THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This Third Amendment to Second Amended and Restated Loan and Security Agreement
(this "Third Amendment") is made and entered into this 29th day of December,
1995, by and between EXECUTONE INFORMATION SYSTEMS, INC., a Virginia corporation
("Borrower") and BANK OF AMERICA ILLINOIS, an Illinois banking corporation
("Agent" and "Lender");
WHEREAS, Borrower and Lender (including Continental Bank, an Illinois banking
corporation as the predecessor of Bank of America Illinois) were parties along
with Bank of Boston Connecticut and Fleet Bank, N.A. to a certain Second Amended
and Restated Loan and Security Agreement dated as of August 30, 1994 (the Loan
Agreement ), pursuant to which Lenders made loans and other financial
accommodations to Borrower, as more particularly described therein;
WHEREAS, the Loan Agreement was amended as of January 1, 1995, by that First
Amendment to the Second Amended and Restated Loan Agreement by and among the
parties hereto;
WHEREAS, the Loan Agreement was further amended as of September 29, 1995, by
that Second Amendment to the Second Amended and Restated Loan Agreement by and
among the parties thereto;
WHEREAS, a Waiver and Consent Agreement was entered into as of December 18, 1995
(the "Waiver and Consent"), with respect to the Loan Agreement by and among the
parties thereto, which had the effect of amending certain provisions of the Loan
Agreement;
WHEREAS, effective December 28, 1995, Bank of America Illinois purchased the
Loans, Liabilities and Commitments of Bank of Boston Connecticut and Fleet Bank
N.A. under the Loan Agreement (other than the Stock Purchase Loans);
WHEREAS, Borrower has requested that Lender agree to further amend the
Loan Agreement; and
WHEREAS, Borrower and Lender wish to enter into this Third Amendment in order to
memorialize their mutual understanding regarding such amendments and
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to restate certain matters set forth in the Waiver and Consent;
NOW, THEREFORE, for and in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. All references in the Loan Agreement, as amended, to Lenders shall be
deemed to refer to the singular Lender, so long as Bank of America Illinois
holds all the Liabilities (other than the Stock Purchase Loans) and Commitments
to make Loans under the Loan Agreement.
2. Borrower acknowledges that as of the date hereof the Liabilities
(other than the Stock Purchase Loans) outstanding under the Loan Agreement held
by Bank of America Illinois include the following:
a) Revolving Loans in the principal amount of
$18,065,625.36; and
b) Letter of Credit Obligations in the amount of
$11,756,637.11.
3. The term "Stock Purchase Reserve" shall be amended to read
in its entirety as follows:
"Stock Purchase Reserve" means, with respect to the calculation of the
Borrowing Base on and after each Anniversary Date or other date
specified below, an amount equal to the percentage set opposite each
such Anniversary Date of the Target Stock Purchase Liabilities minus the
aggregate amount by which the Stock Purchase Liabilities have been
repaid or otherwise reduced since the date of the initial loan made
pursuant to the Management Loan Agreement:
December 18, 1995 33 %
Second Anniversary Date 40%
December 31, 1996 66 %
December 31, 1997 100%
4. Section 5.29 of the Loan Agreement is amended to
read in its entirety as follows:
5.29 Capital Expenditures. Not, and not permit any Subsidiary to
make any Capital Expenditures, or commit to make any Capital
Expenditures if, after giving effect to such Capital Expenditures, the
aggregate amount of all Capital Expenditures made by Borrower and its
Subsidiaries on a consolidated basis in
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any Fiscal Year would exceed, in the aggregate, the maximum amount set forth
opposite such Fiscal Year:
Fiscal Year Maximum Amount
---------------------- ---------------
1995 $ 7,500,000
1996 $13,500,000
1997 $ 7,500,000
1998 $ 7,500,000
1999 $ 7,500,000
5. The Terms of the Waiver and Consent are hereby
affirmed and incorporated herein by reference, with the following
modifications:
(a) In accordance with paragraph 3, clause (v) of the Waiver and
Consent the aggregate Transfers to Unistar shall not exceed Three
Million Dollars ($3,000,000) until the Lenders have received a
certified copy of a final, non-appealable order of a court of
competent jurisdiction approving the interstate tele-lottery
enterprise known as the National Indiana Lottery (the Court
Approval ). However, notwithstanding paragraph 3, clause (iv) of
the Waiver and Consent, the initial Three Million Dollars
($3,000,000) of Transfers to Unistar may be funded from Borrower
s cash flow or from Revolving Loans under the Loan Agreement.
Once a Court Approval is obtained and the Transfers from Borrower
to Unistar exceed Three Million Dollars ($3,000,000) the entire
amount of such Transfers must be funded with proceeds of New
Subordinated Debt in accordance with the terms of the Waiver and
Consent, unless the Agent shall otherwise consent.
(b) Notwithstanding the terms of the Waiver and Consent, so long
as the Transfers to Unistar are funded by Borrower's cash flow or
proceeds of Revolving Loans, those Transfers shall be in the form
of senior loans to Unistar that are not subordinated in right of
payment to any other indebtedness of Unistar.
6. (a) The term Revolving Credit Amount shall be amended to read
in its entirety as follows:
Revolving Credit Amount shall mean $45,000,000.
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(b) The Commitment of Bank of America Illinois
(formerly known as Continental Bank) as set forth
on the signature page of the Loan Agreement shall
be increased to $45,000,000; and the Commitments of
Fleet Bank N.A. and Bank of Boston Connecticut
shall be reduced to zero.
7. Representations and Warranties. To induce Lender to make the
financial accommodations to Borrower contemplated hereby, Borrower hereby
restates and renews each and every representation and warranty of Borrower set
forth in the Loan Agreement, including, without limitation, in Section 4
thereof, and in each of the Related Agreements to which Borrower is a party or
by which it is bound (except to the extent such representations and warranties
are untrue solely as a result of transactions previously consented to by Lender
in writing) and hereby further represents and warrants in favor of Lender as
follows: (a) Borrower is duly authorized to execute and deliver this Third
Amendment and any Related Agreements contemplated hereby and is and will
continue to be authorized to obtain the loans contemplated by the Loan
Agreement, as amended by this Third Amendment, and to perform its obligations
under the Loan Agreement, as amended by this Third Amendment, and any Related
Agreements contemplated hereby; (b) the execution, delivery and performance by
Borrower of this Third Amendment and of any Related Agreements contemplated
hereby do not and will not require any consent or approval of any governmental
agency or authority or other Person which has not been obtained and a copy
thereof delivered to Lenders; (c) the execution, delivery and performance by
Borrower of this Third Amendment and any Related Agreements do not and will not
conflict with (i) any provisions of law, (ii) the Charter or bylaws of borrower,
(iii) any agreement binding upon Borrower or (iv) any court or administrative
order or decree applicable to Borrower, and do not and will not require, or
result in, the creation or imposition of any Lien on any assets of Borrower
except as provided in the Loan Agreement; (d) this Third Amendment and any
Related Agreements contemplated hereby, when duly executed and delivered, will
be legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with their respective terms, except as enforceability may
be limited by bankruptcy, insolvency or other similar laws of general
application affecting the enforcement of creditors rights or by general
principles of entity limiting the availability of equitable
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remedies and (e) after giving effect to the execution and delivery of this Third
Amendment and the consummation of the transactions contemplated hereby, no Event
of Default or Unmatured Event of Default has occurred and is continuing.
8. Miscellaneous. Except as set forth expressly herein, all terms
of the Loan Agreement and the Related Agreements shall be and remain in full
force and effect and shall constitute the legal, valid, binding and enforceable
obligations of Borrower. To the extent any terms and conditions in any of the
Related Agreements shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this Third Amendment,
such terms and conditions are hereby deemed modified and amended accordingly to
reflect the terms and conditions of the Loan Agreement as modified and amended
hereby. Each reference to the Loan Agreement in any Related Agreement shall be
deemed to refer the Loan Agreement, as amended by this Third Amendment. Borrower
hereby restates, ratifies and reaffirms each and every term and condition set
forth in the Loan Agreement, as amended hereby, and the Related Agreements
effective as of the date hereof. To induce Lender to enter into this Third
Amendment and to continue to make Revolving Loans to Borrower under the Loan
Agreement, Borrower hereby acknowledges and agrees that, as of the date hereof,
there exists no right of offset, defense, counterclaim or objection in favor of
Borrower as against Lender with respect to the Liabilities. This Third Amendment
shall be governed by, and construed in accordance with, the laws of the State of
Illinois and all applicable federal laws of the Untied States of America.
Borrower agrees to pay on demand all costs and expenses of Lenders in connection
with the preparation, execution, delivery and enforcement of this Third
Amendment and any other Related Agreements executed in connection herewith, the
closing hereof, and any other transactions contemplated thereby, including the
fees and out-of-pocket expenses of Lender s counsel. In the event of Borrower s
failure to pay such fees on demand, such fees may be charged as Revolving Loans.
All defined terms herein shall have the meanings ascribed thereto in the Loan
Agreement and in the Waiver and Consent.
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IN WITNESS WHEREOF, the parties hereto have caused this Third
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
EXECUTONE INFORMATION SYSTEM, INC.
By:
Name:
Title:
BANK OF AMERICA ILLINOIS
By:
Name:
Title:
BANK OF AMERICA ILLINOIS, as Agent
By:
Name:
Title:
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