adverse Change and as
to which the time for appeal or petition for rehearing of which has not yet
expired, or in respect of which a Borrower is in good faith prosecuting an
appeal or proceeding for a review, and in respect of which a stay of execution
pending such appeal or proceeding for review has been secured, (k) Liens with
respect to the Real Property Collateral that are exceptions to the commitments
for title insurance issued in connection with the Mortgages, as accepted by
Agent, (l) with respect to any Real Property that is not part of the Real
Property Collateral, easements, rights of way, zoning and similar covenants and
restrictions, and similar encumbrances that customarily exist on properties of
Persons engaged in similar activities and similarly situated and that in any
event do not materially interfere with or impair the use or operation of the
Collateral by any Borrower or the value of Lender Group's Lien thereon or
therein, or materially interfere with the ordinary conduct of the business of
any Borrower, (m) Liens on leases (and the underlying Equipment) in which
Datacomm Leasing is the lessor, provided that (i) Agent receives not less than
30 days prior written notice of the incurrence of such Liens and the
Indebtedness secured thereby and (ii) the proceeds of the Indebtedness secured
by such Liens are deposited in a lockbox, and (n) Liens with respect to the
Naugatuck Property described on Schedule P-1 or as provided for or contemplated
under the Reorganization Plan.
"Permitted Protest" means the right of the applicable Borrower to
protest any Lien (other than any such
Lien that secures the Obligations), taxes (other than payroll taxes or taxes
that are the subject of a United States federal tax lien), or rental payment,
provided that (a) a reserve with respect to such obligation is established on
the Books in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by the applicable Borrower in good
faith, and (c) Required Lenders are reasonably satisfied that, while any such
protest is pending, there will be no impairment of the enforceability, validity,
or priority of any of the Agent's Liens.
13
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, limited
liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other organizations,
irrespective of whether they are legal entities, and governments and agencies
and political subdivisions thereof.
"Personal Property Collateral" means all Collateral
other than the Real Property Collateral.
"Plan" means any employee benefit plan, program, or arrangement
maintained or contributed to by a Borrower
or with respect to which it may incur liability.
"Pledge Agreements" means, collectively, (i) the Pledge Agreement,
dated as of even date herewith, made by
the Parent in favor of the Agent for the benefit of the Lenders, as amended,
supplemented or otherwise modified from time to time, (ii) the Pledge Agreement,
dated as of even date herewith, made by General DataComm in favor of the Agent
for the benefit of the Lenders, as amended, supplemented or otherwise modified
from time to time, and (iii) the Pledge Agreement, dated as of even date
herewith, made by GDC Realty in favor of the Agent for the benefit of the
Lenders, as amended, supplemented or otherwise modified from time to time.
"Pre-Petition Loan Agreement" has the meaning set
forth in the recitals to this Agreement.
"Pro Rata Share" means:
(a) with respect to a Lender's obligation to
make the Term A Loan and receive payments of principal, interest, fees, costs,
and expenses with respect thereto, the percentage obtained by dividing (i) the
principal amount of such Lender's Term A Loan Commitment by (ii) the principal
amount of the Term A Loan,
(b) with respect to a Lender's obligation to
make the Term B Loan and receive payments of principal, interest, fees, costs,
and expenses with respect thereto, the percentage obtained by dividing (i) the
principal amount of such Lender's Term B Loan Commitment by (ii) the principal
amount of the Term B Loan,
(c) with respect to all other matters as to a
particular Lender (including the indemnification obligations arising under
Section 18.7, the percentage obtained by dividing (i) the unpaid principal
amount of such Lender's portion of the Term A Loan plus such Lender's portion of
the Term B Loan (inclusive of such Lender's portion of the Term B PIK Amount) by
the aggregate amount of (ii) the Term A Loan plus the Term B Loan (inclusive of
the Term B PIK Amount).
"Purchase Money Indebtedness" means Indebtedness (other than
the Obligations, but including obligations under capital leases), incurred
at the time of, or within 20 days after, the
acquisition of any fixed assets for the purpose of financing all or any part of
the acquisition cost thereof.
14
"Real Property" means any estates or interests in real property
now owned or hereafter acquired by any Borrower.
"Real Property Collateral" means the parcel or parcels of real
property and the related improvements thereto identified on Schedule R-1, and
any Real Property hereafter acquired by any Borrower.
"Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is retrievable in
perceivable form.
"Reference Bank" means JPMorgan Chase Bank, its
successors or any other commercial bank designated by Agent
to the Administrative Borrower from time to time.
"Reference Rate" means the rate of interest publicly
announced by the Reference Bank in New York, New York
from time to time as its reference rate, base rate or prime rate. The reference
rate, base rate or prime rate is determined from time to time by the Reference
Bank as a means of pricing some loans to its borrowers and neither is tied to
any external rate of interest or index nor necessarily reflects the lowest rate
of interest actually charged by the Reference Bank to any particular class or
category of customers. Each change in the Reference Rate shall be effective from
and including the date such change is publicly announced as being effective.
"Registration Rights Agreement" means the Registration Rights
Agreement, in form and substance satisfactory
to the Agent, by and between the Parent and Holder, with respect to the shares
of Warrant Stock that Holder may acquire pursuant to the Warrants and certain
rights associated with such shares.
"Reorganization" shall mean the reorganization of the Debtors
pursuant to the Reorganization Plan and the Confirmation Order.
"Reorganization Plan" means the Plan of Reorganization of the
Debtors dated April 29, 2003 proposed pursuant to Section 1121 et. seq. of the
Bankruptcy Code.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA or the regulations thereunder other than a Reportable Event
as to which the provision of 30 days notice to the PBGC is waived under
applicable regulations.
"Required Lenders" means, at any time, Lenders whose
Pro Rata Shares aggregate fifty-one percent (51%) or
more of the Commitments or, if the Commitments have been terminated irrevocably,
51% of the Obligations then outstanding.
"Retiree Health Plan" means an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA
that provides benefits to individuals after termination of their employment,
other than as required by Section 601 of ERISA.
"SEC" means the United States Securities and Exchange
Commission and any successor Federal agency having similar powers.
15
"Securities Account" means a "securities account" as
that term is defined in the Code.
"Stock" means all shares, options, warrants, interests,
participations, or other equivalents (regardless of
how designated) of or in a Person, whether voting or nonvoting, including all
classes of common stock, preferred stock, or any other "equity security" (as
such term is defined in Rule 3a11-1 of the General Rules and Regulations
promulgated by the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation, partnership, limited
liability company, or other entity in
which that Person directly or indirectly owns or controls the shares of Stock or
other ownership interests having ordinary voting power to elect a majority of
the board of directors (or appoint other comparable managers) of such
corporation, partnership, limited liability company, or other entity.
"Term A Loan" has the meaning set forth in Section
2.4(a)(i).
"Term A Loan Commitment" means the amount set forth
opposite such Lender's name on Schedule C-1 as such
Lender's "Term A Loan Commitment", as the same may be adjusted from time to time
pursuant to the terms of this Agreement.
"Term B Loan" has the meaning set forth in Section
2.4(b)(i).
"Term B Loan Commitment" means the amount set forth
opposite such Lender's name on Schedule C-1 as such
Lender's "Term B Loan Commitment", as the same may be adjusted from time to time
pursuant to the terms of this Agreement.
"Term B PIK Amount" means, as of any date of
determination, the amount of all interest accrued with respect
to the Term B Loan that has been paid in kind by being added to the balance
thereof in accordance with Section 2.7(a).
"Term Loans" means, collectively, the Term A Loan and
the Term B Loan.
"Trademark Security Agreement" means that certain
Trademark Security Agreement, dated as of even date
herewith, among Borrowers and Agent, in form and substance satisfactory to
Agent.
"UCC Filing Authorization Letter" means a letter
executed by each Borrower authorizing Agent to file
appropriate financing statements on Form UCC-1 in such office or offices as may
be necessary or, in the opinion of Agent, desirable to perfect the Liens to be
created by each applicable Loan Document.
"Voidable Transfer" has the meaning set forth in
Section 19.8.
"Warrants" has the meaning set forth in Section 15.
16
"Warrant Stock" means each share of Common Stock
issuable by the Parent upon the exercise of the Warrants.
1.2 Accounting Terms. All accounting terms not specifically defined herein shall
be construed in accordance with GAAP. When used herein, the term "financial
statements" shall include the notes and schedules thereto. Whenever the term
"Parent and its Subsidiaries" is used in respect of a financial covenant or a
related definition, it shall be understood to mean the Parent and its
Subsidiaries on a consolidated basis unless the context clearly requires
otherwise.
1.3 Code. Any terms used in this Agreement that are defined in the Code shall be
construed and defined as set forth in the Code unless otherwise defined herein.
1.4 Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term "including" is
not limiting, and the term "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and/or." The words "hereof,"
"herein," "hereby," "hereunder," and similar terms in this Agreement or any
other Loan Document refer to this Agreement or any other Loan Documents, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be. An Event of Default shall
"continue" or be "continuing" until such Event of Default has been waived in
writing by Agent or cured. Section, subsection, clause, schedule, and exhibit
references are to this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to this Agreement or any of the Loan
Documents shall include all alterations, amendments, changes, extensions,
modifications, renewals, replacements, substitutions, joiners, and supplements,
thereto and thereof, as applicable (subject to any restrictions on such
alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). Any
reference herein to any Person shall be construed to include such Person's
successors and assigns. Any requirement of a writing contained herein or in the
other Loan Documents shall be satisfied by the transmission of a Record and any
Record transmitted shall constitute a representation and warranty as to the
accuracy and completeness of the information contained therein.
1.5 Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference. Disclosure in
any schedule to this Agreement shall be deemed disclosure for all purposes of
this Agreement
2. LOAN AND TERMS OF PAYMENT.
2.1 [Intentionally Omitted].
2.2 [Intentionally Omitted].
2.3 [Intentionally Omitted].
2.4 Term Loans. (a)(i) Subject to the terms and conditions of this Agreement,
each Lender that has a Term A Loan Commitment severally agrees to make a term
loan as of the Closing Date (the "Term A Loan") to Borrowers in the original
aggregate principal amount equal to such Lender's Term A Loan Commitment.
17
Notwithstanding the forgoing, Borrower and Lenders agree that the entire Term A
Loan is outstanding as of the Closing Date. The Term A Loan shall be repaid on
the first day of each month during the applicable periods set forth below and in
the amounts corresponding to such periods, as follows:
(A) during the period from
August 20, 2002 to and including December 31, 2004, the
Term A Loan shall be repaid in monthly installments of principal equal to
$250,000, provided that any and all adequate assurance payments made by Debtors
on or after the Closing Date shall be deemed to have been made on and shall
reduce the principal balance of the Term A Loan on a dollar for dollar basis;
and
(B) on January 1, 2005 and
each month thereafter, the Term A Loan shall be repaid in
monthly installments of principal equal to the greater of (I) the product of (x)
the principal amount of the Term A Loan outstanding on December 31, 2004
multiplied by (y) 1/36th and (II) $250,000.
(ii) Notwithstanding the foregoing, with respect to any monthly amortization
installment due and payable on the Term A Loan during the 2003 calendar year,
Borrowers shall have the right to defer the payment of any such installment for
thirty (30) days from the date such installment is otherwise due hereunder,
provided that Borrowers may exercise such deferral right once during the 2003
calendar year.
(iii) Borrowers shall repay (A) at least $7,500,000 of the original principal
amount of the Term A Loan by September 30, 2003 (i.e., the Term A Loan is
reduced to $17,500,000 by such date) and (B) at least $10,000,000 of the
original principal amount of the Term A Loan by December 31, 2003 (i.e., the
Term A Loan is reduced to $15,000,000 by such date); provided, however, that
each deadline set forth in clauses (A) and (B) above shall be extended by sixty
(60) days from the applicable deadline if, at least two (2) Business Days prior
to such deadline, Borrowers deliver to Agent a fully executed letter of intent,
in form and substance reasonably satisfactory to Agent, providing for the
purchase by a Person (other than an Affiliate of a Borrower) of any of the
assets set forth on Schedule 7.4 and the Net Proceeds resulting from such sale
would, when aggregated with all prior principal repayments of the Term A Loan,
enable Borrowers to satisfy the minimum repayment amount corresponding to such
deadline.
(iv) The outstanding principal balance and all accrued and unpaid interest under
the Term A Loan shall be due and payable upon the termination of this Agreement,
whether by its terms, by prepayment, by acceleration, or otherwise. The unpaid
principal balance of the Term A Loan may be prepaid in whole or in part without
penalty or premium at any time during the term of this Agreement upon 10 days
prior written notice by Borrowers to Agent, all such prepaid amounts to be
applied to the principal installments due on the Term A Loan in the inverse
order of their maturity. All amounts outstanding under the Term A Loan shall
constitute Obligations.
(v) Notwithstanding anything contained in this Agreement to the contrary if (A)
on or before June 30, 2003, the Borrowers have repaid $23,000,000 of the
aggregate principal amount of the Term A Loan, together with all accrued
interest thereon, the remaining principal balance of the Term A Loan and any
18
interest accrued thereon shall be forgiven by the Lenders, and (B) on or before
December 31, 2003, the Borrowers have repaid $24,000,000 of the aggregate
principal amount of the Term A Loan, together with all accrued interest thereon,
the remaining principal balance of the Term A Loan and any interest accrued
thereon shall be forgiven by the Lenders.
(b) (i) Subject to the terms and conditions of this Agreement, each Lender that
has a Term B Loan Commitment severally agrees to make a term loan as of the
Closing Date (the "Term B Loan") to Borrowers in the original aggregate
principal amount equal to such Lender's Term B Loan Commitment. Notwithstanding
the foregoing, Borrower and Lenders agree that, subject to adjustment in
accordance with the subsequent provisions of this Section 2.4(b), the entire
Term B Loan is outstanding as of the Closing Date. The following portions of the
outstanding principal amount of the Term B Loan shall be forgiven, together with
all accrued interest on the principal amount so forgiven, upon the satisfaction
of the condition corresponding to such forgiven amount:
(A) $1,250,000, if at
least $5,000,000 of the aggregate principal balance of the
Term A Loan has been repaid during the period from August 20, 2002 to June 30,
2003;
(B) $1,250,000, if at least
$10,000,000 of the aggregate principal balance of the
Term A Loan has been repaid during the period from August 20, 2002 to December
31, 2003;
(C) $1,250,000, if at least
$15,000,000 of the aggregate principal balance of the
Term A Loan has been repaid during the period from August 20, 2002 to June 30,
2004; and
(D) $1,250,000, if the
aggregate principal amount of the Term A Loan has been repaid
in full, together with all accrued interest thereon, by December 31, 2004 or
forgiven as provided in Section 2.4(a)(v).
(ii) If any principal amount of the Term B Loan is outstanding on January 1,
2005, the balance owing under the Term B Loan shall be determined by the
Bankruptcy Court based upon the aggregate amount claimed by the Lenders to be
owing by the Debtors under the Pre-Petition Agreement Loan as of August 20,
2002, less the amount determined by the Bankruptcy Court in accordance with the
Reorganization Plan as not owing to the Lenders thereunder (such determination
having been made in connection with the Adversary Proceeding), less $25,000,000
and less any reductions to the principal balance of the Term B Loan pursuant to
clauses (A) through (D) of Section 2.4(b)(i).
(iii) The outstanding principal balance and all accrued and unpaid interest
under the Term B Loan shall be due and payable upon the termination of this
Agreement, whether by its terms, by prepayment, by acceleration, or otherwise.
If and only if the Term A Loan has been repaid in full, the unpaid principal
balance of the Term B Loan may be prepaid in whole or in part without fee,
penalty or premium at any time during the term of this Agreement upon written
notice by Borrowers to Agent. All amounts outstanding under the Term B Loan
shall constitute Obligations.
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2.5 Payments.
(a) Payments by Borrower.
(i) All payments to be made by Borrowers shall be made without set-off,
recoupment, deduction, or counterclaim, except as otherwise required by law.
Except as otherwise expressly provided herein, all payments by Borrowers shall
be made to Agent for the account of the Lenders, at Agent's address set forth in
Section 12, and shall be made in immediately available funds, no later than 2:00
p.m. (New York time) on the date specified herein. Any payment received by Agent
later than 2:00 p.m. (New York time), at the option of Agent, shall be deemed to
have been received on the following Business Day and any applicable interest or
fee shall continue to accrue until such following Business Day.
(ii) Whenever any payment is due on a day other than a Business Day, such
payment shall be made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.
(iii) Unless Agent receives notice from Administrative Borrower prior to the
date on which any payment is due to Lenders that Borrowers will not make such
payment in full as and when required, Agent may assume that Borrowers have made
such payment in full to Agent on such date in immediately available funds and
Agent may (but shall not be so required), in reliance upon such assumption,
distribute to each Lender on such due date an amount equal to the amount then
due such Lender. If and to the extent Borrowers have not made such payment in
full to Agent, each Lender shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the Reference Rate
for each day from the date such amount is distributed to such Lender until the
date repaid.
(iv) Immediately upon the receipt by any Borrower or any of its Subsidiaries of
any Net Proceeds from the disposition of the assets set forth on Schedule 7.4 of
such Borrower or any of its Subsidiaries, such Borrower shall prepay the Term A
Loan in an amount equal to 100% of such Net Proceeds. Lenders agree to cooperate
with Borrowers on the realization of proceeds from the sale of the assets
identified in Schedule 7.4, including (A) consent to the sale of such assets in
which Agent has security interests, provided that the Net Proceeds of such sales
are applied in accordance with the immediately preceding sentence to the
reduction of the Term A Loan, and (B) consent to a prior mortgage on the
Naugatuck Property and/or the satisfaction of Agent's Lien on the Naugatuck
Property in connection with the sale or mortgage of the Naugatuck Property,
provided the Net Proceeds therefrom are applied in accordance with the
immediately preceding sentence to the reduction of the Term A Loan and applied
to the satisfaction of any existing prior mortgages on the Naugatuck Property in
an amount not exceeding $635,000 using cash on hand. In addition to the
foregoing, any Net Proceeds received by Borrowers from any life insurance
policies maintained by Borrowers on the life of Xxxxxx X. Xxxxxx shall be
promptly paid to Agent to prepay the Term A Loan.
(b) Apportionment, Application of Payments, and Reversal of Payments. (i) Except
as otherwise provided with respect to Defaulting Lenders, aggregate principal
20
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of each Lender's Term Loans as to which such
payments relate), and payments of the fees (other than fees designated for
Agent's sole and separate account) shall, as applicable, be apportioned ratably
among the Lenders. Except as otherwise provided in paragraph (b)(ii) below, all
payments shall be remitted to Agent and all such payments not relating to
principal of or interest on specific Term Loans (other than payments received
while no Event of Default has occurred and is continuing and that relate to the
payment of principal or interest of specific Obligations or that relate to the
payment of specific fees or other amounts) and all proceeds of Accounts or other
Collateral received by Agent pursuant to this Agreement or any other Loan
Document, shall be applied as follows:
first, to pay any Lender Group Expenses then due to Agent from
Borrowers until paid in full;
second, to pay any Lender Group Expenses then due to Lenders from
Borrowers;
third, to pay interest due in respect of all Agent Advances until
paid in full;
fourth, to pay interest due in respect of the Term A Loan until paid
in full;
fifth, to pay or prepay principal of Agent Advances until paid in
full;
sixth, to pay or prepay the principal of the Term A Loan until paid
in full;
seventh, when due and payable, to pay all Obligations in respect of
the Term B Loan until paid in full; and
eighth, ratably to pay any other Obligations due to Agent or any
Lender by Borrowers.
Agent shall promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it may
be entitled to receive, subject to a settlement delay.
(ii) In each instance, so long as no Event of Default has occurred and is
continuing, Section 2.5(b)(i) shall not be deemed to apply to any payment by
Borrowers specified by Borrowers to Agent to be for the payment of Obligations
in respect of a Term Loan when due and payable under any provision of this
Agreement or the prepayment of all or part of the principal of the Term A Loan
pursuant to Section 2.5(a)(iv).
(iii) For purposes of the foregoing, "paid in full" with respect to interest
shall include interest accrued after the commencement of any Insolvency
Proceeding irrespective of whether a claim for such interest is allowable in
such Insolvency Proceeding.
(iv) In the event of a direct conflict between the priority provisions of this
Section 2.5(b) and other provisions contained in any other Loan Document, it is
the intention of the parties hereto that both such priority provisions in such
documents shall be read together and construed, to the fullest extent possible,
to be in concert with each other. In the event of any actual, irreconcilable
conflict that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.5(b) shall control and govern.
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2.6 Agent Advances.
(a) Subject to the limitations set forth in the proviso contained in this
Section 2.6(a), Agent hereby is authorized by Borrowers and Lenders, from time
to time in Agent's sole discretion, after the occurrence and during the
continuance of a Default or an Event of Default (but without constituting a
waiver of such Default or Event of Default), to make advances to Borrowers on
behalf of Lenders that Agent, in its reasonable business judgment, deems
necessary or desirable (i) to preserve or protect the Collateral, or any portion
thereof, (ii) to enhance the likelihood of, or maximize the amount of, the
repayment of the Obligations, or (iii) to pay any other amount chargeable to the
Borrowers pursuant to the terms of this Agreement, including Lender Group
Expenses and the advances described in Section 10 (any of the advances described
in this Section 2.6(a) being hereinafter referred to as "Agent Advances");
provided, that the Required Lenders may at any time revoke Agent's authorization
contained in this Section 2.6(a) to make Agent Advances, any such revocation to
be in writing and to become effective upon Agent's receipt thereof.
(b) Agent Advances shall be repayable by Borrowers on demand and secured by the
Collateral, shall constitute Obligations hereunder, and shall bear interest at
the rate then applicable to Obligations pursuant to Section 2.7.
2.7 Interest: Rates, Payments, and Calculations.
(a) Interest Rate. Except as provided in clause (c) below, all Obligations shall
bear interest at a per annum rate of 7.25 percentage points, provided that after
December 31, 2003, all Obligations shall bear interest at a per annum rate equal
to the greater of (i) 7.25 percentage points and (ii) the Reference Rate plus
2.5 percentage points; provided, however, that the interest on the outstanding
principal amount of the Term B Loan shall be paid by capitalizing such interest
and adding such capitalized interest to the then outstanding principal amount of
the Term B Loan. Any interest to be capitalized shall be capitalized on the date
such interest is to be paid pursuant to Section 2.7(e) and added to the then
outstanding principal amount of the Term B Loan and, thereafter, shall bear
interest as provided hereunder as if it had originally been part of the
outstanding principal of the Term B Loan.
(b) [Intentionally Omitted]
---------------------
(c) Default Rate. Upon the occurrence and during the continuation of an Event of
Default, all Obligations shall bear interest at a per annum rate equal to 2.00
percentage points above the interest rate applicable to such Obligations at such
time.
(d) Minimum Interest. In no event shall the rate of interest chargeable under
Section 2.7(a) for any day be less than 7.25% per annum. To the extent that
interest accrued hereunder at the rate set forth herein would be less than the
foregoing minimum daily rate, the interest rate chargeable hereunder for such
day automatically shall be deemed increased to the minimum rate.
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(e) Payments. Interest (other than the Term B PIK Amount) payable hereunder
shall be due and payable, in arrears, on the first day of each month during the
term hereof. Borrowers will pay on demand, all Lender Group Expenses incurred by
Agent and each Lender. Lenders and Borrowers hereby authorize Agent to, and
Agent may, from time to time, charge the Loan Account of Borrowers with any
amount due and payable by Borrowers under any Loan Document. Lenders and
Borrowers agree that Agent shall have the right to make such charges whether or
not any Default or Event of Default shall have occurred and be continuing. Any
amount charged to the Loan Account of Borrowers shall be deemed an Obligation
hereunder and, if not paid within 10 days after the same are billed to Borrowers
by Agent, thereafter shall bear interest as provided hereunder. Lenders and
Borrowers confirm that any charges which Agent may so make to the Loan Account
of Borrowers as herein provided will be made as an accommodation to Borrowers
and solely at Agent's discretion.
(f) Computation. In the event the Reference Rate is changed from time to time
hereafter, the applicable rate of interest hereunder automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Reference Rate. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual number of days
elapsed.
(g) Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.
2.8 Collection of Accounts. (a) Each Borrower shall at all times maintain
lockboxes (the "Lockboxes") and, immediately after the Closing Date, (i) shall
instruct all Account Debtors with respect to the Accounts, General Intangibles,
and Negotiable Collateral of such Borrower to remit all Collections in respect
thereof to such Lockboxes and (ii) shall deposit all other Collections received
by such Borrower from any source immediately upon receipt into the Lockboxes.
Each Borrower, Agent, and the Lockbox Banks shall enter into the Lockbox
Agreements, which among other things shall provide for the opening of a Lockbox
Account for the deposit of Collections at a Lockbox Bank. Each Borrower agrees
that all Collections and other amounts received by such Borrower from any
Account Debtor or any other source immediately upon receipt shall be deposited
into a Lockbox Account. No Lockbox Agreement or arrangement contemplated thereby
shall be modified by any Borrower without the prior written consent of Agent. In
the absence of an Event of Default, Borrowers shall be permitted to use any and
all cash deposited into any Lockbox Account.
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(b) The Lockbox Accounts shall be cash collateral accounts, with all cash,
checks and similar items of payment in such accounts securing payment of the
Obligations, and in which Borrowers are hereby deemed to have granted a Lien to
Agent.
2.9 Crediting Payments. Borrowers will make each payment under this Agreement
not later than 2:00 p.m. (New York City time) on the day when due, in lawful
money of the United States of America and in immediately available funds, to the
Agent's Account. All payments received by Agent after 2:00 p.m. (New York City
time) on any Business Day will be credited to the Loan Account on the next
succeeding Business Day. All payments shall be made by Borrowers without
set-off, counterclaim, deduction or other defense to Agent and Lenders.
2.10 [Intentionally Omitted].
2.11 Maintenance of Loan Account; Statements of Obligations. Agent on behalf of
the Lender Group shall maintain an account on its books in the name of Borrowers
(the "Loan Account") on which Borrowers will be charged with the Term Loans made
by Agent or the Lenders to Borrowers or for Borrowers' account, including,
accrued interest and Lender Group Expenses. In accordance with Section 2.9, the
Loan Account will be credited with all payments received by Agent from Borrowers
or for Borrowers' account, including all amounts received in the Agent's Account
from any Lockbox Bank. Agent shall render statements regarding the Loan Account
to Administrative Borrower, including principal, interest, and including an
itemization of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be correct and
accurate and constitute an account stated between Borrowers and the Lender Group
unless, within 30 days after receipt thereof by Administrative Borrower,
Administrative Borrower shall deliver to Agent written objection thereto
describing the error or errors contained in any such statements.
2.12 Joint and Several Liability of the Borrowers.
(a) Each Borrower is accepting joint and several liability hereunder and under
the other Loan Documents in consideration of the financial accommodations to be
provided by Lender Group under this Agreement, for the mutual benefit, directly
and indirectly, of each Borrower and in consideration of the undertakings of the
other Borrowers to accept joint and several liability for the Obligations.
(b) Each Borrower, jointly and severally, hereby irrevocably and unconditionally
accepts, not merely as a surety but also as a co-debtor, joint and several
liability with the other Borrowers, with respect to the payment and performance
of all of the Obligations (including, without limitation, any Obligations
arising under this Section 2.12), it being the intention of the parties hereto
that all the Obligations shall be the joint and several obligations of each
Borrower without preferences or distinction among them.
(c) If and to the extent that any Borrower shall fail to make any payment with
respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.
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(d) The Obligations of each Borrower under the provisions of this Section 2.12
constitute the absolute and unconditional, full recourse Obligations of each
Borrower enforceable against each such Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each Borrower
hereby waives notice of acceptance of its joint and several liability, notice of
the occurrence of any Default, Event of Default, or of any demand for any
payment under this Agreement, notice of any action at any time taken or omitted
by Agent or the Lender Group under or in respect of any of the Obligations, any
requirement of diligence or to mitigate damages and, generally, to the extent
permitted by applicable law, all demands, notices and other formalities of every
kind in connection with this Agreement (except as otherwise provided in this
Agreement). Each Borrower hereby assents to, and waives notice of, any extension
or postponement of the time for the payment of any of the Obligations, the
acceptance of any payment of any of the Obligations, the acceptance of any
partial payment thereon, any waiver, consent or other action or acquiescence by
Lender Group at any time or times in respect of any default by any Borrower in
the performance or satisfaction of any term, covenant, condition or provision of
this Agreement, any and all other indulgences whatsoever by Lender Group in
respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any Borrower. Without limiting the generality of the foregoing, each Borrower
assents to any other action or delay in acting or failure to act on the part of
Agent or Lender Group with respect to the failure by any Borrower to comply with
any of its respective Obligations, including, without limitation, any failure
strictly or diligently to assert any right or to pursue any remedy or to comply
fully with applicable laws or regulations thereunder, which might, but for the
provisions of this Section 2.12 afford grounds for terminating, discharging or
relieving any Borrower, in whole or in part, from any of its Obligations under
this Section 2.12, it being the intention of each Borrower that, so long as any
of the Obligations hereunder remain unsatisfied, the Obligations of such
Borrowers under this Section 2.12 shall not be discharged except by performance
and then only to the extent of such performance. The Obligations of each
Borrower under this Section 2.12 shall not be diminished or rendered
unenforceable by any winding up, reorganization, arrangement, liquidation,
reconstruction or similar proceeding with respect to any Borrower, Agent or any
Lender. The joint and several liability of the Borrowers hereunder shall
continue in full force and effect notwithstanding any absorption, merger,
amalgamation or any other change whatsoever in the name, constitution or place
of formation of any Borrower, Agent or any Lender.
(f) The provisions of this Section 2.12 are made for the benefit of Agent and
each Lender and their respective successors and assigns, and may be enforced by
them from time to time against any or all of the Borrowers as often as occasion
therefor may arise and without requirement on the part of Agent or any Lender or
such successor or assign first to xxxxxxxx any of its or their claims or to
exercise any of its or their rights against any of the other Borrowers or to
exhaust any remedies available to it or them against any of the other Borrowers
or to resort to any other source or means of obtaining payment of any of the
Obligations hereunder or to elect any other remedy. The provisions of this
25
Section 2.12 shall remain in effect until all of the Obligations shall have been
indefeasibly paid in full or otherwise fully and finally satisfied. If at any
time, any payment, or any part thereof, made in respect of any of the
Obligations, is rescinded or must otherwise be restored or returned by Lender
Group upon the insolvency, bankruptcy or reorganization of any Borrower, or
otherwise, the provisions of this Section 2.12 will forthwith be reinstated in
effect, as though such payment had not been made.
(g) Each Borrower hereby agrees that it will not enforce any of its rights of
contribution or subrogation against the other Borrowers with respect to any
liability incurred by it hereunder or under any of the other Loan Documents, any
payments made by it to Lender Group with respect to any of the Obligations or
any collateral security therefor. Any claim which any Borrower may have against
any other Borrower with respect to any payments to Lender Group hereunder or
under any other Loan Documents are hereby expressly made subordinate and junior
in right of payment, without limitation as to any increases in the Obligations
arising hereunder or thereunder, to the prior indefeasible payment in full in
cash of the Obligations and, in the event of any insolvency, bankruptcy,
receivership, liquidation, reorganization or other similar proceeding under the
laws of any jurisdiction relating to any Borrower, its debts or its assets,
whether voluntary or involuntary, all such Obligations shall be paid in full in
cash before any payment or distribution of any character, whether in cash,
securities or other property, shall be made to any other Borrower therefor.
(h) Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Default or Event of Default, the payment of any amounts due
with respect to the indebtedness owing by any Borrower to any other Borrower is
hereby subordinated to the prior indefeasible payment in full in cash of the
Obligations. Each Borrower hereby agrees that after the occurrence and during
the continuance of any Default or Event of Default, such Borrower will not
demand, xxx for or otherwise attempt to collect any indebtedness of any other
Borrower owing to such Borrower until the Obligations shall have been paid in
full in cash. If, notwithstanding the foregoing sentence, such Borrower shall
collect, enforce or receive any amounts in respect of such indebtedness, such
amounts shall be collected, enforced and received by such Borrower as trustee
for Lender Group.
3. DELIVERIES; TERM OF AGREEMENT.
3.1 Deliveries By Borrower. On or before the Effective Date, Borrowers
shall deliver to Agent the following:
(a) The UCC Filing Authorization Letter duly executed by each Borrower and
satisfactory evidence of the filing of all financing statements on Form UCC-1 in
such office or offices as may be necessary or, in the opinion of Agent,
desirable to perfect the security interests purported to be created by each
applicable Loan Document;
(b) The following documents, in form and substance satisfactory to Agent, duly
executed, and each such document shall be in full force and effect:
a. the Lockbox Agreements;
b. a Pledge Agreement, duly executed by the Parent, General DataComm, and
GDC Realty;
26
c. the Patent Security Agreement;
d. the Trademark Security Agreement;
e. the Warrants;
f. the Registration Rights Agreement; and
g. a collateral assignment of any and
all life insurance policies owned by
Parent on the life of Xxxxxx Xxxxxx
together with duly executed
beneficiary designations for such
policies naming Agent as the
Beneficiary of such policies.
(c) A certificate from the Secretary of each Borrower attesting to the
resolutions of such Borrower's Board of Directors authorizing its execution,
delivery, and performance of this Agreement and the other Loan Documents
(including the Warrants) to which such Borrower is a party and authorizing
specific officers of such Borrower to execute the same;
(d)Copies of each Borrower's Governing Documents, as amended, modified, or
supplemented to the Effective Date, certified by the Secretary of such Borrower;
(e) A certificate of status with respect to each Borrower, dated within 10 days
of the Effective Date, such certificate to be issued by the appropriate officer
of the jurisdiction of organization of such Borrower, which certificate shall
indicate that such Borrower is in good standing in such jurisdiction except as
otherwise disclosed in the Chapter 11 Case;
(f) Certificates of status with respect to each Borrower, each dated within 15
days of the Effective Date, such certificates to be issued by the appropriate
officer of the jurisdictions in which its failure to be duly qualified or
licensed would constitute a Material Adverse Change, which certificates shall
indicate that such Borrower is in good standing in such jurisdictions;
(g) A certificate of insurance, together with the endorsements thereto, as are
required by Section 6.11, the form and substance of which shall be satisfactory
to Agent and its counsel;
(h) Agent shall have received such Collateral Access Agreements from lessors,
warehousemen, bailees, and other third persons as Agent may require;
(i) Agent shall have received a certificate from the chief executive officer of
each Borrower (on behalf of such Borrower) certifying as to the truth and
accuracy of the representations and warranties of Borrowers contained in Article
5 and as to the absence of any Defaults or Events of Default;
(j) Agent shall have received evidence, satisfactory to the Agent, that each of
the conditions precedent to the Effective Date and consummation of the
Reorganization Plan shall have been satisfied and that the Effective Date shall
have occurred;
27
(k) Borrowers shall have paid or caused to be paid all amounts accrued and
unpaid through and including the Effective Time with respect to any adequate
protection provided under the Bankruptcy Code in accordance with the terms of,
and to the extent required by, the Reorganization Plan, the Confirmation Order
or any other order of the Bankruptcy Court;
(l) A copy of the Confirmation Order shall have become a Final Order and Agent
shall have received a copy thereof certified by a clerk of the Bankruptcy Court
as true, complete and correct and such order shall be in full force and effect;
(m) Agent shall have received a fully executed copy of the Indenture pertaining
to the Debentures and the Subordinated Security Agreement securing payment of
the Debentures, each certified by the Parent as a true and complete copy
thereof; and
(n) all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Agent and its counsel and the
fees and disbursements of Xxxxxxx Xxxx & Xxxxx LLP and all other accrued and
unpaid Lender Group Expenses (including the fees and disbursements of counsel to
any member of the Lender Group on the Effective Date) that are required to be
paid under this Agreement shall be paid if invoiced as of the Effective Date.
Execution and delivery to the Agent by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (i) all conditions
precedent in this Section 3.1 have been fulfilled to the satisfaction of such
Lender and (ii) the decision of such Lender to execute and deliver to the Agent
an executed counterpart of this Agreement was made by such Lender independently
and without reliance on the Agent or any other Lender as to the satisfaction of
any condition set forth in this Section 3.1.
3.2 [Intentionally Omitted].
3.3 [Intentionally Omitted].
3.4 Term. This Agreement shall become effective upon the execution and delivery
hereof by each Borrower, each of the Lenders and the Agent, and shall continue
in full force and effect for a term ending on December 31, 2007 (the "Maturity
Date"), unless sooner terminated pursuant to the terms hereof. The foregoing
notwithstanding, Agent (on behalf of the Lender Group) shall have the right to
terminate Lender Group's obligations under this Agreement immediately and
without notice upon the occurrence and during the continuation of an Event of
Default.
3.5 Effect of Termination. On the date of termination of this Agreement, all
Obligations immediately shall become due and payable without notice or demand.
No termination of this Agreement, however, shall relieve or discharge any
Borrower of Borrower's duties, Obligations, or covenants hereunder or under the
other Loan Documents, and Lender Group's continuing security interests in the
Collateral shall remain in effect until all Obligations have been fully and
finally discharged and Lender Group's obligation to provide additional credit
hereunder is terminated.
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3.6 Early Termination by Borrower. Borrowers have the option, at any time upon
written notice to Agent, to terminate this Agreement by paying to Agent (for the
ratable benefit of Lender Group), in cash, the Obligations, in full, without
fee, premium or penalty.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Each Borrower hereby grants to Agent, for the
benefit of the Lender Group, a continuing security interest in all of its right,
title, and interest in all currently existing and hereafter acquired or arising
Personal Property Collateral in order to secure prompt repayment of any and all
of the Obligations in accordance with the terms and conditions of the Loan
Documents and in order to secure prompt performance by such Borrower of each of
its covenants and duties under the Loan Documents. The Agent's Liens in and to
the Personal Property Collateral shall attach to all Personal Property
Collateral without further act on the part of Agent or any Borrower. Anything
contained in this Agreement or any other Loan Document to the contrary
notwithstanding, except for the sale of the properties and assets under Section
7.4 hereof and as otherwise provided in this Agreement, the Borrowers have no
authority, express or implied, to dispose of any item or portion of the
Collateral.
4.2 Negotiable Collateral. In the event that any Collateral, including proceeds,
is evidenced by or consists of Negotiable Collateral, and if and to the extent
that perfection or priority of Agent's security interest is dependent on or
enhanced by possession, each Borrower, immediately upon the request of Agent,
shall endorse and deliver physical possession of such Negotiable Collateral to
Agent.
4.3 Collection of Accounts, General Intangibles, and Negotiable Collateral. At
any time after the occurrence and during the continuance of an Event of Default,
Agent or its designee may (a) notify customers or Account Debtors of each
Borrower that the Accounts, chattel paper or General Intangibles have been
assigned to Agent or that Agent has a security interest therein, and (b) collect
the Accounts, chattel paper or General Intangibles directly and charge the
collection costs and expenses to the Loan Account, and each Borrower agrees that
it will hold in trust for Lender Group, as Agent's trustee, any Collections that
it receives and immediately will deliver said Collections to Agent in their
original form as received by such Borrower.
4.4 Filing of Financing Statements; Commercial Tort Claims; Pledge
Amendments; Delivery of Additional Documentation Required.
(a) Each Borrower authorizes Agent to file any financing statement required
hereunder, and any continuation statement or amendment with respect thereto, in
any appropriate filing office without the signature of any Borrower where
permitted by applicable law. Each Borrower hereby ratifies the filing of any
financing statement, and any continuation statement or amendment with respect
thereto, filed without the signature of any Borrower prior to the date hereof.
(b) If any Borrower acquires any commercial tort claims after the date hereof,
such Borrower shall immediately deliver to Agent a written description of such
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commercial tort claim and shall deliver a written agreement, in form and
substance reasonably satisfactory to Agent, pursuant to which such Borrower
shall pledge and collaterally assign all of its right, title and interest in and
to such commercial tort claim to Agent, for the benefit of the Lenders, as
security for the Obligations (a "Commercial Tort Claim Assignment").
(c) At any time upon the request of Agent, each Borrower shall execute and
deliver to Agent, any and all financing statements, original financing
statements in lieu of continuation statements, fixture filings, security
agreements, pledges, assignments, Commercial Tort Claim Assignments,
endorsements of certificates of title, and all other documents (the "Additional
Documents") that Agent may request in its Permitted Discretion, in form and
substance reasonably satisfactory to Agent, to perfect and continue perfected or
better perfect the Agent's Liens in the Collateral (whether now owned or
hereafter arising or acquired), to create and perfect Liens in favor of Agent in
any Real Property acquired after the Closing Date, and in order to fully
consummate all of the transactions contemplated hereby and under the other Loan
Documents, including any Mortgages.
(d) To the maximum extent permitted by applicable law, each Borrower authorizes
Agent to execute any such Additional Documents in such Borrower's name and
authorizes Agent to file such executed Additional Documents in any appropriate
filing office. To the maximum extent permitted by applicable law, each Borrower
authorizes the filing of any such Additional Documents without the signature of
such Borrower in any appropriate filing office. In addition, on such periodic
basis as Agent shall require, each Borrower shall (i) provide Agent with a
report of all new patentable, copyrightable, or trademarkable materials acquired
or generated by such Borrower during the prior period, (ii) cause all patents,
copyrights, and trademarks acquired or generated by such Borrower that are not
already the subject of a registration with the appropriate filing office (or an
application therefor diligently prosecuted) to be registered with such
appropriate filing office in a manner sufficient to impart constructive notice
of such Borrower's ownership thereof, and (iii) cause to be prepared, executed,
and delivered to Agent supplemental schedules to the applicable Loan Documents
to identify such patents, copyrights, and trademarks as being subject to the
security interests created thereunder.
4.5 Power of Attorney. Each Borrower hereby irrevocably makes, constitutes, and
appoints Agent (and any of Agent's officers, employees, or agents designated by
Agent) as Borrower's true and lawful attorney, with power to (a) if such
Borrower refuses to, or fails timely to execute and deliver any of the documents
described in Section 4.4, sign the name of such Borrower on any of the documents
described in Section 4.4, (b) at any time that an Event of Default has occurred
and is continuing, sign such Borrower's name on any invoice or xxxx of lading
relating to any Account, drafts against Account Debtors, schedules and
assignments of Accounts, verifications of Accounts, and notices to Account
Debtors, (c) send requests for verification of Accounts, (d) endorse such
Borrower's name on any Collection item that may come into Lender Group's
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under Borrower's policies of
insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has occurred
and is continuing, settle and adjust disputes and claims respecting the
Accounts, chattel paper or General Intangibles directly with Account Debtors,
for amounts and upon terms that Agent determines to be reasonable, and Agent may
cause to be executed and delivered any documents and releases that Agent
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determines to be necessary. The appointment of Agent as each Borrower's
attorney, and each and every one of Agent's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations have been fully
and finally repaid and performed and Lender Group's obligations to extend credit
hereunder have been terminated.
4.6 Right to Inspect. Agent and each Lender (through any of their respective
officers, employees, or agents) shall have the right, from time to time
hereafter to inspect the Books and to check, test, and appraise the Collateral
in order to verify each Borrower's financial condition or the amount, quality,
value, condition of, or any other matter relating to, the Collateral.
4.7 Control Agreements. Each Borrower agrees that it will not transfer assets
out of any Securities Accounts other than as permitted under Section 7.22 and,
if to another securities intermediary, unless such Borrower, Agent, and the
substitute securities intermediary have entered into a Control Agreement. No
arrangement contemplated hereby or by any Control Agreement in respect of any
Securities Accounts or other investment property shall be modified by any
Borrower without the prior written consent of Agent. Upon the occurrence and
during the continuance of a Default or Event of Default, Agent may notify any
securities intermediary to liquidate or transfer the applicable Securities
Account or any related investment property maintained or held thereby and remit
the proceeds thereof to the Agent's Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce Lender Group to enter into this Agreement,
each Borrower makes the following representations and warranties which shall be
true, correct, and complete in all respects as of the Effective Date (except to
the extent that such representations and warranties relate solely to an earlier
date) and such representations and warranties shall survive the execution and
delivery of this Agreement:
5.1 No Encumbrances. Each Borrower has good and indefeasible title to the
Collateral, free and clear of Liens except for Permitted Liens.
5.2 [Intentionally Omitted]
5.3 [Intentionally Omitted]
5.4 Equipment. All of the Equipment is used or held for use in
Borrowers' business.
5.5 Location of Inventory and Equipment. The Inventory and Equipment
are not stored with a bailee, warehouseman, or similar party (without Agent's
prior written consent) and no material part of the Inventory or Equipment is
located at locations other than those identified on Schedule 6.11 or otherwise
permitted by Section 6.11.
5.6 Inventory Records. Each Borrower keeps records itemizing and
describing the kind, type, quality, and quantity of the Inventory, and such
Borrower's cost therefor that are correct and accurate in all material respects.
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5.7 State of Incorporation; Location of Chief Executive Office; FEIN,
Organizational ID Number; Commercial Tort Claims.
(a) The state of incorporation of each Borrower is set forth in Schedule
5.7(a).
(b) The chief executive office of each Borrower is located at the address
indicated in Schedule 5.7(b).
(c) Each Borrower's FEIN and organizational identification number is
identified in Schedule 5.7(c).
(d) None of the Borrowers holds any commercial tort claim as of the date
hereof, except as set forth in Schedule 5.7(d).
5.8 Due Organization and Qualification; Subsidiaries.
(a) Except as disclosed in the Chapter 11 Cases or in Schedule 5.8, each
Borrower is duly organized and existing and in good standing under the laws of
the jurisdiction of its organization and qualified and licensed to do business
in, and in good standing in, any state where the failure to be so licensed or
qualified reasonably could be expected to have a Material Adverse Change.
(b) Set forth on Schedule 5.8, is a complete and accurate description of the
authorized capital stock of Parent, by class, and, as of the Effective Date, a
description of the number of shares of each such class that are issued and
outstanding and the number of such shares that are held in Parent's treasury.
All such outstanding shares have been validly issued and, as of the Effective
Date, are fully paid, nonassessable shares free of contractual preemptive
rights. The issuance and sale of all such shares have been in compliance with
all applicable federal and state securities laws. Other than as described on
Schedule 5.8 or disclosed in the Reorganization Plan, there are no
subscriptions, options, warrants, or calls relating to any shares of Parent's
capital stock, including any right of conversion or exchange under any
outstanding security or other instruments and Parent is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or any security convertible into or
exchangeable for any of its capital stock.
(c) Set forth on Schedule 5.8, is a complete and accurate list of each
Borrower's direct and indirect Subsidiaries, showing: (i) the jurisdiction of
their organization; and (ii) the number and the percentage of the outstanding
shares of each such class owned directly or indirectly by such Borrower. All of
the outstanding capital stock of each such Subsidiary has been validly issued
and is fully paid and non-assessable.
(d) Except as set forth on Schedule 5.8, no capital stock (or any securities,
instruments, warrants, options, purchase rights, conversion or exchange rights,
calls, commitments or claims of any character convertible into or exercisable
for capital stock) of any direct or indirect Subsidiary of any Borrower is
subject to the issuance of any security, instrument, warrant, option, purchase
right, conversion or exchange right, call, commitment or claim of any right,
title, or interest therein or thereto.
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(e) The Parent has reserved, out of its authorized but unissued Stock, a
sufficient number of shares of Stock to permit Holder to purchase shares of the
Warrant Stock in accordance with the Warrants.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by each Borrower of this Agreement
and the Loan Documents to which it is a party have been duly authorized by all
necessary corporate action.
(b) The execution, delivery, and performance by each Borrower of this Agreement
and the Loan Documents to which it is a party do not and will not (i) violate
any provision of federal, state, or local law or regulation applicable to any
Borrower, the Governing Documents of any Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on any Borrower,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any material contractual obligation or
material lease of any Borrower, (iii) result in or require the creation or
imposition of any Lien of any nature whatsoever upon any properties or assets of
any Borrower, other than Permitted Liens, or (iv) require any approval of
stockholders or any approval or consent of any Person under any material
contractual obligation of any Borrower.
(c) Except as set forth on Schedule 5.9(c) and other than the filing of
appropriate financing statements, filings or registrations in the United States
Patent and Trademark Office and the equivalent foreign filings and
registrations, fixture filings, mortgages and compliance with the Assignment of
Claims Act or any state or foreign statutory equivalent, the execution,
delivery, and performance by each Borrower of this Agreement and the Loan
Documents to which such Borrower is a party do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any federal, state, foreign, or other Governmental Authority or other
Person.
(d) This Agreement and the Loan Documents to which a Borrower is a party, and
all other documents contemplated hereby and thereby, when executed and delivered
by a Borrower will be the legally valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors' rights generally.
(e) Upon the filing of appropriate financing statements, filings or
registrations in the United States Patent and Trademark Office and the
equivalent foreign filings and registrations, fixture filings and mortgages, and
upon delivery to the Agent of the Pledged Collateral (as defined in the
respective Pledge Agreements), the Liens granted by each Borrower to Agent for
the benefit of the Lender Group in and to its properties and assets pursuant to
this Agreement and the other Loan Documents are validly created, perfected, and
first priority Liens, subject only to Permitted Liens.
5.10 Litigation. There are no actions or proceedings pending by or against any
Borrower before any court or administrative agency and no Borrower has knowledge
33
of any pending, threatened, or imminent litigation, governmental investigations,
or claims, actions, or prosecutions involving any Borrower, except for: (a)
ongoing collection matters in which a Borrower is the plaintiff; (b) matters
disclosed on Schedule 5.10 or in the Reorganization Plan; (c) other matters
existing on the Effective Date that, if decided adversely to such Borrower,
would in the aggregate result in liability to such Borrower of not more than
$100,000 in the aggregate; and (d) matters arising after the Effective Date
hereof that are not reasonably likely to have a Material Adverse Change.
5.11 Financial Statements; No Material Adverse Change. The most recent financial
statements (excluding financial projections) filed in the Bankruptcy Court prior
to the Effective Date relating to any Borrower have been prepared in accordance
with GAAP (except for the lack of footnotes and being subject to year-end audit
adjustments) and fairly present such Borrower's financial condition as of the
date thereof and such Borrower's results of operations for the period then
ended. There has not been a Material Adverse Change with respect to any Borrower
since the date of such financial statements submitted to Lender Group on or
before the Effective Date.
5.12 [Intentionally Omitted]
5.13 Employee Benefits. No Borrower, any of its Subsidiaries, or any of their
ERISA Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.13. Each Borrower, each of its Subsidiaries and each ERISA
Affiliate have satisfied the minimum funding standards of ERISA and the IRC with
respect to each Benefit Plan to which it is obligated to contribute. No ERISA
Event has occurred nor has any other event occurred that may result in an ERISA
Event that reasonably could be expected to result in a Material Adverse Change.
No Borrower or its Subsidiaries, any ERISA Affiliate, or any fiduciary of any
Plan is subject to any direct or indirect liability with respect to any Plan
under any applicable law, treaty, rule, regulation, or agreement. No Borrower or
its Subsidiaries or any ERISA Affiliate is required to provide security to any
Benefit Plan under Section 401(a)(29) of the IRC.
5.14 Environmental Condition. Except as set forth in Schedule 5.14, none of any
Borrower's properties or assets has ever been used by a Borrower in the disposal
of, or to produce, store, handle, treat, release, or transport, any Hazardous
Materials in violation of applicable environmental laws or, if in violation of
applicable environmental laws, all such violations have been cured, none of any
Borrower's properties or assets has, to the best of Borrower's knowledge, been
designated or identified in any manner pursuant to any environmental protection
statute as a Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute, no Lien arising under any
environmental protection statute has attached to any revenues or to any real or
personal property owned or operated by any Borrower, and no Borrower has
received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal or state governmental agency during the
year prior to the Effective Date concerning any action or omission by any
Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment.
34
5.15 Brokerage Fees. No brokerage commission or finders fees has or shall be
incurred or payable in connection with or as a result of Borrowers' obtaining
financing from the Lender Group under this Agreement, and no Borrower has
utilized the services of any broker or finder in connection with Borrowers'
obtaining financing from the Lender Group under this Agreement.
5.16 Permits and other Intellectual Property. Set forth on Schedule 5.16 is a
complete and accurate list of all Permits, patents, patent applications,
trademarks, trademark applications, service marks, service xxxx applications,
trade names, copyrights, trade secrets and know-how (collectively, the
"Intellectual Property"), owned by each Borrower, showing as of the date hereof
the jurisdiction in which registered, the registration or application number.
Each Borrower owns or possesses adequate licenses or other rights that are
necessary for the operation of its business as currently conducted or proposed
to be conducted. No claim is pending or, to the knowledge of Borrowers,
threatened to the effect that any Borrower infringes upon, or conflicts with,
the asserted rights of any other Person under any Intellectual Property, and, to
the best of each Borrower's knowledge without independent investigation other
than those investigations customarily undertaken by owners of similar
businesses, there is no basis for any such claim (whether pending or threatened)
which is reasonably likely to result in a Material Adverse Change. No claim is
pending or, to the knowledge of Borrowers, threatened to the effect that any
such Intellectual Property owned or licensed by any Borrower, or in which any
Borrower otherwise has the right to use is invalid or unenforceable by any
Borrower, and, to the best of each Borrower's knowledge without independent
investigation other than those investigations customarily undertaken by owners
of similar businesses, there is no basis for any such claim (whether or not
pending or threatened).
5.17 Material Contracts; Restrictive Agreements. Except for such changes as have
been provided to Agent in writing, each other Material Contract to which any
Borrower or any Subsidiary of a Borrower is a party is set forth in Part I of
Schedule 5.17. Borrower has provided to Agent or its counsel each definitive
written agreement relating to each such Material Contract. Except as set forth
in Part II of Schedule 5.17, no Borrower nor Subsidiary of a Borrower is a party
to or bound by any agreement or instrument or subject to any corporate or other
restriction, the performance or observance of which has caused or, as far as
such Borrower or Subsidiary can reasonably foresee, is likely to cause a
Material Adverse Change.
5.18 Government Contracts. No Borrower nor any Subsidiary of a Borrower is in
receipt of any notice from any Governmental Authority that such Borrower or such
Subsidiary of a Borrower is disqualified, barred or suspended from bidding on or
performing any contract or proposed contract.
6. AFFIRMATIVE COVENANTS.
Each Borrower covenants and agrees that, until full and final
payment of the Obligations, each Borrower shall, and shall cause each of its
Subsidiaries to, do all of the following:
6.1 Accounting System. Maintain a standard and modern system of accounting that
enables each Borrower to produce financial statements in accordance with GAAP,
35
and maintain records pertaining to the Collateral that contain information as
from time to time may be reasonably requested by Agent. Each Borrower also shall
keep a modern inventory reporting system that shows all additions, sales,
claims, returns, and allowances with respect to the Inventory.
6.2 Financial Statements, Reports, Certificates. Deliver to Agent with copies to
each Lender: (a) as soon as available, but in any event within 20 days after the
end of each month during each of Borrowers' fiscal years, a company prepared
balance sheet and income statement, covering the operations of the Parent and
its Subsidiaries on a consolidated basis during such period; (b) as soon as
available, but in any event within 45 days after the end of each fiscal quarter
during each of Borrowers' fiscal years, a company prepared balance sheet, income
statement, and statements of cash flows covering the operations of the Parent
and its Subsidiaries on a consolidated basis during such period; and (c) as soon
as available, but in any event within 90 days after the end of each of
Borrowers' fiscal years, consolidated financial statements of Parent and its
Subsidiaries for each such fiscal year, audited by independent certified public
accountants reasonably acceptable to Agent and certified that they have been
prepared in accordance with GAAP, together with a certificate of such
accountants addressed to Agent stating that such accountants do not have
knowledge of the existence of any Default or Event of Default that is
continuing. Such audited financial statements shall include a balance sheet,
profit and loss statement, and statement of cash flow and, if prepared, such
accountants' letter to management.
In addition to the above, Parent also shall deliver to Agent
Parent's Form 10-Q Quarterly Reports, Form 10-K Annual Reports, and Form 8-K
Current Reports, and any other filings made by Parent with the Securities and
Exchange Commission, if any, as soon as the same are filed, or any other written
information that is provided by Borrower to its shareholders, and any other
report reasonably requested by Agent relating to the financial condition of
Parent and its Subsidiaries.
Each month, together with the financial statements provided
pursuant to Sections 6.2(a) and (b), Administrative Borrower shall deliver to
Agent a certificate signed by its chief financial officer to the effect that:
(i) all financial statements delivered or caused to be delivered to Agent
hereunder have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and fairly present the financial condition of each
Borrower, (ii) the representations and warranties of each Borrower contained in
this Agreement and the other Loan Documents are true and correct in all material
respects on and as of the date of such certificate, as though made on and as of
such date (except to the extent that such representations and warranties relate
solely to an earlier date), (iii) for each month that also is the date on which
a financial covenant in Section 7.20 is to be tested, a Compliance Certificate
demonstrating in reasonable detail compliance at the end of such period with the
applicable financial covenant contained in Section 7.20, and (iv) on the date of
delivery of such certificate to Agent there does not exist any condition or
event that constitutes a Default or Event of Default that is continuing (or, in
the case of clauses (i), (ii), or (iii), the extent of any non-compliance,
describing such non-compliance as to which he or she may have knowledge and what
action Borrowers have taken, is taking, or proposes to take with respect
thereto).
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6.3 Tax Returns. Deliver to Agent copies of each Borrower's future federal
income tax returns, and any amendments thereto, within 30 days after the filing
thereof with the Internal Revenue Service ("IRS").
6.4 [Intentionally Omitted]
6.5 Returns. Cause returns and allowances, if any, as between a Borrower and its
Account Debtors to be on the same basis and in accordance with the usual
customary practices of such Borrower, as they exist at the time of the execution
and delivery of this Agreement. If, at a time when no Event of Default has
occurred and is continuing, any Account Debtor returns any Inventory to a
Borrower, such Borrower promptly shall determine the reason for such return and,
if such Borrower accepts such return, issue a credit memorandum (with a copy to
be sent to Agent) in the appropriate amount to such Account Debtor. If, at a
time when an Event of Default has occurred and is continuing, any Account Debtor
returns any Inventory to a Borrower, such Borrower promptly shall determine the
reason for such return and, if Agent consents (which consent shall not be
unreasonably withheld), issue a credit memorandum (with a copy to be sent to
Agent) in the appropriate amount to such Account Debtor.
6.6 Title to Equipment. Upon Agent's request, each Borrower promptly shall
deliver to Agent, properly endorsed, any and all evidences of ownership of,
certificates of title, or applications for title to any items of Equipment.
6.7 Maintenance of Equipment. Maintain the Equipment that is presently used in
Borrowers' operations in its present operating condition and repair (ordinary
wear and tear excepted), and make all necessary replacements thereto so that the
value and operating efficiency thereof shall at all times be maintained and
preserved. Other than (i) those items of Equipment that constitute fixtures on
the Effective Date and (ii) heating, ventilation and air conditioning equipment,
no Borrower shall permit any item of Equipment to become a fixture to real
estate or an accession to other property, and such Equipment shall at all times
remain personal property.
6.8 Taxes. Cause all assessments and taxes, whether real, personal, or
otherwise, due or payable by, or imposed, levied, or assessed against a Borrower
or any of its Subsidiaries or any of their respective properties to be paid in
accordance with the Reorganization Plan, in the case of any taxes accruing prior
to the Filing Date, or, in all other cases, to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax (other than payroll taxes or
taxes that are the subject of a United States federal tax lien) shall be the
subject of a Permitted Protest. Each Borrower shall make, and cause its
Subsidiaries to make, due and timely payment or deposit of all such federal,
state, and local taxes, assessments, or contributions accruing after the
Effective Date required of them by law, and will execute and deliver to Agent,
on demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto. Each Borrower will make, and cause its Subsidiaries to
make, timely payment or deposit of all tax payments and withholding taxes
accruing after the Effective Date required of them by applicable laws, including
those laws concerning F.I.C.A., F.U.T.A., state disability, and local, state,
and federal income taxes, and will, upon request, furnish Agent with proof
satisfactory to Agent indicating that such Borrower and such Subsidiaries has
made such payments or deposits.
37
6.9 Insurance.
(a) At its expense, keep the Personal Property Collateral insured against loss
or damage by fire, theft, explosion, sprinklers, and all other hazards and
risks, and in such amounts, as are ordinarily insured against by other owners in
similar businesses. Each Borrower also shall maintain business interruption,
public liability, product liability, and property damage insurance relating to
such Borrower's ownership and use of the Personal Property Collateral, as well
as insurance against larceny, embezzlement, and criminal misappropriation to the
same extent as maintained on the Effective Date.
(b) At its expense, obtain and maintain (i) insurance of the type necessary to
insure the Improvements and Chattels (as such terms are defined in the
Mortgages), for the full replacement cost thereof, subject to deductibles
consistent with historical business practice, against any loss by fire,
lightning, windstorm, hail, explosion, aircraft, smoke damage, vehicle damage,
earthquakes, elevator collision, and other risks from time to time included
under "extended coverage" policies, in such amounts as Agent may reasonably
require, but in any event in amounts sufficient to prevent any Borrower from
becoming a co-insurer under such policies; (ii) combined single limit bodily
injury and property damages insurance against any loss, liability, or damages
on, about, or relating to each parcel of Real Property Collateral, in an amount
reasonably acceptable to the Agent; (iii) business rental insurance covering
annual receipts for a 12 month period for each parcel of Real Property
Collateral; and (iv) insurance for such other risks as Agent may require.
Replacement costs, at Agent's option, may be redetermined by an insurance
appraiser, satisfactory to Agent, not more frequently than once every 12 months
at Borrowers' cost. All such insurance shall be to the same extent as maintained
on the Effective Date.
(c) All such policies of insurance shall be in such form, with such companies,
and in such amounts as may be reasonably satisfactory to Agent. All insurance
required herein shall be written by companies which have a Best's rating of A
for capital and X for financial stability. All hazard insurance and such other
insurance as Agent shall reasonably require and shall contain a satisfactory
lender's loss payable endorsement naming Agent as sole loss payee (other than
with respect to the Real Property Collateral) or additional insured, as
appropriate, and shall contain a waiver of warranties. Every policy of insurance
referred to in this Section 6.9 shall contain an agreement by the insurer that
it will not cancel such policy except after 30 days prior written notice to
Agent and that any loss payable thereunder shall be payable notwithstanding any
act or negligence of any Borrower or Agent which might, absent such agreement,
result in a forfeiture of all or a part of such insurance payment and
notwithstanding (i) occupancy or use of the Real Property Collateral for
purposes more hazardous than permitted by the terms of such policy, (ii) any
foreclosure or other action or proceeding taken by Agent or the Lender Group
pursuant to the Mortgages upon the happening of an Event of Default, or (iii)
any change in title or ownership of the Real Property Collateral. Each Borrower
shall deliver to Agent certified copies of such policies of insurance and
evidence of the payment of all premiums therefor. Agent acknowledges that
Borrowers' policies and coverages in effect as of the Effective Date are
satisfactory.
(d) Original policies or certificates thereof satisfactory to Agent evidencing
such insurance shall be delivered to Agent at least 30 days prior to the
38
expiration of the existing or preceding policies. Each Borrower shall give Agent
prompt notice of any loss covered by such insurance. Agent shall have the
exclusive right to adjust all losses payable under any such insurance policies
without any liability to any Borrower whatsoever in respect of such adjustments;
provided that either (i) an Event of Default has occurred and is continuing at
the time of such adjustment, or (ii) the amount of any such loss covered by such
insurance is in excess of $750,000. Any monies received as payment for any loss
under any insurance policy including the insurance policies mentioned above,
shall be paid over to Agent (for the ratable benefit of the Lender Group) to be
applied at the option of Agent either to the repayment of the Obligations
without premium, or shall be disbursed to a Borrower under stage payment terms
satisfactory to Agent for application to the cost of repairs, replacements, or
restorations, except to the extent such insurance proceeds are required to be
paid to the holders of Permitted Liens to the extent required by the agreement
creating or evidencing such Permitted Lien or the indebtedness secured thereby.
All repairs, replacements, or restorations shall be effected with reasonable
promptness and shall be of a value at least equal to the value of the items or
property destroyed prior to such damage or destruction. Upon the occurrence of
an Event of Default that is continuing, Agent shall have the right to apply all
prepaid premiums to the payment of the Obligations.
6.10 No Setoffs or Counterclaims. Make payments hereunder and under the other
Loan Documents by or on behalf of any Borrower without setoff or counterclaim
and free and clear of, and without deduction or withholding for or on account
of, any federal, state, or local taxes.
6.11 Location of Inventory and Equipment; Segregation of Inventory. (a)Keep the
Inventory and Equipment only at the locations identified on Schedule 6.11;
provided, however, that Borrowers may amend Schedule 6.11 so long as such
amendment occurs by written notice to Agent not less than 30 days prior to the
date on which the Inventory or Equipment is moved to such new location, so long
as such new location is within the continental United States, and so long as, at
the time of such written notification, each Borrower provides to Agent a
Collateral Access Agreement.
(b) Keep all xxxx and hold Inventory physically segregated from all other
Inventory of the Borrowers and marked to indicate that such segregated Inventory
is not the property of a Borrower.
6.12 Compliance with Laws. Comply and cause its Subsidiaries to comply with the
requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority, including the Fair Labor Standards Act and the Americans
With Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not cause and
could not reasonably be expected to cause a Material Adverse Change.
6.13 Employee Benefits.
(a) Cause to be delivered to Agent: (i) promptly, and in any event within 10
Business Days after a Borrower or any of its Subsidiaries knows or has reason to
know that an ERISA Event has occurred that reasonably could be expected to
39
result in a Material Adverse Change, a written statement of the chief financial
officer of such Borrower describing such ERISA Event and any action that is
being taking with respect thereto by such Borrower, any such Subsidiary or ERISA
Affiliate, and any action taken or threatened by the IRS, Department of Labor,
or PBGC. A Borrower or such Subsidiary, as applicable, shall be deemed to know
all facts known by the administrator of any Benefit Plan of which it is the plan
sponsor, (ii) promptly, and in any event within 3 Business Days after the filing
thereof with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and all communications received by a Borrower, any of its
Subsidiaries or, to the knowledge of such Borrower, any ERISA Affiliate with
respect to such request, and (iii) promptly, and in any event within 3 Business
Days after receipt by a Borrower, any of its Subsidiaries or, to the knowledge
of such Borrower, any ERISA Affiliate, of the PBGC's intention to terminate a
Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies
of each such notice.
(b) Cause to be delivered to Agent, upon Agent's request, each of the following:
(i) a copy of each Plan (or, where any such plan is not in writing, a complete
description thereof) (and if applicable, related trust agreements or other
funding instruments) and all amendments thereto, all written interpretations
thereof and written descriptions thereof that have been distributed to employees
or former employees of a Borrower or its Subsidiaries; (ii) the most recent
determination letter issued by the IRS with respect to each Benefit Plan; (iii)
for the three most recent plan years, annual reports on Form 5500 Series
required to be filed with any governmental agency for each Benefit Plan; (iv)
all actuarial reports prepared for the last three plan years for each Benefit
Plan; (v) a listing of all Multiemployer Plans, with the aggregate amount of the
most recent annual contributions required to be made by a Borrower or any ERISA
Affiliate to each such plan and copies of the collective bargaining agreements
requiring such contributions; (vi) any information that has been provided to a
Borrower or any ERISA Affiliate regarding withdrawal liability under any
Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of a Borrower or its Subsidiaries under any
Retiree Health Plan.
6.14 Leases. Pay when due after the Filing Date, all rents and other amounts
payable under any leases to which any Borrower is a party or by which any
Borrower's properties and assets are bound, unless such payments are the subject
of a Permitted Protest.
7. NEGATIVE COVENANTS.
Each Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, no Borrower will, nor will permit any of its Subsidiaries to, do
any of the following:
7.1 Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become
or remain, directly or indirectly, liable with respect to any Indebtedness,
except:
(a) Indebtedness evidenced by this Agreement;
(b) Indebtedness set forth on Schedule 7.1;
------------
(c) Indebtedness secured by Permitted Liens;
40
(d) refinancings, renewals, exchanges, or extensions of Indebtedness permitted
by clauses (b) and (c) of this Section 7.1 (and continuance or renewal of any
Permitted Liens associated therewith) so long as: (i) the terms and conditions
of such refinancings, renewals, or extensions do not materially impair the
prospects of repayment of the Obligations by any Borrower, (ii) the net cash
proceeds of such refinancings, renewals, or extensions do not result in an
increase in the aggregate principal amount of the Indebtedness so refinanced,
renewed, or extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted maturity of the
Indebtedness so refinanced, renewed, or extended, and (iv) to the extent that
Indebtedness that is refinanced was subordinated in right of payment to the
Obligations, then the subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to Lender Group as those applicable
to the refinanced Indebtedness;
(e) Debentures in an aggregate principal amount not to exceed the total allowed
general unsecured claims allowed in the Chapter 11 cases at any time, provided
that none of the Borrowers shall make any payment of principal of, interest
(other than interest that is paid-in-kind) on or fees in respect of the
Debentures until all Obligations have been paid in full and this Agreement has
terminated;
(f) Purchase Money Indebtedness incurred after the Closing Date in an aggregate
amount outstanding at any one time not to exceed the amount of capital
expenditures permitted under Section 7.21.
7.2 Liens. Create, incur, assume, or permit to exist, directly or indirectly,
any Lien on or with respect to any of its property or assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens (including Liens that are replacements of Permitted
Liens to the extent that the original Indebtedness is refinanced under Section
7.1(d) and so long as the replacement Liens only encumber those assets or
property that secured the original Indebtedness).
7.3 Restrictions on Fundamental Changes. Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its capital Stock, or
liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of transactions, all or any substantial part of
its property or assets, except that (a) a Borrower may be merged into another
Borrower, (b) a Subsidiary of a Borrower may be merged into a Borrower and (c) a
Subsidiary that is not a Borrower may be merged into another Subsidiary that is
not a Borrower, or liquidated or dissolved, provided that if any such Person is
merged with or into the Administrative Borrower, the Administrative Borrower
shall be the surviving entity.
7.4 Disposal of Assets. Sell, lease, assign, transfer, or otherwise dispose of
any of such Borrower's properties or assets other than (a) sales of Inventory to
buyers in the ordinary course of such Borrower's business and (b) the sale of
the assets listed on Schedule 7.4 hereto so long as the Net Proceeds from such
sales are remitted to Agent in accordance with Section 2.5(a)(iv).
41
7.5 Change Name. Change its name, organizational identification number,
structure, or identity, or add any new fictitious name; provided, however, that
any Borrower may change its name upon at least 30 days prior written notice to
Agent of such change and so long as, at the time of such written notification,
it provides any financing statements or fixture filings necessary to perfect and
continue perfected the Agent's Liens.
7.6 Guarantee. Guarantee or otherwise become in any way liable with respect to
the obligations of any third Person except by endorsement of instruments or
items of payment for deposit to the account of a Borrower or which are
transmitted or turned over to Agent, except as set forth in Schedule 7.6.
7.7 Nature of Business. Make any change in the principal nature of any
Borrower's business.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing or exchange permitted by Sections
7.1(d), and except for the prepayment, redemption, retirement or defeasement of
any Indebtedness for a consideration consisting solely of Stock, and except for
the prepayment of any Indebtedness that is secured solely by the Real Property
Collateral, prepay, redeem, refinance, retire, defease, purchase, or otherwise
acquire any Indebtedness owing to any third Person, other than the Obligations
in accordance with this Agreement, and
(b) Except in connection with a refinancing or exchange permitted by Sections
7.1(d), directly or indirectly, amend, modify, alter, increase, or change any of
the terms or conditions of any agreement, instrument, document, indenture, or
other writing evidencing or concerning Indebtedness permitted under Sections
7.1(b), (c), (d) or (e); and
(c) (i) Except as provided in or contemplated by the Reorganization Plan, amend,
modify or otherwise change its Governing Documents, including, without
limitation, by the filing or modification of any certificate of designation, or
any agreement or arrangement entered into by it with respect to any of its
capital Stock (including any shareholders' agreement), or enter into any new
agreement with respect to any of its capital Stock, or (ii) amend, modify or
otherwise change any Material Contract, except any such amendments,
modifications or changes or any such new agreements or arrangements pursuant to
this paragraph (c) that, either individually or in the aggregate, could not
reasonably be expected (A) to have a Material Adverse Effect, (B) to have an
adverse impact on the Warrants or the Registration Rights Agreement, or (C) to
materially impair any Borrower's ability to conduct any aspect of its business
or perform or satisfy any representation, warranty or covenant contained in this
Agreement or any other Loan Document.
(d) The Parent shall not satisfy any of its obligations with respect to any
redemption, tender, put or other similar obligation under the Debentures by
paying cash or any other consideration other than its Common Stock.
7.9 Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.
42
7.10 Consignments. Consign any Inventory or sell any Inventory on xxxx and hold,
sale or return, sale on approval, or other conditional terms of sale, except (i)
xxxx and hold Inventory having an aggregate value up to $1,000,000, and (ii)
consignment Inventory for short term demonstration purposes, and (iii) spares
used to service products.
7.11 Distributions. Make any distribution or declare or pay any dividends (in
cash or other property, other than Stock) on, or purchase, acquire, redeem, or
retire any of such Borrower's capital Stock, of any class, whether now or
hereafter outstanding, except that (i) a Subsidiary of a Borrower (other than
Parent) may pay dividends to such Borrower, (ii) Parent may receive shares of
its Stock in consideration for the exercise of stock options granted to its
employees and directors (so long as no cash consideration is paid by Parent or
any of its Subsidiaries), (iii) Parent may cancel or retire options in
accordance with its stock option plans (so long as Parent does not make any cash
payments in connection therewith), and (iv) Parent may issue shares of Parent's
Stock upon the exercise of Parent's warrants outstanding as of the Closing Date
(including the Warrants).
7.12 Accounting Methods. Modify or change its method of accounting, except as
required to comply with GAAP or enter into, modify, or terminate any agreement
currently existing, or at any time hereafter entered into with any third party
accounting firm or service bureau for the preparation or storage of such
Borrower's accounting records without said accounting firm or service bureau
agreeing to provide Agent information regarding the Collateral or such
Borrower's financial condition. Each Borrower waives the right to assert a
confidential relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by Agent pursuant to
or in accordance with this Agreement, and agrees that Agent may contact directly
any such accounting firm or service bureau in order to obtain such information.
7.13 Investments. Directly or indirectly make, acquire, or incur any liabilities
(including contingent obligations) for or in connection with (a) the acquisition
of the securities (whether debt or equity) of, or other interests in, a Person,
except for (i) those securities listed in Schedule 7.13, or (ii) securities of
the aggregate value of which does not exceed $350,000, (b) loans, advances,
capital contributions, or transfers of property to a Person, except intercompany
loans made by a Borrower to a Borrower provided that (A) the repayment of each
such intercompany loan shall be subordinated to the payment of the Obligations,
pursuant to the terms of and evidenced by one or more promissory notes in form
and substance satisfactory to the Agent, and (B) such notes shall be pledged to
the Agent pursuant to the Pledge Agreement or (c) the acquisition of all or
substantially all of the properties or assets of a Person.
7.14 Transactions with Affiliates. Directly or indirectly enter into or permit
to exist any material transaction with any Affiliate of a Borrower except for
transactions permitted under Sections 7.11 and 7.13 hereof, issuance of Stock
under its 2003 Stock and Bonus Plan and other stock option plans, and
transactions that are in the ordinary course of a Borrower's business, upon fair
and reasonable terms, that are fully disclosed to Agent, and that are no less
favorable to such Borrower than would be obtained in an arm's length transaction
with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial portion of its
business.
43
7.16 [Intentionally Omitted]
7.17 Use of Proceeds. Use the proceeds of the Term Loans made hereunder for any
purpose other than a purpose consistent with the terms and conditions hereof,
for its lawful and permitted corporate purposes. 7.18 Change in Location of
Chief Executive Office; Inventory and Equipment with Bailees. Relocate its chief
executive office to a new location without providing 30 days prior written
notification thereof to Agent, and so long as, at the time of such written
notification, the applicable Borrower provides any financing statements or
fixture filings necessary to perfect and continue perfected Agent's Liens and
also provides to Agent a Collateral Access Agreement with respect to such new
location. Except as set forth in Schedule 7.18, the Inventory and Equipment
shall not at any time now or hereafter be stored with a bailee, warehouseman, or
similar party without Agent's prior written consent.
7.19 No Prohibited Transactions Under ERISA. Directly or indirectly:
(a) engage, or permit any Subsidiary of a Borrower to engage, in any prohibited
transaction which is reasonably likely to result in a civil penalty or excise
tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory
or class exemption is not available or a private exemption has not been
previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit Plan any accumulated
funding deficiency (as defined in Sections 302 of ERISA
and 412 of the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of a Borrower to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(d) terminate, or permit any Subsidiary of a Borrower to terminate, any Benefit
Plan where such event would result in any liability of a Borrower, any of its
Subsidiaries or any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of a Borrower to fail, to make any
required contribution or payment to any Multiemployer Plan;
(f) fail, or permit any Subsidiary of a Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the IRC on or
before the due date for such installment or other payment;
(g) amend, or permit any Subsidiary of a Borrower to amend, a Plan resulting in
an increase in current liability for the plan year such that either of a
Borrower, any Subsidiary of such Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC; or
44
(h) withdraw, or permit any Subsidiary of a Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of a Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $250,000.
7.20 Financial Covenant. Fail to maintain EBITDA, measured on a fiscal
quarter-end basis, of not less than (a) for the fiscal quarter ending December
31, 2003, $0.01 and (b) for each fiscal quarter ending thereafter, the greater
of (i) $1,100,000 and (ii) $750,000 plus the aggregate amount of all interest on
the Term A Loan accrued during such fiscal quarter. For purposes of this Section
7.20, EBITDA shall be calculated on a cumulative basis by (i) adding the
aggregate amount of EBITDA for each fiscal quarter subsequent to December 31,
2003 and (ii) subtracting from such sum the aggregate amount of EBITDA required
to be maintained by the Borrowers pursuant to this Section 7.20 for each fiscal
quarter subsequent to December 31, 2003. Notwithstanding the foregoing,
Borrowers shall not be required to maintain the applicable EBITDA for any
particular fiscal quarter and thereafter if Borrowers' loan availability based
on the traditional asset-based loan borrowing structure in the Pre-Petition
Agreement (as in effect immediately prior to the Filing Date), as determined on
the last day of any fiscal quarter, equals or exceeds the aggregate principal
amount of the Term A Loan outstanding as of such date.
7.21 Capital Expenditures. Make capital expenditures in any fiscal year
in excess of $12,000,000.
7.22 Securities Accounts. No Borrower shall establish or maintain any Securities
Account unless Agent shall have received a Control Agreement, duly executed and
in full force and effect, in respect of such Securities Account. Each Borrower
agrees that it will not transfer assets out of any Securities Accounts;
provided, however, that, so long as no Event of Default has occurred and is
continuing or would result therefrom, each Borrower may use such assets to the
extent permitted by this Agreement.
8. EVENTS OF DEFAULT.
Any one or more of the following events occurring after the
Effective Date shall constitute an event of default (each, an "Event of
Default") under this Agreement:
8.1 ....If Borrowers fail to pay when due and payable or when
declared due and payable, any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), reimbursement of Lender Group
Expenses within 10 days after such Lender Group Expenses are billed to
Borrowers, or other amounts constituting Obligations);
8.2 ....If any Borrower fails to perform, keep, or observe any
term, provision, condition, covenant, or agreement contained in 6.1, 6.2 (but
only up to three times during any 12-month period, and only in relation to
45
Defaults caused by the failure of third Persons to provide required information
or reporting, and not in relation to Defaults caused by a Borrower), 6.3, 6.5,
6.7, 6.8, 6.12, 6.13 and 6.14 of this Agreement, or comparable provisions of the
other Loan Documents, within 10 days of the date when required (or within 5 days
of the date when required in the case of Section 6.2 or Section 6.3) and such
failure continues for 30 days after written notice thereof, or if any Borrower
otherwise fails to perform, keep, or observe any other term, provision,
condition, covenant, or agreement contained in this Agreement, in any of the
other Loan Documents, or in any other present or future agreement between any
Borrower, Agent and/or the Lender Group and (with the exception of any breach of
Section 7.20 hereof) such failure continues for 30 days after written notice
thereof;
8.3 ....[Intentionally Omitted];
8.4 ....If any material portion of any Borrower's properties
or assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person and the same is
not dismissed or stayed prior to the earliest to occur of (x) any seizure or
taking and (y) the expiration of 30 days after any attachment, issuance of any
writ or distress warrant, or notice of levy;
8.5 ....If an Insolvency Proceeding is commenced by any
Borrower;
8.6 ....If an Insolvency Proceeding is commenced against any
Borrower and any of the following events occur: (a) such Borrower consents to
the institution of the Insolvency Proceeding against it; (b) the petition
commencing the Insolvency Proceeding is not timely controverted; (c) the
petition commencing the Insolvency Proceeding is not dismissed within 45
calendar days of the date of the filing thereof; (d) an interim trustee is
appointed to take possession of all or a substantial portion of the properties
or assets of, or to operate all or any substantial portion of the business of,
such Borrower; or (e) an order for relief shall have been issued or entered
therein;
8.7 ....If any Borrower is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;
8.8 ....If a notice of Lien (other than a Permitted Lien),
levy, or assessment in excess of $100,000 is filed of record with respect to any
Borrower's properties or assets by the United States Government, or any
department, agency, or instrumentality thereof, or by any state, county,
municipal, or governmental agency, or if any taxes or debts owing at any time
hereafter to any one or more of such entities becomes a Lien (other than a
Permitted Lien), whether xxxxxx or otherwise, upon any Borrower's properties or
assets and the same is not paid on the payment date thereof;
8.9 ....If a judgment or other claim for an amount in excess
of $100,000 becomes a Lien or encumbrance upon any material portion of any
Borrower's properties that is not a Permitted Lien and is not stayed or
dismissed within 30 days thereafter;
8.10 ...Except as provided in or contemplated under the
Reorganization Plan, if there is a default in any material agreement to which
any Borrower is a party with one or more third Persons and such Borrower has an
obligation to pay money thereunder in an amount in excess of $1,000,000 to one
or more such third Persons and such default (a) occurs at the final maturity of
46
the obligations thereunder, or (b) results in a right by such third Person(s),
irrespective of whether exercised, to accelerate the maturity of such Borrower's
obligations thereunder, to terminate such agreement, or to refuse to renew such
agreement pursuant to an automatic renewal right therein;
8.11 ...If Borrower makes any payment on account of
Indebtedness that has been contractually subordinated in right of payment to the
payment of the Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such Indebtedness;
8.12 ...If any material misstatement or misrepresentation
exists now or hereafter as at the time made in any warranty, representation,
statement, or report made to Lender Group by any Borrower or any officer,
authorized employee, agent, or director of any Borrower, or if any such material
warranty or representation is withdrawn;
8.13 ...[Intentionally Omitted]
8.14 ...If this Agreement or any other Loan Document that
purports to create a Lien, shall, for any reason (other than failure of Lenders
or Agent to make any required filings or registrations or to perform any other
action authorized hereunder to perfect such Liens), fail or cease to create a
valid and perfected and, except to the extent permitted by the terms hereof or
thereof, first priority Lien on or security interest in the Collateral with an
aggregate value in excess of $250,000 covered hereby or thereby; or
8.15 ...Any provision of any Loan Document shall at any time
for any reason be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Borrower, or a proceeding shall
be commenced by any Borrower, or by any Governmental Authority having
jurisdiction over any Borrower, seeking to establish the invalidity or
unenforceability thereof, or any Borrower shall deny that any Borrower has any
liability or obligation purported to be created under any Loan Document.
Upon the occurrence of any of the foregoing Events of Default or the cure of the
same by Borrowers, Agent, without any liability for the failure to do so, shall
provide notice (in the same manner provided for notice to a party set forth in
Section 12 hereof) of such Event of Default to the Debenture Trustee at such
address as the Debenture Trustee may from time to time provide to Agent for
purposes of such notice.
9. LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and during the continuation, of an
Event of Default, the Required Lenders (at their election but without notice of
their election and without demand) may, except to the extent otherwise expressly
provided or required below, authorize and instruct Agent to do any one or more
of the following on behalf of the Lender Group (and Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), all of which are authorized by each Borrower:
47
(a) Declare all Obligations, whether evidenced by this Agreement, by any
of the other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to or for the benefit of Borrowers
under this Agreement, under any of the Loan Documents, or under any other
agreement between Borrowers and Lender Group;
(c) Terminate this Agreement and any of the other Loan Documents as to any
future liability or obligation of Lender Group, but without affecting Lender
Group's rights and security interests in the Personal Property Collateral or the
Real Property Collateral and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly with Account Debtors for
amounts and upon terms which Agent considers advisable, and in such cases, Agent
will credit Borrowers' Loan Account with only the net amounts received by Agent
in payment of such disputed Accounts after deducting all Agent Expenses incurred
or expended in connection therewith;
(e) Cause a Borrower to hold all returned Inventory in trust for Lender Group,
segregate all returned Inventory from all other property of such Borrower or in
such Borrower's possession and conspicuously label said returned Inventory as
the property of Lender Group;
(f) Without notice to or demand upon Borrower or any Guarantor, make such
payments and do such acts as Agent considers necessary or reasonable to protect
its security interests in the Collateral of Agent (for the benefit of Lender
Group). Each Borrower agrees to assemble the Personal Property Collateral if
Agent so requires, and to make the Personal Property Collateral available to
Agent as Agent may designate. Each Borrower authorizes Agent to enter the
premises where the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of it, and to pay,
purchase, contest, or compromise any encumbrance, charge, or Lien that in
Agent's determination appears to conflict with the security interests of the
Agent and to pay all expenses incurred in connection therewith. With respect to
a Borrower's owned or leased premises, such Borrower hereby grants Agent a
license to enter into possession of such premises and to occupy the same,
without charge, for up to 120 days in order to exercise any of Lender Group's
rights or remedies provided herein, at law, in equity, or otherwise;
(g) Without notice to any Borrower (such notice being expressly waived), and
without constituting a retention of any collateral in satisfaction of an
obligation (within the meaning of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of each Borrower held by
Lender Group (including any amounts received in the Lockbox Accounts), or (ii)
indebtedness at any time owing to or for the credit or the account of Borrowers
held by Lender Group;
(h) Hold, as cash collateral, any and all balances and deposits of each Borrower
held by Lender Group, and any amounts received in the Lockbox Accounts, to
secure the full and final repayment of all of the Obligations;
48
(i) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell (in the manner provided for herein) the Personal
Property Collateral. Agent is hereby granted a license or other right to use,
without charge for the benefit of Lender Group, each Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names, trademarks,
service marks, and advertising matter, or any property of a similar nature, as
it pertains to the Personal Property Collateral, in completing production of,
advertising for sale, and selling any Personal Property Collateral and each
Borrower's rights under all licenses and all franchise agreements shall inure to
Lender Group's benefit;
(j) Sell the Personal Property Collateral at either a public or private sale, or
both, by way of one or more contracts or transactions, for cash or on terms, in
such manner and at such places (including any Borrower's premises) as Agent
determines is commercially reasonable. It is not necessary that the Personal
Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of the Personal Property
Collateral as follows:
(1) Agent shall give the Borrower with rights in the applicable Personal
Property Collateral and each holder of a security interest in the Personal
Property Collateral who has filed with Agent a written request for notice, a
notice in writing of the time and place of public sale, or, if the sale is a
private sale or some other disposition other than a public sale is to be made of
the Personal Property Collateral, then the time on or after which the private
sale or other disposition is to be made;
(2) The notice shall be personally delivered or mailed, postage prepaid, to the
Borrower with rights in the applicable Personal Property Collateral as provided
in Section 12, at least 5 days before the date fixed for the sale, or at least 5
days before the date on or after which the private sale or other disposition is
to be made; no notice needs to be given prior to the disposition of any portion
of the Personal Property Collateral that is perishable or threatens to decline
speedily in value or that is of a type customarily sold on a recognized market.
Notice to Persons other than the Borrower with rights in the applicable Personal
Property Collateral shall be sent to such addresses as they have furnished to
Agent;
(l) Agent, on behalf of the Lender Group, may credit bid and purchase at
any public sale;
(m) Agent may seek the appointment of a receiver or keeper to take possession of
all or any portion of the Collateral or to operate same and, to the maximum
extent permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing;
(n) The Lender Group shall have all other rights and remedies available
to it at law or in equity pursuant to any other Loan Documents; and
(o) Any deficiency that exists after disposition of the Personal Property
Collateral as provided above will be paid immediately by Borrowers. Any excess
will be returned, without interest and subject to the rights of third Persons,
by Agent to Borrowers.
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9.2 Remedies Cumulative. Lender Group's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Lender Group shall have all other rights and remedies not inconsistent herewith
as provided under the Code, by law, or in equity. No exercise by Lender Group of
one right or remedy shall be deemed an election, and no waiver by Lender Group
of any Event of Default shall be deemed a continuing waiver. No delay by Lender
Group shall constitute a waiver, election, or acquiescence by it.
10. TAXES AND EXPENSES.
If any Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that Agent
reasonably determines that such failure by such Borrower could result in a
Material Adverse Change, in its discretion and without prior notice to
Borrowers, Agent for the benefit of the Lender Group may do any or all of the
following: (a) make payment of the same or any part thereof; or (b) obtain and
maintain insurance policies of the type described in Section 6.9, and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses. Any such payments made by
Lender Group shall not constitute an agreement by Lender Group to make similar
payments in the future or a waiver by Lender Group of any Event of Default under
this Agreement. Agent need not inquire as to, or contest the validity of, any
such expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Each Borrower waives demand, protest, notice of
protest, notice of default or dishonor, notice of payment and nonpayment,
nonpayment at maturity, release, compromise, settlement, extension, or renewal
of accounts, documents, instruments, chattel paper, and guarantees at any time
held by Lender Group on which any Borrower may in any way be liable.
11.2 Lender Group's Liability for Collateral. Each Borrower hereby agrees that:
(a) so long as Agent complies with its obligations, if any, under the Code, the
Lender Group shall not in any way or manner be liable or responsible for: (i)
the safekeeping of the Collateral, (ii) any loss or damage thereto occurring or
arising in any manner or fashion from any cause, (iii) any diminution in the
value thereof, or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency, or other Person, and (b) all risk of loss, damage, or
destruction of the Collateral shall be borne by Borrowers.
11.3 Indemnification. Each Borrower shall pay, indemnify, defend, and hold each
Agent-Related Person, each Lender-Related Person, each Lender, each Participant,
and each of their respective officers, directors, employees, counsel, agents,
and attorneys-in-fact (each, an "Indemnified Person") harmless (to the fullest
extent permitted by law) from and against any and all claims, demands, suits,
actions, investigations, proceedings, and damages, and all reasonable attorneys
fees and disbursements and other costs and expenses actually incurred in
connection therewith (as and when they are incurred and irrespective of whether
50
suit is brought), at any time asserted against, imposed upon, or incurred by any
of them in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this Agreement and any
other Loan Documents or the transactions contemplated herein, and with respect
to any investigation, litigation, or proceeding related to this Agreement, the
Pre-Petition Agreement, any other Loan Document, or the use of the proceeds of
the credit provided hereunder (irrespective of whether any Indemnified Person is
a party thereto), or any act, omission, event or circumstance in any manner
related thereto (all the foregoing, collectively, the "Indemnified
Liabilities"). Borrowers shall not have any obligation to any Indemnified Person
under this Section 11.3 with respect to any Indemnified Liability that a court
of competent jurisdiction finally determines to have resulted from the gross
negligence or willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment of the
Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which any
Borrower was required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Borrowers with respect thereto in accordance with
and subject to the terms of this Agreement.
12. NOTICES.
Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, electronic mail (at such email
addresses as Administrative Borrower or Agent, as applicable, may designate to
each other in accordance herewith), or telefacsimile to Administrative Borrower
or to Agent, as the case may be, at its address set forth below:
If to a Borrower
or Administrative Borrower:
c/o GENERAL DATACOMM INDUSTRIES, INC.
0 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxxx, Chief Executive Officer
Fax No. 000-000-0000
with copies to: YOUNG XXXXXXX STARGATT & XXXXXX
0000 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxx, Esq.
Fax No. 000-000-0000
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If to Agent:
ABLECO FINANCE LLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Fax No. 000-000-0000
with copies to: XXXXXXX XXXX & XXXXX LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxx, Esq.
Fax No. 000-000-0000
The parties hereto may change the address at which they are to
receive notices hereunder, by notice in writing in the foregoing manner given to
the other. All notices or demands sent in accordance with this Section 12, other
than notices by Agent in connection with enforcement rights against the
Collateral under the provisions of the Code, shall be deemed received on the
earlier of the date of actual receipt or 3 Business Days after the deposit
thereof in the mail. Each Borrower acknowledges and agrees that notices sent by
Agent in connection with the exercise of enforcement rights against Collateral
under the provisions of the Code shall be deemed sent when deposited in the mail
or personally delivered, or, where permitted by law, transmitted by
telefacsimile or any other method set forth above.
13. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.
EXCEPT TO THE EXTENT JURISDICTION IS RETAINED BY THE
BANKRUPTCY COURT, THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(UNLESS AND TO THE EXTENT EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW
YORK, STATE OF NEW YORK OR, AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT IN
WHICH AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT
MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY. EACH BORROWER, AGENT AND
EACH LENDER WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH
MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO
THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 13.
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EACH
BORROWER, AGENT AND EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. EACH BORROWER, AGENT AND EACH LENDER REPRESENTS THAT IT HAS
REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents (excluding Negotiable Collateral), schedules,
invoices, agings, or other papers delivered to Agent may be destroyed or
otherwise disposed of by Agent 4 months after they are delivered to or received
by Agent, unless Administrative Borrower requests, in writing, the return of
said documents, schedules, or other papers and makes arrangements, at Borrowers'
expense, for their return.
15. ISSUANCE OF EQUITY INTERESTS TO HOLDER.
15.1 Authorization and Issuance of Warrants. On the Closing Date, the Parent
shall issue to Ableco Holding, LLC, a Delaware limited liability company (the
"Holder"), one or more warrant certificates covering the purchase of the Warrant
Stock of the Parent substantially in the form of and upon the terms set forth in
Exhibit W-1 hereto (such certificates, together with the rights to purchase
Common Stock provided thereby and all warrant certificates covering such stock
issued upon transfer, division or combination of, or in substitution for, any
thereof, being herein called the "Warrants"). The exercise price thereof shall
be an amount equal to $0.01 per share. It is understood and agreed that the
Warrants contain provisions affecting the number of shares of Common Stock that
may be acquired by the holder of such Warrant or issued by the Parent, which
provisions are set forth in the Warrants.
15.2 Securities Act Matters. (a) Holder represents and warrants to
the Parent that:
(i) Holder is acquiring the Warrants hereunder for its own account, without
a view to the distribution thereof, all without prejudice, however, to
the right of Holder at any time, in accordance with this Reorganization
Plan, lawfully to sell or otherwise to dispose of all or any part of
the Warrants or Warrant Stock held by it after the fifth anniversary of
the Effective Date or, prior to such fifth anniversary, to any
Affiliate of Holder.
(ii) Holder is an "accredited investor" within the meaning of Regulation D
under the Securities Act and was not organized for the specific purpose
of acquiring the Warrant or the Warrant Stock.
(iii) Holder has sufficient knowledge and experience in investing in
companies similar to Parent so as to be able to evaluate the risks and
merits of its investment in Parent and is able financially to bear the
risks thereof; and
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(iv) Holder understands that (A) this Warrant and the Warrant Stock have not
been registered under the Securities Act in reliance upon an exemption
from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 506 promulgated under such act and under
applicable state securities laws, (B) this Warrant and the Warrant
Stock must be held indefinitely unless a subsequent disposition thereof
is registered under the Securities Act and under applicable state
securities laws or is exempt from such registration, (C) this Warrant
and the Warrant Stock will bear a legend to such effect, and (D) Parent
will make a notation on its transfer books to such effect.
(b) The Parent represents and warrants to Holder that:
(i) Assuming the truth and accuracy of Holder's representations and
warranties contained in the immediately preceding paragraphs, the
issuance of the Warrants to Holder hereunder and the issuance of shares
of Common Stock to Holder pursuant to the Warrants are exempt from the
registration and prospectus delivery requirements of the Securities
Act.
(ii) All stock and securities of the Parent heretofore issued and sold by
the Parent were, and all securities of the Parent issued and sold by
the Parent on and after the date hereof are or will be issued and sold
in accordance with, or are or will be exempt from, the registration and
prospectus delivery requirements of the Securities Act.
(iii) The Parent agrees that neither it nor any Person acting on its behalf
has offered or will offer the Warrants or Warrant Stock or any part
thereof or any similar securities for issue or sale to, or has
solicited or will solicit any offer to acquire any of the same from,
any Person so as to bring the issuance and sale of the Warrants or
Warrant Stock hereunder within the provisions of the registration and
prospectus delivery requirements of the Securities Act.
15.3 Certain Taxes. The Parent shall pay all taxes (other than federal, state or
local income taxes) which may be payable in connection with the issuance of the
Warrants or Warrant Stock hereunder and shall hold the Lenders harmless without
limitation as to time against any and all liabilities with respect to all such
taxes. The obligations of the Parent under this Section 15.3 shall survive any
redemption, repurchase or acquisition of Warrants or Warrant Stock by the
Parent, any termination of this Agreement, and any cancellation or termination
of the Warrants.
15.4 Cancellation and Issuance. If Holder assigns or otherwise transfers all or
any of its portion of the Term Loans (including by selling participations
therein) to any Person, Holder may request (upon 10 days' prior notice to the
Parent) that (a) a number of Warrants held by Holder be canceled on the date of
such assignment and transfer and (b) a like number of Warrants be issued by the
Parent to the Person to whom such Obligations are being assigned or otherwise
transferred. Upon the date specified in such request:
54
(i) The Parent shall issue, and Holder shall surrender (or cause to be
surrendered) for cancellation, such number of Warrants as aforesaid,
provided that such issuance shall not violate the Securities Act or any
applicable state securities laws;
(ii) The Parent will deliver to each Person that receives a certificate for
Warrants a favorable legal opinion from counsel to the Parent
acceptable to such Person, covering the matters set forth in the
opinion of counsel to the Parent and its Subsidiaries delivered to the
Agent on the Closing Date (to the extent relating to the Warrants);
(iii) each Person that receives Warrants will deliver a certificate to the
Parent affirming the representations and warranties contained in
Section 15.2(a) hereof as applied to such Person as of such date; and
(iv) The Parent will deliver a certificate to each Person that receives
Warrants affirming the representations and warranties contained in
Section 15.2(b) hereof as of such date.
16. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
16.1 Assignments and Participations.
(a) Any Lender may, with the written consent of Agent, assign and delegate to
one or more assignees (provided that no written consent of Agent shall be
required in connection with any assignment and delegation by a Lender to an
Eligible Transferee) (each an "Assignee") all, or any ratable part, of the
Obligations, the Commitments, and the other rights and obligations of such
Lender hereunder and under the other Loan Documents, in a minimum amount of
$1,000,000 (provided that no such minimum amount shall be required in the case
of an Assignee that is an Affiliate of a Lender), provided, however, that
Borrowers and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, shall have been given to Borrowers and
Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Borrowers and Agent a fully executed Assignment and
Acceptance; and (iii) other than with respect to an assignment by an existing
Lender to any Affiliate of such Lender, the assignor Lender or Assignee has paid
to Agent for Agent's sole and separate account a processing fee in the amount of
$2,500; provided, further, that the written consent of the Borrowers shall be
required for an Assignment and Acceptance to be effective if, but only if, the
proposed Assignee has been a lender to a Borrower at any time during the three
years prior to the Closing Date unless the assignor Lender is selling all or a
substantial portion of its loan portfolio to such proposed Assignee, in which
case no such written consent of the Borrowers shall be required. Anything
contained herein to the contrary notwithstanding, the consent of Agent shall not
be required (and payment of any fees shall not be required) if such assignment
is in connection with any merger, consolidation, sale, transfer, or other
disposition of all or any substantial portion of the business or loan portfolio
of such Lender.
(b) From and after the date that Agent notifies the assignor Lender that it has
received a fully executed Assignment and Acceptance and payment (if applicable)
55
of the above-referenced processing fee, (i) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder and under the
other Loan Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights (except with respect to Section 11.3 hereof)
and be released from its obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto), and such
assignment shall effect a novation between Borrowers and the Assignee.
(c) By executing and delivering an Assignment and Acceptance, the assigning
Lender thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (1) other than as provided in
such Assignment and Acceptance, 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 this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency, or
value of this Agreement or any other Loan Document furnished pursuant hereto;
(2) such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Borrower or the
performance or observance by any Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto; (3) such
Assignee confirms that it has received a copy of this Agreement, together with
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into such Assignment and Acceptance;
(4) such Assignee will, independently and without reliance upon Agent, 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 this Agreement; (5) such
Assignee appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are delegated to
Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; and (6) 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.
(d) Immediately upon each Assignee's making its processing fee payment under the
Assignment and Acceptance, this Agreement shall be deemed to be amended to the
extent, but only to the extent, necessary to reflect the addition of the
Assignee and the resulting adjustment of the Commitments of the assignor Lender
and Assignee arising therefrom. The Commitment allocated to each Assignee shall
reduce such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written consent of Agent, sell to one
or more commercial banks, financial institutions, or other Persons not
Affiliates of such Lender (a "Participant") participating interests in the
Obligations owing to such Lender, such Lender's Commitment, and the other rights
and interests of that Lender (the "Originating Lender") hereunder and under the
other Loan Documents (provided that no written consent of Agent shall be
required in connection with any sale of such participating interests by a Lender
to an Eligible Transferee); provided, however, that (i) the Originating Lender's
56
obligations under this Agreement shall remain unchanged, (ii) the Originating
Lender shall remain solely responsible for the performance of such obligations,
(iii) Borrowers and Agent shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender's rights and
obligations under this Agreement and the other Loan Documents, (iv) no
Originating Lender shall transfer or grant any participating interest under
which the Participant has the sole and exclusive right to approve any amendment
to, or any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment to, or consent or waiver with
respect to this Agreement or of any other Loan Document would (A) extend the
final maturity date of the Obligations hereunder in which such Participant is
participating; (B) reduce the interest rate applicable to the Obligations
hereunder in which such Participant is participating; (C) release all or a
material portion of the Collateral or guaranties (except to the extent expressly
provided herein or in any of the Loan Documents) supporting the Obligations
hereunder in which such Participant is participating; (D) postpone the payment
of, or reduce the amount of, the interest or fees hereunder in which such
Participant is participating; (E) change the amount or due dates of scheduled
principal repayments or prepayments or premiums in respect of the Obligations
hereunder in which such Participant is participating; or (F) subordinate the
Liens of Agent for the benefit of the Lender Group to the Liens of any other
creditor of any Borrower; and (v) all amounts payable by Borrowers hereunder
shall be determined as if such Originating Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due and payable
upon the occurrence of an Event of Default, each Participant shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement. The rights of any Participant shall only be derivative through the
Originating Lender with whom such Participant participates and no Participant
shall have any direct rights as to the other Lenders, Agent, Borrowers, the
Collections, the Collateral, or otherwise in respect of the Term Loans. No
Participant shall have the right to participate directly in the making of
decisions by Lenders among themselves. The provisions of this Section 16.1(e)
are solely for the benefit of Lender Group, and no Borrower shall have any
rights as a third party beneficiary of any of such provisions.
(f) In connection with any such assignment or participation or proposed
assignment or participation, subject to Section 18.16(d), a Lender may disclose
to a third party all documents and information which it now or hereafter may
have relating to any Borrower's business.
(g) Notwithstanding any other provision in this Agreement, any Lender may at any
time create a security interest in, or pledge, all or any portion of its rights
under and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 C.F.R. ss.203.14, and such Federal Reserve Bank may enforce such
pledge or security interest in any manner permitted under applicable law.
16.2 Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties hereto; provided,
however, that no Borrower may assign this Agreement or any rights or duties
hereunder without Lenders' prior written consent and any prohibited assignment
57
shall be absolutely void. No consent to assignment by Lenders shall release any
Borrower from the Obligations. A Lender may assign this Agreement and the other
Loan Documents and its rights and duties hereunder pursuant to Section 16.1 and,
except as expressly required pursuant to Section 16.1, no consent or approval by
any Borrower is required in connection with any such assignment.
17. AMENDMENTS; WAIVERS.
17.1 Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by any Borrower therefrom, shall be effective unless the same shall be
in writing and signed by Agent and Required Lenders (or by Agent at the written
request of Required Lenders) and Borrower, and then any such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no such waiver, amendment, or consent
shall, unless in writing and signed by all Lenders and each Borrower, and
acknowledged by Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts
due to Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified herein on,
the Term Loans or any fees or other amounts payable hereunder or under
any other Loan Document;
(d) change the percentage of the Commitments or the percentage of the
aggregate unpaid principal amount of the Obligations, as the case may
be, which is required for Lenders or any of them to take any action
hereunder;
(e) amend this Section 17.1 or any provision of this Agreement providing
for consent or other action by all Lenders;
(f) release Collateral other than as permitted by Section 18.11;
(g) change the definition of "Required Lenders" or "Pro Rata Share";
(h) release a Borrower from any Obligation for the payment of money;
(i) amend any of the provisions of Article 17; or
(j) subordinate the Liens of Agent for the benefit of the Lender Group to
the Liens of any other creditor of a Borrower. and, provided further, that no
amendment, waiver or consent shall, unless in writing and signed by Agent,
58
affect the rights or duties of Agent under this Agreement or any other Loan
Document. The foregoing notwithstanding, any amendment, modification, waiver,
consent, termination, or release of or with respect to any provision of this
Agreement or any other Loan Document that relates only to the relationship of
Lender Group among themselves, and that does not affect the rights or
obligations of any Borrower, shall not require consent by or the agreement of
Borrowers.
17.2 No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement, any other Loan
Document, or any present or future supplement hereto or thereto, or in any other
agreement between or among Borrowers and Agent and/or any Lender, or delay by
Agent or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by Agent or any Lender will be effective unless it is in writing, and
then only to the extent specifically stated. No waiver by Agent or Lenders on
any occasion shall affect or diminish Agent's and each Lender's rights
thereafter to require strict performance by Borrowers of any provision of this
Agreement. Agent's and each Lender's rights under this Agreement and the other
Loan Documents will be cumulative and not exclusive of any other right or remedy
which Agent or any Lender may have.
18. AGENT; LENDER GROUP.
18.1 Appointment and Authorization of Agent. Each Lender hereby designates and
appoints Ableco as its Agent under this Agreement and the other Loan Documents.
Each Lender hereby irrevocably authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Agent agrees to act as such on the
express conditions contained in this Article 18. The provisions of this Article
18 are solely for the benefit of Agent and Lenders, and the Borrowers shall not
have any rights as a third party beneficiary of any of the provisions contained
herein; provided, however, that the provisions of Sections 18.10, 18.11, and
18.16(d) also shall be for the benefit of Borrowers. Any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations, or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word "Agent" is for
convenience only, that Ableco is merely the representative of the Lenders, and
has only the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions which Agent is expressly
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
other provision of the Loan Documents that provides rights or powers to Agent,
Lenders agree that Agent shall have the right to exercise the following powers
and to delegate the exercise of any such powers to any sub-agent of Agent as
long as this Agreement remains in effect: (a) maintain, in accordance with its
customary business practices, ledgers and records reflecting the status of the
Term Loans, the other Obligations, the Collateral, the Collections, and related
59
matters; (b) execute and/or file any and all financing or similar statements or
notices, amendments, renewals, supplements, documents, instruments, proofs of
claim for Lenders, notices and other written agreements with respect to the Loan
Documents; (c) make the Term Loans, for itself or on behalf of Lenders as
provided in the Loan Documents; (d) receive, apply, and distribute the
Collections as provided in the Loan Documents; (e) open and maintain such bank
accounts and lock boxes as Agent deems necessary and appropriate in accordance
with the Loan Documents for the foregoing purposes with respect to the
Collateral and the Collections; (f) perform, exercise, and enforce any and all
other rights and remedies of Lender Group with respect to Borrowers, the Term
Loans, the other Obligations, the Collateral, the Collections, or otherwise
related to any of same as provided in the Loan Documents; and (g) incur and pay
such Lender Group Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant to the Loan
Documents.
18.2 Delegation of Duties. Except as otherwise provided in this Section 18.2,
Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees, or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
Agent shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects as long as such selection was made in
compliance with this Section 18.2 and without gross negligence or willful
misconduct.
18.3 Liability of Agent-Related Persons. None of Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or, (ii) be responsible in any manner to any of Lenders for any recital,
statement, representation or warranty made by any Borrower, or any Subsidiary or
Affiliate of any Borrower, or any officer or director thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement, or other document referred to or provided for in, or received by any
Agent under or in connection with, this Agreement or any other Loan Document, or
the validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of a Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books, or records of a Borrower, or of a
Borrower's Subsidiaries or Affiliates.
18.4 Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex, or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to Borrowers or counsel to any Lender), independent accountants, and other
experts selected by Agent. Agent shall be fully justified in failing or refusing
to take any action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of Required Lenders or all
Lenders, as applicable, and until such instructions are received, Agent shall
act, or refrain from acting, as it deems advisable. If Agent so requests, it
shall first be indemnified to its reasonable satisfaction by Lenders against any
and all liability and expense which may be incurred by it by reason of taking or
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continuing to take any such action. Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of Required Lenders or all
Lenders, as applicable, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of Lenders.
18.5 Notice of Default or Event of Default. Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of Agent or Lenders,
except with respect to Defaults and Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Borrowers referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a "notice of default." Agent promptly
will notify Lenders of its receipt of any such notice or of any Event of Default
of which Agent has actual knowledge. If any Lender obtains actual knowledge of
any Event of Default, such Lender promptly shall notify the other Lenders and
Agent of such Event of Default. Each Lender shall be solely responsible for
giving any notices to its Participants, if any. Subject to Section 18.4, Agent
shall take such action with respect to such Default or Event of Default as may
be requested by Required Lenders in accordance with Section 9; provided,
however, that unless and until Agent has received any such request, Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable:
(a) At all times, Agent may propose and, with the consent of Required
Lenders (which shall not be unreasonably withheld and which shall be
deemed to have been given by a Lender unless such Lender has notified
Agent to the contrary in writing within three (3) days of notification
of such proposed actions by Agent) exercise any remedies on behalf of
Lender Group; and
(b) At all times, once Agent and Required Lenders or all Lenders, as the
case may be, have approved the exercise of a particular remedy or
pursuit of a course of action, Agent may, but shall not be obligated
to, make all administrative decisions in connection therewith or take
all other actions reasonably incidental thereto (for example, if
Required Lenders approve the foreclosure of certain Collateral, Agent
shall not be required to seek consent for the administrative aspects of
conducting such sale or handling of such Collateral).
18.6 Credit Decision. Each Lender acknowledges that none of Agent-Related
Persons has made any representation or warranty to it, and that no act by Agent
hereinafter taken, including any review of the affairs of each Borrower and its
respective Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition, and
creditworthiness of any Borrower and any other Person (other than Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrowers. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals, and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
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and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition, and
creditworthiness of any Borrower, and any other Person (other than Lender Group)
party to a Loan Document. Except for notices, reports, and other documents
expressly herein required to be furnished to Lenders by Agent, Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition, or creditworthiness of any Borrower, and any other Person
party to a Loan Document that may come into the possession of any of
Agent-Related Persons.
18.7 Costs and Expenses; Indemnification. Agent may incur and pay Lender Group
Expenses to the extent Agent deems reasonably necessary or appropriate for the
performance and fulfillment of its functions, powers, and obligations pursuant
to the Loan Documents, including, without limiting the generality of the
foregoing, but subject to any requirements of the Loan Documents that it obtain
any applicable consents or engage in any required consultation, court costs,
reasonable attorneys fees and expenses, costs of collection by outside
collection agencies and auctioneer fees and costs of security guards or
insurance premiums paid to maintain the Collateral, whether or not Borrowers are
obligated to reimburse Agent or Lenders for such expenses pursuant to the Loan
Agreement or otherwise. Agent is authorized and directed to deduct and retain
sufficient amounts from Collections to reimburse Agent for such out-of-pocket
costs and expenses prior to the distribution of any amounts to Lenders. In the
event Agent is not reimbursed for such costs and expenses from Collections, each
Lender hereby agrees that it is and shall be obligated to pay to or reimburse
such Agent for the amount of such Lender's Pro Rata Share thereof. Whether or
not the transactions contemplated hereby are consummated, Lenders shall
indemnify upon demand Agent-Related Persons (to the extent not reimbursed by or
on behalf of Borrowers and without limiting the obligation of Borrowers to do
so), according to their Pro Rata Shares, from and against any and all
Indemnified Liabilities; provided, however, that no Lender shall be liable for
the payment to Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence, or willful
misconduct. Without limitation of the foregoing, each Lender shall reimburse
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including attorney fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section 18.7 shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.
18.8 Agent in Individual Capacity. Ableco and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, lending, trust,
financial advisory, underwriting, or other business with any Borrower and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though Ableco were not Agent hereunder and without notice to or consent of
Lenders. Lenders acknowledge that, pursuant to such activities, Ableco and its
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Affiliates may receive information regarding a Borrower and its Affiliates and
any other Person (other than Lender Group) party to any Loan Documents that is
subject to confidentiality obligations in favor of such Borrower or such other
Person and that prohibit the disclosure of such information to Lenders, and
Lenders acknowledge that, in such circumstances (and in the absence of a waiver
of such confidentiality obligations, which waiver Agent will use its reasonable
best efforts to obtain), Agent shall be under no obligation to provide such
information to them. With respect to Agent Advances, Ableco shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not Agent, and the terms "Lender" and "Lenders" include
Ableco in its individual capacity. With respect to Ableco Loans, Agent, in its
individual capacity, shall, if it is a Lender hereunder, have the same rights
and powers under this Agreement as any other Lender and may exercise the same as
though it were not Agent, and the terms "Lender" and "Lenders" shall, in such
case, include Agent in its individual capacity.
18.9 Successor Agent. Agent may resign as Agent upon 45 days notice to the
Lenders. If Agent resigns under this Agreement, the Required Lenders shall
appoint a successor Agent for the Lenders. If no successor Agent is appointed
prior to the effective date of the resignation of Agent, Agent may appoint,
after consulting with the Lenders, a successor Agent. If Agent has materially
breached or failed to perform any material provision of this Agreement or of
applicable law, the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term "Agent" shall mean such successor Agent and the retiring Agent's
appointment, powers, and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Section 18 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of the duties of
Agent hereunder until such time, if any, as the Lenders appoint a successor
Agent as provided for above.
18.10 Withholding Tax.
(a) If any Lender is a "foreign corporation, partnership or trust" within the
meaning of the IRC and such Lender claims exemption from, or a reduction of,
U.S. withholding tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrowers, to deliver to Agent and Administrative
Borrower:
(i) if such Lender claims an exemption from withholding tax pursuant to its
portfolio interest exception, (a) a statement of the Lender, signed under
penalty of perjury, that it is not a (I) a "bank" as described in Section
881(c)(3)(A) of the IRC, (II) a 10% shareholder (within the meaning of Section
881(c)(3)(B) of the IRC), or (III) a controlled foreign corporation described in
Section 881(c)(3)(C) of the IRC, and (B) a properly completed IRS Form W-8BEN,
before the first payment of any interest under this Agreement and at any other
time reasonably requested by Agent or Administrative Borrower;
(ii) if such Lender claims an exemption from, or a reduction of, withholding tax
under a United States tax treaty, properly completed IRS Form W-8BEN before the
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first payment of any interest under this Agreement and at any other time
reasonably requested by Agent or Administrative Borrower;
(iii) if such Lender claims that interest paid under this Agreement is exempt
from United States withholding tax because it is effectively connected with a
United States trade or business of such Lender, two properly completed and
executed copies of IRS Form W-8ECI before the first payment of any interest is
due under this Agreement and at any other time reasonably requested by Agent or
Administrative Borrower;
(iv) such other form or forms as may be required under the IRC or other laws of
the United States as a condition to exemption from, or reduction of, United
States withholding tax.
Such Lender agrees promptly to notify Agent and Administrative Borrower of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from, or reduction of, withholding tax under
a United States tax treaty by providing IRS Form W-8BEN and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations of Borrowers to such Lender, such Lender agrees to notify Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of Borrowers to such Lender. To the extent of such percentage
amount, Agent will treat such Lender's IRS Form W-8BEN as no longer valid.
(c) If any Lender is entitled to a reduction in the applicable withholding tax,
Agent may withhold from any interest payment to such Lender an amount equivalent
to the applicable withholding tax after taking into account such reduction. If
the forms or other documentation required by subsection (a) of this Section are
not delivered to Agent, then Agent may withhold from any interest payment to
such Lender not providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(d) If the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such Lender failed to
notify Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason) such Lender
shall indemnify and hold Agent harmless for all amounts paid, directly or
indirectly, by Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to Agent
under this Section, together with all costs and expenses (including attorneys
fees and expenses). The obligation of the Lenders under this subsection shall
survive the payment of all Obligations and the resignation or replacement of
Agent.
(e) All payments made by Borrowers hereunder or under any note will be made
without setoff, counterclaim, or other defense, except as required by applicable
law other than for Taxes (as defined below). All such payments will be made free
and clear of, and without deduction or withholding for, any present or future
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction (other than the United
States) or by any political subdivision or taxing authority thereof or therein
(other than of the United States) with respect to such payments (but excluding,
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any tax imposed by any jurisdiction or by any political subdivision or taxing
authority thereof or therein (i) measured by or based on the net income or net
profits of a Lender, or (ii) to the extent that such tax results from a change
in the circumstances of the Lender, including a change in the residence, place
of organization, or principal place of business of the Lender, or a change in
the branch or lending office of the Lender participating in the transactions set
forth herein) and all interest, penalties or similar liabilities with respect
thereto (all such non-excluded taxes, levies, imposts, duties, fees, assessments
or other charges being referred to collectively as "Taxes"). If any Taxes are so
levied or imposed, Borrowers agree to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that every payment of all amounts
due under this Agreement or under any note, including any amount paid pursuant
to this Section 18.10(e) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts payable to
Agent or any Lender (i) that is not organized under the laws of the United
States, if such Person fails to comply with the other requirements of this
Section 18.10, or (ii) if the increase in such amount payable results from
Agent's or such Lender's own willful misconduct or gross negligence. Each
Borrower will furnish to Agent as promptly as possible after the date the
payment of any Taxes is due pursuant to applicable law certified copies of tax
receipts evidencing such payment by such Borrower.
18.11 Collateral Matters.
(a) Lenders hereby irrevocably authorize Agent to release any Lien on any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by or on behalf of Borrowers of all Obligations; and upon
such termination and payment Agent shall deliver to Borrowers, at Borrowers'
sole cost and expense, all UCC termination statements and any other documents
necessary to terminate the Loan Documents and release the Liens with respect to
the Collateral; (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if each Borrower
certifies to Agent that the sale or disposition is permitted under Section 7.4
of this Agreement or the other Loan Documents (and Agent may rely conclusively
on any such certificate, without further inquiry); (iii) constituting property
in which a Borrower does not own an interest at the time the Lien was granted or
at any time thereafter; or (iv) constituting property leased to a Borrower under
a lease that has expired or been terminated in a transaction permitted under
this Agreement. Except as provided above, Agent will not release any Lien on any
Collateral without the prior written authorization of (y) if the release is of
all or any material portion of the Collateral, of all Lenders or (z) otherwise,
of the Required Lenders. Upon request by Agent or Borrowers at any time, Lenders
will confirm in writing Agent's authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 18.11;
provided, however, that (i) the Agent shall not be required to execute any
document necessary to evidence such release on terms that, in Agent's opinion,
would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Lien without recourse,
representation, or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens (other than those
expressly being released), upon (or obligations of Borrowers in respect of) all
interests retained by Borrowers, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
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(b) Agent shall not have any obligation whatsoever to any Lender to assure that
the Collateral exists or is owned by a Borrower, is cared for, protected, or
insured or has been encumbered, or that the Liens of Agent (for the benefit of
Lender Group) have been properly or sufficiently or lawfully created, perfected,
protected, or enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of care,
disclosure, or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the Agent pursuant to any of the
Loan Documents, it being understood and agreed that in respect of the
Collateral, or any act, omission or event related thereto, subject to the terms
and conditions contained herein, the Agent may act in any manner it may deem
appropriate, absent Agent's gross negligence or willful misconduct, in its sole
discretion given the Agent's own interest in the Collateral in their capacity as
Lenders and that the Agent shall have no other duty or liability whatsoever to
any Lender as to any of the foregoing, except as otherwise provided herein.
18.12 Restrictions on Actions by Lenders; Sharing of Payments.
(a) Each of Lenders agrees that it shall not, without the express consent of
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the request of Agent, set off against the Obligations any amounts owing by such
Lender to a Borrower or any deposit accounts of a Borrower now or hereafter
maintained with such Lender. Each of Lenders further agrees that it shall not,
unless specifically requested to do so by Agent, take or cause to be taken any
action, including the commencement of any legal or equitable proceedings, to
foreclose any Lien on, or otherwise enforce any security interest in, any of the
Collateral the purpose of which is, or could be, to give such Lender any
preference or priority against the other Lenders with respect to the Collateral.
(b) If, at any time or times, any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to, this Agreement or
the other Loan Documents, except for any such proceeds or payments received by
such Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender's Pro Rata Share of all such distributions
by Agent, such Lender shall promptly (1) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of Lenders
and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
Lenders in accordance with their Pro Rata Shares; provided, however, that if all
or part of such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
18.13 Agency for Perfection. Agent hereby appoints each Lender as its agent (and
each Lender hereby accepts such appointment) for the purpose of perfecting
Agent's Liens in assets which, in accordance with Article 9 of the Code, can be
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perfected only by possession. Should any Lender obtain possession of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent's
request therefor, shall deliver such Collateral to Agent or in accordance with
Agent's instructions.
18.14 Payments by Agent to Lenders. All payments to be made by Agent to Lenders
shall be made by bank wire transfer or internal transfer of immediately
available funds in accordance with such wire transfer instructions as each party
may designate for itself by written notice to Agent. Concurrently with each such
payment, Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest of the Obligations.
18.15 Concerning the Collateral and Related Loan Documents. Each member of
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents relating to the Collateral, for the benefit of Lender
Group. Each member of Lender Group agrees that any action taken by Agent in
accordance with the terms of this Agreement or the other Loan Documents relating
to the Collateral and the exercise by Agent of its powers set forth therein or
herein, together with such other powers that are reasonably incidental thereto,
shall be binding upon all of Lenders.
18.16 Field Audits and Examination Reports; Confidentiality; Disclaimers by
Lenders; Other Reports and Information. By becoming a party to this Agreement,
each Lender:
(a) is deemed to have requested that Agent furnish such Lender, promptly after
it becomes available, a copy of each field audit or examination report (each a
"Report" and collectively, "Reports") prepared by or at the request of Agent,
and Agent shall so furnish each Lender with such Reports;
(b) expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not comprehensive
audits or examinations, that Agent or other party performing any audit or
examination will inspect only specific information regarding Borrowers and will
rely significantly upon the Books, as well as on representations of each
Borrower's personnel;
(d) agrees to keep all Reports and other material, non-public information
regarding a Borrower and its Subsidiaries and their operations, assets, and
existing and contemplated business plans in a confidential manner; it being
understood and agreed by the Borrowers that in any event such Lender may make
disclosures (i) to counsel for and other advisors, accountants, and auditors to
such Lender, (ii) reasonably required by any bona fide potential or actual
Assignee, transferee, or Participant in connection with any contemplated or
actual assignment or transfer by such Lender of an interest herein or any
participation interest in such Lender's rights hereunder, provided that such
potential or actual Assignee, transferee or Participant agrees to comply with
this Section 18.16(d) as if it were a Lender hereunder, (iii) of information
that has become public by disclosures made by Persons other than such Lender,
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its Affiliates, Assignees, transferees, or Participants, or (iv) as required or
requested by any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall promptly notify Administrative
Borrower of any request by any court, governmental or administrative agency, or
pursuant to any subpoena or other legal process for disclosure of any such
non-public material information concurrent with, or where practicable, prior to
the disclosure thereof; and
(e) without limiting the generality of any other indemnification provision
contained in this Agreement, agrees: (i) to hold Agent and any other Lender
preparing a Report harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrowers, or the indemnifying Lender's
participation in, or the indemnifying Lender's purchase of, a loan or loans to
Borrowers; and (ii) to pay and protect, and indemnify, defend, and hold Agent
and any such other Lender preparing a Report harmless from and against, the
claims, actions, proceedings, damages, costs, expenses and other amounts
(including, attorneys fees and costs) incurred by Agent and any such other
Lender preparing a Report as the direct or indirect result of any third parties
who might obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) any Lender may from time to
time request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by any Borrower to Agent that has not been
contemporaneously provided by such Borrower to such Lender, and, upon receipt of
such request, Agent promptly shall provide a copy of same to such Lender; (y) to
the extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from a Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender's notice to Agent, whereupon Agent promptly shall request of such
Borrower the additional reports or information specified by such Lender, and,
upon receipt thereof, Agent promptly shall provide a copy of same to such
Lender; and (z) any time that Agent renders to Borrowers a statement regarding
the Loan Account, Agent shall send a copy of such statement to each Lender.
18.17 Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of Lenders, any
and all obligations on the part of the Lenders to make any credit available
hereunder shall constitute the several (and not joint) obligations of the
respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.
Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 18.7, no member of Lender Group shall have any
liability for the acts of any other member of Lender Group.
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19. GENERAL PROVISIONS.
19.1 Effectiveness. This Agreement shall be binding and deemed effective when
executed by each Borrower, the Agent and each of the Lenders whose signature is
provided for on the signature page hereof.
19.2 Successors and Assigns. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their successors and assigns to the
extent set forth in Section 18.
19.3 Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.
19.4 Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against Lender Group or Borrowers, whether under any
rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to accomplish fairly the purposes and
intentions of all parties hereto.
19.5 Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.
19.6 Amendments in Writing. This Agreement can only be amended by a
writing signed in accordance with Section 17.
19.7 Counterparts; Telefacsimile Execution. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.
19.8 Revival and Reinstatement of Obligations. If the incurrence or payment of
the Obligations by Borrowers or the transfer to Lender Group of any property
should for any reason subsequently be declared to be void or voidable under any
state or federal law relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences, or other
voidable or recoverable payments of money or transfers of property
(collectively, a "Voidable Transfer"), and if Lender Group is required to repay
or restore, in whole or in part, any such Voidable Transfer, or elects to do so
upon the reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that Lender Group is required or elects to repay
or restore, and as to all reasonable costs, expenses, and attorneys fees of
69
Lender Group related thereto, the liability of Borrowers automatically shall be
revived, reinstated, and restored and shall exist as though such Voidable
Transfer had never been made.
19.9 Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.
19.10 General DataComm as Agent for Borrowers. Each Borrower hereby irrevocably
appoints General DataComm as the borrowing agent and attorney-in-fact for the
Borrowers (the "Administrative Borrower") which appointment shall remain in full
force and effect unless and until Agent shall have received prior written notice
signed by all of the Borrowers that such appointment has been revoked and that
another Borrower has been appointed Administrative Borrower. Each Borrower
hereby irrevocably appoints and authorizes the Administrative Borrower to take
such action as the Administrative Borrower deems appropriate on its behalf to
exercise such other powers as are reasonably incidental thereto to carry out the
purposes of this Agreement. It is understood that the handling of the Loan
Account and Collateral of the Borrowers in a combined fashion, as more fully set
forth herein, is done solely as an accommodation to the Borrowers in order to
utilize the collective borrowing powers of the Borrowers in the most efficient
and economical manner and at their request, and that Lender Group shall not
incur liability to the Borrowers as a result hereof. Each of the Borrowers
expects to derive benefit, directly or indirectly, from the handling of the Loan
Account and the Collateral in a combined fashion since the successful operation
of each Borrower is dependent on the continued successful performance of the
integrated group. To induce Lender Group to do so, and in consideration thereof,
each of the Borrowers hereby jointly and severally agrees to indemnify Lender
Group and hold Lender Group harmless against any and all liability, expense,
loss or claim of damage or injury, made against Lender Group by any of the
Borrowers or by any third party whosoever, arising from or incurred by reason of
(a) the handling of the Loan Account and Collateral of the Borrowers in a
combined fashion as herein provided, (b) Lender Group's relying on any
instructions of the Administrative Borrower, or (c) any other action taken by
Lender Group hereunder or under the other Loan Documents, except that Borrowers
will have no liability to the relevant Agent-Related Person or Lender-Related
Person under this Section 19.10 with respect to any liability that has been
finally determined by a court of competent jurisdiction to have resulted solely
from the gross negligence or willful misconduct of such Agent-Related Person or
Lender-Related Person, as the case may be.
{Signature Page Follows}
70
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the date set forth above.
Borrowers:
---------
GENERAL DATACOMM INDUSTRIES, INC.,
a Delaware corporation
By /S/ XXXXXX XXXXXX
Title: CHAIRMAN
GENERAL DATACOMM, INC.,
a Delaware corporation
By /S/ XXXXXX XXXXXX
Title: CHAIRMAN
DATACOMM LEASING CORPORATION,
a Delaware corporation
By /S/ XXXXXX XXXXXX
Title: CHAIRMAN
GDC HOLDING COMPANY, LLC,
a Delaware limited liability company
By /S/ XXXXXX XXXXXX
Title: CHAIRMAN
GDC FEDERAL SYSTEMS, INC.,
a Delaware corporation
By /S/ XXXXXX XXXXXX
Title:CHAIRMAN
GDC REALTY, INC.,
a Texas corporation
By /S/ XXXXXX XXXXXX
Title CHAIRMAN
GDC NAUGATUCK, INC.,
a Delaware Corporation
By /S/ XXXXXX XXXXXX
Title: CHAIRMAN
Agent and Lender:
----------------
ABLECO FINANCE LLC,
a Delaware limited liability company
By
Title:
Schedule C-1
Lenders and Lenders' Commitments
Term A Loan Term B Loan
Lender Commitment Commitment
Ableco Finance LLC $ $
[Other Lenders]
All Lenders $25,000,000 $5,000,000
