FIRST AMENDMENT TO
STOCK PLEDGE AND SECURITY AGREEMENT
THIS FIRST AMENDMENT TO STOCK PLEDGE AND SECURITY AGREEMENT (this
"Amendment") is made as of the 11th day of June, 1997, by and between VODAVI
TECHNOLOGY, INC., a Delaware corporation formerly known as V Technology Holdings
Corp. (the "Pledgor"), and GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation (the "Lender").
Statement of Facts
------------------
WHEREAS, Vodavi Communications Systems, Inc., an Arizona
corporation formerly known as V Technology Acquisition Corp. (the "Borrower"),
and the Lender are parties to that certain Amended and Restated Credit
Agreement, dated as of April 11, 1994, as amended and restated effective as of
June 11, 1997 (as the same may be amended, restated, supplemented or otherwise
modified from time to time, the "Credit Agreement"; capitalized terms used
herein and not otherwise defined herein are used as therein defined), pursuant
to which the Lender has committed to make a certain Revolving Credit Loan
available to the Borrower; and
WHEREAS, it is condition under the Credit Agreement that the
Pledgor pledge and grant a security interest in and to all of the outstanding
shares of capital stock of Arizona Repair Services, Inc., an Arizona
corporation, and Enhanced Systems, Inc., an Arizona corporation (collectively,
the "Additional Pledged Subsidiaries"); and
WHEREAS, in order to satisfy the above referenced condition, the
Pledgor and the Lender desire to modify in certain respects that certain Stock
Pledge and Security Agreement, dated as of April 11, 1994, between the Pledgor
and the Lender (the "Pledge Agreement"), all in accordance with and subject to
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises, the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Pledgor and the
Lender do hereby agree as follows:
Statement of Terms
------------------
1. Amendment to Pledge Agreement. Subject to the terms and
conditions of this Amendment, the Pledge Agreement is hereby amended to provide
for the pledge by the Pledgor to the Lender of all of the outstanding stock of
the Additional Pledged Subsidiaries, as follows:
(a) As used herein, the term "Additional Pledged Stock" shall mean
100% of the shares of the outstanding stock of each of the Additional Pledged
Subsidiaries, which stock is described on Schedule 1 attached hereto and which
includes all stock of each of the Additional Pledged Subsidiaries of any class
that the Pledgor may now or hereafter own, control or hold.
(b) The Pledgor represents and warrants that on the date hereof (a)
the Additional Pledged Stock consists of the stock of the each of the Additional
Pledged Subsidiaries as described in Schedule 1 attached hereto, (b) the Pledgor
is the holder of record and sole beneficial owner of such Additional Pledged
Stock, (c) the Additional Pledged Stock constitutes 100% of the issued and
outstanding stock of each of the Additional Pledged Subsidiaries, and (d) each
of the Additional Pledged Subsidiaries has (i) only one class of authorized,
issued or outstanding common stock and (ii) only one class of authorized
preferred stock, none of which has been issued or is outstanding.
(c) To further secure the Secured Obligations and for the purposes
set forth in Section 1 of the Pledge Agreement, the Pledgor hereby pledges to
the Lender the Additional Pledged Stock, together with (i) subject to the rights
of the Pledgor set forth in Section 5 of the Pledge Agreement, all dividends
(whether in cash, stock, warrants, options, or other securities), cash,
instruments or other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Additional Pledged Stock, and (ii) all cash and non-cash proceeds of the
foregoing; and hereby assigns, transfers, hypothecates and sets over to the
Lender all of the Pledgor's right, title and interest in and to the Additional
Pledged Stock (and in and to the certificates or instruments evidencing the
items described in clauses (i), and (ii) above) to be held by the Lender, upon
the terms and conditions set forth in the Pledge Agreement. The Pledgor agrees
to deliver to the Lender on the date hereof the certificates representing the
Additional Pledged Stock accompanied by undated stock powers duly executed in
blank by the Pledgor and all certificates and instruments evidencing the items
described in clauses (i) and (ii) above promptly upon the Pledgor's receipt
thereof.
(d) The Pledged Stock and all items described in subsection (c)
above are hereinafter called the "Additional Pledged Securities," and the
Additional Pledged Securities, together with all other securities and moneys
received and at the time held by the Lender hereunder and any cash or non-cash
proceeds of any of the foregoing, are hereinafter called the "Additional
Collateral." For all purposes of the Pledge Agreement, the term "Pledged
Securities" shall mean and include the Pledged Securities of the Borrower
initially pledged thereunder and the Additional Pledged Securities, and the term
"Collateral" shall mean and include the Collateral initially pledged thereunder
and the Additional Collateral.
2. Subordination. As an independent covenant, the Pledgor hereby
expressly covenants and agrees for the benefit of the Lender that all present or
future indebtedness, obligations and liabilities of any other Credit Party to
the Pledgor of whatsoever description (collectively, the "Junior Claims") shall
be subordinate and junior in right of payment to all Obligations, effective upon
the occurrence and during the continuance of an Event of Default. If an Event of
Default shall occur, then, unless and until such Event of Default shall have
been cured or shall have ceased to exist, no direct or indirect payment (in
-2-
cash, property, securities, by set-off or otherwise) shall be made by any other
Credit Party to the Pledgor on account of or in any manner in respect of any
Junior Claim except such payments and distributions the proceeds of which shall
be applied to the Obligations. In the event of a Proceeding (as hereinafter
defined), all Obligations shall first be paid in full before any direct or
indirect payment or distribution (in cash, property, securities, by set-off or
otherwise) shall be made to the Pledgor on account of or in any manner in
respect of any Junior Claim except such payments and distributions the proceeds
of which shall be applied to the Obligations. For the purposes of the previous
sentence, a "Proceeding" shall occur if any Credit Party shall make an
assignment for the benefit of creditors, file a petition in bankruptcy, have
entered against or in favor of it an order for relief under the Bankruptcy Code
or similar law of any other jurisdiction, generally fail to pay its debts as
they come due (either as to number or amount), admit in writing its inability to
pay its debts generally as they mature, make a voluntary assignment for the
benefit of creditors, commence any proceeding relating to it under any
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, or by
any act, indicate its consent to, approval of or acquiescence in any such
proceeding or in the appointment of any receiver of, or trustee or custodian (as
defined in the Bankruptcy Code) for itself, or any substantial part of its
property, or a trustee or a receiver shall be appointed for any Credit Party or
for a substantial part of the property of any Credit Party, or a petition under
any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute or any jurisdiction (whether now or hereafter in
effect) shall be filed against any Credit Party. In the event any direct or
indirect payment or distribution is made to the Pledgor in contravention of this
Section, such payment or distribution shall be deemed received in trust for the
benefit of the Lender and shall be immediately paid over to the Lender for
application against the Obligations. The Pledgor agrees to execute such
additional documents as the Lender may reasonably request to evidence the
subordination provided for in this Section.
3. No Other Amendments. Except for the amendments expressly set
forth and referred to above, the Pledge Agreement shall remain unchanged and in
full force and effect. Nothing in this Amendment is intended, or shall be
construed, to constitute a novation or an accord and satisfaction of any of the
Pledgor's obligations under or in connection with the Pledge Agreement or any
other Loan Document or to modify, affect or impair the perfection or continuity
of the Lender's security interests in, security titles to or other liens on any
Collateral for the Obligations.
4. Representations and Warranties. To induce Lender to enter into
this Amendment, the Pledgor does hereby warrant, represent and covenant to
Lender that: (a) each representation or warranty of the Pledgor set forth in the
Pledge Agreement, as amended by this Amendment, is hereby restated and
reaffirmed as true and correct in all material respects on and as of the date
hereof (except to the extent that any such representation or warranty expressly
relates to a prior specific date or period), and no Default or Event of Default
has occurred and is continuing as of this date as defined under the Credit
Agreement; and (b) the Pledgor has the power and is duly authorized to enter
into, deliver and perform this Amendment, and this Amendment is the legal, valid
and binding obligation of the Pledgor enforceable against it in accordance with
its terms except to the extent that such enforceability may be effected by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
-3-
affecting the rights and remedies of creditors generally, and general principles
of equity.
5. Covenants. The Pledgor shall deliver to the Lender upon
execution of this Amendment, the share certificates representing the shares of
issued and outstanding capital stock of each of the Additional Pledged
Subsidiaries pledged hereunder, together with an irrevocable stock transfer
power covering such shares.
6. Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument.
7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE.
8. Binding Effect. This Amendment shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered as of the day and year specified at the
beginning hereof.
VODAVI TECHNOLOGY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: CFO & V.P.
---------------------------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Title: Duly Authorized Signatory
---------------------------------
-4-
SCHEDULE 1
Pledged Stock
-------------
Number and Percentage
Name of Corporation Class of Shares Shares of Such Class
------------------- --------------- --------------------
Arizona Repair Services, Inc. 5000 Common 100%
Enhanced Systems, Inc. 5000 Common 100%
