LOAN AND SECURITY AGREEMENT
among
GENERAL DATACOMM INDUSTRIES, INC.,
GENERAL DATACOMM, INC.,
GDC FEDERAL SYSTEMS, INC.,
GDC NAUGATUCK, INC.
and
VITAL NETWORK SERVICES, INC.,
as Borrowers,
TRANSAMERICA BUSINESS CREDIT CORPORATION,
as Agent,
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Co-Agent
and
TRANSAMERICA BUSINESS CREDIT CORPORATION
and the other financial
institutions from time to time parties hereto,
as Lenders
Dated as of October 22, 1997
TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINITIONS
SECTION 1.1. General Definitions 2
SECTION 1.2. Accounting Terms and Determinations 23
SECTION 1.3. Other Terms; Headings 23
ARTICLE II.
THE CREDIT FACILITIES
SECTION 2.1. The Revolving Credit Loans 23
SECTION 2.2. The Term Loan 24
SECTION 2.3. Procedure for Borrowing 25
SECTION 2.4. Application of Proceeds 26
SECTION 2.5. Maximum Amount of the Facility;
Mandatory Prepayments; Optional Prepayments 26
SECTION 2.6. Maintenance of Loan Account; Statements of Account 27
SECTION 2.7. Expiration Date 28
SECTION 2.8. Pro Rata Treatment and Payments; Collection 28
SECTION 2.9. Replacement of Lenders 29
SECTION 2.10. Collection of Receivables 30
SECTION 2.11. Letters of Credit 31
SECTION 2.12. Letter of Credit Participations 31
ARTICLE III.
SECURITY
SECTION 3.1. General 33
SECTION 3.2. Further Security 33
SECTION 3.3. Termination 34
SECTION 3.4. Recourse to Security 34
SECTION 3.5. Special Provisions Relating to Inventory 34
SECTION 3.6. Special Provisions Relating to Receivables 36
SECTION 3.7. Special Provisions Relating to Equipment 38
SECTION 3.8. Continuation of Liens, Etc. 38
SECTION 3.9. Power of Attorney 39
ARTICLE IV.
INTEREST, FEES AND EXPENSES
SECTION 4.1. Interest 39
SECTION 4.2. Interest After Event of Default; Late Fee 39
SECTION 4.3. Fee Letter 40
SECTION 4.4. [Intentionally Omitted] 40
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SECTION 4.5. Unused Line Fee; Letter of Credit Fees 40
SECTION 4.6. Early Termination Fee 40
SECTION 4.7. Calculations 41
SECTION 4.8. Indemnification in Certain Events 41
SECTION 4.9. Taxes 41
ARTICLE V.
CONDITIONS OF LENDING
SECTION 5.1. Conditions to Initial Borrowing or Letter of Credit 44
SECTION 5.2. Conditions Precedent to Each Loan and Each Letter of
Credit 49
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of the Borrowers 50
ARTICLE VII.
COVENANTS OF THE BORROWERS
SECTION 7.1. Affirmative Covenants 59
SECTION 7.2. Negative Covenants 69
ARTICLE VIII.
FINANCIAL COVENANTS
SECTION 8.1. Current Ratio 76
SECTION 8.2. Stockholders Equity 76
SECTION 8.3. Capital Expenditures 77
ARTICLE IX.
EVENTS OF DEFAULT
SECTION 9.1. Events of Default 77
SECTION 9.2. Acceleration, Termination of Commitments and
Cash Collateralization 78
SECTION 9.3. Remedies 79
SECTION 9.4. Right of Setoff 81
SECTION 9.5. License for Use of Software and Other
Intellectual Property 81
SECTION 9.6. No Marshalling; Deficiencies; Remedies
Cumulative 82
SECTION 9.7. Waivers 82
SECTION 9.8. Further Rights of the Agent 82
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ARTICLE X.
THE AGENT
SECTION 10.1 Authorization and Action 83
SECTION 10.2. Agent's Reliance, Etc. 84
SECTION 10.3. TBCC and Affiliates 84
SECTION 10.4. Lender Credit Decision 85
SECTION 10.5. Indemnification 85
SECTION 10.6. Successor Agent 85
SECTION 10.7. Co-Agent 86
ARTICLE XI.
ASSIGNMENTS AND PARTICIPATIONS
SECTION 11.1. Conditions to Assignments 86
SECTION 11.2. No Representations, Etc. 87
SECTION 11.3. Record of Assignments 88
SECTION 11.4. New Notes 88
SECTION 11.5. Participations 88
SECTION 11.6. Disclosure 89
SECTION 11.7. Security Interest to Federal Reserve Bank 89
ARTICLE XII.
GENERAL PROVISIONS
SECTION 12.1. Governing Law 89
SECTION 12.2. Submission to Jurisdiction 89
SECTION 12.3. Service of Process 90
SECTION 12.4. Jury Trial 90
SECTION 12.5. Limitation of Liability 90
SECTION 12.6. Delays; Partial Exercise of Remedies 90
SECTION 12.7. Notices 90
SECTION 12.8. Indemnification; Reimbursement of Expenses of
Collection 91
SECTION 12.9. Amendments and Waivers 92
SECTION 12.10. Counterparts; Telecopied Signatures 93
SECTION 12.11. Severability 93
SECTION 12.12. Maximum Rate 93
SECTION 12.13. Entire Agreement; Successors and Assigns 94
SECTION 12.14. Joint and Several Liability of the Borrowers 94
SECTION 12.15. Confidentiality 95
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is entered into as of October 22,
1997, by and among GENERAL DATACOMM INDUSTRIES, INC., a Delaware corporation
having its chief executive office and principal place of business at 0000
Xxxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, GENERAL DATACOMM, INC., a
Delaware corporation having its chief executive office and principal place of
business at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000, GDC FEDERAL
SYSTEMS, INC., a Delaware corporation having its chief executive office and
principal place of business at 0000 Xxxxxxxx Xxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxxx,
GDC NAUGATUCK, INC., a Delaware corporation having its chief executive office
and principal place of business at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxx 00000, VITAL NETWORK SERVICES, INC., a Delaware corporation having
its chief executive office and principal place of business at 0 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx (collectively, the "Borrowers"), TRANSAMERICA BUSINESS
CREDIT CORPORATION, a Delaware corporation having its principal office at 0000
Xxxx Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 and having an office at
00 Xxxxxxxxx Xxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000 ("TBCC"), the other
financial institutions from time to time parties hereto (together with TBCC, the
"Lenders"), THE CIT GROUP/BUSINESS CREDIT, INC., as co-agent (in such capacity,
the "Co-Agent"), and TBCC, as agent for the Lenders (in such capacity, the
"Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers wish to obtain a revolving credit facility and a
term loan facility to refinance existing indebtedness and for general working
capital purposes; and
WHEREAS, upon the terms and subject to the conditions set forth herein,
the Lenders are willing to make loans and other extensions of credit to the
Borrowers in an aggregate amount not to exceed $40,000,000;
NOW, THEREFORE, the Borrowers, the Lenders, the Co-Agent and the Agent
hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1. General Definitions. As used herein, the following terms
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
"Advance" means a loan or advance made by a Lender hereunder.
"Affiliate" means as to any Person, any other Person who directly or
indirectly controls, is under common control with, is controlled by or is a
director or officer of such Person. As used in this definition, "control"
(including its correlative meanings, "controlled by" and "under common control
with") means possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of voting
securities or partnership or other ownership interests, by contract or
otherwise), provided that, in any event, any Person who owns directly or
indirectly fifteen percent (15%) or more of the securities having ordinary
voting power for the election of the members of the board of directors or other
governing body of a corporation or fifteen percent (15%) or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation, partnership or other Person.
"Agreement" means this Loan and Security Agreement, as amended,
supplemented or otherwise modified from time to time.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an Eligible Assignee, and accepted by the Agent, in
accordance with Section 11.1 and in substantially the form of Exhibit C annexed
hereto.
"Auditors" means Coopers & Xxxxxxx L.L.P. or such other nationally
recognized firm of independent public accountants selected by GDC and
satisfactory to the Agent in its sole discretion.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as that title may be amended from time to time, or any successor
statute.
"Base Rate" means the higher of (a) the highest prime, base or
equivalent rate of interest announced from time to time by Citibank, N.A., First
National Bank of Chicago and Bank of America of Illinois (which may not be the
lowest rate of interest charged by such bank) and (b) the published annualized
rate for
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90-day dealer commercial paper which appears in the "Money Rates" section of The
Wall Street Journal.
"Benefit Plan" means a "defined benefit plan" as defined in Section 3(35)
of ERISA for which any Loan Party or any ERISA Affiliate has been an "employer"
as defined in Section 3(5) of ERISA within the past six years.
"Borrowing Base Certificate" has the meaning specified in Section 7.1(k)
(iv).
"Borrowing Base Parties" means the Borrowers, DataComm Canada and DataComm
England.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banks in Farmington, Connecticut or Chicago, Illinois are
required or permitted by law to close.
"Business Plan" means a business plan, consisting of projected balance
sheets and related cash flow statements, profit and loss statements and income
statements, together with appropriate supporting details and a statement of the
underlying assumptions which covers the three-year period commencing January 1,
1997 and which is prepared on a quarterly basis.
"Capital Expenditures" means expenditures for any fixed assets or
improvements, replacements, substitutions or additions thereto which have a
useful life of more than one year, including the direct or indirect acquisition
of such assets by way of increased product service charges, offset items or
otherwise and shall include all payments in respect of Capitalized Lease
Obligations and leasehold improvements, but shall exclude software that is
capitalized.
"Capitalized Lease Obligations" means any rental obligation which, under
GAAP, is or will be required to be capitalized on the books of the lessee, taken
at the amount thereof accounted for as indebtedness (net of interest expense) in
accordance with GAAP.
"Cash Equivalents" means (i) securities issued, guaranteed or insured by
the United States or any of its agencies with maturities of not more than one
year from the date acquired; (ii) certificates of deposit with maturities of not
more than one year from the date acquired, issued by a U.S. federal or state
chartered commercial bank of recognized standing, which has capital and
unimpaired surplus in excess of $200,000,000 and which bank or its holding
company has a short-term commercial paper rating of at least A-1 or the
equivalent by Standard & Poor's Corporation or at least P-1 or the equivalent by
Xxxxx'x Investors Service, Inc.; (iii) repurchase agreements and reverse
repurchase agreements with terms of not more than seven days from
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the date acquired, for securities of the type described in clause (i) above and
entered into only with commercial banks having the qualifications described in
clause (ii) above; (iv) commercial paper, other than commercial paper issued by
a Borrower or any of its Affiliates, issued by any Person incorporated under the
laws of the United States or any state thereof and rated at least A-1 or the
equivalent thereof by Standard & Poor's Corporation or at least P-1 or the
equivalent thereof by Xxxxx'x Investors Service, Inc., in each case with
maturities of not more than one year from the date acquired; (v) investments in
money market funds registered under the Investment Company Act of 1940, which
have net assets of at least $200,000,000 and at least eighty-five percent (85%)
of whose assets consist of securities and other obligations of the type
described in clauses (i) through (iv) above; and (vi) other instruments,
commercial paper or investments acceptable to the Agent in its sole discretion.
"Change of Control" means one or more of the following events:
(a) less than a majority of the members of
any Borrower's Board of Directors shall be persons who either
(i) were serving as directors on the Closing Date or (ii) were
nominated as directors and approved by the vote of the
majority of the directors who are directors referred to in
clause (i) above or this clause (ii); or
(b) the stockholders of any Borrower shall approve any plan
or proposal for the liquidation or dissolution of such
Borrower; or
(c) a Person or group of Persons acting in
concert (other than the direct or indirect beneficial owners
of the capital stock of GDC as of the Closing Date) shall, as
a result of a tender or exchange offer, open market purchases,
privately negotiated purchases or otherwise, have become the
direct or indirect beneficial owner (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended from time to time) of securities of GDC representing
more than thirty-five percent (35%) of the combined voting
power of the outstanding voting securities for the election of
directors (after giving effect to the rights of the holders of
GDC's Class B Stock to have ten votes per share under certain
circumstances) or shall have the right to elect a majority of
the Board of Directors of GDC.
"Charge Over Shares" means the Charge Over Shares, substantially in the
form of Exhibit S, made by GDC in favor of
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the Agent, as amended, supplemented or otherwise modified from time to time.
"Closing Date" means the date of execution and delivery of this
Agreement.
"Code" has the meaning specified in Section 1.3.
"Collateral" means the Receivables, Inventory, Equipment and the other
collateral specified in this Agreement and the collateral specified in the
Security Documents.
"Collateral Access Agreements" means any landlord waiver, mortgagee
waiver, bailee letter or similar acknowledgment of any warehouseman or processor
in possession of Inventory, in each case substantially in the form of Exhibit E.
"Collections" means all cash, funds, checks, notes, instruments and any
other form or remittance tendered by account debtors in respect of payment of
Receivables.
"Commitment" as to any Lender means Revolving Credit Commitment of such
Lender and the Term Loan Commitment of such Lender, as applicable.
"Commitment Period" means the period from the Effective Date to but not
including the Expiration Date.
"Compliance Certificate" has the meaning specified in Section 7.1(k)(i).
"Concentration Account" has the meaning specified in Section 2.10.
"Concentration Account Agreement" has the meaning specified in Section
2.10.
"Concentration Bank" has the meaning specified in Section 2.10.
"Consolidated Current Assets" means all assets which would, in
accordance with GAAP, be classified on a balance sheet of GDC and its
Subsidiaries as current assets.
"Consolidated Current Liabilities" means all liabilities which would,
in accordance with GAAP, be classified on a balance sheet of GDC and its
Subsidiaries as current liabilities.
"Contingent Obligation" means any direct, indirect, contingent or
non-contingent guaranty or obligation for the Indebtedness of another Person,
except endorsements in the ordinary course of business.
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"Contribution Agreement" means the Indemnity, Subrogation
and Contribution Agreement, substantially in the form of Exhibit N, made by the
Guarantors and the Borrowers (other than GDC) in favor of the Agent, as amended,
supplemented or otherwise modified from time to time.
"Convertible Senior Subordinated Debentures" means the 7-3/4%
Convertible Senior Subordinated Debentures of GDC due 2002 offered pursuant to
the Offering Memorandum and issued pursuant to the Indenture.
"DataComm Canada" means General DataComm Ltd., a Subsidiary of GDC that
is incorporated under the laws of Canada.
"DataComm England" means General DataComm Limited, a Subsidiary of GDC
that is organized under the laws of England and Wales.
"DataComm Leasing" means DataComm Leasing Corporation, a Delaware
corporation and a Subsidiary of GDC.
"Debenture" means the Debenture, substantially in the form of Exhibit
O, between DataComm England and the Agent, as amended, supplemented or otherwise
modified from time to time.
"Default" means any of the events specified in Section 9.1, whether or
not any of the requirements for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.
"Defaulting Lender" has the meaning given thereto in Section 2.9.
"Dollars" and the sign "$" means freely transferable lawful currency of
the United States.
"Domestic Subsidiary" means any Subsidiary of GDC other than a Foreign
Subsidiary.
"Effective Date" means the date on which all of the conditions
specified in Section 5.1 shall have been satisfied.
"Eligible Assignee" means (i) a Lender or any Affiliate thereof; (ii) a
commercial bank having total assets in excess of $1,000,000,000; (iii) a finance
company, insurance company, other financial institution or fund, reasonably
acceptable to the Agent, which is regularly engaged in making, purchasing or
investing in loans and having total assets in excess of $1,000,000,000; (iv) a
savings and loan association or savings bank organized under the laws of the
United States or any state thereof which has a net worth, determined in
accordance with GAAP, in excess of $500,000,000; or (v) a finance company,
insurance company, bank, other financial institution or fund
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reasonably acceptable to the Agent and the Borrowers; provided, however, that
neither a Borrower nor an Affiliate of a Borrower nor a direct competitor of the
Borrower shall qualify as an Eligible Assignee under this definition.
"Eligible Inventory" means only such Inventory of a Borrower located in
the United States consisting of raw materials, work in process or finished goods
ready for sale which are readily usable and merchantable, undamaged and not
obsolete or obsolescent, which is free from any claim of title or Lien in favor
of any Person (other than the Agent) and except where no event has occurred and
no condition exists which would substantially impair a Borrower's ability to use
or sell such Inventory in the ordinary course of its business and which the
Agent, in its sole discretion, shall deem eligible to serve as collateral for
Advances, based on such considerations as the Agent may deem appropriate from
time to time and less any such reserves as the Agent, in its sole discretion,
may require, including, without limitation, reserves for special order goods. No
Inventory shall be Eligible Inventory unless the Agent has a first priority
perfected Lien thereon. No Inventory shall be Eligible Inventory if it is
located on property not owned by a Borrower unless such property is subject to a
duly executed Collateral Access Agreement and such Inventory is segregated or
otherwise separately identifiable from the assets of other Persons. The value of
Eligible Inventory shall be computed at the lower of cost (computed on a "first
in, first out" basis) or market. Any Inventory of a Borrower that is not in the
control or possession of such Borrower and is covered by a warehouse receipt, a
xxxx of lading or other document of title shall in no event be Eligible
Inventory unless such warehouse receipt, xxxx of lading or document of title is
in the name of or held by the Agent.
"Eligible Receivables" means and includes only those unpaid Receivables
of a Borrowing Base Party, without duplication, which (i) arise out of the
rendition of services ordinarily rendered or a bona fide sale of goods of the
kind ordinarily sold by a Borrowing Base Party in the ordinary course of its
business and are evidenced by an invoice, (ii) are made to a Person competent to
contract therefor who is not an Affiliate of a Borrowing Base Party and is not
controlled by an Affiliate of a Borrowing Base Party, (iii) are not in dispute,
(iv) are not subject to renegotiation or redating, (v) are free and clear of any
Lien in favor of any Person other than the Agent, (vi) mature as stated in the
assignment thereof to the Agent and as set forth in the duplicate invoice or
other supporting data covering such sale, and (vii) are not subject to any
deduction, offset, counterclaim, claim of payment or other condition. No
Receivable shall be an Eligible Receivable unless the Agent has a first priority
perfected Lien thereon. No Receivable of a Borrowing Base Party shall be an
Eligible Receivable if it is more than one hundred twenty days past the date of
the original invoice or it
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is more than sixty days past the due date therefor. The Agent may treat any
Receivable as ineligible if:
(a) any warranty contained in this Agreement or in
any other Loan Document with respect to such Receivable or in
any assignment or statement of warranties or representations
relating to such Receivable delivered by a Borrowing Base
Party to the Agent has been breached or is untrue in any
material respect; or
(b) the account debtor or any Affiliate of the
account debtor has disputed liability, or made any claim with
respect to any other Receivable due from such account debtor
or Affiliate to a Borrowing Base Party; or
(c) the account debtor or any of its assets or any
Affiliate of the account debtor is the subject of an
Insolvency Event or, in the sole discretion of the Agent,
likely to become the subject of an Insolvency Event; or
(d) the account debtor or any Affiliate of the
account debtor has called a meeting of its creditors to obtain
any general financial accommodation; or
(e) the account debtor is also a supplier to or
creditor of a Borrowing Base Party (excluding amounts owed to
Specified Accounts Debtors in the ordinary course of
business), to the extent of the amount owed by such Borrowing
Base Party to the account debtor; or
(f) the sale is to an account debtor outside the
United States, England and Canada (excluding Nova Scotia,
Newfoundland and Xxxxxx Xxxxxx Island) (a "foreign account
debtor"), unless the sale is (i) on letter of credit,
acceptance or other terms acceptable to the Agent, (ii) to a
foreign account debtor approved by the Agent or (iii) to a
foreign account debtor not covered by clause (i) or (ii),
provided that the aggregate Receivables created by all sales
to all foreign account debtors under clauses (ii) and (iii) do
not exceed $10,000,000, provided, further that the aggregate
Receivables created by all sales to all foreign account
debtors under clause (iii) do not exceed $5,000,000; or
(g) fifty percent (50%) or more of the accounts of
the account debtor and its Affiliates to a Borrowing Base
Party are unpaid more than one hundred twenty days past the
date of the applicable invoice or more than sixty days past
the due date; or
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(h) the account debtor is the United States of
America or any department, agency or instrumentality thereof,
unless the relevant Borrowing Base Party assigns its right to
payment under such account to the Agent as collateral
hereunder in full compliance with (including, without
limitation, the filing of a written notice of the assignment
and a copy of the assignment with, and receipt of
acknowledgment thereof by, the appropriate contracting and
disbursing offices pursuant to) the Assignment of Claims Act
of 1940, as amended (31 U.S.C. e 203); provided, that such
Receivables shall be ineligible pursuant to this clause (h)
only to the extent they exceed $1,000,000 in the aggregate; or
(i) it arises out of the rendition of services, to
the extent that such Receivable is not earned within 45 days
of the date it is created; or
(j) the sale is to an account debtor in the provinces
of Nova Scotia, Newfoundland or Xxxxxx Xxxxxx Island; or
(k) the Agent believes, in its sole discretion, that
collection of such Receivable is insecure or that such
Receivable may not be paid by reason of the account debtor's
inability or unwillingness to pay.
"Environmental Guaranty and Indemnity Agreement" means the
Environmental Guaranty and Indemnity Agreement made by GDC and GDC Naugatuck,
Inc. in favor of the Agent for the benefit of the Lenders, substantially in the
form of Exhibit H, as amended, supplemented or otherwise modified from time to
time.
"Environmental Laws" means all federal, state and local statutes, laws
(including common or case law), rulings, regulations or governmental,
administrative or judicial policies, directives, orders or interpretations
applicable to the business or property of a Borrower relating to pollution or
protection of human health or the environment (including, without limitation,
ambient air, surface water, ground water, land surface or subsurface strata)
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of any Hazardous Materials.
"Equipment" means all machinery, equipment, furniture, fixtures,
conveyors, tools, materials, storage and handling equipment, hydraulic presses,
cutting equipment, computer equipment and hardware, including central processing
units,
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terminals, drives, memory units, printers, keyboards, screens, peripherals and
input or output devices, molds, dies, stamps, and other equipment of every kind
and nature and wherever situated now or hereafter owned by a Borrower or in
which a Borrower may have any interest as lessee or otherwise (to the extent of
such interest), together with all additions and accessions thereto, all
replacements and all accessories and parts therefor, all manuals, blueprints,
know-how, warranties and records in connection therewith, all rights against
suppliers, warrantors, manufacturers, sellers or others in connection therewith,
and together with all substitutes for any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C. ee 1000 et seq., amendments thereto, successor statutes, and regulations
or guidelines promulgated thereunder.
"ERISA Affiliate" means any entity required to be aggregated with any
Loan Party under Section 414(b), (c), (m) or (o) of the Internal Revenue Code.
"Event of Default" means the occurrence of any of the events specified
in Section 9.1.
"Excess Availability" means, with respect to the Borrowers, as of the
date of determination thereof, the aggregate amount of Revolving Credit Loans
the Borrowers would be permitted to have outstanding, based on the formulas and
the other provisions set forth in this Agreement, which exceeds the aggregate
amount of Revolving Credit Loans then outstanding.
"Existing Indebtedness" means the Indebtedness of GDC and its
Subsidiaries existing on the date of the initial Loan hereunder as specified in
Schedule 7.2(a).
"Existing Loan Facility" means the Third Amended and Restated Revolving
Credit and Security Agreement, dated as of November 30, 1995, among BNY
Financial Corporation (as successor in interest to The Bank of New York
Commercial Corporation), GDC and certain of its Affiliates, and all other
agreements, documents and instruments executed and delivered by GDC or any of
its Affiliates in connection therewith, each as amended, supplemented or
otherwise modified from time to time.
"Existing Mortgages" means the mortgages in favor of The Chase
Manhattan Bank (National Association), as Agent on the Mortgaged Properties, as
disclosed on Schedule 7.2(i).
"Expiration Date" means the earlier of (a) the date occurring three
years from the Closing Date, as such date may be extended in accordance with
Section 2.7 and (b) the date of termination of the Lenders' obligations to make
Loans pursuant to the terms hereof.
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"Federal Funds Effective Rate" for any day, means the rate equal to the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as such
weighted average is published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for such Business Day, the
average of the quoted rates for such Business Day on such transactions received
by the Agent from three federal funds brokers of recognized standing selected by
the Agent. Each determination by the Agent of the Federal Funds Effective Rate
shall, in the absence of manifest error, be conclusive.
"Fee Letter" means the letter agreement, dated even date herewith,
between GDC and TBCC, as amended, supplemented or otherwise modified from time
to time.
"Financial Covenants" means those covenants set forth in Article VIII.
"Financial Statements" means the balance sheets, statements of
operations, cash flows, profits and losses, shareholder's equity and changes in
intercompany balances of GDC and its Subsidiaries for the period specified,
prepared in accordance with GAAP and consistent with prior practices.
"Foreign Subsidiary" means any Person (i) that is a "controlled foreign
corporation," as defined in Section 957(a) of the Internal Revenue Code and (ii)
of which GDC or any of its Subsidiaries is a "United States shareholder," as
defined in Section 951(b) of the Internal Revenue Code, excluding DataComm
England, DataComm Canada and any other Person that is incorporated, organized or
formed under the laws of Canada or England or any province or territory thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board that are applicable to the
circumstances as of the date of this Agreement. Whenever any accounting term is
used herein which is not otherwise defined, it shall be interpreted in
accordance with GAAP.
"GDC" means General DataComm Industries, Inc., a Delaware corporation.
"Governing Documents" means, with respect to any Person, the
certificate of incorporation and by-laws or other organizational or governing
documents of such Person.
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"Governmental Authority" means any nation or government, any state or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions thereof or
pertaining thereto.
"Guarantor" means DataComm Canada, DataComm England, General DataComm
International Corp., General DataComm China, Ltd., DataComm Rental Corporation,
GDC Realty, Inc. and any other Person that from time to time guaranties any or
all of the Obligations.
"Guarantor Intellectual Property Security Agreement" means the
Intellectual Property Security Agreement, substantially in the form of Exhibit
G-2, made by the Guarantors in favor of the Agent, as amended, supplemented or
otherwise modified from time to time.
"Guarantor Security Agreement" means the Security Agreement,
substantially in the form of Exhibit I, made by the Guarantors in favor of the
Agent, as amended, supplemented or otherwise modified from time to time.
"Guaranty" means the Guaranty, substantially in the form of Exhibit L,
made by the Guarantors in favor of the Agent, as amended supplemented or
otherwise modified from time to time.
"Hazardous Materials" means any and all pollutants and contaminants and
any and all toxic, caustic, radioactive or hazardous materials, substances or
wastes that are regulated under any Environmental Laws.
"Hypothec" means the Movable Hypothec, substantially in the form of
Exhibit P, made by DataComm Canada in favor of the Agent, as amended,
supplemented or otherwise modified from time to time.
"Indebtedness" means, with respect to any Person, as of the date of
determination thereof (without duplication), (i) all obligations of such Person
to borrow money or for borrowed money of any kind or nature, including funded
and unfunded debt, and hedging or swap agreements or arrangements therefor and
regardless of whether the same is evidenced by any note, debenture, bond or
other instrument, (ii) all obligations of such Person to pay the deferred
purchase price of property or services (other than current trade accounts
payable under normal trade terms and which arise in the ordinary course of
business), (iii) all obligations of such Person to acquire or for the
acquisition or use of any fixed asset, including Capitalized Lease Obligations
(but excluding operating leases), or improvements which are payable over a
period longer than one year, regardless of the term thereof or the Person or
Persons to whom the same are payable, (iv) the then outstanding amount of
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withdrawal or termination liability incurred under ERISA, (v) all Indebtedness
of others secured by a Lien on any asset of such Person whether or not the
Indebtedness is assumed by such Person, (vi) all Indebtedness of others to the
extent guaranteed by such Person and (vii) all obligations of such Person in
respect of letters of credit, bankers acceptances or similar instruments issued
or accepted by banks or other financial institutions for the account of such
Person.
"Indenture" means the Indenture dated as of September 26, 1997 between
GDC and Continental Stock Transfer & Trust Company, as Trustee, as amended,
supplemented or otherwise modified from time to time.
"Insolvency Event" means, with respect to any Person, the occurrence of
any of the following: (a) such Person shall be adjudicated insolvent or
bankrupt, or shall generally fail to pay or admit in writing its inability to
pay its debts as they become due, (b) such Person shall seek dissolution or
reorganization or the appointment of a receiver, trustee, custodian or
liquidator for it or a substantial portion of its property, assets or business
or to effect a plan or other arrangement with its creditors, (c) such Person
shall make a general assignment for the benefit of its creditors, or consent to
or acquiesce in the appointment of a receiver, trustee, custodian or liquidator
for a substantial portion of its property, assets or business, (d) such Person
shall file a voluntary petition under any bankruptcy, insolvency or similar law
or take any corporate or similar act in furtherance thereof, or (e) such Person,
or a substantial portion of its property, assets or business shall become the
subject of an involuntary proceeding or petition for its dissolution,
reorganization, or the appointment of a receiver, trustee, custodian or
liquidator or shall become subject to any writ, judgment, warrant of attachment,
execution or similar process.
"Intellectual Property Security Agreement" means the Intellectual
Property Security Agreement made by the Borrowers in favor of the Agent,
substantially in the form of Exhibit G-1, as amended, supplemented or otherwise
modified from time to time.
"Intercompany Note" means a separate note made by DataComm Canada,
DataComm England and each Borrower (other than GDC) in favor of GDC,
substantially in the form of the Annexes to the Pledge Agreement.
"Internal Revenue Code" means the Internal Revenue Code of 1986, any
amendments thereto, any successor statute and any regulations and guidelines
promulgated thereunder.
"Internal Revenue Service" or "IRS" means the United States Internal
Revenue Service and any successor agency.
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"Inventory" means, with respect to a Person, as of the date of
determination thereof, all present and future goods intended for sale, lease or
other disposition by such Person, including, without limitation, all raw
materials, work in process, finished goods, goods in the possession of outside
processors or other third parties, goods consigned to such Person to the extent
of its interest therein as consignee, materials and supplies of any kind, nature
or description which are or might be used in connection with the manufacture,
packing, shipping, advertising, selling or finishing of any such goods, all
documents of title or documents representing the same and all records, files and
writings with respect thereto.
"Investment" in any Person means, as of the date of determination
thereof, any payment or contribution, or commitment to make a payment or
contribution, by any Person including, without limitation, property contributed
or committed to be contributed by any Person, on its account for or in
connection with its acquisition of any stock, bonds, notes, debentures,
partnership or other ownership interest or any other security of the Person in
whom such Investment is made or any evidence of indebtedness by reason of a
loan, advance, extension of credit, guaranty or other similar obligation of any
debt, liability or indebtedness of such Person in whom the Investment is made.
In determining the aggregate amount of Investments outstanding at any particular
time, (i) a guaranty shall be valued at not less than the principal amount
outstanding of the guaranteed obligation; (ii) returns of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution) shall be deducted; (iii) earnings, whether as
dividends, interest or otherwise, shall not be deducted; and (iv) decreases in
the market value shall not be deducted unless such decreases are computed in
accordance with GAAP.
"Letter of Credit Agreement" means the collective reference to any and
all agreements from time to time entered into by the Agent and a bank or
financial institution (each, an "issuing bank") pursuant to which the Agent
causes such issuing bank to issue Letters of Credit for the account or benefit
of GDC in accordance with the terms of this Agreement.
"Letters of Credit" means all letters of credit issued for the account
or benefit of a Borrower pursuant to Article II of this Agreement and all
amendments, renewals, extensions or replacements thereof.
"Liabilities" of a Person as of the date of determination thereof means
the liabilities of such Person on such date as determined in accordance with
GAAP. Liabilities to Affiliates of such Person shall be treated as Liabilities
except where eliminated by consolidation in financial statements prepared in
accordance with GAAP or as otherwise provided herein.
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"Lien" means any lien, claim, charge, pledge, security interest,
assignment, hypothecation, deed of trust, mortgage, lease, conditional sale,
retention of title or other preferential arrangement having substantially the
same economic effect as any of the foregoing, whether voluntary or imposed by
law.
"Loan Account" has the meaning specified in Section 2.6.
"Loan Documents" means this Agreement and all documents and instruments
to be delivered by a Borrower or any of its Affiliates under or in connection
with this Agreement, as each of the same may be amended, supplemented or
otherwise modified from time to time, including, without limitation, the Notes,
the Mortgages, the Intellectual Property Security Agreement, the Guaranty, the
Guarantor Security Agreement, the Guarantor Intellectual Property Security
Agreement, the Contribution Agreement, the Pledge Agreement, the Environmental
Guaranty and Indemnity Agreement, the Fee Letter, the Debenture, the
Subordination Agreement, the Lockbox Agreements, the Concentration Account
Agreement, the Letter of Credit Agreement, the Charge Over Shares and the
Hypothec.
"Loan Parties" means the Borrowers and the Guarantors.
"Loans" means the loans and financial accommodations made by the
Lenders hereunder or under any Letter of Credit or Letter of Credit Agreement
including, without limitation, the Term Loan and the Revolving Credit Loans.
"Lockbox Agreement" has the meaning specified in Section 2.10.
"Lockbox Account" has the meaning specified in Section 2.10.
"Lockbox Bank" means any of NationsBank, N.A., Bank of Boston
Connecticut, Bank of America, Bank of New York, American National Bank and Trust
Company, any of their respective successors or any other banks acceptable to the
Agent to act as such.
"Material Adverse Effect" means (i) a material adverse effect on the
business, prospects, operations, results of operations, assets, liabilities or
condition (financial or otherwise) of any Loan Party, (ii) the impairment in any
material respect of any Loan Party's ability to perform its obligations under
the Loan Documents to which it is a party or of the Agent or the Lenders to
enforce the Obligations or realize upon the Collateral or (iii) a material
adverse effect on the value of the Collateral or the amount which the Agent or
the Lenders would be likely to receive (after giving consideration to delays in
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payment and costs of enforcement) in the liquidation of the Collateral.
"Material Contract" means any contract or other arrangement to which
any Loan Party is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could have a Material Adverse
Effect.
"Maximum Amount of the Facility" means Forty Million Dollars
($40,000,000).
"Mortgage" means each of the two separate mortgages or deeds of trust
made by GDC and GDC Naugatuck, Inc., respectively, in favor of the Agent,
substantially in the form of Exhibit J, relating to the Mortgaged Properties, as
amended, supplemented or otherwise modified from time to time.
"Mortgaged Properties" means (i) the real property and improvements
thereon located at 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx and (ii) the
real property and improvements thereon located at 0 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxx.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
4001(a)(3) of ERISA, to which a Borrower or any ERISA Affiliate has contributed
within the past six years or with respect to which a Borrower may incur any
liability.
"Net Cash Proceeds" means the aggregate cash proceeds (including
payments from time to time in respect of installment obligations, as and when
received) received by any Loan Party in respect of any sale or other disposition
of assets of any Loan Party (other than sales of inventory in the ordinary
course of business and the sale permitted under Section 7.2(e)(iii)), in each
case net of (without duplication) (i) the amount required to repay any
Indebtedness (other than the Loans) under Capitalized Lease Obligations incurred
with respect to, or secured by a Purchase Money Lien on, any assets of a Loan
Party that are sold or otherwise disposed of in connection with such asset sale,
(ii) the reasonable out-of-pocket expenses incurred by such Loan Party in
effecting such sale or other disposition and (iii) any taxes reasonably
attributable to such asset sale and reasonably estimated by such Loan Party to
be actually payable.
"9% Convertible Subordinated Debentures" means the 9% Convertible
Subordinated Debentures of GDC due 2006 issuable pursuant to the 9% Indenture.
"9% Indenture" means the Indenture dated as of May 1, 1997 GDC and
Continental Stock Transfer & Trust Company as Trustee, as supplemented by the
Supplemental Indenture dated as of September 26, 1997 and as further amended,
supplemented or otherwise modified from time to time.
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"Notes" means the Term Notes and the Revolving Credit Notes.
"Notice of Borrowing" has the meaning specified in Section 2.3(a).
"Obligations" means and includes all loans (including the Loans),
advances (including the Advances), debts, liabilities, obligations, covenants
and duties owing by any Borrower to the Agent or to the Lenders of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, which may arise under, out of, or in connection with, this
Agreement, the Notes, the other Loan Documents or any other agreement executed
in connection herewith or therewith, whether or not for the payment of money,
whether arising by reason of an extension of credit, opening, guaranteeing or
confirming of a letter of credit (including, without limitation, the Letters of
Credit), loan, guaranty, indemnification or in any other manner, whether direct
or indirect (including those acquired by assignment, purchase, discount or
otherwise), whether absolute or contingent, due or to become due, now due or
hereafter arising and however acquired. The term includes, without limitation,
all interest (including interest accruing on or after an Insolvency Event,
whether or not an allowed claim), charges, expenses, commitment, facility,
closing and collateral management fees, letter of credit fees, attorneys' fees,
and any other sum properly chargeable to any Borrower under this Agreement, the
Notes, the other Loan Documents or any other agreement executed in connection
herewith or therewith.
"Offering Memorandum" means the Offering Memorandum dated September 23,
1997 relating to the Convertible Senior Subordinated Debentures.
"Other Taxes" has the meaning specified in Section 4.9(b).
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permitted Discretion" means the Agent's good faith judgment based upon
any factor which the Agent reasonably believes (i) is likely to adversely affect
the value of any Eligible Receivable or Eligible Inventory, the enforceability
or priority of the Agent's Liens thereon or the amount which the Agent and the
Lenders would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of such Collateral; (ii)
indicates that any collateral report or financial information delivered to the
Agent by any Person on behalf of a Loan Party is incomplete, inaccurate or
misleading in any material respect; (iii) increases the likelihood of a
bankruptcy, reorganization or other insolvency
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proceeding involving any Loan Party or any of the Eligible Receivables; or (iv)
creates or reasonably could be expected to create an Event of Default. In
exercising such judgment, the Agent may consider such factors already included
in or tested by the definition of Eligible Receivables or Eligible Inventory as
well as any of the following factors: (x) the financial and business climate of
a Loan Party's industry, (y) changes in collection history and dilution with
respect to the Receivables and (z) any other factors that materially adversely
change the credit risk of lending to the Borrowers on the security of the
Receivables or the Inventory. The burden of establishing lack of good faith
shall be on the Borrowers.
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding shall have
been commenced and be continuing: (i) Liens for taxes, assessments and other
governmental charges or levies or the claims or demands of landlords, carriers,
warehousemen, mechanics, laborers, materialmen and other like Persons arising by
operation of law in the ordinary course of business for sums which are not yet
due and payable, or Liens the enforcement of which are, at all times effectively
and fully stayed and are being contested in good faith by appropriate
proceedings diligently conducted, (ii) deposits or pledges (but nothing in this
clause (ii) shall permit the creation of Liens on Receivables or Inventory) to
secure the payment of workmen's compensation, unemployment insurance or other
social security benefits or obligations, public or statutory obligations, surety
or appeal bonds, bid or performance bonds, or other obligations of a like nature
incurred in the ordinary course of business, (iii) zoning restrictions,
easements, encroachments, licenses, restrictions or covenants on the use of the
Property which do not materially impair either the use of the Property in the
operation of the business of a Borrower or the value of the Property, (iv)
inchoate Liens arising under ERISA to secure current service pension liabilities
as they are incurred under the provisions of employee benefit plans from time to
time in effect, (v) rights of general application reserved to or vested in any
municipality or other governmental, statutory or public authority to control or
regulate the Property, or to use the Property in a manner which does not
materially impair the use of the Property for the purposes for which it is held
by a Borrower, (vi) state and municipal Liens for personal property taxes where
no enforcement or execution proceedings have been taken in respect thereof,
provided that the same do not exceed $100,000 in the aggregate at any time and
(vii) Purchase Money Liens.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, joint stock company, association,
corporation, institution, entity, party or government (including any division,
agency or department thereof) a court or any other legal entity, whether
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acting in an individual, fiduciary or other capacity, and, as applicable, the
successors, heirs and assigns of each.
"Plan" means any employee benefit plan, program or arrangement
maintained or contributed to by any Loan Party or with respect to which it may
incur liability.
"Pledge Agreement" means the Pledge Agreement, substantially in the
form of Exhibit F, made by GDC and certain of its affiliates in favor of the
Agent, as amended, supplemented or otherwise modified from time to time.
"Prohibited Transaction" has the meaning specified in Section 6.1(y)(v).
"Property" or "the Property" means and includes the real property
owned, leased or controlled by a Borrower.
"Purchase Money Liens" has the meaning specified in Section 7.2(a)(v).
"Qualification" or "Qualified" means, with respect to any report of
independent public accountants covering Financial Statements, a material
qualification to such report (i) resulting from a limitation on the scope of
examination of such Financial Statements or the underlying data, (ii) as to the
capability of GDC and its Subsidiaries to continue operations as a going concern
or (iii) which could be eliminated by changes in Financial Statements or notes
thereto covered by such report (such as by the creation of or increase in a
reserve or a decrease in the carrying value of assets) and which if so
eliminated by the making of any such change and after giving effect thereto
would result in a Default or an Event of Default.
"Receivables" means all present and future accounts, contract rights,
promissory notes, chattel paper, documents, tax refunds, rights to receive tax
refunds, bonds, certificates, insurance policies, insurance proceeds, patents,
patent applications, copyrights (registered and unregistered), royalties,
licenses, permits, franchise rights, authorizations, customer lists, rights of
indemnification, contribution and subrogation, leases, drafts, computer tapes,
programs, discs and software, trade secrets, computer service contracts,
trademarks, trade names, service marks and names, logos, goodwill, deposits,
causes of action, choses in action, judgments, designs, blueprints, plans,
know-how, all other general intangibles, claims against third parties of every
kind or nature, investment securities, notes, drafts, acceptances, letters of
credit and rights to receive proceeds of letters of credit, instruments and
deposit accounts, book accounts, credits and reserves and all forms of
obligations whatsoever owing, together with all instruments, all documents of
title representing any of the foregoing, and all leasehold rights in any
merchandise or goods
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which any of the same may represent, all books, ledgers, files and records with
respect to any Collateral or security given by a Borrower to the Agent, for the
ratable benefit of the Lenders, together with all right, title, security and
guaranties with respect to each Receivable, including any right of stoppage in
transit.
"Register" has the meaning specified in Section 11.3.
"Replacement Lender" means an Eligible Assignee that has agreed to
acquire and assume all or part of a Lender's Loans and Commitment pursuant to
Section 2.9.
"Replacement Notice" has the meaning specified in Section 2.9.
"Reportable Event" means any of the events described in Section 4043 of
ERISA and the regulations thereunder, other than a reportable event for which
the 30-day notice requirement to the PBGC has been waived.
"Required Lenders" means, at any date, Lenders having or holding a
majority of the sum of (i) the aggregate Revolving Credit Commitments at such
date, (ii) the aggregate Term Loan Commitments at such date and (iii) the
outstanding principal amount of the Term Loan at such date or (b) if the
Commitments have been terminated, the holders of a majority of the outstanding
principal amount of the Loans in the aggregate at such date.
"Requirement of Law" means (a) the Governing Documents, (b) any
applicable law, treaty, rule, regulation, order or determination of an
arbitrator, court or other Governmental Authority or (c) any franchise, license,
lease, permit, certificate, authorization, qualification, easement, right of
way, right or approval binding on a Borrower or any of its property.
"Responsible Officer" means the Chief Executive Officer, the Chief
Financial Officer, the Chief Operating Officer, the Senior Vice
President-Finance, the Treasurer or the Controller of GDC.
"Retiree Health Plan" means an "employee welfare benefit plan" within
the meaning of Section 3(1) of ERISA that provides benefits to persons after
termination of employment, other than as required by Section 601 of ERISA.
"Revolving Credit Commitment" means (a) with respect to each Lender
that is a Lender on the date hereof, the amount set forth opposite such Lender's
name on Schedule 1 as such Lender's "Revolving Credit Commitment" and (b) in the
case of any Lender that becomes a Lender after the date hereof, the amount
specified
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as such Lender's "Revolving Credit Commitment" in the Assignment and Acceptance
pursuant to which such Lender assumed a portion of the aggregate Revolving
Credit Commitment, in each case as the same may be changed from time to time
pursuant to the terms hereof.
"Revolving Credit Commitment Percentage" means at any time, for each
Lender, the percentage obtained by dividing such Lender's Revolving Credit
Commitment by the Revolving Credit Commitments of all Lenders, provided that at
any time when the Revolving Credit Commitments shall have been terminated, each
Lender's Revolving Credit Commitment Percentage shall be its Revolving Credit
Commitment Percentage as in effect immediately prior to such termination.
"Revolving Credit Loans" has the meaning specified in Section 2.1(a).
"Revolving Credit Note" has the meaning specified in Section 2.1(c).
"Security Documents" means Article III of this Agreement, the
Intellectual Property Security Agreement, the Mortgages, the Guarantor Security
Agreement, the Guarantor Intellectual Property Security Agreement, the Pledge
Agreement, the Debenture, the Lockbox Agreements, the Concentration Account
Agreement, the Hypothec, the Charge Over Shares and any other agreement
delivered in connection herewith which purports to xxxxx x Xxxx in favor of the
Agent to secure any or all of the Obligations.
"Solvent" means when used with respect to any Person that as of the
date as to which such Person's solvency is to be measured:
(a) the fair saleable value of its assets is in excess of the
total amount of its liabilities (including contingent liabilities
as valued in accordance with applicable law) as they become absolute
and matured;
(b) it has sufficient capital to conduct its business; and
(c) it is able to meet its debts as they mature.
"Specified Account Debtor" means MCI and any other account debtor
approved in writing by the Agent from time to time.
"Stockholders Equity" means, with respect to any Person, as of the date
of determination thereof, (i) total assets determined in accordance with GAAP
(excluding therefrom net
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software development costs that are capitalized, to the extent they exceed
$26,000,000, and amounts due from Affiliates), less (ii) total Liabilities, plus
(iii) the Convertible Senior Subordinated Debentures, plus (iv) 60% of capital
stock and subordinated Indebtedness issued after the date hereof with the prior
written consent of the Required Lenders (it being understood that the
subordinated Indebtedness permitted under Sections 7.2(a)(viii) and (ix) shall
be excluded from this clause (iv)).
"Subordination Agreement" means the Subordination Agreement,
substantially in the form of Exhibit Q, among GDC, the Agent and DataComm
Leasing, as amended, supplemented or otherwise modified from time to time.
"Subsidiary" means, as to any Person, a corporation 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 managers of such corporation or other
entity. DataComm Leasing shall not be deemed to be a Subsidiary of GDC for
purposes of this Agreement other than consolidated financial reporting.
"Taxes" has the meaning specified in Section 4.9(a).
"Term Loan" has the meaning specified in Section 2.2(a).
"Term Loan Commitment" means the amount set forth opposite such
Lender's name on Schedule 1 as such Lender's "Term Loan Commitment".
"Term Loan Expiration Date" means the earlier of (a) September 15,
2002 and (b) the date on which the Term Loan becomes due and payable pursuant
to Section 9.2(a).
"Term Note" has the meaning specified in Section 2.2(b).
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan or Multiemployer Plan; (ii) the withdrawal of any Loan Party or any
ERISA Affiliate from a Benefit Plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA); (iii) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA); (iv) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan; (v)
any event or condition (a) which is reasonably likely to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Benefit Plan or Multiemployer Plan, or (b) that is
reasonably likely to result in termination
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of a Multiemployer Plan pursuant to Section 4041A of ERISA; or (vi) the partial
or complete withdrawal, within the meaning of Sections 4203 and 4205 of ERISA,
of a Borrower or any ERISA Affiliate from a Multiemployer Plan.
SECTION 1.2. Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms used in this Agreement shall
be construed in accordance with GAAP, applied on a basis consistent in all
material respects with the Financial Statements delivered to the Agent on or
before the Closing Date. All accounting determinations for purposes of
determining compliance with Article VIII shall be made in accordance with GAAP
as in effect on the Closing Date and applied on a basis consistent in all
material respects with the audited Financial Statements delivered to the Agent
on or before the Closing Date. The Financial Statements required to be delivered
hereunder from and after the Closing Date, and all financial records, shall be
maintained in accordance with GAAP. If GAAP shall change from the basis used in
preparing the audited Financial Statements delivered to the Agent on or before
the Closing Date, the Compliance Certificates required to be delivered pursuant
to Section 7.1 shall include calculations setting forth the adjustments
necessary to demonstrate how GDC and its Subsidiaries are in compliance with the
Financial Covenants based upon GAAP as in effect on the Closing Date.
SECTION 1.3. Other Terms; Headings. Unless otherwise defined herein,
terms used herein that are defined in the Uniform Commercial Code, from time to
time, in effect in the State of Illinois (the "Code") shall have the meanings
given in the Code. Each of the words "hereof," "herein," and "hereunder" refer
to this Agreement as a whole. An Event of Default shall "continue" or be
"continuing" unless and until such Event of Default has been cured or has been
waived in accordance with Section 12.9 hereof. References to Articles, Sections,
Annexes, Schedules, and Exhibits are internal references to this Agreement, and
to its attachments, unless otherwise specified. The headings and the Table of
Contents are for convenience only and shall not affect the meaning or
construction of any provision of this Agreement.
ARTICLE II.
THE CREDIT FACILITIES
SECTION 2.1. The Revolving Credit Loans.
(a) Each Lender, subject to Section 2.5 and the other terms and
conditions of this Agreement, severally agrees to make loans (the "Revolving
Credit Loans") to GDC, from time to time during the Commitment Period at GDC's
request to the Agent, in an
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aggregate principal amount at any one time outstanding not to exceed such
Lender's Revolving Credit Commitment Percentage of an aggregate amount equal to
(i) up to 80% of the Eligible Receivables, plus (ii) up to 50% of the Eligible
Inventory, all of the foregoing less such reserves as the Agent, in its sole and
absolute discretion, shall deem proper; provided, however, that in no event
shall the aggregate amount of Revolving Credit Loans outstanding at any time in
respect of Eligible Inventory exceed the lesser of (x) $7,500,000 and (y) 50% of
the aggregate outstanding principal balance of all Revolving Credit Loans; and
provided, further, that in no event shall the aggregate amount of Revolving
Credit Loans outstanding at any time exceed $25,000,000.
(b) The Agent, at any time in the exercise of its Permitted Discretion,
on prior written notice to the Borrowers, may (i) establish and increase or
decrease reserves against Eligible Receivables and Eligible Inventory, (ii)
reduce the advance rates against Eligible Receivables and Eligible Inventory, or
restore such advance rates to any level equal to or below the advance rates in
effect as of the date of this Agreement, and (iii) impose additional
restrictions (or eliminate the same) to the standards of eligibility set forth
in the definitions of Eligible Receivables and Eligible Inventory. Without
limiting the generality of the foregoing, the Agent shall establish a standing
reserve against Eligible Receivables, in an amount from time to time determined
by it in good faith, with respect to the liabilities owing by the Borrowing Base
Parties to any Specified Account Debtor.
(c) The Revolving Credit Loans made by each Lender shall be evidenced
by a promissory note payable to the order of such Lender, substantially in the
form of Exhibit A (each, as amended, supplemented or otherwise modified from
time to time, a "Revolving Credit Note"), executed by the Borrowers, in each
case delivered to the Agent on the Effective Date. The Revolving Credit Note of
each Lender shall be in a stated maximum principal amount equal to such Lender's
Revolving Credit Commitment Percentage of $25,000,000.
(d) Each Revolving Credit Loan shall, subject to Section 2.7, be
payable by the Borrowers in full, with all interest accrued thereon, on the
Expiration Date. The Borrowers may borrow, repay and reborrow Revolving Credit
Loans, in whole or in part, in accordance with the terms hereof.
SECTION 2.2. The Term Loan.
(a) Subject to the terms and conditions set forth in this
Agreement, each Lender severally agrees to make a term loan (the "Term Loan") to
the Borrowers on the Effective Date in the principal amount equal to such
Lender's Term Loan Commitment.
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The Term Loan Commitment shall terminate at the close of business on the
Effective Date.
(b) The Term Loan made by each Lender shall be evidenced by a
promissory note payable to the order of such Lender, substantially in the form
of Exhibit B (each, as amended, supplemented or otherwise modified from time to
time, a "Term Note"), executed by the Borrowers, in each case delivered to Agent
on the Effective Date. The Term Note of each Lender shall be in a stated
principal amount equal to such Lender's Term Loan Commitment.
(c) The principal and interest owing under each Term Note
shall be payable by the Borrowers in arrears in twenty consecutive quarterly
installments in arrears, payable on the first day of each calendar quarter,
commencing January 1, 1998, in an amount for each installment equal to the
product of (a) the original principal amount of such Term Note and (b) the
percentage set forth below opposite the applicable installment number below:
Installment Percentage
1 - 4 4.50%
5 - 8 5.7533%
9 - 19 6.2933%
20 29.3716%
provided, that the entire outstanding balance of this Note shall be payable in
full on the Term Loan Expiration Date. The parties agree that the imputed
interest rate on the Term Loans is 11.51% per annum.
SECTION 2.3. Procedure for Borrowing.
(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. Upon receipt of any Notice of Borrowing from
GDC, the Agent shall promptly notify each Lender thereof. On each date on which
a Loan is made, each Lender will make the amount of its pro rata share of each
borrowing available to the Agent for the account of the Borrowers at the Agent's
account specified in Section 2.8(a) prior to 2:00 P.M., Chicago time, on the
borrowing date requested by the GDC, in funds immediately available to the
Agent. Such borrowing will then be made available to the Borrowers by the
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Agent wire transferring to an account of the Borrowers' choosing as specified in
writing from time to time the aggregate of the amounts made available to the
Agent by the Lenders and in like funds as received by the Agent.
(b) 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 such borrowing date, and the Agent may, in
reliance upon such assumption, make available to the Borrowers a corresponding
amount. If such amount is made available to the Agent on a date after such
borrowing date, such Lender shall pay to the Agent, on demand, 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 borrowing 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(b) shall be conclusive
in the absence of manifest error. If such Lender's Revolving Credit Commitment
Percentage of such borrowing is not in fact made available to the Agent by such
Lender within three Business Days of such borrowing 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.
SECTION 2.4. Application of Proceeds. The proceeds of all Loans shall
be used by the Borrowers to repay the Existing Loan Facility and for its general
working capital purposes.
SECTION 2.5. Maximum Amount of the Facility; Mandatory
Prepayments; Optional Prepayments.
(a) In no event shall the sum of the aggregate outstanding principal
balances of the Revolving Credit Loans and the Term Loan and the aggregate
undrawn amount of all outstanding Letters of Credit exceed the Maximum Amount of
the Facility. In no event shall the sum of the outstanding principal balances of
the Revolving Credit Loans and the aggregate undrawn amount of all outstanding
Letters of Credit exceed the Revolving Credit Commitments of all of the Lenders.
(b) In addition to any prepayment required as a result of an Event of
Default hereunder, the Loans shall be subject to mandatory prepayment as
follows:
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(i) immediately upon discovery by or notice
to a Borrower that any of the lending limits set forth in
Section 2.1(a) or 2.5(a) has been exceeded, an amount
sufficient to reduce the outstanding balances (and to cash
collateralize outstanding Letters of Credit) to the applicable
maximum allowed amount shall become due and payable by the
Borrowers without the necessity of a demand by the Agent or
any Lender;
(ii) subject to Section 2.7, the entire
principal amount of the Revolving Credit Loans, together with
all accrued and unpaid interest thereon, shall become due and
payable on the Expiration Date;
(iii) the entire outstanding amount of the
Term Loan shall become due and payable on the Term Loan
Expiration Date; and
(iv) the outstanding principal amount of the
Loans shall be immediately prepaid by an amount equal to 100%
of all Net Cash Proceeds. Prepayments of the Loans pursuant to
this Section 2.5(b)(iv) shall be applied, first, to the
installments under the Term Loan pro rata in the inverse order
of maturity, and second, to the outstanding principal amount
of the Revolving Credit Loans.
(c) The Borrowers may, at any time and from time to time, prepay the
Term Loan, in whole but not in part, subject to Section 4.6 hereof, upon
irrevocable notice given to the Agent prior to 11:00 A.M. (Chicago time) on the
date of such prepayment, specifying the date of prepayment. Upon receipt of such
notice, the Agent shall promptly notify each Lender thereof. If such notice is
given, the entire outstanding amount of the Term Loan (including accrued and
unpaid interest thereon to the date of such payment) shall be due and payable on
the date specified therein. Amounts prepaid on account of the Term Loan may not
be reborrowed. If the Borrowers prepay the Term Loan, the amount of accrued and
unpaid interest owing thereon shall be determined by the Agent in good faith
using an imputed interest rate of 11.51% per annum.
SECTION 2.6. Maintenance of Loan Account; Statements of Account. The
Agent shall maintain an account on its books in the name of the Borrowers (the
"Loan Account") in which the Borrowers will be charged with all loans and
advances made by the Lenders to the Borrowers or for a Borrower's account,
including the Term Loan, the Revolving Credit Loans, fees, expenses and any
other Obligations. The Loan Account will be credited with all amounts received
by the Agent from the Borrowers or for a Borrower's account, including as set
forth in Section 2.10. The Agent shall send the Borrowers a monthly statement
reflecting the activity in the Loan Account. The monthly statement shall be an
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account stated and shall be final, conclusive and binding on the Borrowers in
the absence of manifest error.
SECTION 2.7. Expiration Date. The Expiration Date may be extended for
up to two successive one-year periods beyond the then effective expiration date
if, not less than 180 days prior to such time, the parties hereto agree to such
extension in writing. In no event may the Expiration Date be later than the date
occurring five years from the Closing Date. If (a) the Borrowers give the
Lenders notice of their desire to extend the Expiration Date in accordance with
the immediately preceding sentence but the Lenders are unwilling to agree to
such extension and (b) no Event of Default has occurred and is continuing, then
notwithstanding anything to the contrary contained in Sections 2.1(d) and
2.5(b)(ii), the aggregate principal balance of the Revolving Credit Loans
outstanding on the then effective Expiration Date shall be payable in twelve
equal consecutive monthly installments, together with accrued and unpaid
interest thereon, payable on the first Business Day of each month, commencing
with the month immediately following the then effective Expiration Date.
SECTION 2.8. Pro Rata Treatment and Payments; Collection.
(a) Each borrowing from the Lenders hereunder, each payment by a
Borrower on account of any fee payable under Section 4.5 and any reduction of
the Revolving Credit Commitments shall be made pro rata according to the
respective Revolving Credit Commitment Percentages of the Lenders. Each payment
by a Borrower on account of principal of and interest on the Loans shall be made
pro rata according to the respective outstanding principal amounts of the Loans
then held by the Lenders. Any payment (including prepayments under Section 2.5)
by a Borrower during the continuance of an Event of Default shall be applied as
determined by the Agent in its sole discretion. All payments (including
prepayments) to be made by a Borrower hereunder and under the Notes, whether on
account of principal, interest, fees or otherwise, shall be made without setoff,
deduction or counterclaim and shall be made prior to 4:00 P.M., Chicago time, on
the due date thereof to the Agent, for the account of the Lenders (except as
expressly otherwise provided), at the Agent's account at The First National Bank
of Chicago (Account #55-75427) in Dollars and in immediately available funds.
The Agent may, but shall not be obligated to, charge any such payment due to the
Loan Account. Except for payments which are expressly provided to be made to the
account of the Agent only, the Agent shall distribute all payments to the
Lenders on the Business Day following receipt in like funds as received. The
Agent shall credit all such payments to the Loan Account, conditional upon final
collection; credit will be given for cleared funds received during business
hours one Business Day after receipt thereof by the Agent at its account at The
First National Bank of Chicago
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(Account #55-75427). Notwithstanding anything to the contrary contained in this
Agreement, if a Lender exercises its right of setoff under Section 9.4 or
otherwise, any amounts so recovered shall promptly be shared by such Lender with
the other Lenders pro rata according to the respective outstanding principal
amounts of the Loans then held by the Lenders.
(b) If (i) the Lenders' commitment to make Loans has been terminated in
accordance with Section 9.2(b), (ii) the Agent reasonably believes that fraud
has occurred by a Loan Party against a Lender or the Agent and the Agent has
given the Borrowers written notice of the basis of such belief or (iii) the
Obligations shall have become due and payable (whether by declaration or
automatically) pursuant to Section 9.2(a), the Agent or its designee may notify
customers or account debtors of the Borrowers that Receivables have been
assigned to the Agent, for the benefit of the Lenders, or of the Agent's
security interest therein, collect the same directly and charge all collection
costs and expenses to the Loan Account, but unless and until it does so or gives
the Borrowers other instructions, the Borrowers shall make collection of all
Receivables for the Lender in a prudent and businesslike manner.
(c) Whenever any payment to be made hereunder shall be stated to be due
on a day that is not a Business Day, the payment may be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the amount of interest due hereunder.
SECTION 2.9. Replacement of Lenders. If any Lender defaults in its
obligation to make Loans in accordance with the terms of this Agreement (such
Lender being referred to as a "Defaulting Lender") and such default shall
continue unremedied for three Business Days, the Borrowers may, within sixty
days after such default, by notice (a "Replacement Notice") in writing to the
Agent and such Defaulting Lender, (A) request the Defaulting Lender to cooperate
with the Borrowers in obtaining a Replacement Lender satisfactory to the Agent
and the Borrowers; (B) request the non-Defaulting Lenders to acquire and assume
all or a portion of the Defaulting Lender's Loans and Revolving Credit
Commitments, but none of such Lenders shall be obligated to do so; or (C)
designate a Replacement Lender satisfactory to the Agent. If a satisfactory
Replacement Lender shall be obtained or one or more of the non-Defaulting
Lenders shall agree to acquire and assume all or part of the Defaulting Lender's
Loans and Commitment, then such Defaulting Lender shall assign, in accordance
with Article XI, all or part, as the case may be, of its Revolving Credit
Commitment, Loans, Notes and other rights and obligations under this Agreement
and all other Loan Documents to such Replacement Lender or non-Defaulting
Lenders, as the case may be, in exchange for payment of the principal amount or
the portion thereof so assigned and all interest and fees accrued on the portion
thereof so assigned, plus all or part, as the case
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may be, of the other Obligations then due and payable to the Defaulting Lender;
provided, however, that (i) such assignment shall be on the terms and conditions
set forth in Article XI, and (ii) prior to any such assignment, the Borrowers
shall have paid to such Defaulting Lender (x) all amounts properly demanded and
unreimbursed under Sections 4.8 and 4.9 and (y) paid to the Agent all amounts
properly demanded and unreimbursed under Sections, 4.4, 4.5 and 4.6. If the
Replacement Lender and non-Defaulting Lenders shall only be willing to acquire
less than all of the Defaulting Lender's outstanding Loans and Revolving Credit
Commitment, the Loans and Revolving Credit Commitment of the Defaulting Lender
shall not terminate as provided herein, but shall be reduced proportionately,
and the Defaulting Lender shall continue to be a "Lender" hereunder with a
reduced Revolving Credit Commitment and Revolving Credit Commitment Percentage.
Upon the effective date of such assignment, the Borrowers shall issue
replacement Notes to such Replacement Lender, non-Defaulting Lenders and the
Defaulting Lender, as the case may be, in exchange for the Notes of the
Defaulting Lender theretofore outstanding, and such Replacement Lender shall, if
not already a Lender, become a "Lender" for all purposes under this Agreement
and the other Loan Documents.
SECTION 2.10. Collection of Receivables. Subject to Section 7.1(s)(iv),
GDC, the Agent and a Lockbox Bank shall enter into five 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"),
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 (a "Concentration Account") maintained by the Agent at a financial
institution acceptable to GDC and the Agent (a "Concentration Bank"). GDC shall
enter into two separate agreements with the Agent and the Concentration Bank, in
substantially the form of Exhibit R (each, as amended, supplemented or otherwise
modified from time to time, a "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 a separate 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
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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 4:00 P.M., Chicago time, by the Agent at its
account at First National Bank of Chicago (Account #55-75427), 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 be credited only with the net amounts actually
received in payment of Receivables.
SECTION 2.11. Letters of Credit. Upon the request of GDC, the Agent
shall, subject to Sections 2.1, 2.5 and the other provisions of this Agreement,
cause a bank or financial institution acceptable to the Agent to issue for the
account or benefit of a Borrower, Letters of Credit of a tenor and containing
terms acceptable to the Agent and the issuer of such Letter of Credit, in a
maximum aggregate face amount outstanding at any time not to exceed Five Million
Dollars ($5,000,000); provided, that no Letter of Credit shall have an
expiration date after the Expiration Date. The term of any standby Letter of
Credit shall not exceed three hundred sixty (360) days from the date of
issuance. The term of any documentary Letter of Credit shall not exceed one
hundred twenty (120) days from the date of issuance. It is further agreed that
(a) an amount equal to 105% of the aggregate unpaid face amount of Letters of
Credit covering goods imported to the United States shall be reserved out of
amounts available for borrowing under the Revolving Credit Loans, (b) an amount
equal to 100% of the aggregate unpaid face amount of all other Letters of Credit
shall be reserved out of amounts available for borrowing under Revolving Credit
Loans and (c) a sum equal to the aggregate face amount of all outstanding
Letters of Credit shall be included in calculating outstanding amounts for
purposes of calculating the Maximum Amount of the Facility. Upon each drawing or
payment under a Letter of Credit, the amount of such drawing or payment for all
purposes under this Agreement shall become and be deemed to be, without any
further action on the part of any Person, a Revolving Credit Loan made by the
Lenders on the date of such drawing or payment (but without any requirement for
compliance with the conditions precedent to the making of Loans contained in
this Agreement).
SECTION 2.12. Letter of Credit Participations.
(a) The Agent irrevocably agrees to grant and hereby grants to each
Lender, and, to induce the Agent to join in the application to issue Letters of
Credit in accordance with the terms hereof, each Lender irrevocably agrees to
accept and purchase from the Agent, on the terms and conditions hereinafter
stated, for such Lender's own account and risk, an undivided interest equal to
such Lender's Revolving Credit Commitment Percentage in the Agent's obligations
and rights under each
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Letters of Credit Agreement and in the amount of each draft reimbursed by the
Agent thereunder. Each Lender unconditionally and irrevocably agrees with the
Agent that, if a draft is paid under any Letter of Credit for which the issuing
bank is not reimbursed in full by a Borrower in accordance with the terms of the
Letter of Credit Agreement, such Lender shall pay to the Agent (for the sole
account of the Agent), upon the Agent's demand, an amount equal to such Lender's
Revolving Credit Commitment Percentage of the amount of such draft, or any part
thereof, which is not so reimbursed by a Borrower.
(b) If any amount required to be paid by any Lender to the Agent
pursuant to Section 2.12(a) in respect of any unreimbursed portion of any
payment made by the issuing bank under any Letter of Credit is paid to the Agent
within three Business Days after the date such payment is due, such Lender shall
pay to the Agent on demand an amount equal to the product of (i) such amount and
(ii) the daily average Federal Funds Effective Rate during the period from and
including the date such payment is required to be made to the date on which such
payment has been made to the Agent and (iii) a fraction, the numerator of which
is the number of days that elapse during such period and the denominator of
which is 360. If any such amount required to be paid by any Lender pursuant to
Section 2.12(a) is not paid to the Agent by such Lender within three Business
Days after the date such payment is due, the Agent shall be entitled to recover
from such Lender, on the Agent's demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Revolving
Credit Loans hereunder. A certificate of the Agent submitted to any Lender with
respect to any amount owing under this subsection shall be conclusive in the
absence of manifest error.
(c) Whenever, at any time after the Agent has made any reimbursement in
respect of any Letter of Credit and has received from any Lender its pro rata
share of such reimbursement in accordance with Section 2.12(a), the Agent
receives any payment related to such Letters of Credit (whether directly from a
Borrower or otherwise, including proceeds of collateral applied thereto by the
Agent), or any payment of interest on account thereof, the Agent will distribute
to such Lender its pro rata share thereof; provided, however, that in the event
that any such payment received by the Agent shall be required to be returned by
the Agent, such Lender shall return to the Agent the portion thereof previously
distributed by the Agent to it.
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ARTICLE III.
SECURITY
SECTION 3.1. General. To secure the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or otherwise)
of all of the Obligations, each Borrower hereby grants to the Agent, for the
ratable benefit of the Lenders, a Lien on and security interest in all of its
present and future Receivables, Inventory and Equipment (but excluding Equipment
acquired with the proceeds of Indebtedness permitted under Section 7.2(a)(v) to
the extent that the agreements governing such Indebtedness prohibit the granting
of a junior lien thereon and such prohibition has not been waived), wherever
located, and all additions and accessions thereto and substitutions and
replacements therefor and improvements thereon, and all proceeds (whether cash
or other property) and products thereof including, without limitation, all
proceeds of insurance covering the same and all tort claims in connection
therewith. As further security for the Obligations, and to provide other
assurances to the Agent, for the ratable benefit of the Lenders, the Agent shall
receive, among other things:
(a) the Intellectual Property Security Agreement;
(b) the Pledge Agreement;
(c) the Mortgages;
(d) the Guarantor Security Agreement;
(e) the Guarantor Intellectual Property Security Agreement;
(f) the Debenture;
(g) the Hypothec;
(h) the Lockbox Agreements;
(i) the Concentration Account Agreement; and
(j) the Charge Over Shares.
SECTION 3.2. Further Security. Each Borrower also grants to the Agent,
for the ratable benefit of the Lenders, as further security for the prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of all of the Obligations, a Lien on and security
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interest in all property of each Borrower in the possession of or deposited with
or in the custody of the Agent, any Lender or any Affiliate, representative,
agent or correspondent thereof and in all present and future deposit accounts.
For purposes of this Agreement, any property in which the Agent, any Lender or
any such Affiliate, representative, agent or correspondent has any security or
title retention interest shall be deemed to be in the custody of the Agent, such
Lender or such Affiliate, representative, agent or correspondent.
SECTION 3.3. Termination. Upon the termination of this Agreement and
all outstanding Letters of Credit and the indefeasible payment in cash in full
of all Obligations, the Agent shall promptly deliver to the Borrowers, upon
request and at the expense of the Borrowers, releases and satisfactions of all
financing statements, mortgages, notices of assignment and other registrations
of security and the Borrowers shall deliver to the Agent and the Lenders a
general release of all of the Agent's and the Lenders' liabilities and
obligations under all Loan Documents and an acknowledgment that the same have
been terminated (except for those provisions which are expressly stated to
survive the termination of this Agreement).
SECTION 3.4. Recourse to Security. Recourse to security shall not be
required for any Obligation hereunder and each Borrower hereby waives any
requirement that the Agent or any Lender exhaust any right or take any action
against any of the Collateral before proceeding to enforce the Obligations
against any Borrower.
SECTION 3.5. Special Provisions Relating to Inventory.
(a) All Inventory. The security interest in the Inventory granted to
the Agent, for the ratable benefit of the Lenders, shall continue through all
steps of manufacture and sale and attach without further act to raw materials,
work in process, finished goods, returned goods, documents of title, warehouse
receipts, and to proceeds resulting from the sale or other disposition of
Inventory. Until all of the Obligations have been satisfied and all outstanding
Letters of Credit have been terminated, the Agent's security interest in
Inventory and in all proceeds thereof shall continue in full force and effect
and the Agent shall have, in its sole and absolute discretion and at any time
upon the occurrence and continuance of an Event of Default or if the Agent
reasonably believes that fraud has occurred, the right to take physical
possession of Inventory and to maintain it on the premises of a Borrower, in a
public warehouse, or at such other place as the Agent may deem appropriate. If
the Agent exercises such right to take possession of the Inventory, each
Borrower will, upon demand, and at such Borrower's cost and expense, assemble
the Inventory and make it available to the Agent at a place or places convenient
to the Agent.
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(b) No Liens. Each Borrower represents and warrants that all of its
Inventory is, and will be, owned by such Borrower free and clear of all Liens,
other than Permitted Liens and Liens in favor of the Agent. All Inventory shall
be maintained at the locations shown on Schedule 3.5(b) hereto, except for
Inventory moved from such locations solely for the purpose of sale in the
ordinary course of a Borrower's business, and except for such sales and returns
in the ordinary course of business, the Borrowers will not sell, encumber, grant
a security interest in, dispose of or permit the sale, encumbrance, return or
disposal of any Inventory without the prior written consent of the Agent. If
sales are made for cash, each Borrower shall, upon the occurrence and
continuance of an Event of Default or if the Agent reasonably believes that
fraud has occurred, immediately deliver to the Agent, for the ratable benefit of
the Lenders, the checks or other forms of payment which it receives, together
with any necessary endorsements.
(c) Further Assurances. Each Borrower will perform any and all steps
that the Agent may request to perfect the Agent's security interests in the
Inventory, including, without limitation, placing and maintaining signs,
appointing custodians, executing and filing financing or continuation statements
in form and substance satisfactory to the Agent, maintaining stock records,
conducting lien searches and transferring Inventory to warehouses. In each case,
each Borrower shall take such action as promptly as possible after requested by
the Agent but in any event within ten calendar days after any such request is
made except that each Borrower shall take such action immediately upon the
Agent's request following the occurrence and during the continuance of an Event
of Default. If any Inventory is in the possession or control of any Person other
than a purchaser in the ordinary course of business or a public warehouseman
where the warehouse receipt is in the name of or held by the Agent, the
Borrowers shall notify such Person of the Agent's security interest therein and,
upon request, instruct such Person or Persons to hold all such Inventory for the
account of the Agent, for the ratable benefit of the Lenders, and subject to the
Lender's instructions. If so requested by the Agent, the Borrowers (as promptly
as possible after requested by the Agent but in any event within ten calendar
days after any such request is made) will deliver to the Agent warehouse
receipts covering any Inventory located in warehouses showing the Agent, for the
ratable benefit of the Lenders, as the beneficiary thereof and will also deliver
to the warehouseman such agreements relating to the release of warehouse
Inventory as the Agent may reasonably request. A physical verification of all
Inventory wherever located will be taken by the Borrowers at least every twelve
months and, in any case, as often as reasonably requested by the Agent, and a
copy of such physical verification shall be promptly thereafter submitted to the
Agent. The Borrowers shall also submit to the Agent, for the ratable benefit of
the Lenders, a copy of the annual physical Inventory as observed and tested by
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their public accountants in accordance with generally accepted auditing
standards and GAAP. From time to time, and at least once every month in any
event, the Borrowers shall execute and deliver to the Agent, for the ratable
benefit of the Lenders, a confirmatory written instrument, in form and substance
satisfactory to the Agent, listing all the Inventory (and which, for each month,
shall be delivered to the Agent for receipt by it on or prior to the 20th day of
the following month), but any failure to execute or deliver the same shall not
affect or limit the Agent's security interest in and to the Inventory. The
Borrowers shall, upon request by the Agent, deliver a report of Inventory, based
upon a physical count, which shall describe the Inventory by category and by
item (in reasonable detail) and report the then appraised value (at lower of
cost or market) of such Inventory. The Borrowers shall promptly deliver to the
Co-Agent copies of all verifications, instruments and other materials delivered
to the Agent under this clause (c).
(d) Inventory Records. Each Borrower shall maintain full, accurate and
complete records respecting the Inventory describing the kind, type and quantity
of the Inventory, such Borrower's cost therefor, withdrawals therefrom and
additions thereto, including a perpetual inventory.
SECTION 3.6. Special Provisions Relating to Receivables.
(a) Assignments, etc. Promptly upon the request of the Agent, the
Borrowers shall execute and deliver to the Agent, for the ratable benefit of the
Lenders, confirmatory written assignments to the Agent of the Receivables, but
the failure to execute or deliver any schedule or assignment shall not affect or
limit any security interest or other right of the Agent or any Lender in and to
any Receivable. Promptly upon the Agent's request therefor, the Borrowers shall
also furnish to the Agent copies of invoices to customers and shipping and
delivery receipts or warehouse receipts thereof. The Borrowers will also furnish
the Agent with detailed monthly agings (which, for each month, shall be
delivered to the Agent for receipt by it on or prior to the 20th day of the
following month) and such other documents and instruments the Agent may request
in connection with any Receivables. Upon the occurrence and during the
continuance of an Event of Default, each Borrower shall deliver to the Agent the
originals of all letters of credit, notes, and instruments in its favor and such
endorsements or assignments as the Agent may reasonably request. Each Borrower
shall promptly deliver to the Agent the originals of all notes and instruments
in an amount in excess of $300,000 in its favor, together with such endorsements
or assignments in form and substance reasonably satisfactory to the Agent.
(b) Records, Collections, etc. The Borrowers shall promptly report all
material credits to the Agent. The Borrowers
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shall notify the Agent of all material returns and recoveries of merchandise and
of all claims asserted with respect to merchandise. The Borrowers shall promptly
report to the Agent each such material return, repossession or recovery of
merchandise, advising the Agent of the location thereof and providing it with a
description of such goods and their location. The Borrowers shall not settle or
adjust any dispute or claim, or grant any discount (except ordinary trade
discounts), credit or allowance or accept any return of merchandise, except in
the ordinary course of its business, without the Agent's consent. The Agent may
at any time, upon the occurrence and continuance of an Event of Default or if
the Agent reasonably believes in its sole and absolute discretion that fraud has
occurred by a Loan Party against a Lender or the Agent (i) settle or adjust
disputes or claims directly with account debtors for amounts and upon terms
which it considers advisable, and (ii) notify account debtors on the Receivables
that the Receivables have been assigned to the Agent, and that payments in
respect thereof shall be made directly to the Agent. Where a Borrower receives
collateral of any kind or nature by reason of transactions between itself and
its customers or account debtors, such Borrower will hold the same on the
Agent's behalf, subject to the Agent's instructions, and as property forming
part of the Receivables. Where a Borrower sells goods or services to a customer
which also sells goods or services to it or which may have other claims against
it, such Borrower will so advise the Agent, promptly upon being notified of such
order and in time to permit the Agent to establish a reserve therefor. Each
Borrower hereby irrevocably authorizes and appoints the Agent, or any Person the
Agent may designate, as its attorney-in-fact, at such Borrower's sole cost and
expense, to exercise, subject to the limitations set forth below, all of the
following powers, which being coupled with an interest, shall be irrevocable
until all of the Obligations have been indefeasibly paid and satisfied in full
in cash: (i) upon the occurrence and during the continuance of an Event of
Default, to receive, take, endorse, sign, assign and deliver, all in the name of
the Agent or a Borrower, any and all checks, notes, drafts, and other documents
or instruments relating to the Collateral; (ii) to request at any time from
customers indebted on Receivables verification of information concerning
Receivables and the amount owing thereon; (iii) to receive, open and dispose of
all mail containing remittances addressed to a Borrower and to notify postal
authorities to change the address for delivery thereof to such address as the
Agent may designate; (iv) upon the occurrence and during the continuance of an
Event of Default, to take or bring, in the name of the Agent or a Borrower, all
steps, actions, suits or proceedings deemed by the Agent necessary or desirable
to enforce or effect collection of Receivables or file and sign any Borrower's
name on a proof of claim in bankruptcy or similar document against any obligor
of any Borrower.
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SECTION 3.7. Special Provisions Relating to Equipment.
(a) Location. Each item of Equipment of a Borrower, now owned or
hereafter acquired, will be kept at the locations shown on Schedule 3.7(a)
hereto and may not be moved without the prior written consent of the Agent,
except from one such location to another such location. Each Borrower shall at
all times hereafter keep correct and accurate records itemizing and describing
the location, kind, type, age and condition of Equipment, such Borrower's cost
therefor and accumulated depreciation thereof and retirements, sales, or other
dispositions thereof, all of which records shall be available during such
Borrower's usual business hours on demand to any of the officers, employees or
agents of the Agent.
(b) Repair. Each Borrower shall keep all of its Equipment in a
satisfactory state of repair and satisfactory operating condition in accordance
with industry standards, and will make all repairs and replacements when and
where necessary and practical, will not waste or destroy it or any part thereof,
and will not be negligent in the care or use thereof. Each Borrower shall repair
and maintain all Equipment in accordance with industry practices in a manner
sufficient to continue the operation of its business as heretofore conducted.
Each Borrower shall keep accurate lists and records of all the Equipment. The
Equipment shall be used in accordance with law and the manufacturer's
instructions and shall be kept separate from and shall not be annexed or affixed
to or become part of the Property or any other realty.
(c) Disposal. Where a Borrower is permitted to dispose of any Equipment
under this Agreement or by any consent thereto hereafter given by the Lenders,
such Borrower shall do so at arm's length, in good faith and by using its best
efforts to obtain the maximum amount of recovery practicable therefor and
without impairing the operating integrity or value of the remaining Equipment.
SECTION 3.8. Continuation of Liens, Etc. The Borrowers shall defend the
Collateral against all claims and demands of all Persons at any time claiming
any interest therein, other than claims relating to Liens permitted by the Loan
Documents. Each Borrower agrees to comply with the requirements of all state and
federal laws to grant to the Agent, for the ratable benefit of the Lenders,
valid and perfected first security interests in the Collateral. The Agent is
hereby authorized by each Borrower to sign such Borrower's name and or file any
financing statements or similar documents or instruments covering the Collateral
whether or not such Borrower's signature appears thereon. Each Borrower agrees,
from time to time, at the Agent's request, to file notices of Liens, financing
statements similar document or instruments, and amendments, renewals and
continuations thereof, and cooperate with the Agent's
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representatives, in connection with the continued perfection and protection of
the Collateral.
SECTION 3.9. Power of Attorney. In addition to all of the powers
granted to the Agent in this Article III, each Borrower hereby appoints and
constitutes the Agent as such Borrower's attorney-in-fact to, upon the
occurrence and during the continuance of an Event of Default, (i) convey any
item of Collateral to any purchaser thereof, (ii) give or sign such Borrower's
name to any notices or statements necessary or desirable to create or continue
the Lien on any Collateral granted hereunder and (iii) make any payment or take
any act necessary or desirable to protect or preserve any Collateral. The
Agent's authority hereunder shall include, without limitation, the authority to
execute and give receipt for any certificate of ownership or any document,
transfer title to any item of Collateral and take any other actions arising from
or incident to the powers granted to the Agent under this Agreement. This power
of attorney is coupled with an interest and is irrevocable.
ARTICLE IV.
INTEREST, FEES AND EXPENSES
SECTION 4.1. Interest. The Borrowers shall pay to the Agent, for the
ratable benefit of the Lenders, interest on the Revolving Credit Loans payable
monthly in arrears on the first Business Day of each month, commencing with the
month immediately following the Effective Date, and on the Expiration Date at a
fluctuating rate which is equal to (i) the Base Rate then in effect plus (ii)
one percent (1%), each change in such fluctuating rate to take effect
simultaneously with the corresponding change in the Base Rate.
SECTION 4.2. Interest After Event of Default; Late Fee.
(a) From the date of occurrence of any Event of Default until the
earlier of the date upon which (i) all Obligations shall have been paid and
satisfied in full or (ii) such Event of Default shall have been cured or waived,
interest on the Revolving Credit Loans shall be payable on demand at a rate per
annum equal to the rate that would be otherwise applicable thereto under Section
4.1 plus two percent (2%).
(b) If any installment of the Term Loan is not paid within five days
after its due date, the Borrowers agree to pay to the Agent, for the ratable
benefit of the Lenders, on demand, a late fee in an amount equal to 5% of such
installment.
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SECTION 4.3. Fee Letter. GDC shall pay to TBCC the fees referred to
in the Fee Letter on the Effective Date.
SECTION 4.4. [Intentionally Omitted].
SECTION 4.5. Unused Line Fee; Letter of Credit Fees.
(a) The Borrowers shall pay to the Agent, for the ratable benefit of
the Lenders that have Revolving Credit Commitments, on the first Business Day of
each month, commencing with the month immediately following the Effective Date,
and on the Expiration Date, in arrears, an unused line fee equal to one half of
one percent (.50%) per annum of the difference, if positive, between (i)
$25,000,000 and (ii) the average daily outstanding amount of the Revolving
Credit Loans during such month or portion thereof.
(b) The Borrowers shall promptly pay to the Agent all costs and
expenses charged to the Agent by any issuer of a Letter of Credit which relate
directly to the opening, amending or drawing under Letters of Credit. In
addition, the Borrowers shall pay to the Agent, for the ratable benefit of the
Lenders, on the first Business Day of each month, commencing with the month
immediately following the Effective Date, and on the Expiration Date, in
arrears, a fee equal to two percent (2%) per annum of the daily average of the
face amount of the Letters of Credit outstanding during the preceding month or
during the interim period ending on the Expiration Date, as the case may be.
SECTION 4.6. Early Termination Fee. The Borrowers shall have the right
to terminate this Agreement at any time on sixty days' prior written notice to
the Agent and the Lenders; provided that on the date of such termination all
Obligations, including all interest and fees payable to the date of such
termination, shall be paid in full. If the Borrowers give such notice to
terminate or prepays the Term Loan prior to the fifth anniversary of the date of
this Agreement, the Borrowers shall pay a fee to the Agent, for the ratable
benefit of the Lenders that hold Term Notes, in an amount equal to (a) two and
one-half percent (2.5%) of the outstanding balance of the Term Loan on the date
of such termination or prepayment if such termination or prepayment occurs prior
to the second anniversary of the Closing Date, (b) one and one-half percent
(1.5%) of the outstanding balance of the Term Loan on the date of such
termination of prepayment if such termination or prepayment occurs on or after
the second anniversary but prior to the third anniversary of the Closing Date
and (c) one percent (1%) of the outstanding balance of the Term Loan on the date
of such termination of prepayment if such termination or prepayment occurs on or
after the third anniversary but prior to the fifth anniversary of the Closing
Date.
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SECTION 4.7. Calculations. All calculations of interest and fees
hereunder shall be made by the Agent or any Lender, on the basis of a year of
360 days for the actual number of days elapsed in the period for which such
interest or fees are payable. Each determination by the Agent or any Lender of
an interest rate, fee or other payment hereunder shall be conclusive and binding
for all purposes, absent manifest error.
SECTION 4.8. Indemnification in Certain Events. If, after the Closing
Date, (i) any change in or in the interpretation of any law or regulation is
introduced, including, without limitation, with respect to reserve requirements,
applicable to the Agent, any Lender or any other banking or financial
institution from whom such Lender borrows funds or obtains credit, (ii) the
Agent or any Lender complies with any future guideline or request from any
central bank or other Governmental Authority or (iii) the Agent or any Lender
reasonably determines that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof has or would have the effect described below, or the
Agent or any Lender complies with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, and in the case of any event set forth in this clause
(iii), such adoption, change or compliance has or would have the direct or
indirect effect of reducing the rate of return on the Agent's or such Lender's
capital as a consequence of its obligations hereunder to a level below that
which the Agent or such Lender could have achieved but for such adoption, change
or compliance (taking into consideration the Agent's or such Lender's policies
as the case may be with respect to capital adequacy) by an amount deemed by the
Agent or such Lender to be material, and any of the foregoing events described
in clauses (i), (ii) and (iii) increases the cost to the Agent or such Lender of
funding or maintaining the Loans, or reduces the amount receivable in respect
thereof by the Agent or such Lender, then the Borrowers shall upon demand by the
Agent or such Lender pay to the Agent or such Lender additional amounts
sufficient to indemnify the Agent or such Lender against such increase in cost
or reduction in amount receivable. A certificate as to the amount of such
increased cost and setting forth in reasonable detail the calculation thereof
shall be submitted to the Borrowers by the Agent or such Lender, and shall be
conclusive absent manifest error.
SECTION 4.9. Taxes.
(a) Any and all payments made by the Borrowers hereunder or under the
Notes shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings
and
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penalties, interest and all other liabilities with respect thereto ("Taxes"),
including any Taxes imposed under Section 7701(l) of the Internal Revenue Code,
excluding in the case of the Agent and each Lender, taxes imposed on its net
income (including, without limitation, any taxes imposed on branch profits) and
franchise taxes imposed on it by the jurisdiction under the laws of which the
Agent or such Lender, as the case may be, is organized or any political
subdivision thereof. If any Borrower shall be required by law to deduct any
Taxes from or in respect of any sum payable hereunder or under any Loan to or
for the benefit of the Agent or any Lender, (A) the sum payable shall be
increased to the extent necessary so that after making all required deductions
of Taxes (including deductions of Taxes applicable to additional sums payable
under this Section 4.9) the Agent or such Lender receives an amount equal to the
sum it would have received had no such deductions been made, (B) such Borrower
shall make such deductions and (C) such Borrower shall pay the full amount so
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(b) In addition, the Borrowers agree to pay any present or future
stamp, documentary, excise, privilege, intangible or similar levies that arise
at any time or from time to time (i) from any payment made under any and all
Loan Documents, (ii) from the transfer of the rights of the Agent or any Lender
under any Loan Documents to any transferee or (iii) from the execution or
delivery by the Borrowers of, or from the filing or recording or maintenance of,
or otherwise with respect to the exercise by the Agent or such Lender of its
rights under, any and all Loan Documents (hereinafter referred to as "Other
Taxes").
(c) The Borrowers agree to indemnify the Agent and the Lenders for the
full amount of (i) Taxes imposed on or with respect to amounts payable
hereunder, (ii) Other Taxes and (iii) any Taxes (other than Taxes imposed by any
jurisdiction on amounts payable under this Section 4.9) paid by the Agent or any
Lender and any liability (including penalties, interest and expenses) arising
solely therefrom or with respect thereto. Payment of this indemnification shall
be made within thirty days from the date the Agent or such Lender certifies and
sets forth in reasonable detail the calculation thereof as to the amount and
type of such Taxes. Any such certificate submitted by the Agent or any Lender in
good faith to the Borrowers shall, absent manifest error, be final, conclusive
and binding on all parties.
(d) Within thirty days after the date of any payment of Taxes or Other
Taxes, the Borrowers will furnish to the Agent the original or a certified copy
of a receipt evidencing payment thereof.
(e) If a Person organized under the laws of a jurisdiction outside of
the United States acquires an interest in
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this Agreement or any Loan, on or prior to the effective date of such
acquisition, it will deliver to the Borrowers and the Agent (i) two valid, duly
completed copies of IRS Form 1001 or 4224 or successor applicable form, as the
case may be, and any other required form, certifying in each case that such
Person is entitled to receive payments under this Agreement and the Notes
payable to it without deduction or withholding of United States federal income
tax or with such withholding imposed at a reduced rate; and (ii) a valid, duly
completed IRS Form W-8 or W-9 or successor applicable form, as the case may be,
to establish an exemption from United States backup withholding tax. Each Tax
Transferee that delivers to the Borrowers and the Agent a Form 1001 or 4224, and
Form W-8 and any other required form, pursuant to the next preceding sentence,
further undertakes to deliver two further copies of such Form 1001 or 4224 and
Form W-8 or W-9, or successor applicable forms, or other manner of required
certification, as the case may be, on or before the date that any such form
expires or becomes obsolete or otherwise is required to be resubmitted as a
condition to obtaining an exemption from a required withholding of United States
federal income tax or entitlement to having such withholding imposed at a
reduced rate or after the occurrence of any event requiring a change in the most
recent form previously delivered by it to the Borrowers and the Agent, and such
extensions or renewals thereof as may reasonably be requested by the Borrowers
and the Agent, certifying (i) in the case of a Form 1001 or 4224 that such
Person is entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes or with such withholding
imposed at a reduced rate, unless any change in treaty, law or regulation or
official interpretation thereof has occurred after the effective date of such
acquisition or change and prior to the date on which any such delivery would
otherwise be required that renders all such forms inapplicable or that would
prevent such Person from duly completing and delivering any such form with
respect to it, and such Person advises the Borrowers and the Agent that it is
not capable of receiving payments (a) without any deduction or withholding of
United States federal income tax or (b) with such withholding at a reduced rate,
as the case may be, or (ii) in the case of a Form W-8 or W-9, establishing an
exemption from United States backup withholding tax.
(f) If any Taxes for which the Borrowers would be required to make
payment under this Section 4.9 are imposed, the Agent and the Lenders shall use
their reasonable best efforts to avoid or reduce such Taxes by taking any
appropriate action (including, without limitation, assigning their rights
hereunder to a related entity or a different office) which would not in the sole
opinion of the Agent and the Lenders be otherwise disadvantageous to the Agent
and the Lenders.
(g) Without prejudice to the survival of any other agreement of the
Borrowers hereunder, the agreements
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and obligations of the Borrowers contained in this Section 4.9 shall survive the
termination of this Agreement and the indefeasible payment in full of the
Obligations.
ARTICLE V.
CONDITIONS OF LENDING
SECTION 5.1. Conditions to Initial Borrowing or Letter of Credit. The
obligation of the Lenders to make the initial Loan or to cause to be issued the
initial Letter of Credit hereunder is subject to the satisfaction of the
following conditions prior to or concurrent with such initial Loan or Letter of
Credit:
(a) the Agent shall have received the following, each dated the date of
the initial Loan or Letter of Credit or as of an earlier date acceptable to the
Agent, in form and substance satisfactory to the Agent and its counsel and the
Lenders:
(i) the Revolving Credit Notes and the Term Notes, each duly executed
by the Borrowers;
(ii) the Intellectual Property Security Agreement, duly executed by
the Borrowers;
(iii) (A) each Mortgage, duly executed by the mortgagor party
thereto and (B) the Environmental Guaranty and Indemnity Agreement, duly
executed by the Borrowers;
(iv) (A) the Guarantor Security Agreement, duly executed by the
Guarantors, and (B) the Guarantor Intellectual Property Security Agreement,
duly executed by the Guarantors;
(v) (A) the Pledge Agreement, duly executed by the pledgors party
thereto and duly acknowledged by the issuers of the shares pledged thereunder,
and (B) the Charge Over Shares, duly executed by GDC, in each case together with
the stock certificates evidencing such shares and related stock powers executed
in blank (it being understood that the Borrower shall not be required to pledge
more than 66% of the shares of capital stock in each Foreign Subsidiary);
(vi) the Debenture, duly executed by DataComm England;
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(vii) the Hypothec, duly executed by DataComm Canada;
(viii) (A) the Guaranty, duly executed by the Guarantors, and
(B) the Contribution Agreement, duly executed by the Loan Parties
(other than GDC).
(ix) the Fee Letter, duly executed by GDC;
(x) acknowledgement copies of Uniform Commercial Code financing
statements and similar instruments under Canadian and English law (naming the
Agent as secured party and each Loan Party as debtor) and termination
statements, in form and substance satisfactory to the Agent, duly filed in all
jurisdictions that the Agent deems necessary or desirable to perfect and protect
the Liens created hereunder and under the Security Documents;
(xi) completed requests for information, dated on or before the
date of the initial Loan or Letter of Credit, listing all effective financing
statements (or similar registrations) filed in the jurisdictions referred to in
clause (x) above, that name a Loan Party as debtor, together with copies of such
financing statements (or similar registrations);
(xii) evidence of (A) the recording of each Mortgage, the
Intellectual Property Security Agreement and the Guarantor Intellectual Property
Security Agreement with all offices that the Agent deems necessary or desirable
to perfect and protect the Liens created thereunder and (B) the release of all
mortgages, security agreements and assignments previously encumbering any of the
Collateral covered thereby in all offices as the Agent may deem necessary or
desirable to perfect and protect the Liens created under the Security Documents;
(xiii) a certificate executed by a Responsible Officer certifying
that since June 30, 1997, no change, event, occurrence or development or event
involving a prospective change has occurred which has had or could reasonably be
expected to have a Material Adverse Effect except as disclosed in the Business
Plan delivered pursuant to Section 5.1(a)(xvii), and that all information
provided by or on behalf of any Loan Party to the Agent hereunder or in
connection herewith is true and correct in all material respects;
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(xiv) the opinions of New York counsel, Connecticut Counsel,
Canadian counsel and English counsel for the Loan Parties, in each case covering
such matters incident to the transactions contemplated by this Agreement as the
Agent may reasonably require;
(xv) copies of all policies of insurance required by this
Agreement and the other Loan Documents, together with loss payee endorsements
for all such policies naming the Agent as lender loss payee and an additional
insured;
(xvi) in respect of each Mortgage, the consent of The Chase
Manhattan Bank (National Association), as Agent and a mortgagee's title policy
(A) dated the Effective Date in an amount satisfactory to the Agent; (B)
insuring that such Mortgage creates a valid third Lien on the Mortgaged Property
subject thereto, free and clear of all Liens except the Lien in favor of the
Agent, Liens permitted hereunder and other Liens that are satisfactory to the
Agent; (C) naming the Agent as the insured thereunder; (D) in the form of ALTA
Loan Policy-1992; and (E) containing revolving endorsements, affirmative zoning
coverage and such other endorsements and effective coverage as the Agent may
request, together with evidence that all premiums in respect of such policy have
been paid by or on behalf of GDC and GDC Naugatuck, Inc.;
(xvii) a copy of the Business Plan, accompanied by a
certificate executed by a Responsible Officer certifying to the Agent that the
Business Plan has been prepared in good faith based upon the assumptions
contained therein and all information currently available and, as of the date of
such certificate, such Responsible Officer is not aware of any information
contained in the Business Plan which is false or misleading in any material
respect;
(xviii) copies of the certificate of incorporation and bylaws
(or equivalent organizational documents) of each Loan Party and a copy of the
resolutions of the Board of Directors of each Loan Party authorizing the
execution, delivery and performance of this Agreement, the other Loan Documents,
and the transactions contemplated hereby and thereby, attached to which is a
certificate of the Secretary or Assistant Secretary of such Loan Party
certifying (A) that such copies of the certificate of incorporation, bylaws (or
equivalent organizational documents) and resolutions are true, complete and
accurate copies thereof, have not been amended or modified and are in full force
and effect and (B) the incumbency, names and true signatures of
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the officers of such Loan Party authorized to sign the Loan Documents to which
it is a party;
(xix) a certified copy of the certificate of the Secretary of State
(or equivalent Governmental Authority) of its state of incorporation, dated
within five days of the Effective Date, listing the certificate of incorporation
of such Loan Party and each amendment thereto on file in such official's office
and certifying that (A) such amendments are the only amendments to such
certificate of incorporation on file in that office, (B) to the extent relevant,
that such Loan Party has paid all franchise taxes to the date of such
certificate and (C) such Loan Party is in good standing in that jurisdiction;
(xx) a good standing certificate from the Secretary of State (or
equivalent Governmental Authority) of each state in which each Loan Party is
qualified as a foreign corporation, each dated within five days of the Effective
Date;
(xxi) a certificate, duly executed by the Chief Financial Officer
of GDC to the effect that the Borrowing Base Parties are Solvent and will be
Solvent on a consolidated basis after giving effect to the consummation of the
transactions contemplated by the Loan Documents and otherwise in form and
substance satisfactory to the Agent;
(xxii) copies of unaudited Financial Statements of GDC as of June
30, 1997;
(xxiii) copies of any agreements, documents or instruments
evidencing obligations of any Loan Party for borrowed money due to any Person
which will remain outstanding after the Effective Date, which shall be
satisfactory to the Agent and the Lenders;
(xxiv) a Borrowing Base Certificate, duly executed by GDC;
(xxv) an appraisal of the Inventory and Equipment of the
Borrowers conducted by an appraiser acceptable to the Agent, which shall be in
form and substance satisfactory to the Agent;
(xxvi) (A) the five separate Lockbox Agreements, duly executed by
GDC and the Lockbox Bank party thereto and (B) the two separate Concentration
Account Agreements, duly executed by GDC and the Concentration Bank;
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(xxvii) a survey of each of the Mortgaged Properties, certified
in a manner satisfactory to the Agent (which shall include flood certification)
and endorsements to each of the title policies for each such Property omitting
or otherwise affirmatively insuring all exceptions which in any way are
attributable to the lack of a survey;
(xxviii) the Subordination Agreement, duly executed by GDC and
DataComm Leasing;
(xxix) such agreements and instruments as any issuer of Letters of
Credit deems necessary to issue Letters of Credit;
(xxx) evidence satisfactory to the Agent that the Articles
of Association and the Memorandum of Association of DataComm England have been
amended, in form and substance satisfactory to English counsel to the Agent; and
(xxxi) such other agreements and instruments as the Agent deems
necessary in its reasonable discretion in connection with the transactions
contemplated hereby.
(b) There shall be no pending or threatened litigation, proceeding,
inquiry or other action (i) seeking an injunction or other restraining order,
damages or other relief with respect to the transactions contemplated by this
Agreement, the other Loan Documents, or the transactions contemplated hereby or
thereby or (ii) which affects or could affect the business, prospects,
operations, assets, liabilities or condition (financial or otherwise) of any
Loan Party, except, in the case of clause (ii), where such litigation,
proceeding, inquiry or other action could not be expected to have a Material
Adverse Effect in the judgment of the Agent.
(c) The Borrowers shall have paid all (i) accrued fees and expenses of
the Agent in connection with the negotiation, preparation, execution and
delivery of the Loan Documents (including, without limitation, all of the
Agent's examination, audit, appraisal, and travel expenses and the reasonable
fees and expenses of counsel to the Agent) and (ii) fees to be paid on the
Effective Date referred to in this Agreement and the Fee Letter.
(d) The Borrowers shall have been released from all obligations under
the Existing Loan Facility and all related documents and agreements pursuant to
a release in form and substance satisfactory to the Agent and all Liens related
thereto shall have been released or terminated.
(e) Except for (i) the filing of financing and termination (and
similar) statements under the Code and English
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and Canadian law and the recording of the releases specified in Section
5.1(a)(xi) and (ii) consents or authorizations which have been obtained and are
specified in Schedule 6.1(f) hereto (including the consents required under
Section 5.1(a)(xvi)), no consent or authorization of, filing with or other act
by or in respect of, any Governmental Authority or any other Person is required
in connection, with the execution, delivery, performance, validity or
enforceability of this Agreement, the Notes or the other Loan Documents or the
consummation of the transactions contemplated hereby or thereby or the
continuing operations of any Loan Party following the consummation of such
transactions.
(f) No change, occurrence, event or development or event involving a
prospective change that could reasonably be expected to have a Material Adverse
Effect shall have occurred and be continuing since June 30, 1997 as determined
by the Agent in its reasonable discretion, except as disclosed in the Business
Plan delivered pursuant to Section 5.1(a)(xvii).
(g) The Agent and its counsel shall have performed (i) a review
satisfactory to the Agent of all of the Material Contracts and other assets of
each Loan Party, the financial condition of each Loan Party, including all of
its tax, litigation, environmental and other potential contingent liabilities,
and the corporate and capital structure of GDC and its Subsidiaries; (ii) vendor
and reference checks; and (iii) a pre-closing audit and collateral review, in
each case with results satisfactory to the Agent.
(h) Each Loan Party shall be in compliance in all material respects
with all Requirements of Law and Material Contracts.
(i) The Liens in favor of the Agent shall have been duly perfected and
shall constitute first priority Liens, except as otherwise expressly permitted
in the Loan Documents.
(j) The Agent shall have syndicated at least $20,000,000 of the
Commitments to one or more Lenders other than TBCC.
SECTION 5.2. Conditions Precedent to Each Loan and Each Letter of
Credit. The obligation of the Lenders to make any Loan or cause to be issued any
Letter of Credit is subject to the satisfaction of the following conditions
precedent:
(a) all representations and warranties contained in this Agreement and
the other Loan Documents shall be true and correct in all material respects on
and as of the date of such Loan or issuance of such Letter of Credits if then
made, other than representations and warranties that expressly relate solely
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to an earlier date, in which case they shall have been true and correct as of
such earlier date;
(b) no Default or Event of Default shall have occurred and be
continuing or would result from the making of the requested Loan or the issuance
of the requested Letter of Credit as of the date of such request; and
(c) no Material Adverse Effect shall have occurred and be continuing.
Each borrowing of Loans hereunder shall be deemed to be a representation and
warranty by the Borrowers to the Agent and the Lenders that the conditions set
forth in this Section 5.2 have been fulfilled on and as of the date of such
borrowing.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
SECTION 6.1. Representations and Warranties of the Borrowers.
The Borrowers represent and warrant as follows:
(a) Organization, Good Standing and Qualification. Each Loan Party (i)
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, (ii) has the power and authority to own
its properties and assets and to transact the businesses in which it presently
is, or proposes to be, engaged and (iii) is duly qualified, authorized to do
business and in good standing in each jurisdiction where it presently is, or
proposes to be, engaged in business, except where the failure to be so qualified
or authorized could not be reasonably expected to have a Material Adverse
Effect. Schedule 6.1(a) specifies all the jurisdictions in which each Loan Party
is qualified to do business as a foreign corporation as of the Closing Date.
(b) Locations of Offices, Records and Collateral. The address of the
principal place of business and chief executive office of each Loan Party is,
and the books and records of such Loan Party and all of its chattel paper and
records of Receivables are maintained exclusively in the possession of such Loan
Party at, the address of such Loan Party specified in Schedule 6.1(b)(i). There
is no jurisdiction in which any Loan Party maintains any Collateral (except for
vehicles and Inventory in transit for processing) other than those jurisdictions
specified in Schedule 6.1(b)(ii) with respect to such Loan Party. The legal name
and address of each location at which any Loan Party's Inventory is located are
specified in Schedule 6.1(b)(ii). Schedule 6.1(b)(ii) indicates whether each
location specified therein is leased or owned by a Loan Party. None of
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the receipts received and to be received by any Loan Party from any warehouseman
states that the Inventory or Equipment covered thereby is to be delivered to
bearer or to the order of a named Person or to a named Person and such named
Person's assigns.
(c) Authority. Each Loan Party has the requisite corporate power and
authority to execute, deliver and perform its obligations under each of the Loan
Documents to which it is a party. All corporate action necessary for the
execution, delivery and performance by each Loan Party of the Loan Documents to
which it is a party (including the consent of shareholders where required) has
been taken.
(d) Enforceability. This Agreement is and, when executed and delivered,
each other Loan Document to which each Loan Party is a party will be, the legal,
valid and binding obligation of such Loan Party enforceable in accordance with
its terms, except as enforceability may be limited by (i) bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (ii) general
principles of equity.
(e) No Conflict. The execution, delivery and performance by each Loan
Party of each Loan Document to which it is a party does not and will not
contravene (i) any of the Governing Documents of such Loan Party, (ii) any
Requirement of Law or (iii) any contract to which such Loan Party is a party or
by which it or its property is bound and will not, except as expressly specified
herein, result in the imposition of any Liens upon any of its properties.
(f) Consents and Filings. No consent, authorization or approval of, or
filing with or other act by, any shareholders of any Loan Party or any
Governmental Authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
or any other Loan Document, the consummation of the transactions contemplated
hereby or thereby or the continuing operations of any Loan Party following such
consummation, except (i) those that have been obtained or made and are specified
in Schedule 6.1(f) (including the consents required under Section 5.1(a)(xvi)),
(ii) the filing of financing and termination (and similar) statements under the
Code and English and Canadian law and (iii) the recording of the Mortgages, the
Intellectual Property Security Agreement, the Guarantor Intellectual Property
Security Agreement and related releases.
(g) Subsidiaries. The Borrowers and the other Loan Parties have no
direct or indirect Subsidiaries, except as specified in Schedule 6.1(g).
Schedule 6.1(g) indicates whether each Subsidiary is a Domestic Subsidiary or a
Foreign Subsidiary.
(h) Solvency. The Borrowing Base Parties on a consolidated basis are
Solvent and will be Solvent upon the
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completion of all transactions contemplated to occur on or before the Effective
Date (including, without limitation, the Loans to be made on the Effective
Date).
(i) Financial Data. GDC has provided to the Agent and the Lenders
complete and accurate copies of annual audited Financial Statements for the
fiscal year ended September 30, 1996, certified by the Auditors, and unaudited
Financial Statements for the fiscal period ended June 30, 1997. Such Financial
Statements have been prepared in accordance with GAAP consistently applied
throughout the periods involved and fairly present the financial position,
results of operations and cash flows of GDC and its Subsidiaries for each of the
periods covered. GDC and its Subsidiaries have no Contingent Obligation or
liability for taxes, unrealized losses, unusual forward or long-term commitments
or long-term leases, which is not reflected in such Financial Statements or the
footnotes thereto. During the period from June 30, 1997 to and including the
date hereof there has been no sale, transfer or other disposition by GDC or any
of its Subsidiaries of any material part of its business or property (other than
sales of inventory in the ordinary course of business) and no purchase or other
acquisition of any business or property (including any capital stock of any
other Person) material in relation to the financial condition of GDC and its
Subsidiaries at June 30, 1997. Since June 30, 1997, (i) there has been no
change, occurrence, development or event which has had or could reasonably be
expected to have a Material Adverse Effect, except as disclosed in the Business
Plan delivered pursuant to Section 5.1(a)(xvii), and (ii) none of the capital
stock of the Borrowers has been redeemed, retired, purchased or otherwise
acquired for value by the Borrowers.
(j) Accuracy and Completeness of Information. All data, reports and
information heretofore, contemporaneously or hereafter furnished by or on behalf
of any Loan Party in writing to the Agent or any Lender or the Auditors for
purposes of or in connection with this Agreement or any other Loan Document, or
any transaction contemplated hereby or thereby, are or will be true and accurate
in all material respects on the date as of which such data, reports and
information are dated or certified and not incomplete by omitting to state any
material fact necessary to make such data, reports and information not
misleading at such time. There are no facts now known to any officer of the
Borrowers which individually or in the aggregate could reasonably be expected to
have a Material Adverse Effect and which have not been specified herein, in the
Financial Statements, or any certificate, opinion or other written statement
previously furnished by any Loan Party to the Agent or any Lender.
(k) No Joint Ventures or Partnerships. No Loan Party is engaged in
any joint venture or partnership with any other Person except as set forth in
Schedule 6.1(k).
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(l) Corporate and Trade Name. During the past five years, no Loan Party
has been known by or used any other corporate, trade or fictitious name except
for its name as set forth on the signature pages of the Loan Documents.
(m) No Actual or Pending Material Modification of Business. Except as
set forth on Schedule 6.1(m), there exists no actual or, to the best of the
Borrowers' knowledge, threatened termination, cancellation or limitation of, or
any modification or change in the business relationship of any Loan Party with
any customer or group of customers whose purchases individually or in the
aggregate are material to the operation of such Loan Party's business or with
any material supplier.
(n) No Broker's or Finder's Fees. No broker or finder brought about the
obtaining, making or closing of the Loans or financial accommodations afforded
hereunder or in connection herewith by the Agent, any Lender or by any of their
respective Affiliates, except for Xxxxxxx Xxxxx. No broker's or finder's fees or
commissions will be payable by any Loan Party to any Person in connection with
the transactions contemplated by this Agreement, except to Xxxxxxx Xxxxx.
(o) Investment Company. No Loan Party is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. Neither the making of any Loans or the application of the
proceeds or repayment thereof by the Borrowers, nor the consummation of the
other transactions contemplated by this Agreement or the other Loan Documents,
will violate any provision of such Act or any rule, regulation or order of the
Securities and Exchange Commission thereunder.
(p) Margin Stock. No Loan Party owns any "margin stock" as that term is
defined in Regulation U of the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board") and the proceeds of Loans will be used only for
the purposes contemplated hereunder. None of such proceeds will be used,
directly or indirectly, for the purpose of purchasing or carrying any margin
stock or for the purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin stock or for any other
purpose which might constitute any of the Loans under this Agreement as a
"purpose credit" within the meaning of Regulation G, T, U or X of the Federal
Reserve Board. No Loan Party will take, or permit any Person acting on its
behalf to take, any action which could reasonably be expected to cause this
Agreement or any document or instrument delivered pursuant hereto to violate any
regulation of the Federal Reserve Board.
(q) Taxes and Tax Returns. Except as set forth on Schedule 6.1(q):
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(i) Each Loan Party has properly completed
in all material respects and timely filed, without request
for extension, all income tax returns it is required to
file. The information filed is complete and accurate in all
material respects. All deductions taken in such income tax
returns are appropriate and in accordance with applicable
laws and regulations, except deductions that may have
been disallowed but are being challenged in good faith
and for which adequate reserves have been made in
accordance with GAAP.
(ii) All taxes, assessments, fees and other
governmental charges for periods beginning prior to the date
hereof have been timely paid (or, if not yet due, adequate
reserves therefor have been established) and the Borrowers
have no liability for taxes in excess of the amounts so paid
or reserves so established.
(iii) No material deficiencies for taxes
have been claimed, proposed or assessed by any taxing or other
Governmental Authority against GDC or any of its Subsidiaries
and no tax Liens have been filed. There are no pending or
threatened audits, investigations or claims for or relating to
any liability for taxes and there are no matters under
discussion with any Governmental Authority which could result
in an additional liability for taxes. Either the federal
income tax returns of GDC and its Subsidiaries have been
audited by the Internal Revenue Service and such audits have
been closed or the period during which any assessments may be
made by the Internal Revenue Service has expired without
waiver or extension for all years up to and including the
fiscal year of GDC ended September 30, 1993. No extension of a
statute of limitations relating to taxes, assessments, fees or
other governmental charges is in effect with respect to GDC
and its Subsidiaries.
(iv) Neither GDC nor any of its Subsidiaries
is a party to or has any obligations under any written tax
sharing agreement or agreement regarding payments in lieu of
taxes.
(r) No Judgments or Litigation. Except as specified in Schedule 6.1(r),
no judgments, orders, writs or decrees are outstanding against any Loan Party,
nor is there now pending or threatened any litigation, contested claim,
investigation, arbitration, or governmental proceeding by or against any Loan
Party that (i) could individually or in the aggregate be reasonably expected to
have a Material Adverse Effect or (ii) purports to affect the legality, validity
or enforceability of this Agreement, the Notes any other Loan Document or the
consummation of the transactions contemplated hereby or thereby.
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(s) Real Property. Except as specified in Schedule 6.1(s), no Loan
Party owns or leases any real property. Such Schedule sets forth whether such
real property is leased or owned and indicates which Loan Party is the lessee of
such leased property.
(t) Title to Property. Each Loan Party has (i) good and marketable fee
simple title to or valid leasehold interests in all of its real property and
(ii) good and marketable title to all of its other property, in each case
subject to no Liens other than those Liens permitted by Section 7.2(i).
(u) No Other Indebtedness. After giving effect to the closing of this
Agreement and the transactions contemplated hereby, no Loan Party has any
Indebtedness other than Indebtedness permitted under Section 7.2(a).
(v) Investments; Contracts. Except as specified in Schedule 6.1(v), no
Loan Party (i) has committed to make any Investment; (ii) is a party to any
indenture, agreement, contract, instrument or lease or subject to any charter,
by-law or other corporate restriction or any injunction, order, restriction or
decree, which would materially and adversely affect its business, operations,
assets or financial condition; (iii) is a party to any "take or pay" contract
(i.e., a contract which obligates the purchaser to purchase a minimum amount of
goods or services) as to which it is the purchaser; or (iv) has any material
contingent or long-term liability, including management contracts (excluding
employment contracts of full-time individual officers or employees disclosed to
the Agent), which would have a Material Adverse Effect.
(w) No Defaults. After giving effect to the closing of the
transactions contemplated herein, no Loan Party is in default under any material
term of any Material Contract or Requirement of Law.
(x) Rights in Collateral; Priority of Liens. All property consisting of
Collateral is owned or leased by the Loan Parties, free and clear of any and all
Liens in favor of third parties, other than Permitted Liens and the Liens under
the Existing Mortgages, and to the extent such Collateral consists of real
estate, the Loan Parties have good record and marketable title in fee simple to
such real estate, subject to the Existing Mortgages. Upon the proper filing and
recording of the financing and termination statements specified in Section
5.1(a)(x) and the Security Documents and releases specified in Section
5.1(a)(xii), the Liens granted pursuant to the Loan Documents constitute valid,
enforceable and perfected first priority Liens on the Collateral, except as
otherwise expressly permitted in the Loan Documents.
(y) ERISA.
(i) Neither a Loan Party nor any ERISA
Affiliate maintains or contributes to any Plan, other than
those specified in Schedule 6.1(y).
(ii) Each Loan Party and each ERISA
Affiliate have fulfilled all contribution obligations for each
Plan (including obligations related to the minimum funding
standards of ERISA and the Internal Revenue Code).
(iii) No Termination Event has occurred nor
has any other event occurred that is likely to result in a
Termination Event. Neither a Loan Party or any ERISA
Affiliate, nor any fiduciary of any Plan, is subject to any
direct or indirect liability with respect to any Plan under
any Requirement of Law or agreement.
(iv) Neither a Loan Party nor any ERISA
Affiliate is required to or reasonably expects to be required
to provide security to any Plan under Section 401(a)(29) of
the Internal Revenue Code.
(v) Each Loan Party and each ERISA Affiliate
are in compliance in all respects with any applicable
provisions of ERISA with respect to all Plans. There has been
no prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Internal Revenue Code (a "Prohibited
Transaction") with respect to any Plan or any Multiemployer
Plan. Each Loan Party and each ERISA Affiliate have made when
due any and all payments required to be made under any
agreement relating to a Multiemployer Plan or any Requirement
of Law pertaining thereto. With respect to each Plan and
Multiemployer Plan, each Loan Party and each ERISA Affiliate
have not incurred any liability to the PBGC and have not had
asserted against them any penalty for failure to fulfill the
minimum funding requirements of ERISA.
(vi) Each Loan Party is able to pay benefits
under each Multiemployer Plan when due.
(vii) Neither a Loan Party nor any ERISA
Affiliate has instituted or intends to institute proceedings
to terminate any Plan.
(viii) The aggregate actuarial present value
of all benefit liabilities (whether or not vested) under each
Plan, determined on a plan termination basis, as disclosed in,
and as of the date of, the most recent
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actuarial report for such Plan, does not exceed the aggregate
fair market value of the assets of such Plan.
(ix) Neither a Loan Party nor any ERISA
Affiliate has incurred or reasonably expects to incur any
material Withdrawal Liability to any Multiemployer Plan.
(x) To the extent that any Plan is insured,
the Loan Parties and all ERISA Affiliates have paid when due
all premiums required to be paid for all periods through and
including the Closing Date. To the extent that any Plan is
funded other than with insurance, the Loan Parties and all
ERISA Affiliates have made when due all contributions required
to be paid for all periods through and including the Closing
Date.
(z) Intellectual Property. Set forth on Schedule 6.1(z) is a complete
and accurate list of all patents, trademarks, trade names, service marks and
copyrights, and all applications therefor and licenses thereof, of each Loan
Party, showing as of the date hereof the jurisdiction in which registered, the
registration number, the date of registration and the expiration date. Each Loan
Party owns or licenses all material patents, trademarks, service-marks, logos,
tradenames, trade secrets, know-how, copyrights, or licenses and other rights
with respect to any of the foregoing, which are necessary or advisable for the
operation of its business as presently conducted or proposed to be conducted. No
Loan Party has infringed any patent, trademark, service-xxxx, tradename,
copyright, license or other right owned by any other Person by the sale or use
of any product, process, method, substance, part or other material presently
contemplated to be sold or used, where such sale or use would reasonably be
expected to have a Material Adverse Effect and no claim or litigation is
pending, or to the best of the Borrowers' knowledge, threatened against or
affecting any Loan Party that contests its right to sell or use any such
product, process, method, substance, part or other material.
(aa) Labor Matters. Schedule 6.1(aa) accurately sets forth all labor
contracts to which any Loan Party is a party as of the Closing Date, and their
dates of expiration. There are no existing or threatened strikes, lockouts or
other disputes relating to any collective bargaining or similar agreement to
which any Loan Party is a party which would, individually or in the aggregate,
be reasonably likely to have a Material Adverse Effect.
(bb) Compliance with Environmental Laws. Except as specified in
Schedule 6.1(bb), (i) no Loan Party is the subject of a judicial or
administrative proceeding or investigation relating to the violation of any
Environmental Law or asserting
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potential liability arising from the release or disposal by any Person of any
Hazardous Materials, (ii) no Loan Party has filed or received any notice under
any Environmental Law concerning the treatment, storage, disposal, spill or
release or threatened release of any Hazardous Materials at, on, beneath or
adjacent to property owned or leased by any Loan Party, or the release or
threatened release at any other location of any Hazardous Material generated,
used, stored, treated, transported or released by or on behalf of any Loan Party
and (iii) the Borrowers have no knowledge of any contingent liability for any
release of any Hazardous Materials.
(cc) Licenses and Permits. Each Loan Party has obtained and holds in
full force and effect, all material franchises, licenses, leases, permits,
certificates, authorizations, qualifications, easements, rights of way and other
rights and approvals which are necessary or advisable for the operation of its
business as presently conducted and as proposed to be conducted.
(dd) Government Regulation. No Loan Party is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940, or any other
Requirement of Law that limits its ability to incur indebtedness or its ability
to consummate the transactions contemplated by this Agreement and the other Loan
Documents.
(ee) Material Contracts. Set forth on Schedule 6.1(ee) is a complete
and accurate list of all Material Contracts, showing as of the date hereof the
parties, subject matter and term thereof. Each such contract has been duly
authorized, executed and delivered by a Loan Party and each other party thereto.
Except as specified in Schedule 6.1(ee), none of the Material Contracts contains
any burdensome restrictions on any Loan Party or any of its properties, and each
Material Contract is in full force and effect and is binding upon and
enforceable against all parties thereto in accordance with its terms, and there
exists no default under such contract by any party thereto.
(ff) Business and Properties. The business of any Loan Party is not
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance) that could
reasonably be expected to have a Material Adverse Effect.
(gg) Business Plan. The Business Plan and the Financial Statements
delivered to the Agent on the Closing Date were prepared in good faith on the
basis of assumptions which were fair in light of the conditions existing at the
time of delivery thereof, and, with respect to the Business Plan,
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represented, at the time of delivery, the Borrowers' best estimate of its future
financial performance.
(hh) Affiliate Transactions. Except as specified in Schedule 6.1(hh),
no Loan Party is a party to or bound by any agreement or arrangement (whether
oral or written) to which any Affiliate of such Loan Party is a party except (i)
in the ordinary course of and pursuant to the reasonable requirements of the
business of such Loan Party and (ii) upon fair and reasonable terms no less
favorable to such Loan Party than it could obtain in a comparable arm's-length
transaction with an unaffiliated Person.
(ii) Interrelatedness of Borrowing Base Parties. The business and
operations of each Borrowing Base Party are interrelated and complement one
another, and the Borrowing Base Parties have a common business purpose, with
separate intercompany bookkeeping and accounting adjustments used to separate
their respective assets, liabilities and transactions. To permit their
uninterrupted and continuous operations, the Borrowing Base Parties presently
require and will from time to time hereafter require funds for general business
purposes. The proceeds of Loans will directly or indirectly materially benefit
each Borrowing Base Party, regardless of which Borrowing Base Party requests or
receives the proceeds of the Loans. Each Borrowing Base Party directly and
materially benefits from the assets, business and operations of the other
Borrowing Base Parties, including without limitation, the intellectual property
assets, the marketing operations and the research and development operations of
the Borrowing Base Parties. Certain of the Borrowing Base Parties could not
operate its business as presently conducted without relying to a material extent
on the research and development capabilities, intellectual property assets,
manufacturing operations and marketing efforts of certain other Borrowing Base
Parties.
(jj) Survival of Representations. All representations made by the
Borrowers in this Agreement and in any other Loan Document executed and
delivered by it in connection herewith shall survive the execution and delivery
hereof and thereof and the closing of the transactions contemplated hereby and
thereby.
ARTICLE VII.
COVENANTS OF THE BORROWERS
SECTION 7.1. Affirmative Covenants. Until termination of this Agreement
and all outstanding Letters of Credit and payment and satisfaction of all
Obligations:
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(a) Corporate Existence, etc. GDC shall, and shall cause each of its
Subsidiaries to, (i) maintain its corporate existence, (ii) maintain in full
force and effect all material licenses, bonds, franchises, leases, trademarks,
qualifications and authorizations to do business, and all material patents,
contracts and other rights necessary or advisable to the profitable conduct of
its businesses, (iii) continue in, and limit its operations to, the same lines
of business as presently conducted by it and (iv) conduct its business and
operations in such a manner to insure that the representations and warranties
contained in Section 6.1(ii) remains true and correct in all material respects
at all times.
(b) Maintenance of Property. GDC shall, and shall cause each of its
Subsidiaries to, keep all property useful and necessary to its business in good
working order and condition (ordinary wear and tear excepted) in accordance with
its past operating practices.
(c) Affiliate Transactions. GDC shall, and shall cause each of its
Subsidiaries to, conduct transactions with any of its Affiliates on an
arm's-length basis or other basis more favorable to such Person and which are
approved by the Board of Directors of such Person.
(d) Taxes. GDC shall, and shall cause each of its Subsidiaries to, pay,
when due, (i) all tax assessments, and other governmental charges and levies
imposed against it or any of its property and (ii) all lawful claims that, if
unpaid, might by law become a Lien upon its property; provided, however, that,
unless such tax assessment, charge, levy or claim has become a Lien on any of
the property of such Person, it need not be paid if it is being contested in
good faith, by appropriate proceedings diligently conducted and an adequate
reserve or other appropriate provision shall have been made therefor as required
in accordance with GAAP.
(e) Government Regulations. GDC shall, and shall cause each of its
Subsidiaries to, comply with all applicable Federal, State, local or foreign
laws and regulations, including, without limitation, those relating to
environmental matters, employee matters (including the collection, payment and
deposit of employees' income, unemployment and social security taxes) and with
respect to pension liabilities, except where the failure to comply could not
have a Material Adverse Effect.
(f) Insurance. GDC shall, and shall cause each of its Subsidiaries to,
maintain public liability insurance, business interruption insurance, third
party property damage insurance and replacement value insurance on its assets
(including the Collateral) under such policies of insurance, with such insurance
companies, in such amounts and covering such risks as are at all times
satisfactory to the Agent in its commercially reasonable
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judgment, all of which policies covering the Collateral shall name the Agent as
an additional insured and the Agent loss payee in case of loss, and contain
other provisions as the Agent may reasonably require to protect fully the
Agent's and the Lenders' interest in the Collateral and any payments to be made
under such policies.
(g) Books and Records; Inspections. GDC shall, and shall cause each of
its Subsidiaries to, (i) maintain books and records (including computer
printouts and programs) pertaining to the Collateral in such detail, form and
scope as is consistent with good business practice and (ii) provide the Agent
and its agents access to the premises of such Person at any time and from time
to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time on and after the occurrence and during the
continuance of a Default or Event of Default, for the purposes of (A) inspecting
and verifying the Collateral, (B) inspecting and copying (at the Borrowers'
expense) any and all records pertaining thereto, and (C) discussing the affairs,
finances and business of any Loan Party with any officers, employees or
directors of such Person or with the Auditors. The parties hereto agree that the
Co-Agent shall have the right to accompany the Agent on each audit and
verification performed by the Agent pursuant to this clause (g). The Borrowers
shall reimburse the Agent for the travel and related expenses of the Agent's
employees or, at the Agent's option, of such outside accountants or examiners as
may be retained by the Agent to verify or inspect Collateral, records or
documents of each Borrower and its Subsidiaries on a regular basis or for a
special inspection if the Agent deems the same appropriate. If the Agent's own
employees are used, the Borrowers shall also pay such reasonable per diem
allowance as the Agent may from time to time establish, or, if outside examiners
or accountants are used, the Borrowers shall also pay the Agent such sum as the
Agent may be obligated to pay as fees therefor. With respect to each audit
performed by the Agent or its designees, the Borrowers shall not be liable for
audit fees in excess of the lesser of $3,000 (or, in the case of the audit
performed prior to the Closing Date, $5,000) per audit and $750 per day per
auditor, except that, if an Event of Default has occurred and is continuing, the
Borrowers' maximum liability for the fees for each audit shall be the greater of
$3,000 per audit and $750 per day per auditor. All such Obligations may be
charged to the Loan Account or any other account of a Borrower with the Agent,
any Lender or any of their respective affiliates.
(h) Notification Requirements. GDC shall timely give the Agent the
following notices and other documents:
(i) Notice of Defaults. Promptly, and in any
event within two Business Days after any Borrower becomes
aware of the occurrence of a Default or Event of Default that
is continuing, a certificate of a
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Responsible Officer specifying the nature thereof and the
Borrowers' proposed response thereto, each in reasonable
detail.
(ii) Proceedings or Adverse Changes.
Promptly, and in any event within five Business Days after any
Borrower becomes aware of (A) any proceeding being instituted
or threatened to be instituted by or against any Loan Party in
any federal, state, local or foreign court or before any
commission or other regulatory body (federal, state, local or
foreign) involving a sum in excess of $100,000, (B) any order,
judgment or decree in excess of $100,000 being entered against
any Loan Party or any of its properties or assets, (C) any
actual or prospective change, development or event which has
had or could reasonably be expected to have a Material Adverse
Effect, a written statement describing such proceeding, order,
judgment, decree, change, development or event and any action
being taken with respect thereto by such Loan Party, (D) a
change in the Collateral securing the Obligations from the
places indicated in or permitted by this Agreement or any of
the Security Documents, or (E) a proposed or actual change of
any Loan Party's name, identity or corporate structure.
(iii) ERISA Notices.
(A) Promptly, and in any event within ten
Business Days after a Termination Event has occurred, a
written statement of a Responsible Officer describing such
Termination Event and any action that is being taken with
respect thereto by GDC or ERISA Affiliate, and any action
taken or threatened by the Internal Revenue Service,
Department of Labor or PBGC;
(B) promptly, and in any event within three
Business Days after the filing thereof with the Internal
Revenue Service, a copy of each funding waiver request filed
with respect to any Benefit Plan and all communications
received by GDC or any ERISA Affiliate with respect to such
request;
(C) promptly, and in any event within three
Business Days after receipt by GDC or 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;
(D) promptly, and in any event within three
Business Days after receipt by GDC or any ERISA Affiliate,
notice (including the nature of the event and, when known, any
action taken or threatened by the
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Internal Revenue Service or the PBGC with respect thereto)
of:
(1) any Prohibited Transaction which could subject
GDC or any ERISA Affiliate to a civil penalty
assessed pursuant to Section 502(i) of ERISA or a
tax imposed by Section 4975 of the Internal
Revenue Code in connection with any Plan, or any
trust created thereunder,
(2) any cessation of operations (by GDC or any ERISA
Affiliate) at a facility in the circumstances
described in Section 4063(e) of ERISA,
(3) a failure by GDC or any ERISA Affiliate to make a
payment to a Plan required to avoid imposition of a
Lien under Section 302(f) of ERISA,
(4) the adoption of an amendment to a Plan requiring
the provision of security to such Plan pursuant to
Section 307 of ERISA, or
(5) any change in the actuarial assumptions or
funding methods used for any Plan, where the effect
of such change is to materially increase or
materially reduce the unfunded benefit liability or
obligation to make periodic contributions;
(E) promptly upon the request of the Agent,
each annual report (IRS Form 5500 series) and all accompanying
schedules, the most recent actuarial reports, the most recent
financial information concerning the financial status of each
Plan administered or maintained by GDC or any ERISA Affiliate,
and schedules showing the amounts contributed to each such
Plan by or on behalf of GDC or any ERISA Affiliate in which
any of their personnel participate or from which such
personnel may derive a benefit, and each Schedule B (Actuarial
Information) to the annual report filed by GDC or any ERISA
Affiliate with the Internal Revenue Service with respect to
each such Plan; and
(F) promptly upon the filing thereof, copies
of any Form 5310, or any successor or equivalent form to Form
5310, filed with the PBGC in connection with the termination
of any Plan.
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(iv) Material Contracts. Promptly, and in
any event within ten Business Days after any Material Contract
is terminated or amended or any new Material Contract is
entered into, a written statement describing such event, with
copies of amendments or new contracts, and an explanation of
any actions being taken with respect thereto.
(v) Environmental Matters. Promptly, and in
any event within ten days after receipt by any Loan Party
thereof, copies of each (A) written notice that any violation
of any Environmental Law may have been committed or is about
to be committed by any Loan Party, (B) written notice that any
administrative or judicial complaint or order has been filed
or is about to be filed against any Loan Party alleging
violations of any Environmental Law or requiring any Loan
Party to take any action in connection with the release of
toxic or Hazardous Materials into the environment, (C) written
notice from a Governmental Authority or other Person alleging
that any Loan Party may be liable or responsible for costs
associated with a response to or cleanup of a release of a
Hazardous Material into the environment or any damages caused
thereby or (D) any Environmental Law adopted, enacted or
issued after the date hereof of which any Borrower becomes
aware which could reasonably be expected to have a Material
Adverse Effect.
(i) Casualty Loss. GDC shall, and shall cause each of its Subsidiaries
to, (i) provide written notice to the Agent, within ten Business Days after the
occurrence of such event, of any material damage to, the destruction of or any
other material loss to any asset or property with a fair market value in excess
of $100,000 that is owned or used by such Person or any condemnation,
confiscation or other taking of any such assets or property, in whole or in
part, or any use thereof that otherwise diminishes so as to render impracticable
or unreasonable the use of such asset or property, together with the amount of
the damage, destruction, loss or diminution in value (a "Casualty Loss") and
(ii) diligently file and prosecute its claim or claims for any award or payment
in connection with a Casualty Loss.
(j) Qualify to Transact Business. GDC shall, and shall cause each of
its Subsidiaries to, qualify to transact business as a foreign corporation in
each jurisdiction where the nature or extent of its business or the ownership of
its property requires it to be so qualified or authorized and where failure to
qualify or be authorized could reasonably be expected to have a Material Adverse
Effect.
(k) Financial Reporting. GDC shall timely deliver to the Agent the
following financial information:
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(i) Annual Financial Statements. As soon
as available, but not later than 90 days after the
end of each fiscal year, beginning with the fiscal year ended
September 30, 1997, (A) GDC's consolidated annual audited
Financial Statements; (B) a comparison in reasonable detail to
the prior year's audited Financial Statements; (C) the
Auditors' opinion without Qualification, "Management Letter"
and a statement indicating that the Auditors have not obtained
knowledge of the existence of any Default or Event of Default
during their audit; (D) a narrative discussion of GDC's
financial condition and results of operations and the
liquidity and capital resources for such fiscal year, prepared
by a Responsible Officer; and (E) a compliance certificate,
substantially in the form of Exhibit K (the "Compliance
Certificate"), signed by a Responsible Officer, with an
attached schedule of calculations demonstrating compliance
with the Financial Covenants.
(ii) Projections. Not later than sixty days
after the end of each fiscal year of the Borrowers, the
Business Plan of the Loan Parties for the three-year period
commencing with the next succeeding fiscal year of the
Borrowers certified by a Responsible Officer.
(iii) Unaudited Financial Statements. As
soon as available, but not later than forty-five days after
the end of each of the first three fiscal quarters and not
later than ninety days after the end of each fiscal year,
commencing with the fiscal period ended September 30, 1997,
(A) GDC's interim consolidated and consolidating Financial
Statements as at the end of such fiscal period and for the
fiscal year to date; (B) a comparison to the Financial
Statements for the same periods in the prior year; (C) a
certification by a Responsible Officer that such Financial
Statements have been prepared in accordance with GAAP and are
fairly stated in all material respects (subject to normal
year-end audit adjustments); and (D) a Compliance Certificate
signed by a Responsible Officer, with an attached schedule of
calculations demonstrating compliance with the Financial
Covenants.
(iv) Borrowing Base Certificates. Not later
than 20 days after the end of each month, commencing with the
month of October 1997, a borrowing base certificate,
substantially in the form of Exhibit D (the "Borrowing Base
Certificate"), detailing the Borrowing Base Parties' Eligible
Receivables and the Borrowers' Eligible Inventory as of the
last day of such month, which shall be prepared by or under
the supervision of the Chief Financial Officer or Treasurer
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of
GDC and certified by such officers subject only to adjustment
upon completion of a normal year-end audit of physical
inventory; provided, however, that if any Revolving Loans are
outstanding, then commencing at least two weeks prior to the
date on which the first Revolving Credit Loan is made,
Borrowing Base Certificates shall be delivered not later than
Thursday of each week, detailing the Borrowing Base Parties'
Eligible Receivables and Eligible Inventory as of the last day
of the immediately preceding week.
(l) Other Financial Information. Each Borrower shall timely deliver to
the Agent, when reasonably requested by the Agent, any further information
respecting the financial condition of any Loan Party or any Mortgaged Property.
Each Borrower authorizes the Agent to communicate directly with its officers,
employees and Auditors and to examine and make abstracts from its books and
records. Each Borrower authorizes its Auditors to disclose to the Agent any and
all financial statements, work, papers and other information of any kind that
they may have with respect to any Loan Party and its business and financial and
other affairs. The Agent shall treat such information as confidential. The
Borrowers shall deliver a letter addressed to the Auditors directing them to
comply with the provisions of this paragraph when requested by the Agent.
(m) Punctual Payment. The Borrowers shall timely pay the principal and
interest and any other amount due under this Agreement and the other Loan
Documents.
(n) Payment of Liabilities. GDC shall, and shall cause each of its
Subsidiaries to, pay and discharge, in the ordinary course of business and
consistent with past practice, all obligations and liabilities (including,
without limitation, tax liabilities and other governmental charges), except
where the same may be contested in good faith by appropriate proceedings and
adequate reserves with respect thereto have been provided on the books and
records of such Person in accordance with GAAP.
(o) ERISA. The Borrowers shall (a) maintain each Plan intended to
qualify under Section 401(a) of the Internal Revenue Code so as to satisfy the
qualification requirements thereof, (b) contribute, or require that
contributions be made, in a timely manner (i) to each Plan in amounts sufficient
(A) to satisfy the minimum funding requirements of Section 302 of ERISA or
Section 412 of the Internal Revenue Code, if applicable, (B) to satisfy any
other requirements of the law and (C) to satisfy the terms and conditions of
each such Plan, and (ii) to each Foreign Plan in amounts sufficient to satisfy
the minimum funding requirements of any applicable law or regulation, without
any application for a waiver from any such funding requirements, (c) cause each
Plan or Foreign Plan to comply in all material respects with applicable law
(including all applicable statutes,
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orders, rules and regulations), (d) pay in a timely manner, in all material
respects, all required premiums to the PBGC, (e) deliver a copy to the Agent
within thirty days of the receipt by, or the requisite filing or notification
date for, GDC or any ERISA Affiliate of any: (i) notice of a Reportable Event
for a Plan to the PBGC, (ii) notice of an intent to terminate a Plan to the
PBGC, (iii) notice from the PBGC relating to the failure of GDC or any ERISA
Affiliate to timely pay premiums to the PBGC, the PBGC's intent to terminate any
Plan, the appointment of a trustee to administer a Plan or the imposition of
Employer Liability, computed under Sections 4062, 4063 or 4064 of ERISA, on GDC
or any ERISA Affiliate, (iv) notice and demand for payment of Withdrawal
Liability, described in Section 4201 of ERISA, by GDC or any ERISA Affiliate
from a Multiemployer Plan, (v) notice of any claim made against GDC or any
related Person for unpaid contributions with respect to a Plan, (vi) notice to
the PBGC or any Plan participant or beneficiary of any failure to make a
required contribution to a Plan, (vii) notice by the Department of Labor of any
penalty, audit, investigation or any purported violation of ERISA with respect
to a Plan, (viii) notice by the Internal Revenue Service or the Treasury
Department of any income tax deficiency or delinquency, excise tax, penalty,
audit or investigation with respect to a Plan, (ix) an application for a waiver
of the minimum funding requirement for any Plan or Foreign Plan or a request for
any exemption from a Prohibited Transaction with respect to any Plan, and (x) a
complaint filed in court, judgment, award or settlement agreement with respect
to a Plan that may result in material liability to GDC or any ERISA Affiliate,
or may have a Material Adverse Effect and (f) furnish to the Agent, upon request
from the Agent, whichever of the following may be applicable: (i) a certificate
of GDC or an ERISA Affiliate signed on its behalf by the Chief Executive Officer
or Chief Financial Officer of such Person setting forth details as to the
termination of a Plan, an application for a waiver of a minimum funding
requirement or an application for an exemption from a Prohibited Transaction,
and the action that such Person is taking or proposes to take with respect
thereto, (ii) a copy of each annual report or summary annual report with respect
to any Plan, (iii) copies of all actuarial valuations received by GDC or any
ERISA Affiliate with respect to any Plan or Foreign Plan and (iv) copies of all
correspondence with the PBGC, the Secretary of Labor or any representative of
the Internal Revenue Service with respect to any Plan or any other governmental
agency with respect to any Foreign Plan relating to an actual or threatened
change or development that could have a Material Adverse Effect on the property,
operations or condition (financial or otherwise) of GDC or an ERISA Affiliate.
As used in this Section 7.1(o) and in Section 6.1(y)(ix), the following
terms shall have the following meanings:
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(i) "Employer Liability" means the liability
computed under Section 4062, 4063 or 4064 of ERISA.
(ii) "Foreign Plan" means a plan that provides
retirement or health benefits and that is maintained by, or
otherwise contributed to, GDC or any of its Subsidiaries for
the benefit of employees outside the United States.
(iii) "Withdrawal Liability" means the liability
described in Section 4201 of ERISA.
(p) Environmental Matters. GDC shall, and shall cause each of
its Subsidiaries to, conduct its business so as to comply in all respects with
all applicable Environmental Laws including, without limitation, compliance with
the terms and conditions of all permits and governmental authorizations.
(q) Trademarks. GDC shall, and shall cause each of its
Subsidiaries to, do and cause to be done all things necessary to preserve and
keep in full force and effect all of its material registrations of trademarks,
service marks and other marks, trade names and other trade rights.
(r) Solvency. GDC shall, and shall cause each of its
Subsidiaries to, be and remain Solvent on a consolidated basis at all times.
(s) Further Assurances.
(i) GDC 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 at any
time determine in its reasonable discretion to be necessary or
desirable to carry out and consummate the transactions
contemplated by the Loan Documents and to perfect or protect
the Liens (and the priority status thereof) of the Agent, for
the ratable benefit of the Lenders, on the Collateral.
(ii) In the event that any Person becomes a Domestic
Subsidiary after the date hereof, (it being understood that
this Section 7.1(s)(ii) is not and shall not be deemed to be a
consent to the creation or acquisition of any such
Subsidiary), GDC will promptly notify the Agent and cause such
Subsidiary to execute and deliver to the Agent a counterpart
of the Guaranty, Contribution Agreement, the Guarantor
Security Agreement and the Guarantor Intellectual Property
Security Agreement, and to take all such further actions and
execute all such further documents and instruments as may be
required to grant and perfect in favor of the Agent, for the
benefit of the Lenders, a
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first priority Lien on all the
assets of such Subsidiary. The Borrowers shall deliver to the
Agent, together with such documents, all legal opinions and
other Loan Documents that the Agent may reasonably request. In
the event that GDC or any of its Subsidiaries creates a new
Subsidiary, all (or, in the case of a Foreign Subsidiary, 66%)
of the capital stock or other equity interests of such new
Subsidiary shall promptly be duly and validly pledged to the
Agent for the benefit of the Lenders pursuant to the Loan
Documents, subject to no other Liens.
(iii) With respect to the assets of any Loan Party
that are not subject to a perfected Lien in favor of the
Agent, GDC shall, and shall cause each of its Domestic
Subsidiaries to, promptly following the request of the Agent,
(A) execute and deliver to the Agent such amendments to the
relevant Security Documents or such other documents as the
Agent shall deem necessary or advisable to grant to the Agent,
for the benefit of the Lenders, a Lien on such assets, (B)
take all actions necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable
Requirements of Law, and (C) deliver to the Agent legal
opinions relating to the matters described in clauses (A) and
(B) above, which in each case shall be in form and substance
reasonably satisfactory to the Agent.
(iv) Within 60 days after the Closing Date and
without limiting the generality of the foregoing, GDC shall
either (A) cause to be delivered to the Agent two new Lockbox
Agreements, in form and substance satisfactory to the Agent,
duly executed by GDC and a Lockbox Bank, which Agreements
shall supersede and replace the existing Lockbox Agreements
with Bank of America and Bank of Boston Connecticut as Lockbox
Banks (the "Specified Lockbox Agreements") or (ii) cause all
Collections and other amounts received by any Borrower from
any of its account debtors to be remitted to a lockbox
established pursuant to a Lockbox Agreement other than a
Specified Lockbox Agreement.
SECTION 7.2. Negative Covenants. Until termination of this
Agreement and all outstanding Letter of Credit and payment and satisfaction of
all Obligations:
(a) Indebtedness. GDC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, at any time create, incur, assume or
suffer to exist any Indebtedness other than:
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(i) Indebtedness under the Loan Documents;
(ii) Indebtedness secured by Liens permitted by
Section 7.2(i)(ii);
(iii) Existing Indebtedness;
(iv) endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(v) Indebtedness secured by purchase money Liens on
Equipment acquired after the date of this Agreement or
financed within 180 days after its acquisition ("Purchase
Money Liens") and Indebtedness under Capitalized Lease
Obligations; provided, that the aggregate amount of
Indebtedness under this clause (v) shall not exceed
$15,000,000 for any fiscal year;
(vi) Convertible Senior Subordinated Debentures
in an aggregate outstanding amount not to exceed $30,000,000
at any time;
(vii) Indebtedness of the Borrowing Base Parties
(other than GDC) owing to GDC to the extent permitted by
Section 7.2(h)(ii);
(viii) subordinated Indebtedness subject to the
Subordination Agreement in an aggregate outstanding principal
amount not to exceed $40,000,000 owing by GDC to DataComm
Leasing; and
(ix) 9% Convertible Subordinated Debentures in an
aggregate principal amount not to exceed $25,000,000 at any
time, provided, that such Debentures (A) are issued in
exchange for GDC's 9% Cumulative Convertible Exchangeable
Preferred Stock in accordance with Section 7.2(j) and (B) are
subject to subordination provisions in form and substance
satisfactory to the Agent.
(b) Contingent Obligations. GDC will not, and will not permit
any of its Subsidiaries to, directly or indirectly, incur, assume, or suffer to
exist any Contingent Obligation, excluding (i) indemnities given in connection
with the sale of Inventory or other asset dispositions permitted hereunder and
(ii) Contingent Obligations for Indebtedness of the Borrowers or a Domestic
Subsidiary permitted to be incurred under Sections 7.2(a)(i) through (v).
(c) Corporate Changes, etc. GDC will not, and will not permit
any of its Subsidiaries to, directly or indirectly, merge or consolidate with
any Person or amend, alter or modify its Governing Documents or its corporate
name, mailing address,
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principal places of business, structure, status or existence, or liquidate or
dissolve itself (or suffer any liquidation or dissolution) or issue any capital
stock, except that a Guarantor may merge with and into another Guarantor or a
Borrower so long as such Borrower is the surviving corporation in any such
merger involving such Borrower.
(d) Change in Nature of Business; DataComm Leasing. GDC will
not, and will not permit any of its Subsidiaries to, at any time make any
material change in the lines of its business as carried on at the date hereof or
enter into any new line of business. Notwithstanding anything to the contrary
contained in this Agreement, GDC will not, and will not permit any of its
Subsidiaries, directly or indirectly, to make any investment in, any loan to, or
any sale, transfer or other disposition of assets to DataComm Leasing, except
for sales of inventory in the ordinary course of business and payments expressly
permitted by the Subordination Agreement.
(e) Sales, etc. of Assets. GDC will not, and will not permit
any of its Subsidiaries to, directly or indirectly, in any fiscal year, sell,
lease, transfer or otherwise dispose of any assets, or grant any option or other
right to purchase, lease or otherwise acquire any assets, except:
(i) sales of Inventory in the ordinary course of
business;
(ii) so long as, both before and after giving effect
thereto, no Event of Default has occurred and is continuing
and the Stockholders Equity of GDC and its Subsidiaries is
greater than $80,000,000, upon fifteen days' prior written
notice to the Agent, the sale of other assets for cash to
persons that are not Affiliates; provided, that (A) the
aggregate amount of all such sales does not exceed $5,000,000
in the aggregate during the term of this Agreement and (B)
provided, further, that the Net Cash Proceeds of such sales
are applied in accordance with Section 2.5(b)(iv);
(iii) So long as, both before and after giving effect
thereto, no Event of Default has occurred and is continuing,
the sale of the assets listed on Schedule 7.2(e); provided,
that (A) any such sale is made to an non-Affiliate for fair
market value, as such value is determined by the Board of
Directors of GDC and (B) the Loan Parties promptly comply with
Section 7.1(s) with respect to any non-cash consideration
received in connection with such sale; and
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(iv) the granting of nonexclusive licenses of
intellectual property in the ordinary course of business.
(f) Cancellation of Debt. GDC will not, and will not permit
any of its Subsidiaries to, cancel any claim or debt owed to it, except for
consideration in the ordinary course of business.
(g) Defaults Under Other Agreements. GDC will not, and will
not permit any of its Subsidiaries to, default under any material lease,
mortgage, deed of trust or lien instrument relating to any Property or permit
any landlord to terminate prior to the expiration of its term any leasehold
interest of any Loan Party.
(h) Loans to Other Persons. GDC will not, and will not permit
any of its Subsidiaries to, at any time make a loan or advance any credit
(except to trade debtors in the ordinary course of business) to any Person,
except:
(i) loans to employees, officers and directors of
such Person in the ordinary course of business in an aggregate
outstanding amount not to exceed $750,000 at any time;
(ii) the intercompany loans made by GDC that are
outstanding on the date hereof and set forth on Schedule
7.2(a); provided that each such intercompany loan is evidenced
by an Intercompany Note that is pledged to the Agent pursuant
to the Pledge Agreement; and
(iii) GDC may use the proceeds of Revolving Credit
Loans to make intercompany loans to (A) General DataComm, Inc.
in an aggregate outstanding principal amount which, when
combined with the outstanding principal amount of loans to
such Person permitted under Section 7.2(h)(ii), does not
exceed $25,000,000 and (B) any other Borrowing Base Party in
an aggregate outstanding principal amount which, when combined
with the outstanding principal amount of loans to such Person
permitted under Section 7.2(h)(ii), does not exceed
$10,000,000 to such other Borrowing Base Party; provided, that
each such intercompany loan is evidenced by an Intercompany
Note that is pledged to the Agent pursuant to the Pledge
Agreement.
(i) Liens, etc. GDC will not, and will not permit any of its
Subsidiaries to, directly or indirectly, at any time create, incur, assume or
suffer to exist any Lien on or with respect to any of its properties or assets
of any character whether now owned or hereafter acquired, other than:
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(i) Liens created by the Security Documents;
(ii) Permitted Liens; and
(iii) the Liens existing on the date hereof and
specified in Schedule 7.2(i).
(j) Dividends, Stock Redemptions, Exchange, Distributions,
etc. GDC will not, and will not permit any of its Subsidiaries to, directly or
indirectly, declare or pay any dividends on, purchase, redeem or retire any
shares of any class of its capital stock or any warrants, options or rights to
purchase any such capital stock, whether now or hereafter outstanding ("Stock"),
or make any payment on account of or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of its Stock, or make any other distribution in respect thereof,
either directly or indirectly, whether in cash or property or in obligations of
such Person, except that (i) a Subsidiary of GDC may pay dividends to GDC or
another Subsidiary of GDC, (ii) so long as, both before and after giving effect
thereto, no Event of Default has occurred and is continuing and Excess
Availability is at least $5,000,000, GDC may pay regularly scheduled quarterly
dividends on its 9% Cumulative Convertible Exchangeable Preferred Stock in
respect of the immediately preceding fiscal quarter, (iii) GDC may receive
shares of its common stock in consideration for the exercise of stock options
granted to such employees and directors (so long as no cash consideration is
paid GDC or any of its Subsidiaries), (iv) GDC may cancel or retire options in
accordance with its stock option plans (so long as GDC does not make any
payments in connection therewith) and (iv) GDC may exchange its 9% Cumulative
Convertible Exchangeable Preferred Stock for a corresponding amount of 9%
Convertible Subordinated Debentures (but not for any other consideration).
(k) Investments in Other Persons. GDC will not, and will not
permit any of its Subsidiaries to, directly or indirectly, at any time make or
hold any Investment in any Person (whether in cash, securities or other property
of any kind) other than (i) Investments in Cash Equivalents and (ii) Investments
permitted by Sections 7.2(h) and (l).
(l) Partnerships; Subsidiaries; Joint Ventures; Management
Contracts. GDC will not, and will not permit any of its Subsidiaries to, at any
time create any direct or indirect Subsidiary, enter into any joint venture or
similar arrangement (other than the joint ventures existing on the date hereof
and set forth on Schedule 6.1(k)) or become a partner in any general or limited
partnership or enter into any management contract (other than an employment
contract for the full-time employment of an officer or employee entered into in
the regular course of a Borrower's business) permitting third party management
rights with respect to such Person's business, except that GDC may
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create Domestic Subsidiaries with the prior written consent of the Required
Lenders (which consent shall not be unreasonably withheld).
(m) Fiscal Year. GDC will not, and will not permit any of
its Subsidiaries to, change its fiscal year from a year ending September 30.
(n) Accounting Changes. GDC will not, and will not permit any
of its Subsidiaries to, change its Auditors or at any time make or permit any
change in accounting policies or reporting practices, except as required by GAAP
and except with the prior written consent of the Agent (not to be unreasonably
withheld).
(o) Broker's or Finder's Fees. GDC will not, and will not
permit any of its Subsidiaries to, pay or incur any broker's or finder's fees in
connection with this Agreement or the transactions contemplated hereby, except
that GDC may pay a broker's fee to Xxxxxxx Xxxxx.
(p) Reimbursement for Expenses. GDC will not, and will not
permit any of its Subsidiaries to, reimburse any stockholder, officer, director,
employee or agent of such entity for any expenses incurred by such Person other
than reasonable expenses incurred for or on behalf of such entity in the
ordinary course of business.
(q) No Prohibited Transactions Under ERISA. GDC will not,
and will not permit any of its Subsidiaries to, directly or indirectly:
(i) Engage in any prohibited transaction which
could reasonably be expected to result in a civil penalty or
excise tax described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption
is not available or a private exemption has not been
previously obtained from the Department of Labor;
(ii) permit to exist with respect to any Benefit
Plan any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the Internal Revenue Code),
whether or not waived;
(iii) fail to pay timely required contributions or
annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(iv) terminate any Benefit Plan where such event
would result in any liability of any Loan Party or any ERISA
Affiliate under Title IV of ERISA;
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(v) fail to make any required contribution or
payment to any Multiemployer Plan;
(vi) fail to pay any required installment or any
other payment required under Section 412 of the Internal
Revenue Code on or before the due date for such installment or
other payment;
(vii) amend a Plan resulting in an increase in
current liability for the plan year such that any Loan Party
or any ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue Code; or
(viii) 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.
(r) Unusual Terms of Sale. GDC will not, and will not permit
any of its Subsidiaries to, sell goods or products to customers other than
within the terms normally given by such Person in the ordinary course of its
business and consistent with past practice (it being understood that GDC and its
Subsidiaries shall not sell goods or products on extended terms, pursuant to
progress billing or on a xxxx and hold basis).
(s) Prepayments and Amendments of Material Contracts. GDC will
not, and will not permit any of its Subsidiaries to, at any time (i) prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any subordination
terms of, any Indebtedness (including the Convertible Senior Subordinated
Debentures), other than the prepayment of the Loans in accordance with the terms
of this Agreement or (ii) amend, modify, cancel or terminate, or permit the
amendment, modification, cancellation or termination of, any Material Contract,
except in the event that such amendments or modifications could not have a
Material Adverse Effect, or amend, modify, cancel or terminate, or permit the
amendment, modification, cancellation or termination of any provision of the
Offering Memorandum, the Indenture or the 9% Indenture, except for amendments or
modifications that could not have an adverse effect on a Borrower, the Lenders
or the Agent.
(t) Sale-Leaseback Obligations. GDC will not, and will not
permit any of its subsidiaries to, at any time create, incur or assume any
obligations as lessee for the rental or hire of real or personal property in
connection with any sale and leaseback transaction.
(u) Negative Pledge. GDC will not, and will not permit any of
its Subsidiaries to, at any time enter into or suffer to exist any agreement
prohibiting or conditioning the creation or assumption of any Lien upon any of
its property or
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assets, except with respect to assets that are subject to Liens permitted by
Sections 7.2(i)(iii) and (iv).
(v) Acquisition of Stock or Assets. GDC will not, and will not
permit any of its Subsidiaries to, acquire or commit or agree to acquire all or
any material portion of the stock, securities or assets of any other Person
other than (i) in connection with any transaction permitted under Section
7.2(c), (ii) Investments permitted under Section 7.2(k) and (iii) so long as,
both before and after giving effect thereto, no Event of Default has occurred
and is continuing and the Stockholders Equity of GDC and its Subsidiaries is
greater than $80,000,000, the Borrowers may, subject to Section 7.1(s), acquire
assets from Persons that are not Affiliates; provided, that the aggregate amount
of all such acquisitions does not exceed $5,000,000 in the aggregate during the
term of this Agreement.
(w) Use of Proceeds. The Borrowers will not use any portion of
the proceeds of any Revolving Credit Loan or Term Loan in violation of Section
2.4 or for the purpose of purchasing or carrying any "margin stock" (as defined
in Regulation G of the Board of Governors of the Federal Reserve System) in any
manner which violates the provisions of Regulation G, T, U or X of such Board of
Governors or for any other purpose in violation of any applicable statute or
regulation, or of the terms and conditions of this Agreement.
(x) Collateral Access Agreements. GDC will not, and will not
permit any of its Subsidiaries to, suffer to be terminated any Collateral Access
Agreement.
ARTICLE VIII.
FINANCIAL COVENANTS
Until termination of this Agreement and all outstanding
Letters of Credit and payment and satisfaction of all Obligations:
SECTION 8.1. Current Ratio. The ratio of Consolidated Current
Assets to Consolidated Current Liabilities shall not be less than 1.5:1 at the
end of any fiscal quarter.
SECTION 8.2. Stockholders Equity. The Stockholders Equity
of GDC and its Subsidiaries shall not be less than $80,000,000 at the end of
any fiscal quarter.
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SECTION 8.3. Capital Expenditures. The aggregate amount of
Capital Expenditures of GDC and its Subsidiaries shall not exceed $15,000,000
during any fiscal year.
ARTICLE IX.
EVENTS OF DEFAULT
SECTION 9.1. Events of Default. The occurrence of any of the
following events shall constitute an "Event of Default":
(a) the Borrowers shall fail to pay any principal, interest,
fees, expenses or other Obligations when due, whether at stated maturity, by
acceleration or otherwise; or
(b) (i) any Loan Party shall fail to perform or observe any
term, condition, covenant or agreement contained in Section 7.1(a)(i), (h) or
(r), 7.2, or 8.1 through 8.3 of this Agreement, Section 4(c) of the Pledge
Agreement, Section 2(b) or (h) of the Intellectual Property Security Agreement
or the Guarantor Intellectual Property Security Agreement, Section 4.2, 4.4 or
4.5 of the Guarantor Security Agreement, Clause 4.1 of the Debenture, Sections
1.19 or 1.20 of either Mortgage, or Clause 7(a) or (d) of the Charge Over
Shares; or (ii) any Loan Party shall fail to perform or observe any other term,
condition, covenant or agreement contained in this Agreement or the other Loan
Documents (other than as provided in Sections 9.1(a) and (b)(i)) and, in the
case of this clause (ii) only, such failure continues unremedied for the earlier
of thirty days after its occurrence or ten days after notice from the Agent to
the Borrowers; or
(c) any Loan Party shall dissolve, wind up or otherwise cease
to conduct its business; or
(d) any Loan Party shall become the subject of (i) an
Insolvency Event except as set forth in clause (e) of the definition of
Insolvency Event or (ii) an Insolvency Event as set forth in clause (e) of the
definition of Insolvency Event that is not resolved or dismissed within sixty
days; or
(e) any Loan Party (i) shall fail to pay any Indebtedness in
excess of $1,000,000 (other than the Indebtedness hereunder) or any interest or
premium thereon, when due (whether at scheduled maturity or by required
prepayment, acceleration, demand or otherwise), or (ii) shall otherwise be in
breach or default in any of its obligations under any agreement with respect to
any such Indebtedness, if the effect of such breach, default or failure to pay
is to cause such Indebtedness to become due or redeemed or permit the holder or
holders of such Indebtedness (or a trustee or agent on behalf of such holder or
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holders) to declare such Indebtedness due or require such Indebtedness to be
redeemed prior to its stated maturity; or
(f) any representation or warranty made by any Loan Party
under or in connection with any Loan Document, Financial Statement or
certificate delivered in connection therewith shall prove to have been incorrect
in any material respect when made or deemed made; or
(g) any Federal tax lien for more than $1,000,000 is filed of
record against any Loan Party and is not bonded or discharged within five
Business Days; or
(h) a Change of Control shall have occurred; or
(i) any judgment or order for the payment of money in excess
of $1,000,000 shall be rendered against any Loan Party and shall not be stayed,
vacated, bonded or discharged within thirty days; or
(j) any material covenant, agreement or obligation of any Loan
Party contained in or evidenced by any of the Loan Documents shall cease to be
enforceable, or shall be determined to be unenforceable, in accordance with its
terms; any Loan Party shall deny or disaffirm its obligations under any of the
Loan Documents or any Liens granted in connection therewith; or any Liens
granted in any of the Collateral shall be determined to be void, voidable or
invalid, are subordinated or are not given the priority contemplated by this
Agreement; or
(k) a Security Document shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and, except as otherwise
permitted under Section 7.2(i), perfected first priority Lien on the Collateral
purported to be covered thereby; or
(l) the independent public accountants for the Borrowers shall
deliver a Qualified opinion on any Financial Statement.
SECTION 9.2. Acceleration, Termination of Commitments and Cash
Collateralization. Upon the occurrence and during the continuance of an Event of
Default, the Agent shall at the request, or may with the consent, of the
Required Lenders, take any or all of the following actions, without prejudice to
the rights of the Agent or the Lenders to enforce their claims against the
Borrowers:
(a) Acceleration. Upon delivery of written notice to the
Borrowers from the Agent, all Obligations shall be declared to be immediately
due and payable (except with respect to any Event of Default with respect to a
Borrower set forth in Section 9.1(d), in which case all Obligations shall
automatically become
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immediately due and payable without the necessity of any notice or other demand
to the Borrowers) without presentment, demand, protest or any other action or
obligation of the Agent or the Lenders.
(b) Termination of Commitment. Upon delivery of written notice
to the Borrowers from the Agent, the Lenders' obligations to make Loans
hereunder shall be immediately terminated and, at all times thereafter, all
Loans made by the Lenders pursuant to this Agreement shall be in the Lenders'
sole discretion. Notwithstanding any termination of this Agreement or the
Commitments, until all Obligations shall have been fully and indefeasibly paid
and satisfied, the Agent shall retain all security in all guaranties and in all
existing and future Receivables, Inventory, Equipment and other collateral held
by it hereunder or under any other agreement, and the Borrowers shall continue
to assign Receivables to the Agent and shall turn over collections to it.
(c) Cash Collateralization. With respect to all Letters of
Credit outstanding at the time of an acceleration pursuant to Section 9.2(a),
the Borrowers shall immediately deposit in a cash collateral account established
by the Agent an amount equal to 105% of the aggregate then undrawn amount of
such Letters of Credit. Amounts held in such cash collateral account shall be
(i) under the sole dominion and control of the Agent and (ii) applied by the
Agent to the payment of drafts drawn under such Letters of Credit, and the
balance, if any, in such cash collateral account, after all such Letters of
Credit shall have expired or been fully drawn upon shall be applied to repay the
other Obligations. After all such Letters of Credit shall have expired or been
fully drawn upon, all Letter of Credit obligations shall have been satisfied and
all other Obligations shall have been indefeasibly paid in full in cash, the
balance, if any, in such cash collateral account shall be returned to the
Borrowers.
SECTION 9.3. Remedies.
(a) Upon the occurrence and during the continuance of an Event
of Default, the Agent shall have all rights and remedies with respect to the
Obligations and the Collateral under applicable law and the Loan Documents, and
the Agent may do any or all of the following:
(i) remove for copying all documents, instruments,
files and records (including the copying of any computer
records) relating to the Receivables or use (at the expense of
the Borrowers) such supplies or space of a Borrower at such
Borrower's places of business necessary to administer and
collect the Receivables;
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(ii) accelerate or extend the time of payment,
compromise, issue credits, or bring suit on the Receivables
(in the name of a Borrower or the Agent) and otherwise
administer and collect the Receivables;
(iii) sell, assign and deliver the Receivables and
any returned, reclaimed or repossessed merchandise, with or
without advertisement, at public or private sale, for cash, on
credit or otherwise, subject to applicable law; and
(iv) foreclose the security interests created
pursuant to the Loan Documents by any available procedure, or
take possession of any or all of the Collateral, without
judicial process and enter any premises where any Collateral
may be located for the purpose of taking possession of or
removing the same.
The Agent may bid or become a purchaser at any sale, free from any right of
redemption, which right is expressly waived by the Borrowers. If notice of
intended disposition of any Collateral is required by law, it is agreed that
five Business Days notice shall constitute reasonable notification. The
Borrowers will assemble the Collateral and make it available at such locations
as the Agent may specify, whether at the premises of the Borrowers or elsewhere,
and will make available to the Agent the premises and facilities of the
Borrowers for the purpose of the Agent's taking possession of or removing the
Collateral or putting the Collateral in saleable form.
(b) The proceeds of all collateral granted to the Agent
pursuant to the Loan Documents or otherwise shall be applied by the Agent to the
payment of the Obligations in the following order:
(i) FIRST, to the payment of all reasonable costs
and expenses of the Agent and the Lenders incurred in
connection with the preservation, collection and enforcement
of the Obligations or of any of the liens granted to the Agent
pursuant to the Loan Documents or otherwise;
(ii) SECOND, to the payment of that portion of the
Obligations constituting accrued and unpaid interest and fees
and indemnities payable under this Agreement and the other
Loan Documents, ratably among the Lenders in accordance with
the respective amount of such Obligations owed to the Lenders;
(iii) THIRD, to the payment of the principal of the
Term Loan ratably among the Lenders in accordance with the
outstanding amount of the respective Term Loans
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made by them until the outstanding principal amount of the
Term Loan shall be paid in full;
(iv) FOURTH, to the payment of the principal of the
Revolving Credit Loans ratably among the Lenders in accordance
with their respective Revolving Credit Commitment Percentages
until the outstanding principal amount of the Revolving Credit
Loans shall be paid in full;
(v) FIFTH, to the deposit of cash in a cash
collateral account in an amount equal to 105% of the undrawn
face amount of all outstanding Letters of Credit, which
account shall be established in the manner set forth in
Section 9.2(c);
(vi) SIXTH, to the payment of all other Obligations
ratably among the Lenders in accordance with the respective
amount of such Obligations owed to them until such other
Obligations shall be paid in full; and
(vii) SEVENTH, the balance, if any, after all of the
Obligations have been fully paid and satisfied, shall, except
as otherwise provided in the Loan Documents, be deposited by
the Agent in an account designated by the Borrowers, or paid
over to such other Person or Persons as may be required by
law.
SECTION 9.4. Right of Setoff. In addition to and not in
limitation of all rights of offset that the Agent or any Lender may have under
applicable law, upon the occurrence of any Event of Default, and whether or not
the Agent or such Lender has made any demand or the Obligations have matured,
each Lender shall have the right to appropriate and apply to the payment of the
Obligations all deposits and other obligations then or thereafter owing by such
Lender to or for the credit or the account of any Borrower.
SECTION 9.5. License for Use of Software and Other
Intellectual Property. Unless expressly prohibited by any licensor thereof, the
Agent is, in connection with the exercise of its rights and remedies, hereby
granted a license to use all computer software programs, data bases, processes,
trademarks, tradenames and materials used by any Borrower in connection with its
businesses or in connection with the Collateral. The Agent agrees not to use any
such license unless an Event of Default has occurred and is continuing, without
giving the Borrowers prior notice.
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SECTION 9.6. No Marshalling; Deficiencies; Remedies
Cumulative. The net cash proceeds resulting from the Agent's exercise of any of
the foregoing rights to liquidate all or substantially all of the Collateral
(after deducting all of the Agent's expenses related thereto) shall be applied
by the Agent to the payment of the Obligations, whether due or to become due, in
such order as provided in Section 9.3(b). The Borrowers shall remain liable to
the Agent and the Lenders for any deficiencies and the Agent in turn agrees to
remit to the Borrowers or their successors or assigns, any surplus resulting
therefrom. The foregoing remedies are not intended to be exhaustive and the full
or partial exercise of any of them shall not preclude the full or partial
exercise of any other available remedy under this Agreement, under any other
Loan Document, at equity or at law.
SECTION 9.7. Waivers. Except as may be otherwise specifically
provided herein or in any other Loan Document, each Borrower hereby waives any
right, to the extent applicable law permits, to receive prior notice of or a
judicial or other hearing with respect to any action or prejudgment remedy or
proceeding by the Agent to take possession, exercise control over, or dispose of
any item of Collateral in any instance (regardless of where the same may be
located) where such action is permitted under the terms of this Agreement or any
other Loan Document or by applicable law or of the time, place or terms of sale
in connection with the exercise of the Agent's rights hereunder and also waives,
to the extent permitted by law, any bonds, security or sureties required by any
statute, rule or any other law as an incident to any taking of possession by the
Agent of any Collateral. Each Borrower also waives any damages (direct,
consequential or otherwise) occasioned by the enforcement of the Agent's rights
under this Agreement or any other Loan Document including the taking of
possession of any Collateral or the giving of notice to any account debtor or
the collection of any Receivable, all to the extent that such waiver is
permitted by law. Each Borrower also consents that the Agent, in connection with
the enforcement of the Agent's rights and remedies under this Agreement, may
enter upon any premises owned by or leased to it without obligations to pay rent
or for use and occupancy, through self-help, without judicial process and
without having first obtained an order of any court. These waivers and all other
waivers provided for in this Agreement and the other Loan Documents have been
negotiated by the parties and each Borrower acknowledges that it has been
represented by counsel of its own choice and has consulted such counsel with
respect to its rights hereunder.
SECTION 9.8. Further Rights of the Agent.
(a) Further Assurances. Each Borrower shall do all things and
shall deliver all instruments reasonably requested by the Agent to protect or
perfect any Lien given hereunder
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including, without limitation, financing statements under the Uniform Commercial
Code.
(b) Insurance; Etc. In the event that the Borrowers shall fail
to purchase or maintain insurance (where applicable), or to pay any tax,
assessment, government charge or levy, except as the same may be otherwise
permitted hereunder or which is being contested in good faith by appropriate
proceedings, or in the event that any Lien prohibited hereby shall not be paid
in full or discharged, or in the event that the Borrowers shall fail to perform
or comply with any other covenant, promise or obligation to the Agent or the
Lenders hereunder or under any other Loan Document, the Agent may (but shall not
be required to) perform, pay, satisfy, discharge or bond the same for the
account of the Borrowers, and all amounts so paid by the Agent, including
reasonable attorneys' fees, shall be treated as a Revolving Credit Loan
hereunder to the Borrowers and shall constitute Obligations.
ARTICLE X.
THE AGENT
SECTION 10.1. Authorization and Action. Each Lender (in its
capacity as a Lender) hereby irrevocably appoints and authorizes the Agent to
take such action as contractual representative on its behalf and hereby
irrevocably authorizes the Agent to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters not expressly provided for by
the Loan Documents (including, without limitation, enforcement or collection of
the Notes), the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lenders
and all holders of Notes; provided, however, that the Agent shall not be
required to take any action that the Agent believes exposes it to personal
liability or that is contrary to any Loan Document or applicable law. Each
Lender hereby irrevocably appoints the Agent to act as the contractual
representative of such Lender for purposes of acquiring, holding and enforcing
any and all Liens on collateral (including, without limitation, the Collateral)
granted by the Borrowers to secure any Obligations. The Agent shall not, by
reason of any of the terms and provisions of this Agreement, have a fiduciary
relationship in respect of any Lender. The provisions of this Article X are
solely for the benefit of the Agent and the Lenders, and the Borrowers shall not
have any rights to rely on or enforce any of the provisions
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hereof. In performing its functions hereunder, the Agent shall act solely as the
contractual representative of the Lenders and does not assume and shall not be
deemed to have assumed any fiduciary or similar obligation or relationship with
or for any Lender or any Borrower.
SECTION 10.2. Agent's Reliance, Etc. Neither the Agent nor any
of its directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with the Loan
Documents, except for its or their own gross negligence or willful misconduct as
determined in a final, non-appealable judgment by a court of competent
jurisdiction. Without limitation of the generality of the foregoing, the Agent:
(i) may treat the payee of any Note as the holder thereof until the Agent
receives and accepts an Assignment and Acceptance entered into by a Lender that
is the payee of such Note, as assignor, and an Eligible Assignee, as assignee;
(ii) may consult with legal counsel (including counsel for the Borrowers),
independent public accountants and other experts selected by them and shall not
be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, warranties or representations made in or in
connection with the Loan Documents; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of any Loan Document on the part of the Borrowers or to inspect the
property (including the books and records) of the Borrowers; (v) shall not be
responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Loan Document or any
other instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of any Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (including by telecopier)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 10.3. TBCC and Affiliates. With respect to its
Commitments, the Loans made by it and the Notes issued to it, each of TBCC and
its Affiliates shall have the same rights and powers under the Loan Documents as
any other Lender and may exercise the same as though it were not the Agent; and
the term "Lender" or "Lenders" shall unless otherwise expressly indicated,
include each of TBCC and its Affiliates in its individual capacity. Each of TBCC
and its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Borrower, any of its Affiliates and any Person
who may do business with or own securities of any Borrower, or any such
Affiliate, all as if TBCC were not the Agent and, subject to the last sentence
of Section 2.8(a), without any duty to account therefor to the Lenders.
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SECTION 10.4. Lender Credit Decision. Each Lender acknowledges
that it has, independently and without reliance upon the Agent or any other
Lender and based on the Financial Statements referred to in Sections
5.1(a)(xxii) and 6.1(i) and such other documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent 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.
SECTION 10.5. Indemnification. Each Lender severally agrees to
indemnify the Agent (to the extent not promptly reimbursed by the Borrowers)
from and against such Lender's ratable share of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of the Loan Documents or any action taken or omitted by the Agent under the
Loan Documents; provided, however, that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender agrees to reimburse the Agent promptly upon demand for its ratable
share of any costs and expenses payable by the Borrowers under Section 12.8, to
the extent that the Agent is not promptly reimbursed for such costs and expenses
by the Borrowers. For purposes of this Section 10.5, the Lenders' respective
ratable shares of any amount shall be determined, at any time, according to the
sum of (a) the aggregate principal amount of the Loans outstanding at such time
and owing to the respective Lenders and (b) the aggregate unused portions of
their respective Commitments at such time. In the event that any Loan required
to be made by any Lender has not been made at any time, such Lender's Commitment
shall be considered to be unused for purposes of this Section 10.5 to the extent
of the amount of such Loan. The failure of any Lender to reimburse the Agent
promptly upon demand for its ratable share of any amount required to be paid by
the Lenders to the Agent as provided herein shall not relieve any other Lender
of its obligation hereunder to reimburse the Agent for its ratable share of such
amount, but no Lender shall be responsible for the failure of any other Lender
to reimburse the Agent for such other Lender's ratable share of such amount.
SECTION 10.6. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Borrowers. Upon any
such resignation of the Agent, the Required Lenders shall have the right to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the
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Agent's giving of notice of resignation, then the Agent may, on behalf of
the Lenders, appoint a successor Agent. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent and upon the execution and filing or
recording of such financing statements, or amendments thereto, and such
amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, to continue the perfection of the Liens granted or purported to be
granted by the Loan Documents, such successor shall succeed to and become vested
with all the rights, powers, discretion, privileges and duties of the retiring
Agent and the retiring Agent shall be discharged from its duties and obligations
under the Loan Documents. After any retiring Agent's resignation hereunder, the
provisions of this Article X shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
SECTION 10.7. Co-Agent. The parties hereto agree that the
Co-Agent shall have no duties, responsibilities or other obligations under this
Agreement in its capacity as Co-Agent.
ARTICLE XI.
ASSIGNMENTS AND PARTICIPATIONS
SECTION 11.1. Conditions to Assignments. Each Lender may, with
the consent of the Agent, assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Loans owing to it and the
Notes held by it); provided, however, that (i) each such assignment shall be of
a uniform, and not a varying, percentage of all such rights and obligations,
(ii) except in the case of an assignment to a Person that, immediately prior to
such assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Loans and the Commitment of
the assigning Lender being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $5,000,000 and shall be an integral multiple of
$1,000,000, (iii) each such assignment shall be to an Eligible Assignee and (iv)
the parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register, an Assignment and Acceptance,
together with any Notes subject to such assignment and a processing and
recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment and
Acceptance, (x) 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, have the rights and obligations
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of a Lender hereunder and (y) a Lender assignor thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights 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, such Lender shall cease to be a party
hereto). No Borrower shall assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the Agent.
SECTION 11.2. No Representations, Etc. By executing and
delivering an Assignment and Acceptance, a Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) 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 any other Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under this Agreement or any other Loan
Document or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the Financial Statements referred to in
Sections 5.1(a)(xxii) and 6.1(i) and 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; (iv) such assignee will, independently and
without reliance upon the 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; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement and the other Loan Documents as are delegated to the Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.
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SECTION 11.3. Record of Assignments. The Agent shall maintain
at its address referred to in Section 12.7 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation of
the names and addresses of the Lenders and the Commitment and principal amount
of the Loans owing to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or any Lender at its own expense, at any reasonable time and from
time to time upon reasonable prior notice.
SECTION 11.4. New Notes. Upon its receipt of an Assignment and
Acceptance executed by an assigning Lender and an assignee in accordance with
Section 11.1, together with any Notes subject to such assignment and the
processing and recordation fee referred to in Section 11.1(iv), the Agent shall,
if such Assignment and Acceptance has been completed and is in substantially the
form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt notice
thereof to the Borrowers. Within five Business Days after its receipt of such
notice, the Borrowers, at their own expense, shall execute and deliver to the
Agent in exchange for the surrendered Notes its new Notes to the order of such
Eligible Assignee in an amount equal to the Revolving Credit Commitment and Loan
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Revolving Credit Commitment or Loans hereunder, new Notes
to the order of the assigning Lender in amounts equal to the Revolving Credit
Commitment and Loans retained by it hereunder. Such new Notes shall be in an
aggregate principal amount equal to the aggregate principal amount of such
surrendered Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibits A and B
hereto, as the case may be.
SECTION 11.5. Participations. Each Lender may sell
participations in or to all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitments, the Loans owing to it and the Notes held by it); provided, however,
that (i) such Lender's obligations under this Agreement (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Lender shall remain the holder of any such Notes
for all purposes of this Agreement, (iv) the Borrowers, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
(v) no participant under any such participation
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shall have any right to approve any amendment or waiver of any provision of any
Loan Document, or any consent to any departure by the Borrowers therefrom,
except to the extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, postpone
any date fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable hereunder, in each case to the extent subject to
such participation, or release all or substantially all of the Collateral. No
participant shall be a Lender for any purpose hereunder by reason of such
participant's participation.
SECTION 11.6. Disclosure. Any Lender may, in connection with
any assignment or participation or proposed assignment or participation pursuant
to this Article XI, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Loan Parties furnished to such
Lender by or on behalf of the Loan Parties.
SECTION 11.7. Security Interest to Federal Reserve Bank.
Notwithstanding any other provision set forth in this Agreement, any Lender may
at any time create a security interest in all or any portion of its rights under
this Agreement (including, without limitation, the Loans owing to it and the
Notes held by it) in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal Reserve System.
ARTICLE XII.
GENERAL PROVISIONS
SECTION 12.1. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND ANY DISPUTE
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, WHETHER SOUNDING IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE
GOVERNED BY THE INTERNAL LAWS AND DECISIONS OF THE STATE OF ILLINOIS, WITHOUT
GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
SECTION 12.2. SUBMISSION TO JURISDICTION. ALL DISPUTES BETWEEN
ANY BORROWER AND THE AGENT OR THE LENDERS, WHETHER SOUNDING IN CONTRACT, TORT,
EQUITY OR OTHERWISE, SHALL BE RESOLVED ONLY BY STATE AND FEDERAL COURTS LOCATED
IN CHICAGO, ILLINOIS, AND THE COURTS TO WHICH AN APPEAL THEREFROM MAY BE TAKEN;
PROVIDED, HOWEVER, THAT THE AGENT SHALL HAVE THE RIGHT, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, TO PROCEED AGAINST ANY BORROWER OR ITS PROPERTY IN ANY
LOCATION REASONABLY SELECTED BY THE AGENT IN GOOD FAITH TO ENABLE THE AGENT TO
REALIZE ON SUCH
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PROPERTY, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE AGENT.
EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS,
SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING BROUGHT BY THE AGENT. EACH BORROWER
WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
AGENT HAS COMMENCED A PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON FORUM NON CONVENIENS.
SECTION 12.3. SERVICE OF PROCESS. EACH BORROWER HEREBY
IRREVOCABLY DESIGNATES XXXXXXX CELLER SPETT & XXXXXX P.C., 000 XXXX XXXXXX, XXX
XXXX, XXX XXXX 00000, ATTENTION: XXXXXX X. XXXXXX, ESQ. AS THE DESIGNEE AND
AGENT OF SUCH BORROWER TO RECEIVE, FOR AND ON BEHALF OF THE BORROWER, SERVICE OF
PROCESS IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. IT IS UNDERSTOOD THAT A COPY OF SUCH PROCESS SERVED ON SUCH
AGENT AT ITS ADDRESS WILL BE PROMPTLY FORWARDED BY MAIL TO THE BORROWERS, BUT
THE FAILURE OF THE BORROWERS TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY
THE SERVICE OF SUCH PROCESS. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT
TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 12.4. JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO A TRIAL BY JURY.
SECTION 12.5. LIMITATION OF LIABILITY. THE AGENT AND THE
LENDERS SHALL HAVE NO LIABILITY TO ANY BORROWER (WHETHER SOUNDING IN TORT,
CONTRACT, OR OTHERWISE) FOR LOSSES SUFFERED BY SUCH BORROWER IN CONNECTION WITH,
ARISING OUT OF, OR IN ANY WAY RELATED TO THE TRANSACTIONS OR RELATIONSHIPS
CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND NONAPPEALABLE
JUDGMENT OR COURT ORDER BINDING ON THE AGENT OR ANY LENDER THAT THE LOSSES WERE
THE RESULT OF ACTS OR OMISSIONS CONSTITUTING GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE AGENT OR SUCH LENDER. EACH PARTY HERETO HEREBY WAIVES ALL
CLAIMS AGAINST ANY OTHER PARTY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE
DAMAGES.
SECTION 12.6. Delays; Partial Exercise of Remedies. No delay
or omission of the Agent or the Lenders to exercise any right or remedy
hereunder shall impair any such right or operate as a waiver thereof. No single
or partial exercise by the Agent or any Lender of any right or remedy shall
preclude any other or further exercise thereof, or preclude any other right or
remedy.
SECTION 12.7. Notices. Except as otherwise provided herein,
all notices and correspondences hereunder shall be in writing and sent by
certified or registered mail, return receipt requested, by overnight delivery
service, with all charges prepaid, or by telecopier followed by a hard copy sent
by regular
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mail, if to the Agent, then to Transamerica Business Credit Corporation, 00000
Xxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxxxxxxx 00000, Telecopy: (000) 000-0000, Attn.:
Xx. Xxx Xxxxxxxx, Senior Vice President, with a copy to Luskin, Xxxxx & Xxxxxx
LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy: (000) 000-0000,
Attn: Xxxxxx X. Xxxxxx, Esq., if to any Lender, to the address specified for it
on the signature pages hereto, and if to a Borrower, then to General DataComm
Industries, Inc., 0000 Xxxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx 00000,
Telecopy: (000) 000-0000, Attn: Xx. Xxxxxx X. Xxxxxx, Vice President and
Treasurer, with a copy to Xxxxxxx Celler Spett & Xxxxxx P.C., 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Telecopy: (000) 000-0000, Attn: Xxxxxx X. Xxxxxx, Esq.
All such notices and correspondence shall be deemed given (i) if sent by
certified or registered mail, when received or when delivery is refused, (ii) if
sent by overnight delivery service, when received at the above stated addresses
or when delivery is refused and (iii) if sent by telecopier transmission, when
receipt of such transmission is acknowledged.
SECTION 12.8. Indemnification; Reimbursement of Expenses of
Collection.
(a) The Borrowers hereby indemnify and agree to defend and
hold harmless the Agent, each Lender and their respective directors, officers,
agents, employees and counsel (each, an "Indemnified Party") from and against
any and all losses, claims, damages, liabilities, deficiencies, judgments or
expenses incurred by any of them (except to the extent that it is finally
judicially determined to have resulted from their own gross negligence or
willful misconduct) arising out of or by reason of (i) any litigation,
investigation, claim or proceeding which arises out of or is in any way related
to (A) this Agreement, any other Loan Document or the transactions contemplated
hereby or thereby, (B) any actual or proposed use by a Borrower of the proceeds
of the Revolving Credit Loans or the Term Loan or (C) the Agent's and the
Lenders' entering into this Agreement, the other Loan Documents or any other
agreements and documents relating hereto, including, without limitation, amounts
paid in settlement, court costs and the reasonable fees and disbursements of
counsel incurred in connection with any such litigation, investigation, claim or
proceeding or any advice rendered in connection with any of the foregoing and
(ii) any remedial or other action taken by a Borrower or the Agent or any Lender
in connection with compliance by a Borrower, or any of its properties, with any
federal, state or local Environmental Laws. In addition, the Borrowers shall,
upon demand, pay to the Agent all costs and expenses incurred by the Agent
(including the reasonable fees and disbursements of counsel and other
professionals) in connection with the preparation, execution, delivery,
syndication, administration, modification and amendment of the Loan Documents,
and pay to the Agent and each Lender all costs and expenses (including the
reasonable fees and
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disbursements of counsel and other professionals) paid or incurred by the Agent
or any Lenders in (A) enforcing or defending its or their rights under or in
respect of this Agreement, the other Loan Documents or any other document or
instrument now or hereafter executed and delivered in connection herewith, (B)
collecting the Obligations or otherwise administering this Agreement, (C)
foreclosing or otherwise realizing upon the Collateral or any part thereof and
(D) obtaining any legal, accounting or other advice in connection with any of
the foregoing. If and to the extent that the Obligations of the Borrowers
hereunder are unenforceable for any reason, the Borrowers hereby agree to make
the maximum contribution to the payment and satisfaction of the Obligations
which is permissible under applicable law.
(b) The Borrowers' obligations under Sections 4.8, 4.9 and
this Section 12.8 shall survive any termination of this Agreement and the other
Loan Documents and the payment in full of the Obligations, and are in addition
to, and not in substitution of, any other of their obligations set forth in this
Agreement.
SECTION 12.9. Amendments and Waivers. Any provision of this
Agreement or any other Loan Document may be amended or waived if, but only if,
such amendment or waiver is in writing and signed by the Loan Parties party
thereto and the Required Lenders and then any such amendment or waiver shall be
effective only to the extent set forth therein; provided, however, that (a) no
amendment or waiver shall, unless in writing and signed by all the Lenders
(other than a Defaulting Lender) or the Agent on behalf of all of such Lenders,
do any of the following at any time: (i) waive any of the conditions specified
in Section 5.1 or 5.2, (ii) change the percentage of the Commitments, the
aggregate unpaid principal amount of the Notes or the number of Lenders that
shall be required for the Lenders or any of them to take any action hereunder,
(iii) release any material guaranty or any material portion of the Collateral,
(iv) amend this Section 12.9 or (v) amend the definition of Required Lenders,
(b) no amendment, waiver or consent shall, unless in writing and signed by the
Lenders, (i) increase the Commitments or the Revolving Credit Commitment
Percentage of any Lender or subject such Lender to any additional obligations,
(ii) reduce the principal of, or interest on, the Notes held by any Lender or
any fees or other amounts payable hereunder to such Lender, (iii) postpone any
date fixed for any payment of principal of, or interest on, the Notes held by
any Lender or any fees or other amounts payable hereunder to such Lender or (iv)
waive any prepayment required under Section 2.5 or change the stated order of
application of any prepayment set forth in Section 2.5 in any manner that
materially affects any Lender; provided, further that no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Lenders required above to take such action, affect the rights or duties of the
Agent under this Agreement or any of the other Loan Documents. Notwithstanding
anything to the
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contrary contained in this Agreement, no Defaulting Lender in respect of which
the Borrowers have delivered a Replacement Notice shall have the right to vote
under this Section 12.9 or on any other matters under the Loan Documents and
such Defaulting Lender's Revolving Credit Commitment and Revolving Credit
Commitment Percentage shall be excluded for purposes of determining the Required
Lenders or any other voting threshold under the Loan Documents. In the event
that any Lender (other than TBCC) shall have refused or withheld its consent to
any amendment, or to any waiver of any covenant in this Agreement, requested to
be made by the Borrowers which consent is required under clause (a) or (b) to
the first proviso to this Section 12.9, TBCC shall have the right (but not the
obligation), on two Business Days' notice to such Lender following such refusal
or withholding of consent (which shall be determined, in the case of the
withholding of consent, from the first date of the Borrowers' request therefor),
to purchase, by assignment to it, all of the rights and obligations of the
non-consenting Lender in the manner specified in Sections 11.1 through 11.4.
SECTION 12.10. Counterparts; Telecopied Signatures. This
Agreement and any waiver or amendment hereto may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all of which shall
together constitute one and the same instrument. This Agreement and each of the
other Loan Documents and any notices given in connection herewith or therewith
may be executed and delivered by telecopier or other facsimile transmission all
with the same force and effect as if the same was a fully executed and delivered
original counterpart.
SECTION 12.11. Severability. In case any provision in or
obligation under this Agreement or any Revolving Note, any Term Note or any
other Loan Document shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 12.12. Maximum Rate. Notwithstanding anything to the
contrary contained elsewhere in this Agreement or in any other Loan Document,
the parties hereto hereby agree that all agreements among them under this
Agreement and the other Loan Documents, whether now existing or hereafter
arising and whether written or oral, are expressly limited so that in no
contingency or event whatsoever shall the amount paid, or agreed to be paid, to
the Lenders for the use, forbearance, or detention of the money loaned to the
Borrowers and evidenced hereby or thereby or for the performance or payment of
any covenant or obligation contained herein or therein, exceed the maximum
non-usurious interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the
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Obligations, under the laws of the State of Illinois (or the laws of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Agreement and the other Loan Documents), or under applicable
federal laws which may presently or hereafter be in effect and which allow a
higher maximum non-usurious interest rate than under the laws of the State of
Illinois (or such other jurisdiction), in any case after taking into account, to
the extent permitted by applicable law, any and all relevant payments or charges
under this Agreement and the other Loan Documents executed in connection
herewith, and any available exemptions, exceptions and exclusions (the "Highest
Lawful Rate"). If due to any circumstance whatsoever, fulfillment of any
provisions of this Agreement or any of the other Loan Documents at the time
performance of such provision shall be due shall exceed the Highest Lawful Rate,
then, automatically, the obligation to be fulfilled shall be modified or reduced
to the extent necessary to limit such interest to the Highest Lawful Rate, and
if from any such circumstance the Agent or the Lenders should ever receive
anything of value deemed interest by applicable law which would exceed the
Highest Lawful Rate, such excessive interest shall be applied to the reduction
of the principal amount then outstanding hereunder or on account of any other
then outstanding Obligations and not to the payment of interest, or if such
excessive interest exceeds the principal unpaid balance then outstanding
hereunder and such other then outstanding Obligations, such excess shall be
refunded to the Borrowers. All sums paid or agreed to be paid to the Agent or
the Lenders for the use, forbearance, or detention of the Obligations and other
indebtedness of the Borrowers to the Lenders shall, to the extent permitted by
applicable law, be amortized, prorated, allocated and spread throughout the full
term of such indebtedness, until payment in full thereof, so that the actual
rate of interest on account of all such indebtedness does not exceed the Highest
Lawful Rate throughout the entire term of such indebtedness. The terms and
provisions of this Section shall control every other provision of this
Agreement, the other Loan Documents and all other agreements among the parties
hereto.
SECTION 12.13. Entire Agreement; Successors and Assigns. This
Agreement and the other Loan Documents constitute the entire agreement among the
parties, supersede any prior written and verbal agreements among them, and shall
bind and benefit the parties and their respective successors and permitted
assigns.
SECTION 12.14. Joint and Several Liability of the Borrowers.
(a) Each Borrower agrees that the obligations and liabilities
of the Borrowers under this Agreement and the Notes shall constitute joint and
several obligations and liabilities of the Borrowers.
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(b) Each of the Borrowers waive presentment, demand for
payment, protest and notice of dishonor of this Agreement and the Notes. Each of
the Borrowers further waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and any requirement that the
Agent or any Lender exhaust any rights or take any action against any of the
other Borrowers or any other person or any collateral. Each of the Borrowers
further hereby waives notice of or proof of reliance by the Agent or the Lenders
upon this Agreement and the Notes, and the Obligations shall conclusively be
deemed to have been created, contracted, incurred, renewed, extended, amended or
waived in reliance upon this Agreement and the Notes. The Borrowers shall
jointly and severally make all payments hereunder and under the Notes without
defense, offset or counterclaim, other than the defense of payment.
(c) The liability of each of the Borrowers under this
Agreement and the Notes shall be absolute and unconditional irrespective of any
circumstance which might otherwise constitute a defense available to, or a
discharge of, any of the Borrowers or any guarantor with respect to the
Obligations (including, without limitation, all defenses based on suretyship or
impairment of collateral, and all defenses that any of the Borrowers may assert
to the repayment of the Obligations, including, without limitation, failure of
consideration, breach of warranty, statute of frauds, bankruptcy, lack of legal
capacity, statute of limitations, lender liability, accord and satisfaction, and
usury) or which might otherwise constitute a defense to the obligations of any
or all of the Borrowers under this Agreement and under the Notes, other than the
defense of payment.
(d) This Agreement and the Notes shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Agent
or any Lender upon the insolvency, bankruptcy or reorganization of any of the
Borrowers or otherwise, all as though such payment had not been made. Each of
the Borrowers agrees that if any other Borrower or any guarantor of all or a
portion of the Obligations is the subject of a bankruptcy proceeding under Title
11 of the United States Code, it will not assert the pendency of such proceeding
or any order entered therein as a defense to the timely payment of the
Obligations.
SECTION 12.15. Confidentiality. Except as provided in Section
11.6, each Lender agrees that it will not disclose, without the prior consent of
the Borrowers, any information with respect to any Loan Party which is furnished
pursuant to this Loan Agreement and which is designated by the Borrowers to the
Lenders in writing as confidential, and acknowledges that such information,
except as provided below, is material non-public information about the Borrowers
and their consolidated
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Subsidiaries; provided, that any Lender may disclose any such information (a) to
its Affiliates, employees, auditors, or counsel, or to another Lender if the
disclosing Lender or such disclosing Lender's holding or parent company in its
reasonable discretion determines that any such party should have access to such
information provided that each such person will be advised of the confidential
nature of such information, (b) as has become generally available to the public
other than through improper disclosure by any Lender, (c) as may be required or
appropriate in any report, statement or testimony submitted to any Governmental
Authority having or claiming to have jurisdiction over such Lender, (d) as may
be required or appropriate in response to any summons or subpoena or in
connection with any litigation and (e) in order to comply with any Requirement
of Law.
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their proper and duly authorized officers as
of the date first set forth above.
BORROWERS
GENERAL DATACOMM INDUSTRIES, INC.
By: /S/ XXXXXX X. XXXXXX
____________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
GENERAL DATACOMM, INC.
By: /S/ XXXXXX X. XXXXXX
____________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
GDC FEDERAL SYSTEMS, INC.
By: /S/ XXXXXX X. XXXXXX
____________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
GDC NAUGATUCK, INC.
By: /S/ XXXXXX X. XXXXXX
____________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
VITAL NETWORK SERVICES, INC.
By: /S/ XXXXXX X. NELSER
____________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President & Treasurer
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AGENT
-----
TRANSAMERICA BUSINESS CREDIT
CORPORATION, as Agent
By: /S/ XXXXXX X. XXXXXXX, XX.
______________________
Name: Xxxxxx X. Xxxxxx, Xx.
Title: Executve Vice President
CO-AGENT
--------
THE CIT GROUP/BUSINESS CREDIT,
INC., as Co-Agent
By: /S/ XXXXXX XXXXXX
__________________
Name: Xxxxxx Xxxxxx
Title: Vice President
LENDERS
-------
TRANSAMERICA BUSINESS CREDIT
CORPORATION
By: /S/ XXXXXX X. XXXXXXX
_____________________
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
Address: 00000 Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xx. Xxx Xxxxxxxx
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THE CIT GROUP/BUSINESS CREDIT, INC.
By: /S/ XXXXXX XXXXXX
_________________
Name: Xxxxxx Xxxxxx
Title: Vice President
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxxxxx Xxxxxx
Fax: (000) 000-0000
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SCHEDULE 1
Commitments
Lender Revolving Credit Commitment Term Loan Commitment
______ ___________________________ ____________________
Transamerica Business
Credit Corporation $12,500,000 $7,500,000
The CIT Group/
Business Credit, Inc. $12,500,000 $7,500,000
