Amendment No. 2
dated as of December 21, 1995
to the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of April 25, 1995,
as amended by Amendment No. 1 dated as of September 19, 1995,
between
PENRIL DATACOMM NETWORKS, INC.
and
SIGNET BANK
TABLE OF CONTENTS
Page
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2. Amendments to the Amended Agreement . . . . . . . . . . . 1
Section 3. Effectiveness . . . . . . . . . . . . . . . . . . . . . . 3
Section 4. Existing Revolving Note . . . . . . . . . . . . . . . . . 4
Section 5. Integration; Confirmation . . . . . . . . . . . . . . . . 4
Section 6. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 4
Section 7. Successors and Assigns. . . . . . . . . . . . . . . . . . 5
Section 8. Governing Law . . . . . . . . . . . . . . . . . . . . . . 5
Exhibit A - Form of Revolving Note
Exhibit B - Form of Guarantor Consent
Amendment No. 2
This Amendment No. 2 (this "Amendment No. 2") is dated
as of December 21, 1995 and is between PENRIL DATACOMM NETWORKS,
INC., a Delaware corporation (the "Borrower"), and SIGNET BANK, a
Virginia banking corporation, as successor to Signet
Bank/Maryland (the "Bank").
The Borrower and the Bank are parties to a Second
Amended and Restated Credit Agreement dated as of April 25, 1995,
as amended by "Amendment No. 1 thereto dated as of September 19,
1995 (the "Amended Agreement"). The Borrower has requested the
Bank to extend the availability period for Revolving Loans,
Letters of Credit and Exchange Contracts from December 31, 1995
to March 31, 1996 and to suspend the Borrower's obligation to
comply with the financial covenants specified in the Amended
Agreement for the fiscal quarter ended January 31, 1996. The
Bank is agreeable to the Borrower's request, all on the terms and
conditions set forth in this Amendment No. 2. Accordingly, the
parties hereto agree as follows:
Section 1. Definitions. Terms used herein and not
defined which are defined in the Amended Agreement shall have for
the purposes hereof the respective meanings set forth therein.
Section 2. Amendments to the Amended Agreement.
(a) The Amended Agreement is hereby amended by
substituting "Signet Bank" for all references to "Signet
Bank/Maryland" therein.
(b) Section 1.1 of the Amended Agreement is hereby
amended by adding the following definitions in appropriate
alphabetical order:
"Asset Sale" means any sale, lease or other
disposition (including any such transaction effected by
way of merger or consolidation) by the Borrower or any
Subsidiary of any asset, including without limitation
any sale-leaseback transaction, whether or not
involving a capital lease but excluding
(i) dispositions of inventory or other products or
services in the ordinary course of business and
(ii) dispositions of equipment in the ordinary course
of business, the Net Cash Proceeds of which are used to
purchase replacement equipment within 120 days after
the disposition thereof; provided that the aggregate
amount of Net Cash Proceeds not constituting Asset
Sales pursuant to this clause (ii) shall not exceed
$100,000 in any one fiscal year of the Borrower.
"Equity Issuance" means any sale or issuance by
the Borrower or any Subsidiary of its capital stock,
other than capital stock issued by the Borrower
pursuant to employee stock options, director stock
options or other employee benefit plans.
"Net Cash Proceeds" means, with respect to any
Reduction Event, an amount equal to the cash proceeds
received by the Borrower or any of its Subsidiaries
from or in respect of such Reduction Event (including
any cash proceeds received as income or other proceeds
of any noncash proceeds of any Asset Sale), less
(i) any expenses reasonably incurred by such Person in
respect of such Reduction Event and (ii) if such
Reduction Event is an Asset Sale, (A) the amount of any
Debt secured by a Lien on any asset disposed of in such
Asset Sale and discharged from the proceeds thereof and
(B) any taxes actually paid or to be payable by such
Person (as estimated by a senior financial or
accounting of the Borrower, giving effect to the
overall tax position of the Borrower) in respect of
such Asset Sale.
"Reduction Event" means (i) any Asset Sale or
(ii) any Equity Issuance.
(c) The definition of "Applied Revolving Amount" in
Section 1.1 of the Amended Agreement is hereby amended by
deleting the parenthetical in clause (iii).
(d) The definition of "Letter of Credit" in Section
1.1 of the Amended Agreement is hereby amended by deleting the
phrase ", including the 1995 Appeal Bond LC".
(e) Section 1.1 of the Amended Agreement is hereby
amended by deleting the definitions of "Net Sales Proceeds" and
"1995 Appeal Bond LC".
(f) Section 2.2(b) of the Amended Agreement is hereby
amended by substituting the word "issue" for the word "issues"
therein.
(g) The Amended Agreement is hereby amended by
substituting "March 31, 1996" for each reference to "December 31,
1995" which appears in Sections 2.2, 2.3, 2.10(b) and 2.11.
(h) Section 2.9 of the Amended Agreement is hereby
amended by deleting the word "and" immediately prior to the
phrase "December 31, 1995", by substituting a comma therefor and
by adding the phrase "and March 31, 1996" immediately before the
period.
(i) Section 2.10 (c) of the Amended Agreement is
hereby amended by deleting the caption and introductory language
through and including the colon which first appears therein and
by substituting the following in lieu thereof:
(c) Reduction Transactions. In addition to any
other required payments pursuant to this Section 2.10,
if the Borrower or any Subsidiary shall at any time
receive any Net Cash Proceeds of any Reduction Event,
an amount equal 100% of such Net Cash Proceeds shall be
applied (forthwith upon receipt by the Borrower or any
of its Subsidiaries, as the case may be) as follows:
(j) The Amended Agreement is hereby amended by adding
the following as a new Section 5.7:
Section 5.7. Suspension of Financial Covenants
for Quarter Ending January 31, 1996. Compliance by the
Borrower with the requirements of this Article V shall
be determined as of the end of each fiscal quarter as
specified herein, other than for the fiscal quarter
ending January 31, 1996, but the results of operation
and financial position of the Borrower and its
Subsidiaries for such fiscal quarter shall be included
for purposes of determining the compliance by the
Borrower with the requirements specified herein for
other fiscal quarters.
(k) The Amended Agreement is hereby amended by
substituting Exhibit A to this Amendment No. 2 as Exhibit A to
the Amended Agreement.
Section 3. Effectiveness. This Amendment No. 2
shall become effective as of the date hereof on the date (the
"Effective Date") when the last of the following conditions shall
have been satisfied:
(i) the Bank shall have received
counterparts of this Amendment No. 2 duly executed by
itself and the Borrower;
(ii) the Bank shall have received a
substitute Revolving Note of the Borrower,
substantially in the form of Exhibit A to this
Amendment No. 2, duly executed by the Borrower;
(iii) the Bank shall have received
counterparts of Guarantor Consents and Agreements,
substantially in the form of Exhibit B to this
Amendment No. 2, duly signed by each Guarantor;
(iv) the fact that the representations and
warranties of the Borrower contained in the Amended
Agreement shall be true on and as of the Effective
Date;
(v) the Bank shall have received all
documents it may reasonably request relating to the
existence of the Borrower and its authority to
execute, deliver and perform this Amendment No. 2,
and the validity of this Amendment No. 2 and any
other matters relevant hereto, all in form and
substance satisfactory to the Bank; and
(vi) on the Effective Date, the Borrower
shall have prepaid the Loans by an aggregate
principal amount of at least $200,000, such payment
being applied to repay the Acquisition Loan or the
Term Loans in the order required as if such net
proceeds were Net Cash Proceeds under Section
2.10(c)(ii), (iii) or (iv).
On the Effective Date, the Amended Agreement will be
automatically amended as set forth herein, effective as of
December 21, 1995. On and after the Effective Date, the rights
and obligations of the parties hereto shall be governed by the
Amended Agreement as amended by this Amendment No. 2.
Section 4. Existing Revolving Note. On the
Effective Date, the Revolving Note issued to the Bank under the
Amended Agreement will become void, and the Bank will promptly
return such Revolving Note to the Borrower. The failure by the
Bank so to return the Revolving Note delivered to it under the
Amended Agreement shall not affect the validity of the
Revolving Note delivered to it pursuant to Section 3 of this
Amendment No. 2.
Section 5. Integration; Confirmation. On and
after the Effective Date, each reference in the Amended
Agreement to "this Agreement", "herein", "hereunder" or words
of similar import, and each reference to any other document
delivered in connection with the Amended Agreement to the
"Credit Agreement", the "Amended Agreement" or the "Amended and
Restated Credit Agreement" shall be deemed to be a reference to
the Amended Agreement as amended by this Amendment No. 2, all
other terms and provisions of the Amended Agreement shall
continue in full force and effect and unchanged and are hereby
confirmed in all respects.
Section 6. Counterparts. This Amendment No. 2
may be signed in any number of counterparts, each of which
shall be an original, all of which taken together shall
constitute a single integrated agreement with the same effect
as if the signatures thereto and hereto were upon the same
instrument. Complete sets of counterparts shall be lodged with
the Borrower and the Bank.
Section 7. Successors and Assigns. The
provisions of this Amendment No. 2 shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns, including any successor or assignee
arising by operation of law.
Section 8. Governing Law. This Amendment No. 2
shall be governed by and construed in accordance with the laws
of the State of Maryland.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment No. 2 to be duly executed as of the date and
year first above written.
PENRIL DATACOMM NETWORKS, INC.
By:\s\R. D. Rose
Title: Vice President, and
Chief Financial Officer
1300 Quince Orchard Blvd.
Gaithersburg, Maryland 20878
Telecopier Number: (301) 948-5761
with a copy to:
Richard D. Margolis, Esq.
Benesch, Friedlander, Coplan
& Aronoff
2300 BP America Building
200 Public Square
Cleveland, Ohio 44114
Telephone Number: (216) 363-4500
Telecopier Number: (216) 363-4588
SIGNET BANK
By\s\ Michelle Riley Levenson
Title: Vice President
7799 Leesburg Pike, Suite 500
Falls Church, Virginia 22043
Telecopier Number: (703) 506-9712
with copy to:
Brian D. Murphy, Esq.
McGuire, Woods, Battle & Boothe,
L.L.P.
One James Center
Richmond, Virginia 23219
Telephone Number: (804) 775-4332
Telecopier Number: (804) 775-1062
EXHIBIT A
FORM OF REVOLVING NOTE
December 21, 1995
$5,500,000 Falls Church, Virginia
For value received, PENRIL DATACOMM NETWORKS, INC., a
Delaware corporation (the "Borrower"), promises to pay to the order
of SIGNET BANK (the "Bank") on March 31, 1996 the principal amount of
FIVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($5,500,000) or, if less,
the aggregate unpaid principal amount of all Revolving Loans made by
the Bank to the Borrower pursuant to, or continued under, the Second
Amended and Restated Credit Agreement dated as of April 25, 1995
between the Borrower and the Bank (as amended by Amendment No. 1
dated as of September 19, 1995 and by Amendment No. 2 dated as of
December 21, 1995 and as the same may be further amended, modified or
supplemented from time to time, the "Amended Agreement"). The
Borrower promises to pay interest on the aggregate unpaid principal
amount of such Loans on the dates and at the rate or rates provided
for in the Amended Agreement. All payments of principal and interest
shall be made in lawful money of the United States in immediately
available funds at the office of Signet Bank, 7799 Leesburg Pike,
Suite 500, Falls Church, Virginia 22043.
All Revolving Loans made by the Bank to the Borrower
pursuant to the Amended Agreement and all repayments of the principal
thereof shall be recorded by the Bank and, prior to any transfer
hereof endorsed by the Bank on the schedule attached hereto, or on a
continuation of such schedule attached to and made a part hereof;
provided, that any failure by the Bank to make such a notation or any
error therein shall not in any manner affect the obligation of the
Borrower to repay the Revolving Loans in accordance with the terms
hereof.
This Note is the Revolving Note referred to in the Amended
Agreement. Terms defined in the Amended Agreement are used herein
with the same meanings. Reference is made to the Amended Agreement
for provisions for the prepayment hereof and the acceleration of the
maturity hereof.
PENRIL DATACOMM NETWORKS, INC.
\s\Richard D. Rose
Richard D. Rose
Vice President and
Chief Financial Officer