Exhibit 10.11
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS SECOND AMENDMENT (this "Amendment"), to LOAN AND SECURITY
AGREEMENT, dated as of October 22, 1997, among GENERAL DATACOMM INDUSTRIES,
INC., GENERAL DATACOMM, INC., GDC FEDERAL SYSTEMS, INC., GDC NAUGATUCK, INC.,
VITAL NETWORK SERVICES, L.L.C. (as successor by merger to Vital Network
Services, Inc.) (collectively, the "Borrowers"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), THE CIT GROUP/BUSINESS
CREDIT, INC., as co-agent (in such capacity, the "Co-Agent") for the Lenders and
TRANSAMERICA BUSINESS CREDIT CORPORATION, as agent (in such capacity, the
"Agent") for the Lenders, is made as of October 13, 1998 among the Borrowers,
the undersigned Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, the Borrowers, the Lenders, the Co-Agent and the
Agent are parties to the Loan and Security Agreement, dated as of October 22,
1997 (as heretofore amended, the "Loan Agreement"; capitalized terms used herein
shall have the meanings assigned to such terms in the Loan Agreement unless
otherwise defined herein); and
WHEREAS, the parties hereto desire to amend the Loan Agreement
in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the parties hereto hereby agree as
follows:
1. Amendment to Loan Agreement. Effective as of the date hereof, and
subject to the satisfaction of the conditions to effectiveness set forth in
Section 2 hereof, the Loan Agreement is hereby amended as follows:
(a) Section 1.1 of the Loan Agreement is amended by adding the following
definition in the proper alphabetical order:
"'Settlement Date' has the meaning specified in Section 2.3(b)(ii)."
(b) Section 2.3 of the Loan Agreement is amended and restated as follows:
"SECTION 2.3. Procedure for Borrowing; Settlement Procedures.
(a) Each borrowing shall be made on notice, given not
later than 4:00 P.M. (Chicago time) on the Business Day
immediately preceding the date of the proposed borrowing, by
GDC to the Agent. Each such notice of a borrowing (a "Notice
of Borrowing") shall be by telecopier, in substantially the
form of Exhibit M, specifying therein the requested (i) date
of such borrowing and (ii) aggregate amount of such borrowing.
The Agent may, on behalf of the Lenders, disburse funds to
GDC, for the benefit of the Borrowers, for Revolving Credit
Loans requested by GDC. Each Lender shall reimburse the Agent
at the time set forth in Section 2.3(c) for all funds
disbursed on its behalf by the Agent, or if the Agent so
requests, each Lender will remit to the Agent its pro rata
share of any Revolving Credit Loan before the Agent disburses
the same to GDC, for the benefit of the Borrowers. If the
Agent elects to require that each Lender make funds available
to the Agent prior to a disbursement by the Agent to GDC, the
Agent shall advise each Lender by telephone (but not
voicemail) or telecopier of the amount of such Lender's pro
rata share of the Revolving Credit Loan requested by GDC no
later than 10:00 A.M. (Chicago time), on the borrowing date
applicable thereto, and such Lender shall make available to
the Agent such Lender's pro rata share of such requested
Revolving Credit Loan, in same day funds, by wire transfer to
the Agent's account specified in Section 2.8(a) prior to 12:00
Noon (Chicago time), on the borrowing date applicable thereto.
(b) (i) In order to minimize the frequency of
transfers of funds between the Agent and each Lender,
notwithstanding anything to the contrary set forth herein,
Revolving Credit Loans and payments in respect thereof will be
settled among the Agent and the Lenders according to the
procedures described in this Section 2.3(b). These procedures
notwithstanding, each Lender's obligation to fund its pro rata
share of any Revolving Credit Loan made by the Agent to GDC
will commence on the date such Revolving Credit Loan is made
by the Agent. Such payments will be made by such Lender
without setoff, counterclaim or deduction of any kind.
(ii) On the first Business Day of each week, or more
frequently (including daily) if the Agent so elects (each such
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day being a "Settlement Date"), the Agent will advise each
Lender by telephone (but not voicemail) or telecopier of the
amount of such Lender's pro rata share of the outstanding
principal amount of Revolving Credit Loans as of the close of
business of the first Business Day immediately preceding such
Settlement Date. In the event that payments are necessary to
adjust such Lender's actual pro rata share of the outstanding
principal amount of Revolving Credit Loans as of any
Settlement Date to equal the amount of such Lender's required
pro rata share of the outstanding principal amount of
Revolving Credit Loans, the party from which such payment is
due will pay the other, in same day funds, by wire transfer to
the other's account not later than 12:00 Noon (Chicago time)
on the Business Day immediately following such Settlement
Date.
(c) Unless the Agent shall have been notified in
writing by any Lender prior to a borrowing date that such
Lender will not make the amount that would constitute its
Revolving Credit Commitment Percentage of the borrowing on
such date available to the Agent, the Agent may assume that
such Lender has made such amount available to the Agent on the
Business Day immediately following the next Settlement Date,
and the Agent may, in reliance upon such assumption, make
available to GDC a corresponding amount. If such amount is not
made available to the Agent by 12:00 Noon (Chicago time) on
such date, such Lender shall pay to the Agent, on demand, in
addition to such Lender's Revolving Credit Commitment
Percentage of such borrowing, an amount equal to the product
of (i) the daily average Federal Funds Effective Rate during
such period, times (ii) the amount of such Lender's Revolving
Credit Commitment Percentage of such borrowing, times (iii) a
fraction the numerator of which is the number of days that
elapse from and including such date to the date on which such
Lender's Revolving Credit Commitment Percentage of such
borrowing shall have become immediately available to the Agent
and the denominator of which is 360. A certificate of the
Agent submitted to any Lender with respect to any amounts
owing under this Section 2.3(c) shall be conclusive in the
absence of manifest error. If such Lender's Revolving Credit
Commitment Percentage of such borrowing is not made available
to the Agent by such Lender by 12:00 Noon (Chicago time) on
the third Business Day after such date, the Agent shall be
entitled to recover, on demand, from the Borrowers, such
amount with interest thereon at the rate per annum applicable
to Revolving Credit Loans hereunder. For purposes of this
Section 2.3(c), any amounts received by the Agent on any
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Business Day after 12:00 Noon (Chicago time) shall be deemed
to be received by the Agent on the immediately succeeding
Business Day."
(c) Section 2.10 of the Loan Agreement is amended and restated as follows:
"SECTION 2.10. Collection of Receivables. GDC, the
Agent and a Lockbox Bank shall enter into separate agreements,
each in form and substance satisfactory to the Agent (each, as
amended, supplemented or otherwise modified from time to time,
a "Lockbox Agreement"), each of which, among other things,
shall provide for the opening of an account (each, a "Lockbox
Account") for the deposit of each Borrower's Collections at a
Lockbox Bank. Each Borrower shall promptly direct all of its
account debtors to send their remittances to a lockbox
established pursuant to a Lockbox Agreement. All Collections
and other amounts received by any Borrower from any of its
account debtors shall promptly upon receipt be deposited into
a Lockbox Account. Upon the terms and subject to the
conditions set forth in the Lockbox Agreements, all amounts
held in each Lockbox Account shall be wired each Business Day
into an account maintained by the Agent at First National Bank
of Chicago. GDC shall enter into an agreement with the Agent
and a financial institution acceptable to GDC and the Agent (a
"Concentration Bank") in substantially the form of Exhibit R
(as amended, supplemented or otherwise modified from time to
time, the "Concentration Account Agreement"). All amounts
received by a Borrower from any source (except for Collections
and any other amounts received by any Borrower from any of its
account debtors) shall promptly upon receipt be deposited into
an account (the "Concentration Account") maintained by the
Agent at a Concentration Bank. Upon and subject to the terms
and subject to the conditions set forth in the Concentration
Account Agreement, all amounts held in the Concentration
Account shall be transferred each Business Day into an account
maintained by the Agent at First National Bank of Chicago. The
Agent will credit all such payments to the Borrower's account,
conditional upon final collection; credit will be given only
for cleared funds received prior to 12:00 Noon, Chicago time,
by the Agent at its account at First National Bank of Chicago
(Account #51-011-90), or such other bank as the Agent may
designate; provided, however, that for purposes of calculating
interest due to the Agent for the benefit of the Lenders,
credit will be given to collections one Business Day after
receipt of cleared funds. In all cases, the Loan Account will
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be credited only with the net amounts actually received in
payment of Receivables."
(d) Section 7.1(k)(iv) of the Loan Agreement is amended by deleting
"commencing at least two weeks prior to the date on which the first Revolving
Credit Loan is made" and substituting therefor "upon the request of the Agent".
2. Conditions to Effectiveness.
(a) This Amendment (other than Section 1(c))
shall become effective upon the Agent's receipt of (i) counterparts of this
Amendment, duly executed by the Borrowers and the Required Lenders and duly
consented to by the Guarantors and (ii) the amendment to the Pledge Agreement,
substantially in the form of Exhibit A, duly executed by the pledgors party
thereto and the Required Lenders and duly acknowledged by Grupo GDC de Mexico,
S.A. de C.V., together with the stock certificates pledged thereunder and
related stock powers executed in blank.
(b) Section 1(c) of this Amendment shall become
effective upon the satisfaction of the conditions precedent set forth in Section
2(a) and upon the Agent's receipt of amendments to the existing Lockbox
Agreements, duly executed by GDC and the Lockbox Bank party thereto, in each
case in form and substance satisfactory to the Agent.
3. Authorization by Lenders. Effective as of the date hereof,
each of the undersigned Lenders hereby authorizes the Agent (on behalf of such
Lender) to enter into one or more new Concentration Account Agreements, new
Lockbox Agreements and amendments to the existing Lockbox Agreements and
Concentration Account Agreements to carry out the purpose and intent of Section
1(c) and containing such other terms as the Agent determines to be necessary or
desirable.
4. Covenant Regarding Mexican Stock Pledge. On or before
October 31, 1998, General DataComm Industries, Inc. shall, and shall cause each
of its Subsidiaries to, take all such further actions and execute all such
further documents and instruments as the Agent may determine in its reasonable
discretion to be necessary or desirable to perfect and protect the Liens of the
Agent (and the priority status thereof) on the Collateral granted in accordance
with Section 2(a)(ii).
5. Representations and Warranties of the Borrowers.
Each of the Borrowers represents and warrants as follows:
(a) Since June 30, 1998, there has occurred no
development, event or change that has had or could reasonably be expected to
have a Material Adverse Effect, except as expressly set forth in the Business
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Plan most recently delivered pursuant to Section 7.1(k)(ii) of the Loan
Agreement.
(b) No Default or Event of Default has occurred
and is continuing.
(c) The representations and warranties of such
Borrower contained in Section 6.1 of the Loan Agreement are true and correct in
all material respects on the date hereof as though made on and as of the date
hereof, except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representations and
warranties were true and correct on and as of such earlier date).
(d) This Amendment constitutes the legal, valid
and binding obligation of such Borrower, enforceable against such Borrower in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency and other laws affecting creditors' rights generally and
by general principles of equity.
6. Expenses. The Borrowers shall, jointly and severally,
pay for all of the reasonable costs and expenses incurred by the Agent and the
Lenders in connection with the transactions contemplated by this Amendment,
including, without limitation, the reasonable fees and expenses of counsel to
the Agent and the Lenders.
7. Miscellaneous.
(a) Except as expressly amended herein, all of
the terms and provisions of the Loan Agreement and the other Loan Documents are
ratified and confirmed in all respects and shall remain in full force and
effect.
(b) Upon the effectiveness of this Amendment,
all references in the Loan Documents to the Loan Agreement shall mean the Loan
Agreement as amended by this Amendment and all references in the Loan Agreement
to "this Agreement," "hereof," "herein," or similar terms, shall mean and refer
to the Loan Agreement as amended by this Amendment.
(c) The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided herein, operate as an
amendment to or waiver of any right, power or remedy of the Agent or the Lenders
under any of the Loan documents, or constitute an amendment or waiver of any
provision of any of the Loan Documents.
(d) This Amendment may be executed by the parties
hereto individually or in combination, in one or more counterparts, each of
which shall be an original and all of which shall constitute one and the same
agreement. This Amendment may be executed and delivered by telecopier with the
same force and effect as if the same were a fully executed and delivered
original manual counterpart.
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(e) This Amendment shall constitute a Loan Document.
8. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective duly authorized
officers as of the date first above written.
BORROWERS
GENERAL DATACOMM INDUSTRIES, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GENERAL DATACOMM, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GDC FEDERAL SYSTEMS, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GDC NAUGATUCK, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
VITAL NETWORK SERVICES, L.L.C.
(as successor by merger to Vital
Network Services, Inc.)
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
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LENDERS
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /S/ XXX XXXXXXXX
Name: Xxx Xxxxxxxx
Title: Senior Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Vice President
BANKBOSTON, N.A.
By:
Name:
Title:
AGENT
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent
By: /S/ XXX XXXXXXXX
Name: Xxx Xxxxxxxx
Title: Senior Vice President
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Each of the undersigned Guarantors hereby consents to this
Amendment and agrees that the execution, delivery and performance of this
Amendment do not in any way affect the obligations of such Guarantor under any
Loan Document to which it is a party, all of which obligations are ratified and
confirmed, remain absolute and unconditional and are not subject to any defense,
setoff or counterclaim.
GENERAL DATACOMM LTD.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GENERAL DATACOMM LIMITED
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GENERAL DATACOMM INTERNATIONAL CORP.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
GENERAL DATACOMM CHINA, LTD.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
DATACOMM RENTAL CORPORATION
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
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GDC REALTY, INC.
By: /S/ XXXXXX X. XXXXXX
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Treasurer
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