EIGHTH AMENDMENT and
WAIVER
TO LOAN
AGREEMENT
EIGHTH AMENDMENT, dated January 17, 2007 (the "
Amendment "), to the Loan Agreement referred to below, by
and among (i) GENERAL DATACOMM INDUSTRIES, INC., a Delaware
corporation, GENERAL DATACOMM, INC., a Delaware corporation ("
GDC "), GDC HOLDING COMPANY, LLC, a Delaware limited
liability company, GDC NAUGATUCK, INC., a Delaware corporation, GDC
FEDERAL SYSTEMS, INC., a Delaware corporation, GDC REALTY, INC., a
Texas corporation (each, a " Borrower " and collectively,
the " Borrowers "), (ii) the lenders party thereto from
time to time (the " Lenders "), and (iii) ABLECO FINANCE
LLC, as agent for the Lenders (in such capacity, the " Agent
") and (iv) the Debenture Holders as defined in Section 2 of the
Amendment.
WHEREAS, the Borrowers are obligated to repay
certain indebtedness owing to the Agent and the Lenders under that
certain Loan and Security Agreement dated as of August 20, 2002 (as
amended, supplemented and otherwise modified from time to time, the
" Loan Agreement ");
WHEREAS, the parties have agreed, among other
things, (i) to modify the amortization schedule in respect of the
Term Loans, (ii) to extend the Maturity Date until December 31,
2008, (iii) for certain affiliates of the Lenders defined herein as
Debenture Holders to sell (or cause to be sold) to the Parent for
$1.00 the Debentures held directly or indirectly by such affiliates
(the " Debentures ") and (iv) to permit Howard S. Modlin to
make additional Affiliate Loans to the Borrowers;
WHEREAS, the parties are willing to agree to the
foregoing described in the immediately preceding paragraph, subject
to (i) the execution and delivery of this Amendment by the
Borrowers, and (ii) the other terms and conditions set forth in
this Amendment;
NOW THEREFORE, in consideration of the premises
and other good and valuable consideration, the parties hereto
hereby agree as follows:
1.1.
Definitions in
Amendment . Any
capitalized term used herein and not defined shall have the meaning
assigned to it in the Loan Agreement.
1.2. Existing Definitions .
(a) The definition of the term "Affiliate Loans" in
Section 1.1 of the Loan Agreement is hereby amended in its
entirety to read as follows:
" Affiliate Loans " means (i) the loans
made by Howard S. Modlin and John L. Segall to the Parent, on or
about December 30, 2003 in an aggregate principal amount of
$600,000, which loans are evidenced by Promissory Notes issued by
the Parent and dated on or about December 30, 2003, (ii) the loans
made by Howard S. Modlin and John L. Segall to the Parent on or
about March 1, 2004 in an aggregate principal amount of $250,000,
which loans are evidenced by Promissory Notes issued by the Parent
and dated on or about March 1, 2004, (iii) the loans made by
Howard S. Modlin and John L. Segall to the Parent on or about April
1, 2004 in an aggregate principal amount of $250,000, which loans
are evidenced by Promissory Notes issued by the Parent and dated on
or about April 1, 2004, (iv) the loan made by Howard S. Modlin to
the Parent on or about June 30, 2004 in the principal amount of
$250,000, which loan is evidenced by a Promissory Note issued by
the Parent and dated on or about June 30, 2004, (v) the loan made
by Howard S. Modlin to the Parent on or about September 30, 2004 in
an principal amount of $250,000, which loan is evidenced by a
Promissory Note issued by the Parent and dated on or about
September 30, 2004, all of which loans described in clauses (i)
through (v) above were amended and restated on December 9, 2005, to
extend the maturity of all such loans, including unpaid accrued
interest, 50% of which is payable one year from original due date
and 50% of which is payable two years after original due date, (vi)
the loan made by Howard S. Modlin to the Parent on or about
February 17, 2006 in the original principal amount of $250,000,
which loan is evidenced by a Promissory Note issued by Parent and
dated on or about April 20, 2006, and (vii) one or more loans made
by Howard S. Modlin to the Parent after December 31, 2006 in the
aggregate principal amount not to exceed $2,000,000, subject to
Section 7.1(g) hereof."
(b) The definition of the term "Permitted Liens" in
Section 1.1 of the Loan Agreement is hereby amended by (i)
deleting the word "and" immediately preceding clause (o) therein
and (ii) inserting the following immediately preceding the period
at the end of such definition, to read as follows:
"and (p) Liens
on the Naugatuck Property for taxes or securing the Indebtedness
permitted under Section 7.1(h) ."
1.3. New Definitions . Section 1.1 of the Loan Agreement is
hereby amended by inserting the following definitions thereto in
the proper alphabetical order:
"' Extraordinary Receipts ' means any
cash received by the Parent or any of its Subsidiaries not in the
ordinary course of business, including, without limitation, any
such receipts which are: (i) foreign, United States, state or local
tax refunds, (ii) pension plan reversions, (iii) proceeds of
insurance, (iv) judgments, proceeds of settlements or other
consideration of any kind in connection with any cause of action,
(v) condemnation awards (and payments in lieu thereof), (vi)
indemnity payments, and (vii) proceeds of any Indebtedness received
by Parent or any of its Subsidiaries pursuant to the transactions
described in Section 6.15 ."
1.4. Term A Loan Amortization . Section 2.4(a)(i)(B) of the Loan
Agreement is hereby amended in its entirety to read as
follows:
"(B) the Term A Loan shall be repaid in monthly
installments of principal equal to $100,000 on the 15th day of each
month, commencing on January 16, 2007, until the Term A Loan has
been repaid in full."
1.5. Term B Loan; Acknowledgment
.
(a) The last sentence of Section 2.4(b)(i) of
the Loan Agreement, inclusive of subsections (A) through (D)
therein, is hereby amended and restated in its entirety to read as
follows:
"If the Term A
Loan has been repaid in full on or before December 31, 2007, 50% of
the outstanding principal amount of the Term B Loan, as of the date
the Term A Loan is so repaid, shall be forgiven, together with all
accrued interest on the principal amount so forgiven;
provided that no portion of the Term B Loan shall be so
forgiven if, after giving effect to the Term A Loan repayment and
such forgiveness of the Term B Loan, any portion of the Term B Loan
would remain outstanding."
(b)
Section 2.4(b)(ii)
of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(ii) Notwithstanding anything to the contrary in the
Reorganization Plan or any Loan Document, the Borrowers and Lenders
hereby acknowledge and agree that (A) the aggregate amount of the
Term B Loan outstanding as of January 16, 2007 including principal
and accrued or capitalized interest is $3,000,000, and (B) subject
to Section 2.4(b)(i) , the Borrowers are obligated,
absolutely and unconditionally, to repay all Obligations in respect
of the Term B Loan pursuant to this Agreement. Upon the repayment
in full of the Term A Loan, the Borrowers shall commence making
amortization payments in respect of the Term B Loan in monthly
installments of principal equal to $100,000 on the 15th day of each
month, commencing on the 15th day of the month immediately
following the repayment in full of the Term A Loan, until the Term
B Loan is repaid in full."
1.6. Payments by Borrower .
(a)
Section 2.5(a)(iv)
of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(iv) Immediately upon the receipt by any Borrower or
any of its Subsidiaries of any Net Proceeds from the disposition of
the assets of such Borrower or any of its Subsidiaries (other than
Inventory sold in the ordinary course of business), such Borrower
shall prepay the Term A Loan (or, if the Term A Loan has been paid
in full, the Term B Loan) in an amount equal to 100% of such Net
Proceeds. In addition to the foregoing, any Net Proceeds received
by Borrowers from any life insurance policies maintained by
Borrowers on the life of Howard S. Modlin shall be promptly paid to
Agent to prepay the Term Loans."
(b) A new Section 2.5(a)(v) of the Loan
Agreement is hereby inserted immediately succeeding the end of
Section 2.5(a)(iv) of the Loan Agreement to read as
follows:
"(v) Immediately upon the receipt by the Parent or
any of its Subsidiaries of any Extraordinary Receipts, the
Borrowers shall prepay the outstanding principal of the Term A Loan
(or, if the Term A Loan has been paid in full, the Term B Loan) in
an amount equal to 100% of such Extraordinary Receipts, net of any
reasonable expenses incurred in collecting such Extraordinary
Receipts."
1.7. Interest Rate . Section 2.7(a) of the Loan Agreement is
hereby amended and restated in its entirety to read as
follows:
"(a) Interest Rate . Except as provided in clause (c) below, all
Obligations shall bear interest at a per annum rate of the
Reference Rate plus 2.5 percentage points."
1.8. Maturity Date . Section 3.4 of the Loan Agreement is
amended by deleting the date "December 31, 2007" from the first
sentence therein and replacing such date with "December 31,
2008".
1.9. Naugatuck Property . A new Section 6.15 is
