<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
(Mark One)
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission File Number 0-7428
CALIFORNIA MICROWAVE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1668412
- -------- ----------
(State or other jurisdiction (I.R.S. Employer Identification Number)
of Incorporation)
555 TWIN DOLPHIN DRIVE, REDWOOD CITY, CALIFORNIA 94065
- ------------------------------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 596-9000
--------------
- --------------------------------------------------------------------------
Former name, former address, and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Classes Outstanding at April 30, 1997
- --------------------------- -----------------------------
Common Stock $.10 Par Value 16,390,634
-1-
<PAGE> 2
Part I. Financial Information
Item 1. Financial Statements
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 92,857 $ 100,073 $ 313,638 $ 332,125
Cost of products sold 65,729 70,377 267,830 233,526
--------- --------- --------- ---------
Gross margin 27,128 29,696 45,808 98,599
--------- --------- --------- ---------
Expenses:
Research and development 7,523 7,707 23,279 22,405
Marketing and administration 18,713 18,438 61,189 55,731
Amortization of intangible assets 645 547 1,725 1,641
Restructure charges 7,780 -- 7,780 --
--------- --------- --------- ---------
Total expenses 34,661 26,692 93,973 79,777
--------- --------- --------- ---------
Operating income (loss) (7,533) 3,004 (48,165) 18,822
Interest expense (1,431) (981) (4,321) (3,147)
Interest income 3 45 82 74
Gain on sale of subsidiary -- -- 2,744 --
--------- --------- --------- ---------
Income (loss) before income taxes (8,961) 2,068 (49,660) 15,749
Provision for (benefit from) income taxes (2,957) 743 (16,388) 5,669
--------- --------- --------- ---------
Net income (loss) $ (6,004) $ 1,325 $( 33,272) $ 10,080
========= ========= ========= =========
Net income (loss) per share:
Primary $ (.37) $ .08 $ (2.06) $ .62
========= ========= ========= =========
Fully diluted -- $ .08 -- $ .62
========= =========
Average shares and equivalents outstanding:
Primary 16,273 16,148 16,184 16,203
Fully diluted -- 18,397 -- 18,433
</TABLE>
See accompanying notes.
-2-
<PAGE> 3
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
(Unaudited, See Note A)
<TABLE>
<CAPTION>
March 31 June 30
1997 1996
--------- ---------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,634 $ 4,560
Short-term investments 1,795 1,504
Accounts receivable 85,797 108,278
Inventories 93,667 103,456
Deferred tax assets 23,311 10,387
Prepaid expenses 1,968 2,314
--------- ---------
Total current assets 208,172 230,499
--------- ---------
Net property, plant and equipment 45,506 48,762
Deferred tax assets 3,361 1,973
Intangible and other assets 51,929 57,106
--------- ---------
$ 308,968 $ 338,340
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 11,500 $ --
Current portion of long-term debt 331 525
Accounts payable 31,385 46,566
Accrued income taxes 723 3,406
Other accrued liabilities 50,758 38,750
--------- ---------
Total current liabilities 94,697 89,247
--------- ---------
Long-term liabilities 74,174 79,233
Stockholders' equity:
Common stock 1,630 1,603
Capital in excess of par value 92,010 88,788
Retained earnings 47,071 80,343
Unamortized restricted stock plan expense (482) (722)
Cumulative translation adjustment (132) (152)
--------- ---------
Total stockholders' equity 140,097 169,860
--------- ---------
$ 308,968 $ 338,340
========= =========
</TABLE>
A- The balance sheet at June 30, 1996 has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes.
-3-
<PAGE> 4
CALIFORNIA MICROWAVE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
-----------------------
1997 1996
---- ----
<S> <C> <C>
Operating activities:
Net income (loss) $(33,272) $ 10,080
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 11,300 9,396
Amortization of intangible assets 1,725 1,641
Non-cash portion of restructuring charges 1,160 --
Amortization of debt issuance costs 200 157
Deferred tax assets (16,388) --
Net effect of changes in:
Accounts receivable 24,758 4,940
Inventories 9,789 (4,789)
Prepaid expenses 346 (499)
Accounts payable (15,181) 3,351
Accrued income taxes (607) 3,593
Other accrued liabilities 17,364 (17,495)
-------- --------
Net cash provided by (used in) operating activities 1,194 10,375
-------- --------
Investing activities:
Capital expenditures (9,309) (14,776)
Other 1,049 (722)
-------- --------
Net cash provided by (used in) investing activities (8,260) (15,498)
-------- --------
Financing activities:
Proceeds from (payments on) long-term debt (109) (17)
Proceeds from issuance of common stock 3,249 3,459
Proceeds from bank credit facilities 1,000 1,200
-------- --------
Net cash provided by (used in) financing activities 4,140 4,642
-------- --------
Net increase (decrease) in cash and cash equivalents (2,926) (481)
Cash and cash equivalents at beginning of year 4,560 1,983
-------- --------
Cash and cash equivalents at end of period $ 1,634 $ 1,502
======== ========
Cash paid during the period for:
Interest $ 3,654 $ 2,059
Income taxes 593 1,865
</TABLE>
See accompanying notes.
-4-
<PAGE> 5
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Note 1 - Basis of Presentation
---------------------
The financial information at March 31, 1997, and for the
three and nine-month periods ended March 31, 1997 and 1996,
is unaudited, but includes all adjustments (consisting only of
normal recurring adjustments) which the management of
California Microwave, Inc. believes are necessary for a fair
presentation of the results for the periods presented. Interim
results are not necessarily indicative of results for a full
year. The consolidated interim financial statements should be
read in conjunction with the audited consolidated financial
statements for the year ended June 30, 1996 included in the
California Microwave, Inc. 1996 Annual Report to Stockholders.
In February 1997, The Financial Accounting Standards Board
issued Statement No.128, Earnings per Share, which is required
to be adopted on December 31, 1997. At that time, the Company
will be required to change the method currently used to
compute earnings per share and to restate all prior periods.
Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be
excluded. The impact is expected to result in an increase in
primary earnings per share in those periods in which the
Company has net income. The impact on primary earnings per
share for the quarter ended March 31, 1996 was not
significant. The impact of Statement 128 on fully diluted
earnings per share is also not significant.
Note 2 - Restructuring and other charges
-------------------------------
As a result of continued disappointing operating performance
by the Microwave Network Systems (MNS) division and the
Satellite Transmission Systems (STS) division, the Company
performed a comprehensive review of these and certain other of
the Company's operations during December 1996 and January
1997, including a review of inventory levels, product
development and migration plans, and facility and personnel
needs. It was determined that MNS will focus on products that
have potentially higher margins and STS will focus on selected
strategic customers and network opportunities that utilize the
Company's products. This resulted in the write-off of certain
inventories, the restructuring of MNS and STS operations, and
the recording of charges relating to warranty and contract
issues that arose at MNS and STS during the second quarter.
Inventory, warranty and contract, and other charges of
approximately $39 million were reflected in the results of
operations for the second quarter. Restructuring charges of
approximately $8 million are reflected in the results of
operations in the third quarter. See Management's Discussion
and Analysis of Financial Condition and Results of Operations
for further information.
Note 3 - Contingent Liabilities
----------------------
On November 9, 1995, and December 12, 1995, two putative class
action lawsuits were filed in the United States District Court
for the Northern District of California. The plaintiffs in
these two cases, which have been consolidated, purport to
represent a class of all persons who purchased common stock of
the Company between September 6, 1994, and June 29, 1995 (the
class period). Named as defendants are the Company and certain
of its former executive officers. The Complaints allege that
defendants violated various federal securities laws through
material misrepresentations and omissions during the class
period. Defendants filed motions to dismiss the complaints,
which the court granted on April 19, 1996, with leave to
amend. Plaintiffs filed an amended consolidated complaint and
in August 1996 defendants filed a motion to dismiss that
complaint. On November 1, 1996, the motion to dismiss was
denied. Although the ultimate outcome of these proceedings
cannot be determined, the Company believes that it has
meritorious defenses to the claims alleged in these lawsuits
and intends to defend the actions vigorously.
-5-
<PAGE> 6
The Company is subject to other legal proceedings and claims
that arise in the normal course of its business. The Company
believes these proceedings will not have a material adverse
effect on the financial position or results of operations of
the Company.
Note 4 - Inventories
-----------
<TABLE>
<CAPTION>
(in thousands)
March 31 June 30
1997 1996
-------- ---------
<S> <C> <C>
Projects in process $ 28,829 $ 23,948
Less progress billings 4,874 11,750
-------- --------
23,955 12,198
Work-in-process and finished goods 36,161 43,161
Raw materials and parts 33,551 48,097
-------- --------
$ 93,667 $103,456
======== ========
</TABLE>
Note 5 - Unbilled Accounts Receivable
----------------------------
Included in accounts receivable at March 31, 1997 and June 30,
1996 are approximately $4.7 million and $7.5 million,
respectively, of unbilled receivables resulting from
provisions contained in certain export contracts.
The remaining unbilled receivables at March 31, 1997 are
expected to be billed and collected within one year.
Note 6 - Stockholders' Equity
--------------------
The change in capital in excess of par value for the nine
months ended March 31, 1997 consists principally of common
stock issuances and tax benefit of options exercised.
Note 7- Reclassifications
-----------------
Certain fiscal year 1996 amounts have been reclassified to
conform to the fiscal 1997 presentation.
Note 8 - Income Taxes
------------
At March 31, 1997, the Company had a cumulative net deferred
tax asset of $26.6 million that will be available to reduce
payments on future tax liabilities. Management of the Company
believes it is more likely than not that the asset will be
realized through refunds of previously paid income taxes,
future profitable operations, and tax planning strategies.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Statements made below and elsewhere in this Form 10-Q that are not historical
facts, including any statements about expectations for fiscal year 1997 and
beyond, involve certain risks and uncertainties. Factors that could cause the
Company's actual results to differ materially from management's projections,
estimates and expectations include, but are not limited to, delays in the
receipt of orders or in the shipment of products, delays in implementing the
Company's restructuring plan, delays in transitioning from older to newer
products, and other factors referred to under "Information Regarding Forward
Looking Statements" in the Company's Form 10-K Annual Report for its fiscal year
ended June 30, 1996, and in the Company's Consolidated Financial Statements and
Notes to Financial Statements contained in its 1996 Annual Report to
Stockholders. The Condensed Consolidated Financial Statements and Notes to
Condensed Consolidated Financial Statements should be read in conjunction with
this Management's Discussion and Analysis of Financial Condition and Results of
Operations.
-6-
<PAGE> 7
The following table sets forth for the periods indicated (i) certain income and
expense items expressed as a percentage of the Company's total sales and (ii)
the percentage change of such items for the three and nine months ended March
31, 1997 compared to the three and nine months ended March 31, 1996. See
Condensed Consolidated Statements of Operations.
<TABLE>
<CAPTION>
Period to Period
Percent of Sales Increase (Decrease)
---------------- -------------------
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
March 31 March 31 March 31 March 31
-------- -------- -------- --------
1997 1996 1997 1996 1997 vs 1996 1997 vs 1996
---- ---- ---- ---- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100.0% 100.0% 100.0% 100.0% (7.2)% (5.6)%
Gross margin 29.2 29.7 14.6 29.7 (8.6) (53.5)
Research and development expenses 8.1 7.7 7.4 6.7 (2.4) 3.9
Marketing and administration expenses 20.1 18.4 19.5 16.8 1.5 9.8
Amortization of intangible assets 0.7 0.6 0.6 0.5 17.9 5.1
Restructure charges 8.4 2.5 NM NM
Operating income (loss) (8.1) 3.0 (15.4) 5.7 NM NM
Interest (expense) net (1.5) (0.9) (1.4) (1.0) 52.6 37.9
Income (loss) before income taxes (9.6) 2.1 (15.8) 4.7 NM NM
Net income (loss) (6.5) 1.3 (10.6) 3.0 NM NM
</TABLE>
The following table sets forth sales by product class and by market sector for
the three and nine months ended March 31, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
Sales
-----
Three Months Nine Months
Ended Ended
March 31 March 31
-------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Satellite Communications $ 26,395 $ 39,819 $103,510 $152,381
Wireless 43,058 40,066 138,002 123,787
Intelligence and other 23,404 20,188 72,126 55,957
-------- -------- -------- --------
$ 92,857 $100,073 $313,638 $332,125
======== ======== ======== ========
International $ 39,009 $ 44,624 $139,675 $167,284
U.S. Commercial 28,405 28,910 93,244 90,781
U.S. Government 25,443 26,539 80,719 74,060
-------- -------- -------- --------
$ 92,857 $100,073 $313,638 $332,125
======== ======== ======== ========
</TABLE>
OVERVIEW
As a result of continued disappointing operating performance by the
Microwave Network Systems (MNS) division and the Satellite Transmission Systems
(STS) division, management of the Company performed a comprehensive review of
these and certain other of the Company's operations during December 1996 and
January 1997. MNS represents the merged operations of TeleSciences Transmission
Systems (TTS), acquired in October 1993, Microwave Networks Incorporated,
acquired in May 1995, and certain operations of Microwave Radio Corporation,
acquired in April 1992. This comprehensive
-7-
<PAGE> 8
review included a review of inventory levels, product development and migration
plans, facility and personnel needs, and other matters. As a result of this
review, it was determined that MNS will focus on a smaller number of potentially
higher-margin products, including several recently introduced products, and STS
will focus on selected strategic customers and networking opportunities that
utilize the Company's products. As a result of this product strategy, the
operations of MNS are in the process of being reorganized into two divisions,
one focused on the international cellular market and the other focused on the
domestic Personal Communications Services (PCS) relocation market. MNS will
immediately discontinue the sale of certain products and will phase-out other
products over the next 6 to 18 months. STS will also eliminate certain products
and will transfer others to the Company's EFData subsidiary (EFD). Accordingly,
management determined that certain quantities of inventory on-hand or subject to
firm purchase commitments at MNS and STS, and to a lesser extent at certain
other divisions, were in excess of reforecasted demand. As a result of such
review, including the decision to discontinue or phase-out certain products, the
Company recorded a provision of $31.2 million during the quarter ended December
31, 1996, to write-down certain inventories to their estimated net realizable
value.
In addition, certain customers of MNS have experienced quality problems
with a specific product (now discontinued) which was sold in significant
quantities during 1993 to 1995. After determining the scope of the quality
problem, the Company recently offered to retrofit the affected products at no
cost to the customer. The Company has recorded a provision for the estimated
costs of this program. The Company also determined that warranty and other
provisions should be made for other discontinued products and for certain loss
contracts. Warranty and contract loss provisions recorded in the quarter ended
December 31, 1996 amounted to $6.5 million.
Primarily as a result of the above, during the quarter ended December 31,
1996, the Company recorded $38.0 million to cost of products sold and $1.3
million to marketing and administration expense for the write-down of
inventories to amounts expected to be realized, the recognition of unusual
warranty and contract costs, and other expenses. Only approximately $7.0
million of the total of $39.3 million will result in future cash outlays. The
comprehensive review of operations also resulted in the decision to reduce
future operating expenses through the closure of certain facilities at MNS and
the termination of approximately 175 employees at MNS and STS. The Company
recognized approximately $7.8 million of restructuring charges, of which $6.9
million relates to facility closures and the remainder to severance charges. As
required by generally accepted accounting principles, these restructuring
charges were recorded in the quarter ended March 31, 1997. The Company also
expects aggregate costs of approximately $1 million for the fourth quarter of
fiscal 1997 and the first quarter of fiscal 1998 for retention and relocation
costs for certain employees and other expenses to be incurred in connection
with the restructuring. These costs will be included in marketing and
administration expense and research and development expense in those periods.
Relocation expenses incurred during the quarter ended March 31, 1997, were
approximately $800,000.
As a part of the review process, and in accordance with its accounting
policies, the Company reviewed the $10 million carrying value of intangible
assets associated with the acquisition of TTS. The Company concluded that the
asset will be realized through the on-going domestic operations of MNS. However,
the remaining period over which this asset will be realized has been shortened
to 13 years from 26 years.
In June 1995, the Company recorded restructuring charges of approximately
$20.9 million and other charges of approximately $15.5 million, for a total of
approximately $36.4 million in connection with a program to reduce costs and
improve operating efficiencies. Through March 31, 1997, asset writedowns and
payments in connection with the 1995 charges totaled approximately $33.5 million
leaving approximately $2.9 million to be paid.
RESULTS OF OPERATIONS
Sales Sales were $92.9 million and $100.1 million for the three months
ended March 31, 1997 and 1996, respectively, representing a decrease of 7%.
Wireless product sales and intelligence systems and other sales increased 8% and
16%, respectively, while satellite communication sales decreased 34%.
-8-
<PAGE> 9
The decrease in satellite communications sales was principally due to continued
delays in completing the financing of certain large satellite earth station
projects and the decrease in sales for a telecommunications project in Saudi
Arabia as this project was substantially completed in fiscal 1996 and has not
been replaced by similar projects in fiscal 1997. The Company expects that
satellite communication sales for the fourth quarter will be below satellite
communication sales recorded in the fourth quarter of fiscal 1996.
U.S. commercial sales, sales to the U.S. government and international
sales for the three months ended March 31, 1997 decreased 2%, 4% and 13%,
respectively, when compared to the third quarter of fiscal 1996. Products
represented 69% of sales in the third quarter of 1997 compared to 63% in the
third quarter of 1996, with the balance represented by system sales.
Sales were $313.6 million and $332.1 million for the nine months ended
March 31, 1997 and 1996, respectively, representing a decrease of 6%. Wireless
sales and intelligence systems and other sales increased 12% and 29%,
respectively, substantially offsetting a 32% decrease in satellite
communications sales. U.S. commercial sales and sales to the U.S. government
increased 3% and 9%, respectively, while international sales decreased 17%.
Satellite communications and international sales declined because the Saudi
Arabia project was not replaced.
Gross Margin Gross margin was $27.1 million and $29.7 million for the
three months ended March 31, 1997 and 1996, respectively. Gross margin as a
percentage of total sales was 29.2% and 29.7%, respectively, for such periods.
Continued competitive pricing, particularly at EFData, continues to limit
increases in gross margins on product sales.
Gross margin was $45.8 million and $98.6 million for the nine months
ended March 31, 1997 and 1996, respectively, representing a decrease of 54%.
Gross margin as a percentage of sales was 26.7% (excluding the second quarter
charges discussed in the overview above) and 29.7% for such periods,
respectively.
Research and Development Research and development expenses were $7.5
million and $7.7 million for the three months ended March 31, 1997 and 1996,
respectively, representing a decrease of 2%. Research and development expenses
as a percentage of total sales were 8.1% and 7.7% for such periods,
respectively. The Company continues to focus its research and development
efforts primarily on the development of new satellite networking products and
networking software and wireless products.
Research and development expenses were $23.3 million and $22.4 million
for the nine months ended March 31, 1997 and 1996, respectively, representing an
increase of 4%. Research and development expenses as a percentage of total sales
were 7.4% and 6.7% for such periods, respectively.
Marketing and Administration Marketing and administration expenses were
$18.7 million and $18.4 million for the three months ended March 31, 1997 and
1996, respectively, representing an increase of 2%. Marketing and administration
expenses as a percentage of total sales were 20.1% and 18.4% for such periods,
respectively.
Marketing and administration expenses were $61.2 million and $55.7
million for the nine months ended March 31, 1997 and 1996 respectively,
representing an increase of 10%. Marketing and administration expenses as a
percentage of total sales were 19.5% and 16.8% for such periods, respectively.
Included in marketing and administration expenses for the quarter ended December
31, 1996, is approximately $1.3 million of severance charges for the Company's
former chief executive officer.
Amortization of Intangible Assets Amortization expenses associated with
intangible assets increased by approximately $100,000 during the three months
and nine months ended March 31, 1997. This increase is due to the change in the
remaining amortization period for the TTS intangible assets of approximately $10
million from 26 years to 13 years.
-9-
<PAGE> 10
Restructure Charges The Company recorded $7.8 million of restructuring
charges in the third quarter of fiscal 1997. The amount consists of $800,000 for
employee severance, of which $334,000 was paid during the third quarter, and the
balance of $7.0 million relates to facility closures and is expected to be
incurred over the next 5 years.
Interest Expense, Net Net interest expense was $1.4 million and $0.9
million for the three months ended March 31, 1997 and 1996, respectively,
representing a increase of 53%. Net interest expense was $4.2 million and $3.1
million for the nine months ended March 31, 1997 and 1996, respectively,
representing a 38% increase. The increase in net interest expense reflects the
need for the Company to borrow against its credit lines to fund operations and
capital expenditures.
Gain on Sale of Subsidiary During the second quarter of fiscal 1996,
the Company recognized a $2.7 million gain from the sale of its Digital Radio
Technology subsidiary.
Provision for (Benefit from) Income Taxes The provision for (benefit
from) income taxes was ($3.0) million and $0.7 million for the three months
ended March 31, 1997 and 1996, respectively, and ($16.4) million and $5.7
million for the nine months ended March 31, 1997 and 1996 respectively. The
effective tax rate benefit of 33% for fiscal 1997 represents the federal
statutory rate of 35% reduced for the effect of non-deductible amortization of
goodwill (for tax purposes).
At March 31, 1996, the Company had a cumulative net deferred tax asset of
$26.6 million that will be available to reduce payments on future tax
liabilities. Management of the Company believes it is more likely than not that
the asset will be realized through refunds of previously paid income taxes,
future profitable operations, and tax planning strategies.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of $113.5 million,
including $1.6 million of cash and cash equivalents, compared with working
capital of $141.3 million, including cash and cash equivalents of $4.6 million,
at June 30, 1996.
During the first nine months of fiscal 1997, cash and cash equivalents
were provided by operations (after adjusting the operating loss for depreciation
and amortization and charges discussed in the overview) and decreases in
accounts receivable, offset by reductions of accounts payable. Cash and cash
equivalents were used to pay year-end accrued liabilities, including payments
under incentive agreements and employee benefit plans and certain restructuring
payments. The net result was cash and cash equivalents provided by operations of
$1.2 million. During the first nine months of fiscal 1996, cash and cash
equivalents were provided by operating income (including depreciation and
amortization ) and decreases in inventories, and were used to fund an increase
in accounts receivable and to reduce accounts payable and to pay year-end
accrued liabilities. The net result was cash and cash equivalents provided by
operating activities of $10.4 million.
The Company's investing activities during the first nine months of fiscal
1997 included capital expenditures of $9.3 million. Total cash used for
investing activities was $8.3 million. Net cash used for investing activities
during the first nine months of fiscal 1996 was $15.5 million, which included
$14.8 million of capital expenditures.
During the first nine months of fiscal 1997, cash and cash equivalents of
$4.1 million were provided by financing activities, including borrowings of $1
million under the Company's credit lines and sales of $3.2 million of common
stock to employees under on-going stock option and purchase plans. During the
first nine months of 1996, the Company sold $3.5 million of common stock to its
employees.
The above activity resulted in a net decrease in cash and cash
equivalents of $2.9 million for the first nine months of fiscal 1997 compared to
a net decrease in cash and cash equivalents of $0.5 million for the first nine
months of fiscal 1996.
-10-
<PAGE> 11
In December 1996, the Company amended its principal credit facility. The
facility was reduced to $30 million and is secured by the Company's current
assets. The amended facility expires March 1998. As of March 31, 1997, there
were $11.5 million of borrowings and $5.0 million of standby letters of credit
outstanding under this facility, leaving $13.5 million of available credit. At
March 31, 1997, the Company was not in compliance with certain covenants of its
debt agreements. The lenders have waived such non-compliance and amended such
covenants as necessary to bring the Company into compliance at March 31, 1997.
In May, the Company expects to replace this credit facility with a new 3 year
credit facility with availability based upon an accounts receivable formula.
This new facility will be secured by current and intangible assets and will
require .25% annual commitment fees. Interest rates for borrowings will not
exceed the bank's reference rate plus 0.5%.
The Company has sold certain qualified export receivables to a bank,
these receivables are insured for 95% of their value and the remaining uninsured
5% is with full recourse to CMI. At March 31, 1997, the outstanding balances of
sold and uncollected receivable balances approximated $12.0 million.
The Company believes that its current cash position, funds generated from
operations and funds available from its credit facilities will be adequate to
meet the Company's requirements for working capital, capital expenditures and
debt service for at least the next 12 months.
OTHER FINANCIAL INFORMATION
Bookings Orders booked were $115.7 million and $90.4 million for the
three months ended March 31, 1997 and 1996, respectively, representing an
increase of 28%. Bookings increased in all product areas when compared to the
third quarter of fiscal 1996. Intelligence systems bookings increased by 157% to
$31.9 million and represent 27% of total bookings, wireless increased by 8% to
38% of total bookings and satellite communications by 7% to 35% of total
bookings.
Backlog Backlog was $181.8 million and $206.0 million at March 31, 1997
and 1996, respectively, representing a decrease of 12%. Substantially all of the
March 31, 1997 backlog is expected to be delivered within twelve months.
-11-
<PAGE> 12
Part II - Other Information
Item 1.-5. Inapplicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.25 - First amended and restated credit agreement,
dated December 31, 1996, between California Microwave, Inc.
and Bank of America National Trust Savings Association
(b) Exhibit 11 - Statement re computation of per share earnings.
(c) Reports on Form 8-K.
January 14, 1997 reporting under Item 5. - Other Events.
February 12, 1997 reporting under Item 5. - Other Events
March 19, 1997 reporting under Item 5. - Other Events
-12-
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CALIFORNIA MICROWAVE, INC.
May 12, 1997 BY /s/ Gilbert F. Johnson
- ------------ ---------------------------
Date Gilbert F. Johnson
President
May 12, 1997 BY /s/ George L. Spillane
- ------------ ---------------------------
Date George L. Spillane
Vice President
Chief Financial Officer
-13-
<PAGE> 1
EXHIBIT 10.25
CONFORMED COPY
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 31, 1996
among
CALIFORNIA MICROWAVE, INC.,
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
and
Letter of Credit Issuing Bank
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
Arranged by
BA SECURITIES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.04 Currency Equivalents Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
1.05 Effect of This Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.03 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
2.04 Conversion and Continuation Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
2.05 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . 29
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.07 Cash Collateralization and Mandatory Prepayments of Loans . . . . . . . . . . . . . . . . . . 30
2.08 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.09 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(a) Arrangement and Agency Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(c) Fee Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(d) Utilization Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(e) Amendment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.11 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.12 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
2.13 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.14 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.15 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.01 The Letter of Credit Subfacility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . . . . . . . . . . . 35
3.03 Existing BofA Letters of Credit; Risk Participations,
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
Drawings and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.04 Repayment of Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
3.10 Letters of Credit Denominated in Offshore Currencies . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
4.06 Reserves on Offshore Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.07 Certificates of Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
4.08 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.01 Conditions of Initial Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Credit Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(b) Resolutions; Incumbency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(c) Organization Documents; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(e) Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(f) Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(g) Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(h) Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(i) Repayments and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(j) Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(k) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(a) Notice, Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(b) Continuation of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 49
(c) No Existing Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(d) Cash Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
(e) Foreign Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
<S> <C>
(f) Waived Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.02 Corporate Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . 50
6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.13 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.14 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.15 Copyrights, Patents, Trademarks and Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . 54
6.16 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.18 Swap Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.19 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.20 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.21 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.22 Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.04 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.09 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.10 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.11 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
iii
<PAGE> 5
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
7.13 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.14 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.15 Action Under Collateral Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.16 Borrowing Base Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.17 Foreign Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.02 Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.03 Consolidations and Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.05 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.06 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.07 Contingent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.08 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.09 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.10 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.11 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.12 Quick Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.13 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
8.14 Adjusted Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.15 Funded Debt to EBITDA Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.16 Consecutive Quarterly Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.17 Change in Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.18 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.19 Limitations on Subordinated Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
ARTICLE IX EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(b) Representation or Warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(d) Other Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(f) Insolvency; Voluntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(i) Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
(j) Non-Monetary Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
iv
<PAGE> 6
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
(k) Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(l) Receivables Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(m) Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(n) Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(o) ABN Facility Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(p) Guarantor Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.01 Appointment and Authorization; "Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.07 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.10 Withholding Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.11 Collateral Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.05 Company Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.06 Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.08 Assignments, Participations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.09 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.10 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.11 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.12 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . . . . . . . . . . . 86
11.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
11.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.15 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
</TABLE>
v
<PAGE> 7
<TABLE>
<CAPTION>
Section Page
<S> <C> <C>
11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.17 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.19 ABN Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
11.20 Certain Closing Date Transitional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . 88
</TABLE>
SCHEDULES
Schedule 1.01 Permitted Accounts Receivable
Schedule 2.01 Commitments
Schedule 3.03 Letters of Credit
Schedule 6.05 Litigation
Schedule 6.07 ERISA
Schedule 6.11 Material Obligations Not on Balance Sheet
Schedule 6.12 Environmental Matters
Schedule 6.16 Subsidiaries and Minority Interests
Schedule 6.17 Insurance Matters
Schedule 8.01 Permitted Liens
Schedule 8.07 Contingent Obligations
Schedule 8.19 Permitted Subordinated Indebtedness
Schedule 11.02 Lending Offices; Addresses for Notices
Schedule 11.20 Transitional Commitments
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
Exhibit E Form of Note
Exhibit F Factoring Agreement
Exhibit G Notice of Prepayment
Exhibit H Form of Borrowing Base Certificate
Exhibit I Form of Guaranty
Exhibit J Form of Company Security Agreement
Exhibit K Form of Subsidiary Security Agreement
vi
<PAGE> 8
CREDIT AGREEMENT
This FIRST AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
December 31, 1996, among California Microwave, Inc., a Delaware corporation
(the "Company"), the several financial institutions from time to time party to
this Agreement (collectively, the "Banks"; individually, a "Bank"), and Bank of
America National Trust and Savings Association, as letter of credit issuing
bank and as agent for the Banks.
WHEREAS:
(A) The Company, Banks, the Issuing Bank (as herein
defined) and Agent (as herein defined) were parties to a Credit Agreement dated
as of December 21, 1995, (as such agreement has been amended prior to the date
of this Agreement, the "Prior Credit Agreement") pursuant to which the Agent,
the Issuing Bank and the Banks have extended certain credit facilities to the
Company.
(B) The Company has requested and the Banks, the Issuing
Bank and Agent have agreed to the Company's request to amend and restate the
Prior Credit Agreement as set forth herein to, among other things, provide for
an amended Revolving Termination Date and the provision of certain security and
guarantees in support of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Certain Defined Terms. The following terms have the following
meanings:
"ABN AMRO" means ABN AMRO Bank N.V. and any successor or
assign.
"ABN AMRO Accounts Receivable Facility" means that certain
accounts receivable sale facility granted by ABN AMRO Bank to the
Company pursuant to which ABN AMRO has agreed to purchase certain
accounts receivable of the Company with a total available program
amount currently of US $20,000,000.
"ABN Limit" has the meaning specified in Section 8.01(o).
"Account Receivable" means a present or future right of the
Company to payment for goods sold, consigned or leased, or for
services rendered, including without limitation, an "account" as such
term is used and/or defined in the UCC.
1
<PAGE> 9
"Account Receivable Debtor" means the Person which is
obligated on or under an Account Receivable.
"Acquisition" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly,
in (a) the acquisition of all or substantially all of the assets of a
Person, or of any business or division of a Person, (b) the
acquisition of in excess of 50% of the capital stock, partnership
interests, membership interests or equity of any Person, or otherwise
causing any Person to become a Subsidiary, or (c) a merger or
consolidation or any other combination with another Person (other than
a Person that is a Subsidiary) provided that the Company or the
Subsidiary is the surviving entity.
"Adjusted Tangible Net Worth" means Tangible Net Worth plus
the amount of all subordinated liabilities.
"Adjusted Total Liabilities" means, as of any date of
determination, all amounts which, without duplication, would, in
accordance with GAAP, be included under liabilities on a consolidated
balance sheet of the Company and its Subsidiaries, including all
Indebtedness of the Company and its Subsidiaries, less subordinated
debt plus all Contingent Obligations of the Company and its
Subsidiaries excluding obligations in an amount up to $20,000,000 in
respect of outstanding Surety Instruments issued for the account of
the Company or its Subsidiaries or as to which the Company or its
Subsidiaries is liable for reimbursement of drawings but including the
Letters of Credit.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person. A Person shall be deemed to
control another Person if the controlling Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the
ownership of voting securities, membership interests, by contract, or
otherwise.
"Agent" means BofA in its capacity as agent for the Banks
hereunder, and any successor agent arising under Section 10.09.
"Agent-Related Persons" means BofA and any successor agent
arising under Section 10.09 and any successor letter of credit issuing
bank hereunder, together with their respective Affiliates (including,
in the case of BofA, the Arranger), and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set
forth on Schedule 11.02 or such other address as the Agent may from
time to time specify.
2
<PAGE> 10
"Aggregate Borrowing Base" means, as of any date of
determination, the product of (i) the sum of the Hardware Borrowing
Base, Hardware+Installation/Installment Borrowing Base and Government
Borrowing Base as of such date (provided that after the date occurring
8 months after the Closing Date, the Hardware+Installation/Installment
Borrowing Bases shall no longer be included in any calculation of the
Aggregate Borrowing Base), minus (ii) an amount equal to 15% of the
total available program amount of the ABN AMRO Accounts Receivable
Facility.
"Agreement" means this First Amended and Restated Credit
Agreement.
"Applicable Currency" means, as to any particular payment or
L/C Obligation, Dollars or the Offshore Currency in which it is
denominated or is payable.
"Applicable Margin" means the interest rate margin specified
in subsection 2.09(a).
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 11.08(a).
"Attorney Costs" means and includes all fees and disbursements
of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"Bank" has the meaning specified in the introductory clause
hereto. References to the "Banks" shall include BofA, as Issuing
Bank; for purposes of clarification only, to the extent that BofA may
have any rights or obligations in addition to those of the Banks due
to its status as Issuing Bank, its status as such will be specifically
referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of: (a) 0.50% per
annum above the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some
loans, which may be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in
the public announcement of such change.
3
<PAGE> 11
"Base Rate Loan" means a Revolving Loan or an L/C Advance,
that bears interest based on the Base Rate.
"BofA" means Bank of America National Trust and Savings
Association, a national banking association.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans of the same Type made to the Company on the same day
by the Banks under Article II, and, other than in the case of Base
Rate Loans, having the same Interest Period.
"Borrowing Base Certificate" means a certificate signed by a
Responsible Officer in substantially the form of Exhibit H.
"Borrowing Date" means any date on which a Borrowing occurs
under Section 2.03.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco
are authorized or required by law to close and, if the applicable
Business Day relates to any Offshore Rate Loan, means such a day on
which dealings are carried on in the applicable offshore dollar
interbank market.
"California Microwave Navigation Systems" means California
Microwave Navigation Systems, Inc., a Delaware corporation.
"California Microwave Navigation Systems Guaranty" means a
guaranty executed by California Microwave Navigation Systems in favor
of Agent (on behalf of the Banks) in respect of the Obligations,
substantially in the form of Exhibit I.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"Cash Collateralize" means to pledge and deposit with or
deliver to the Agent, for the benefit of the Agent and the Banks, as
collateral for the L/C Obligations, cash or deposit account balances
pursuant to documentation in form and substance satisfactory to the
Agent and the Issuing Bank (which documents are hereby consented to by
the Banks). Derivatives of such term shall have corresponding
meaning.
"Cash Equivalents" means:
(a) securities issued or fully guaranteed or insured by
the United States Government or any agency thereof and backed by the
4
<PAGE> 12
full faith and credit of the United States having maturities of not
more than six months from the date of acquisition;
(b) certificates of deposit, time deposits, Eurodollar
time deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a tenor of not more than
six months, issued by the Bank, or by any U.S. commercial bank or any
branch or agency of a non-U.S. bank licensed to conduct business in
the U.S. having combined capital and surplus of not less than
$100,000,000 whose short term securities are rated at least A-1 by
Standard & Poor's Corporation and P-1 by Moody's Investors Service,
Inc.;
(c) commercial paper of an issuer rated at least A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors Service Inc.
and in either case having a tenor of not more than six months.
"Change of Control" means (a) any "person" (as such term is
used in subsections 13(d) and 14(d) of the Exchange Act) or group of
persons on or after the Closing Date, is or becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then-outstanding voting
securities, or (b) the existing directors for any reason cease to
constitute a majority of the Company's board of directors. "Existing
directors" means (x) individuals constituting the Company's board of
directors on the Closing Date, and (y) any subsequent director whose
election by the board of directors or nomination for election by the
Company's shareholders was approved by a vote of at least two-thirds
of the directors then in office, which directors either were directors
on the Closing Date or whose election or nomination for election was
previously so approved.
"Closing Date" means the date on which all conditions
precedent set forth in Section 5.01 are satisfied or waived by all
Banks (or, in the case of subsection 5.01(e), waived by the Person
entitled to receive such payment).
"Code" means the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
"Collateral" means all property (domestic or foreign) and
interests in such property and proceeds thereof (including, without
limitation, all bank accounts receivable, general intangibles and cash
and inventory) now owned or hereafter acquired by the Company or any
Guarantor in or upon which a Lien now or hereafter exists in favor of
the Banks or the Agent on behalf of the Banks and Agent, whether under
this Agreement or under any other documents executed by any such
Person and delivered to the Agent or the Banks.
5
<PAGE> 13
"Collateral Documents" means, collectively, (i) the Security
Agreements, and all other security agreements and other similar
agreements between the Company, any Guarantor and the Banks or the
Agent for the benefit of the Banks now or hereafter delivered to the
Banks or the Agent pursuant to or in connection with the transactions
contemplated hereby, and all financing statements (or comparable
documents now or hereafter filed in accordance with the UCC or
comparable law) against the Company or any Guarantor as debtor in
favor of the Banks or the Agent for the benefit of the Banks as
secured party, (ii) the Foreign Security Agreements (when executed),
(iii) the supplemental security agreement relating to investment
property and financial property (as defined in the 1997 UCC) together
with financing statements (or comparable documents now or hereafter
filed in accordance with the UCC or comparable law) all in form and
substance satisfactory to the Agent and the Banks, and (iv) any
amendments, supplements, modifications, renewals, replacements,
consolidations, substitutions and extensions of any of the foregoing.
"Commitment," as to each Bank, has the meaning specified in
Section 2.01.
"Company Security Agreement" means the security agreement
executed by the Company in favor of the Agent (on behalf of the Banks
and the Agent), substantially in the form of Exhibit J.
"Compliance Certificate" means a certificate substantially in
the form of Exhibit C.
"Computation Date" has the meaning specified in subsection
3.10(a).
"Consolidated Current Assets" means, as of any date of
determination, all amounts which would, in accordance with GAAP, be
included under current assets on a consolidated balance sheet of the
Company and its Subsidiaries; provided, however, that such amounts
shall not include (a) any amounts for any Indebtedness owing by an
Affiliate of the Company, unless such Indebtedness arose in connection
with the sale of goods or other property in the ordinary course of
business and would otherwise constitute current assets in conformity
with GAAP, (b) the equity value of any shares of stock issued by an
Affiliate of the Company, (c) the cash surrender value of any life
insurance policy or (d) any consolidated intangibles.
"Consolidated Current Liabilities" means, as of any date of
determination, all amounts which would, in accordance with GAAP, be
included under current liabilities on a consolidated balance sheet of
the Company and its Subsidiaries, but in any event including amounts
of (a) all Indebtedness of any such Person payable on demand or, at
the option of the Person to whom the Indebtedness is owed, not more
than twelve months after such date, (b) any payments in respect of any
Indebtedness of any such Person (whether installment, serial maturity
or sinking fund payments or otherwise) required to be made not more
than twelve months after that date, (c) all reserves in respect of
liabilities or Indebtedness payable on demand or, at the option of the
Person
6
<PAGE> 14
to whom the Indebtedness is owed, not more than twelve months after
that date, the validity of which is contested at that date, and (d)
all Revolving Loans.
"Consolidated Net Interest Expense" means, for any period,
gross consolidated interest expense for the period (including all
commissions, discounts, fees and other charges in connection with
standby letters of credit and similar instruments) for the Company and
its Subsidiaries, plus (a) the portion of the upfront costs and
expenses for Rate Contracts (to the extent not included in gross
interest expense) fairly allocated to such Rate Contracts as expenses
for such period, less (b) interest income for that period and Rate
Contracts payments received; as determined in accordance with GAAP.
"Contingent Obligation" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary
obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise
acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such
primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property,
securities or services primarily for the purpose of assuring the owner
of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to
assure or hold harmless the holder of any such primary obligation
against loss in respect thereof (each, a "Guaranty Obligation"); (b)
with respect to any Surety Instrument (other than any Letter of
Credit) issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments;
(c) to purchase any materials, supplies or other property from, or to
obtain the services of, another Person if the relevant contract or
other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be
made regardless of whether delivery of such materials, supplies or
other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Rate Contract. The
amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of
the primary obligation in respect of which such Guaranty Obligation is
made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other
Contingent Obligations other than in respect of Rate Contracts, shall
be equal to the maximum reasonably anticipated liability in respect
thereof and, in the case of Contingent Obligations in respect of Rate
Contracts, shall be equal to the Swap Termination Value.
"Contractual Obligation" means, as to any Person, any
provision of any security issued by such Person or of any agreement,
undertaking, contract, indenture, mortgage, deed of trust or other
instrument, document or agreement to which such Person is a party or
by which it or any of its property is bound.
7
<PAGE> 15
"Controlled Group" means the Company and all Persons (whether
or not incorporated) under common control or treated as a single
employer with the Company pursuant to Section 414(b), (c), (m) or (o)
of the Code.
"Conversion/Continuation Date" means any date on which, under
Section 2.04, the Company (a) converts Loans of one Type to another
Type, or (b) continues as Loans of the same Type, but with a new
Interest Period, Loans having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any
Revolving Loans hereunder, and (b) the Issuance of any Letters of
Credit hereunder (including the Existing BofA Letters of Credit).
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or
otherwise remedied during such time) constitute an Event of Default.
"Dollars," "dollars" and "$" each mean lawful money of the
United States.
"Dollar Equivalent" means, at any time, (a) as to any amount
denominated in Dollars, the amount thereof at such time, and (b) as to
any amount denominated in an Offshore Currency, the equivalent amount
in Dollars as determined by the Agent or the Issuing Bank, as the case
may be, at such time on the basis of the Spot Rate for the purchase of
Dollars with such Offshore Currency.
"EBITDA" means, for any period, for the Company and its
Subsidiaries on a consolidated basis, determined in accordance with
GAAP, the sum of (a) the net income (or net loss) for such period plus
(b) all amounts treated as expenses for depreciation, and interest and
the amortization of intangibles of any kind to the extent included in
the determination of such net income (or loss), plus (c) all accrued
taxes on or measured by income to the extent included in the
determination of such net income (or loss); provided, however, that
net income (or loss) shall be computed for these purposes without
giving effect to extraordinary losses or extraordinary gains.
"EFData" means EFData Corporation, an Arizona corporation.
"EFData Guaranty" means a guaranty from EFData in favor of the
Agent (on behalf of the Banks and the Agent) in respect of the
Obligations, substantially in the form of Exhibit I.
"Effective Amount" means (a) with respect to any Revolving
Loans on any date, the aggregate outstanding principal amount thereof
after giving effect to any Borrowings and prepayments or repayments of
Revolving Loans occurring on such date; and (b) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C
Obligations on such date after giving effect to any Issuances of
Letters of
8
<PAGE> 16
Credit occurring on such date and any other changes in the aggregate
amount of the L/C Obligations as of such date, including as a result
of any reimbursements of outstanding unpaid drawings under any Letters
of Credit or any reductions in the maximum amount available for
drawing under Letters of Credit taking effect on such date.
"Eligible Assignee" means (a) a commercial bank organized
under the laws of the United States, or any state thereof, and having
a combined capital and surplus of at least $100,000,000; (b) a
commercial bank organized under the laws of any other country which is
a member of the Organization for Economic Cooperation and Development
(the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located
in the country in which it is organized or another country which is
also a member of the OECD; and (c) a Person that is primarily engaged
in the business of commercial banking and that is (i) a Subsidiary of
a Bank, (ii) a Subsidiary of a Person of which a Bank is a Subsidiary,
or (iii) a Person of which a Bank is a Subsidiary.
"Eligible Accounts Receivable" means at any time the aggregate
amount of the Company's Accounts Receivable for Account Receivable
Debtors located in the United States, excluding the following:
(a) Accounts Receivable which are unbilled or for which
the Company's right to receive payment has not been fully earned by
performance or is contingent upon the fulfillment of any condition
whatsoever or which otherwise do not arise from a bona fide completed
transaction;
(b) Accounts Receivable against which there are asserted
any defenses, counterclaims, discounts (other than normal trade
discounts granted in the ordinary course of business) or offsets of
any nature whether well-founded or otherwise, but only to the extent
of such defense, counterclaim, discount or offset;
(c) Accounts Receivable that do not comply with all
applicable legal requirements, including all laws, rules, regulations
and orders of any Governmental Authority;
(d) Accounts Receivable which represent a prepayment or
progress payment or arising out of the placement of goods on
consignment, guaranteed sale or other arrangement by reason of which
the payment by the Account Receivable Debtor may be conditional or
contingent;
(e) Accounts Receivable which are not owned by the
Company free and clear of all Liens and rights of others (other than
the Liens in favor of the Agent or the Banks);
9
<PAGE> 17
(f) Accounts Receivable in which the Agent shall not have
a valid, enforceable and perfected first priority Lien;
(g) Accounts Receivable owing by any officer, director,
employee, agent, partner, Subsidiary or Affiliate of the Company;
(h) Accounts Receivable not paid in full within 90 days
from the original date of invoice except for Permitted Accounts
Receivable;
(i) Accounts Receivable owing by any Account Receivable
Debtor who is the subject of an Insolvency Proceeding;
(j) Accounts Receivable which are evidenced by a
promissory note or other instrument;
(k) Accounts Receivable with respect to which the terms
or conditions prohibit or restrict assignment or collection rights;
(l) Accounts Receivable owing by any Account Receivable
Debtor who resides or who is located in New Jersey, Minnesota or
Indiana (or any other state with any law materially impairing the
collectibility or enforceability of accounts receivable), unless the
Company has filed a Notice of Business Activities Report, or taken
other appropriate action, with the appropriate office or agency of the
states of New Jersey, Minnesota, Indiana or such other state, as
applicable, for the then current year (except if the Company is exempt
from such requirement);
(m) Accounts Receivable to the extent that reserves have
been created in the Company's accounts in respect of such receivables
or otherwise provisions have been made against such Accounts
Receivables; or
(n) Accounts Receivable with respect to which the Agent
and the Majority Banks, in their reasonable discretion, deem the
creditworthiness or financial condition of the Account Receivable
Debtor to be unsatisfactory or the prospect of payment or performance
to be impaired, and other Accounts Receivable which, in the Banks'
reasonable discretion, are otherwise ineligible.
"Eligible Hardware Accounts Receivable" means Eligible
Accounts Receivable representing sales of equipment which are also
made under the Company's ordinary and usual terms of trade, without
retentions, and for which the installation or integration component of
the relevant Eligible Account Receivable comprises less than 10% of
the relevant Eligible Account Receivable.
"Eligible Hardware+Installation/Integration Accounts
Receivable" means Eligible Accounts Receivable representing sales of
equipment which are also made under the Company's ordinary and usual
terms of trade, without retentions, but
10
<PAGE> 18
including some installation or integration components, and for which
the installation or integration component of the relevant Eligible
Accounts Receivable comprises less than 25% of the relevant Eligible
Account Receivable.
"Eligible Government Accounts Receivable" means Eligible
Accounts Receivable representing sales of equipment to the U.S.
Government which are also made under the Company's ordinary and usual
terms of trade, without retentions, but including some installation or
integration components, and for which the installation and integration
component of the relevant Eligible Account Receivable comprises less
than 25% of the relevant Eligible Account Receivable.
"Eligible Receivables" means all receivables net of any
allowance for doubtful accounts, as determined in accordance with
GAAP.
"Environmental Claims" means all written claims, however
asserted, by any Governmental Authority or other Person alleging
potential liability or responsibility for violation of any
Environmental Law or for release or injury to the environment or
threat to public health, personal injury (including sickness, disease
or death), property damage, natural resources damage, or otherwise
alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution,
civil or criminal penalties, injunctive relief, or other type of
relief, resulting from or based upon (a) the presence, placement,
discharge, emission or release (including intentional and
unintentional, negligent and non-negligent, sudden or non-sudden,
accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from
Property, whether or not owned by the Company, or (b) any other
circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, licenses, authorizations,
requests and permits of, agreements with, and obligations due to, any
Governmental Authorities, in each case relating to environmental,
health, safety and land use matters; including, to the extent relating
to the foregoing, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act,
the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Emergency Planning and Community
Right-to-Know Act, the California Hazardous Waste Control Law, the
California Solid Waste Management, Resource, Recovery and Recycling
Act, the California Water Code and the California Health and Safety
Code.
"Environmental Permits" has the meaning specified in
subsection 6.12(b).
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
11
<PAGE> 19
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of
the Code for purposes of provisions relating to Section 412 of the
Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Company or any ERISA Affiliate
from a Pension Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Company or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or
4041A of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan or Multiemployer Plan; or
(f) the imposition of any liability under Title IV of ERISA, other
than PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Company or any ERISA Affiliate.
"Eurodollar Reserve Percentage" has the meaning specified in
the definition of "Offshore Rate."
"Event of Default" means any of the events or circumstances
specified in Section 9.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Existing BofA Letters of Credit" means the letters of credit
described in Schedule 3.03.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set forth in
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or, if
for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the arithmetic
mean as determined by the Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York City
time) on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
12
<PAGE> 20
"Fee Letter" has the meaning specified in subsection 2.10(a).
"Foreign Collateral" means such of the foreign assets of the
Company and/or its Subsidiaries (including, without limitation,
accounts receivable, bank accounts, general intangibles and cash and
inventory) as the Banks shall designate.
"Foreign Security Agreements" means the security agreements to
be entered by the Company and/or the Foreign Guarantors, granting the
Agent (on behalf of the Banks and Agent) a perfected first priority
security interest and Lien (or equivalent interest under the laws of
the relevant jurisdictions where Foreign Collateral is located) in and
over the Foreign Collateral. The Foreign Security Agreements shall be
in a form and substance acceptable to the Banks.
"Foreign Guarantees" means the guarantees of such of the
Company's Subsidiaries as own, hold or otherwise have an interest in
the Foreign Collateral (from time to time), guaranteeing the proper
and complete performance of the Obligations. The Foreign Guarantees
shall be in a form and substance acceptable to the Banks.
"FRB" means the Board of Governors of the Federal Reserve
System, and any Governmental Authority succeeding to any of its
principal functions.
"Funded Debt to EBITDA Ratio" means, as of the last day of
each fiscal quarter, the ratio of (a) the total Indebtedness for
borrowed money, including the Loans, to (b) EBITDA during that and the
prior three fiscal quarters.
"Further Taxes" means any and all present or future taxes,
levies, assessments, imposts, duties, deductions, fees, withholdings
or similar charges (including, without limitation, net income taxes
and franchise taxes), and all liabilities with respect thereto,
imposed by any jurisdiction on account of amounts payable or paid
pursuant to Section 3.01.
"FX Trading Office" means the Foreign Exchange Trading Center
#5193, San Francisco, California, of BofA, or such other of BofA's
offices as BofA may designate from time to time.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting
profession), which are applicable to the circumstances as of the date
of determination.
"Government Borrowing Base" means, as of the date of
determination, 55% of the then outstanding principal amount (net of
any refunds, rebates, allowances, discounts, credits, concessions or
other reductions which are taken by or granted to the
13
<PAGE> 21
Account Receivable Debtors thereof) of the then Eligible Government
Accounts Receivable owned by the Company.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guaranty Obligation" has the meaning specified in the
definition of "Contingent Obligation."
"Guarantees" means the EFData Guaranty and the California
Microwave Navigation Systems Guaranty and any other guaranty
(including any Foreign Guaranty) that may be executed and delivered
after the date of this Agreement by a Guarantor guaranteeing the
proper and complete performance of the Obligations.
"Guarantor" means EFData, California Microwave Navigation
Systems and any other Person that delivers a guaranty (including any
Foreign Guaranty) in favor of the Banks and the Agent relating to the
Obligations.
"Hardware Borrowing Base" means, as of the date of
determination, 65% of the then outstanding principal amount (net of
any refunds, rebates, allowances, discounts, credits, concessions or
other reductions which are taken by or granted to the Account
Receivable Debtors thereof) of the then Eligible Hardware Accounts
Receivable owned by the Company.
"Hardware+Installation/Integration Borrowing Base" means, as
of the date of determination, 55% of the then outstanding principal
amount (net of any refunds, rebates, allowances, discounts, credits,
concessions or other reductions which are taken by or granted to the
Account Receivable Debtors thereof) of the then Eligible
Hardware+Installation/Integration Accounts Receivable owned by the
Company.
"Hazardous Materials" means all those substances which are
regulated by, or which may form the basis of liability under, any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste,
hazardous constituent, special waste, hazardous substance, hazardous
material, or toxic substance, or petroleum or petroleum derived
substance or waste.
"Honor Date" has the meaning specified in subsection 3.03(c).
"Indebtedness" of any Person means, without duplication, (a)
all indebtedness for borrowed money including any subordinated debt;
(b) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services (other
14
<PAGE> 22
than trade payables entered into in the ordinary course of business on
ordinary terms); (c) all non-contingent reimbursement or payment
obligations with respect to Surety Instruments (including the Letters
of Credit); (d) all obligations evidenced by notes, bonds, debentures
or similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses; (e)
all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the
rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such
property); (f) all obligations with respect to capital leases; (g) all
net obligations with respect to Rate Contracts; (h) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which
the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (i) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above.
"Indemnified Liabilities" has the meaning specified in Section
11.05.
"Indemnified Person" has the meaning specified in Section
11.05.
"Independent Auditor" has the meaning specified in subsection
7.01(a).
"Insolvency Proceeding" means, with respect to any Person, (a)
any case, action or proceeding with respect to such Person before any
court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for
creditors, or other, similar arrangement in respect of its creditors
generally or any substantial portion of its creditors; undertaken
under U.S. Federal, state or foreign law, including the Bankruptcy
Code.
"Interest Payment Date" means, as to any Loan other than a
Base Rate Loan, the last day of each Interest Period applicable to
such Loan and, as to any Base Rate Loan, the last Business Day of each
calendar quarter and each date such Base Rate Loan is converted into
another Type of Loan, provided, however, that if any Interest Period
for an Offshore Rate Loan exceeds three months, each date that falls
three months after the beginning of such Interest Period and each
Interest Payment Date that falls thereafter are also Interest Payment
Dates.
"Interest Period" means, as to any Offshore Rate Loan, the
period commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which the Loan is converted into or
continued as an Offshore Rate Loan, and ending on the
15
<PAGE> 23
date one, two, three or six months thereafter as selected by the
Company in its Notice of Borrowing or Notice of Conversion/
Continuation;
provided that:
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period
shall end on the preceding Business Day;
(ii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period for any Loan shall extend beyond
the Revolving Termination Date.
"Investments" has the meaning specified in Section 8.04.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Issuance Date" has the meaning specified in subsection
3.01(a).
"Issue" means with respect to any Letter of Credit, to
incorporate the Existing BofA Letters of Credit into this Agreement,
to issue or to extend the expiry of, or to renew or increase the
amount of, such Letter of Credit; and the terms "Issued," "Issuing"
and "Issuance" have corresponding meanings.
"Issuing Bank" means BofA in its capacity as issuer of one or
more Letters of Credit hereunder, together with any replacement letter
of credit issuer arising under subsection 10.01(b) or Section 10.09.
"Joint Venture" means a single-purpose corporation,
partnership, limited liability company, joint venture or other similar
legal arrangement (whether created by contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any
of its Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C
Borrowing in accordance with its Pro Rata Share.
16
<PAGE> 24
"L/C Amendment Application" means (a) a written application
form for amendment of outstanding standby letters of credit as shall
at any time be in use at the Issuing Bank, as the Issuing Bank shall
request, which may be transmitted by facsimile if immediately
confirmed in an original writing, or (b) notwithstanding the
provisions of Section 11.02, a request transmitted to the Issuing Bank
by electronic transmission in such manner and effective upon such
terms as the Company and the Issuing Bank may separately agree in
writing.
"L/C Application" means (a) a written application form for
issuances of standby letters of credit as shall at any time be in use
at the Issuing Bank, as the Issuing Bank shall request, which may be
transmitted by facsimile if immediately confirmed in an original
writing, or (b) notwithstanding the provisions of Section 11.02, a
request transmitted to the Issuing Bank by electronic transmission in
such manner and effective upon such terms as the Company and the
Issuing Bank may separately agree in writing.
"L/C Borrowing" means an extension of credit resulting from a
drawing under any Letter of Credit which shall not have been
reimbursed on the date when made nor converted into a Borrowing of
Revolving Loans under subsection 3.03(c).
"L/C Commitment" means the commitment of the Issuing Bank to
Issue, and the commitment of the Banks severally to participate in,
Letters of Credit (including the Existing BofA Letters of Credit) from
time to time Issued or outstanding under Article III, in an aggregate
amount not to exceed on any date the Dollar Equivalent amount of
$20,000,000, as the same shall be reduced as a result of a reduction
in the L/C Commitment pursuant to Section 2.05; provided that the
aggregate amount of any Letters of Credit outstanding which may be
drawn in support of the performance of financial obligations shall not
at any time exceed the Dollar Equivalent amount of $5,000,000; and
provided further that the L/C Commitment is a part of the combined
Commitments, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the
aggregate undrawn Dollar Equivalent amount of all Letters of Credit
then outstanding, plus (b) the Dollar Equivalent amount of all
unreimbursed drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"Lending Office" means, as to any Bank, the office or offices
of such Bank specified as its "Lending Office" or "Domestic Lending
Office" or "Offshore Lending Office," as the case may be, on Schedule
11.02, or such other office or offices as such Bank may from time to
time notify the Company and the Agent.
17
<PAGE> 25
"Letters of Credit" means the Existing BofA Letters of Credit
and any standby letters of credit Issued by the Issuing Bank pursuant
to Article III, which may be denominated either in Dollars or Offshore
Currencies.
"Leverage Ratio" means, with respect to any period, the ratio
(determined on a consolidated basis) of Adjusted Total Liabilities to
Adjusted Tangible Net Worth for that period.
"Lien" means any security interest, mortgage, deed of trust,
pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or other) or preferential arrangement of
any kind or nature whatsoever in respect of any property (including
those created by, arising under or evidenced by any conditional sale
or other title retention agreement, the interest of a lessor under a
capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code or any comparable
law) and any contingent or other agreement to provide any of the
foregoing, but not including the interest of a lessor under an
operating lease.
"Loan" means an extension of credit by a Bank to the Company
under Article II or Article III in the form of a Revolving Loan or L/C
Advance.
"Loan Documents" means this Agreement, any Notes, the Fee
Letter, the L/C-Related Documents, the Guarantees, the Collateral
Documents and all other documents delivered to the Agent or any Bank
in connection herewith.
"Majority Banks" means at any time at least two Banks then
holding in excess of 67% of the then aggregate unpaid principal amount
of the Loans, or, if no such principal amount is then outstanding, at
least two Banks then having in excess of 67% of the Commitments.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) of the Company or the
Company and its Subsidiaries taken as a whole; (b) a material
impairment of the ability of the Company to perform under any Loan
Document and to avoid any Event of Default; or (c) a material adverse
effect upon the legality, validity, binding effect or enforceability
of any Loan Document, or the perfection or priority of any Lien under
any Collateral Document.
"Multiemployer Plan" means a "multiemployer plan," within the
meaning of Section 4001(a)(3) of ERISA, to which the Company or any
ERISA Affiliate makes, is
18
<PAGE> 26
making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make,
contributions.
"Note" means a promissory note executed by the Company in
favor of a Bank pursuant to subsection 2.02(b), in substantially the
form of Exhibit E.
"Notice of Borrowing" means a notice in substantially the form
of Exhibit A.
"Notice of Conversion/Continuation" means a notice in
substantially the form of Exhibit B.
"Notice of Prepayment" means a notice in substantially the
form of Exhibit G.
"Obligations" means all advances, debts, liabilities,
obligations, covenants and duties arising under any Loan Document
owing by the Company to any Bank, the Agent, or any Indemnified
Person, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now
existing or hereafter arising.
"Offshore Currency" means any lawful currency constituting a
eurocurrency (other than Dollars) that in the opinion of the Issuing
Bank is at such time freely traded in the offshore interbank foreign
exchange markets and is freely transferable and freely convertible
into Dollars.
"Offshore Rate" means, for any Interest Period, with respect
to Offshore Rate Loans comprising part of the same Borrowing, the rate
of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Agent as follows:
Offshore Rate = IBOR
----
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for
any Interest Period the maximum reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day (whether or not applicable to any Bank)
under regulations issued from time to time by the FRB for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"IBOR" means the rate of interest per annum
determined by the Agent as the rate at which dollar deposits
in the approximate amount of BofA's Offshore Rate Loan for
such Interest Period would be offered by BofA's Grand Cayman
Branch, Grand Cayman B.W.I. (or such other office as may be
designated for
19
<PAGE> 27
such purpose by BofA), to major banks in the offshore dollar
interbank market at their request at approximately 11:00 a.m.
(New York City time) one Business Day prior to the
commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as
to all Offshore Rate Loans then outstanding as of the
effective date of any change in the Eurodollar Reserve
Percentage.
"Offshore Rate Loan" means a Loan that bears interest based on
the Offshore Rate.
"Organization Documents" means, for any corporation, the
certificate or articles of incorporation, the bylaws, any certificate
of determination or instrument relating to the rights of preferred
shareholders of such corporation, any shareholder rights agreement,
and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation.
"Other Taxes" means any present or future stamp, court or
documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, performance, enforcement or registration of, or
otherwise with respect to, this Agreement or any other Loan Documents.
"Participant" has the meaning specified in subsection
11.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions
under ERISA.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which the Company
sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any
time during the immediately preceding five (5) plan years.
"Permitted Accounts Receivable" means Accounts Receivable
which have not been paid within 90 days from the original date of
invoice, but which are due from the Accounts Receivable Debtors listed
in Schedule 1.01; provided that no such Account Receivable shall be
permitted if it has been outstanding for 180 days or more from the
original invoice date.
"Permitted Equipment Sale Financing" means any transaction (a)
pursuant to that certain Financing Program Agreement dated as of May
9, 1996 (as amended), by and between BA Credit Corporation, by which
certain equipment provided by the Company to third party users and
related contracts are purchased or financed by BA Credit Corporation,
or (b) pursuant to similar arrangements to finance the acquisition
20
<PAGE> 28
or leasing by third parties of equipment provided by the Company
without recourse to the Company; provided, however, that the aggregate
amount of such purchases and financings shall not exceed $20,000,000
in any fiscal year."
"Permitted Liens" has the meaning specified in Section 8.01.
"Permitted Subordinated Indebtedness" has the meaning
specified in Section 8.19 which is listed on Schedule 8.19.
"Permitted Swap Obligations" means all obligations (contingent
or otherwise) of the Company or any Subsidiary existing or arising
under Rate Contracts, provided that each of the following criteria is
satisfied: (a) such obligations are (or were) entered into by such
Person in the ordinary course of business for the purpose of directly
mitigating risks associated with liabilities, commitments or assets
held by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or
taking a "market view;" (b) such Rate Contracts do not contain (i) any
provision ("walk-away" provision) exonerating the non-defaulting party
from its obligation to make payments on outstanding transactions to
the defaulting party, or (ii) any provision creating or permitting the
declaration of an event of default, termination event or similar event
upon the occurrence of an Event of Default hereunder.
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Company sponsors or maintains or to which the
Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.
"Prior Credit Agreement" has the meaning ascribed to it in the
recitals to this Agreement.
"Prior Loan Documents" means the Prior Credit Agreement and
all instruments, agreements and documents executed and delivered (or,
as the case may be, ratified and reaffirmed) in connection therewith
or pursuant thereto.
"Property" means any estate or interest in any kind of
property or asset, whether real, personal or mixed, and whether
tangible or intangible.
"Pro Rata Share" means, as to any Bank at any time, the
percentage equivalent (expressed as a decimal, rounded to the ninth
decimal place) at such time of such Bank's Commitment divided by the
combined Commitments of all Banks.
21
<PAGE> 29
"Quick Ratio" means the ratio (determined on a consolidated
basis) of (a) cash plus Cash Equivalents plus the amount of Eligible
Receivables, to (b) Consolidated Current Liabilities.
"Rate Contracts" means interest rate and currency swap
agreements, cap, floor and collar agreements, interest rate insurance,
currency spot and forward contracts and other agreements or
arrangements designed to provide protection against fluctuations in
interest or currency exchange rates.
"Reportable Event" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has
been waived in regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of
an arbitrator or of a Governmental Authority, in each case applicable
to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.
"Responsible Officer" means the chief executive officer or the
president of the Company, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance
with financial covenants, the chief financial officer or the treasurer
of the Company, or any other officer having substantially the same
authority and responsibility.
"Revolving Loan" has the meaning specified in subsection 2.01.
"Revolving Termination Date" means the earlier to occur of:
(a) March 31, 1998; and
(b) the date on which the Commitments terminate
in accordance with the provisions of this Agreement.
"Same Day Funds" means (i) with respect to disbursements and
payments in Dollars, immediately available funds, and (ii) with
respect to disbursements and payments in an Offshore Currency, same
day or other funds as may be determined by the Agent to be customary
in the place of disbursement or payment for the settlement of
international banking transactions in the relevant Offshore Currency.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"Security Agreements" means the Subsidiary Security Agreements
and the Company Security Agreement, and any other security agreements,
or similar
22
<PAGE> 30
documents, which may be executed by any Person in favor of the Bank
and Agent as security for the Obligations.
"Spot Rate" for a currency means the rate quoted by BofA as
the spot rate for the purchase by BofA of such currency with another
currency through its FX Trading Office (i) at approximately 8:00 a.m.
(San Francisco time) on the date two Banking Days prior to the
relevant Computation Date or (ii) at such time and on such date as the
Issuing Bank determines to pay a drawing in an Offshore Currency and
contracts to purchase funds for that purpose.
"Subsidiary" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other
business entity of which more than 50% of the voting stock, membership
interests or other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by the
Person, or one or more of the Subsidiaries of the Person, or a
combination thereof. Unless the context otherwise clearly requires,
references herein to a "Subsidiary" refer to a Subsidiary of the
Company.
"Subsidiary Security Agreements" means the security agreements
executed by each of the EFData and California Microwave Navigation
Systems in favor of the Agent (on behalf of the Banks and the Agent),
substantially in the form of Exhibit K.
"Surety Instruments" means all letters of credit (including
standby and commercial), banker's acceptances, bank guaranties,
shipside bonds, surety bonds and similar instruments.
"Swap Termination Value" means, in respect of any one or more
Rate Contracts, after taking into account the effect of any legally
enforceable netting agreement relating to such Rate Contracts, (a) for
any date on or after the date such Rate Contracts have been closed out
and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date
referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Rate Contracts, as determined based
upon one or more mid-market or other readily available quotations
provided by any recognized dealer in such Rate Contracts (which may
include any Bank).
"Tangible Net Worth" means, as of the date of determination,
the gross book value of the assets of the Company and its consolidated
Subsidiaries (exclusive of goodwill, licensing agreements, patents,
trademarks, trade names, organization expenses, treasury stock,
unamortized debt discount and premium, deferred charges and other like
intangibles) less all reserves applicable to such tangible assets and
all liabilities (including accrued and deferred income taxes and all
liabilities whether or not by their terms they are subordinated
liabilities).
23
<PAGE> 31
"Taxes" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or
similar charges, and all liabilities with respect thereto, excluding,
in the case of each Bank and the Agent, respectively, taxes imposed on
or measured by its net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Bank or the Agent,
as the case may be, is organized or maintains a lending office.
"Type" means either a Base Rate Loan or an Offshore Rate Loan.
"UCC" means the Uniform Commercial Code as in effect in the
State of California.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412
of the Code for the applicable plan year.
"United States" and "U.S." each means the United States of
America.
"Utilization Fee" has the meaning specified in Section
2.10(d);
"Wholly Owned Subsidiary" means any corporation in which
(other than directors' qualifying shares required by law) 100% of the
capital stock of each class having ordinary voting power, and 100% of
the capital stock of every other class, in each case, at the time as
of which any determination is being made, is owned, beneficially and
of record, by the Company, or by one or more of the other Wholly Owned
Subsidiaries, or both.
1.02 Other Interpretive Provisions.
(a) The meanings of defined terms are equally applicable
to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
24
<PAGE> 32
(iii) In the computation of periods of time from a
specified date to a later specified date, the word "from" means "from
and including"; the words "to" and "until" each mean "to but
excluding," and the word "through" means "to and including."
(iv) The term "property" includes any kind of property
or asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and (ii)
references to any statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending, replacing,
supplementing or interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative
and shall each be performed in accordance with their terms. Unless otherwise
expressly provided, any reference to any action of the Agent or the Banks by
way of consent, approval or waiver shall be deemed modified by the phrase "in
its/their sole discretion."
(g) This Agreement and the other Loan Documents are the
result of negotiations among and have been reviewed by counsel to the Agent,
the Company and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in their preparation.
1.03 Accounting Principles.
(a) Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal
quarter" refer to such fiscal periods of the Company.
1.04 Currency Equivalents Generally. For all purposes of this
Agreement (but not for purposes of the preparation of any financial statements
delivered pursuant hereto), the equivalent in any Offshore Currency or other
currency of an amount in Dollars, and the
25
<PAGE> 33
equivalent in Dollars of an amount in any Offshore Currency or other currency,
shall be determined at the "Spot Rate."
1.05 Effect of This Agreement. This Agreement amends, restates and
supersedes the Prior Credit Agreement in its entirety. All references in any
Prior Loan Documents to the Prior Credit Agreement, regardless of how such term
is defined in any such Prior Loan Documents shall be deemed to refer to this
Agreement.
ARTICLE II
THE CREDITS
2.01 Amounts and Terms of Commitments. Each Bank severally agrees,
on the terms and conditions set forth herein, to make loans to the Company
(each such loan, a "Revolving Loan") from time to time on any Business Day
during the period from the Closing Date to the Revolving Termination Date, in
an aggregate amount not to exceed at any time outstanding the amount set forth
on Schedule 2.01 (such amount as the same may be reduced under Subsection 2.05
or as a result of one or more assignments under Section 11.08, the Bank's
"Commitment"); provided, however, that, after giving effect to any Borrowing of
Revolving Loans, the Effective Amount of all outstanding Revolving Loans and
the Effective Amount of all L/C Obligations, shall not at any time exceed the
lower of the: (i) combined Commitments, and (ii) then applicable Aggregate
Borrowing Base; and provided further, that the Effective Amount of the
Revolving Loans of any Bank plus the participation of such Bank in the
Effective Amount of all L/C Obligations shall not at any time exceed such
Bank's Commitment. Within the limits of each Bank's Commitment, and subject to
the other terms and conditions hereof, the Company may borrow under this
Section 2.01, prepay under Section 2.06 and reborrow under this Section 2.01.
2.02 Loan Accounts.
(a) The Loans made by each Bank and the Letters of Credit
Issued by the Issuing Bank shall be evidenced by one or more accounts or
records maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the Agent,
the Issuing Bank, and each Bank shall be conclusive, absent manifest error, of
the amount of the Loans made by the Banks to the Company and the Letters of
Credit Issued for the account of the Company, and the interest and payments
thereon. Any failure so to record or any error in doing so shall not, however,
limit or otherwise affect the obligation of the Company hereunder to pay any
amount owing with respect to the Loans or any Letter of Credit.
(b) Upon the request of any Bank, made through the Agent,
the Loans made by such Bank may be evidenced by one or more Notes, instead of
or in addition to loan accounts. Each such Bank shall endorse on the schedules
annexed to its Note(s) the date, amount and maturity of each Loan made by it
and the amount of each payment of principal
26
<PAGE> 34
made by the Company with respect thereto. Each such Bank is irrevocably
authorized by the Company to endorse its Note(s) and each Bank's record shall
be conclusive, absent manifest error; provided, however, that the failure of a
Bank to make, or an error in making, a notation thereon with respect to any
Loan shall not limit or otherwise affect the obligations of the Company
hereunder or under any such Note to such Bank.
2.03 Procedure for Borrowing.
(a) Each Borrowing of Revolving Loans shall be made upon
the Company's irrevocable written notice delivered to the Agent in the form of
a Notice of Borrowing which notice must be received by the Agent (i) prior to
11:00 a.m. (San Francisco time) three Business Days prior to the requested
Borrowing Date in the case of Offshore Rate Loans, or (ii) prior to 8:00 a.m.
(San Francisco time) on the requested Borrowing Date in the case of Base Rate
Loans; specifying: (A) the amount of the Borrowing (which shall be in an
aggregate minimum amount of $2,000,000 in the case of Offshore Rate Loans and
$1,000,000 in the case of Base Rate Loans, or any integral multiple of $500,000
in excess thereof); (B) the requested Borrowing Date, which shall be a Business
Day; (C) the Type of Loans comprising the Borrowing (provided that any Loan
made on the Closing Date shall only consist of Base Rate Loans); and (D) with
respect to Offshore Rate Loans, the duration of the Interest Period applicable
to such Loans. If the Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of Offshore Rate Loans, such
Interest Period shall be three months.
The Agent will promptly notify each Bank of its receipt of any Notice
of Borrowing and of the amount of such Bank's Pro Rata Share of that Borrowing.
Each Bank will make the amount of its Pro Rata Share of each Borrowing
available to the Agent for the account of the Company at the Agent's Payment
Office by 11:00 a.m. (San Francisco time) on the Borrowing Date requested by
the Company in funds immediately available to the Agent. The proceeds of all
such Loans will then be made available to the Company by the Agent at such
office by crediting the account of the Company on the books of BofA with the
aggregate of the amounts made available to the Agent by the Banks and in like
funds as received by the Agent.
(b) After giving effect to any Borrowing, unless the
Agent shall otherwise consent, there may not be more than six different
Interest Periods in effect.
2.04 Conversion and Continuation Elections.
(a) The Company may, upon irrevocable written notice to
the Agent in accordance with subsection 2.04(b): (i) elect, as of any Business
Day, in the case of Base Rate Loans, or as of the last day of the applicable
Interest Period, in the case of Offshore Rate Loans, to convert any such Loans
(or any part thereof in an amount not less than $2,000,000 in the case of
Offshore Rate Loans and $1,000,000 in the case of Base Rate Loans, or that is
in an integral multiple of $500,000 in excess thereof) into Loans of any other
Type; or (ii) elect as of the last day of the applicable Interest Period, to
continue any Offshore Rate
27
<PAGE> 35
Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $2,000,000, or that is in an integral multiple of $500,000
in excess thereof);
provided, that if at any time the aggregate amount of Offshore Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $2,000,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into,
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of
Conversion/Continuation to be received by the Agent not later than (i) 8:00
a.m. (San Francisco time) on the Conversion/Continuation Date, if the Loans
are to be converted into Base Rate Loans; and (ii) 11:00 a.m. (San Francisco
time) three Business Days in advance of the Conversion/Continuation Date, if
the Loans are to be converted into or continued as Offshore Rate Loans;
specifying: (A) the proposed Conversion/Continuation Date; (B) the aggregate
amount of Loans to be converted or continued; (C) the Type of Loans resulting
from the proposed conversion or continuation; and (D) other than in the case of
conversions into Base Rate Loans, the duration of the requested Interest
Period. If the Notice of Conversion/Continuation fails to specify the duration
of the Interest Period for any Base Rate Loan to be converted into an Offshore
Rate Loan, such Interest Period shall be three months.
(c) If upon the expiration of any Interest Period
applicable to Offshore Rate Loans, the Company has failed to select timely a
new Interest Period to be applicable to such Offshore Rate Loans or if any
Default or Event of Default then exists, the Company shall be deemed to have
elected to convert such Offshore Rate Loans into Base Rate Loans effective as
of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Agent will promptly notify each Bank of the
details of any automatic conversion. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of
the Loans with respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during
the existence of a Default or Event of Default, the Company may not elect to
have a Loan converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation
of Loans, unless the Agent shall otherwise consent, there may not be more than
six different Interest Periods in effect.
2.05 Voluntary Termination or Reduction of Commitments. The
Company may, upon not less than five Business Days' prior notice to the Agent,
terminate the Commitments, or permanently reduce the Commitments by an
aggregate amount of $5,000,000 or more; unless, after giving effect thereto and
to any prepayments of Loans made on the effective date
28
<PAGE> 36
thereof, (a) the Effective Amount of all Revolving Loans and L/C Obligations
together would exceed the amount of the combined Commitments then in effect, or
(b) the Effective Amount of all L/C Obligations then outstanding would exceed
the L/C Commitment. Once reduced in accordance with this Section, the
Commitments may not be increased. Any reduction of the Commitments shall be
applied to each Bank according to its Pro Rata Share. If and to the extent
specified by the Company in the notice to the Agent, some or all of the
reduction in the combined Commitments may be applied to reduce the L/C
Commitment. All accrued commitment fees to, but not including, the effective
date of any termination of Commitments, shall be paid on the effective date of
such termination.
2.06 Optional Prepayments. Subject to Section 4.04, the Company
may, at any time or from time to time, upon delivery of a Notice of Prepayment
to the Agent (a) prior to 11:00 a.m. (San Francisco time) three Business Days
prior to the date of prepayment in the case of Offshore Rate Loans, or (b)
prior to 11:00 a.m. (San Francisco time) on the date of prepayment in the case
of Base Rate Loans, ratably prepay Loans in whole or in part in minimum amounts
of $2,000,000 in the case of Offshore Rate Loans and $1,000,000 in the case of
Base Rate Loans, or any integral multiple of $500,000 in excess thereof. The
Agent will promptly notify each Bank of its receipt of any such notice, and of
such Bank's Pro Rata Share of such prepayment. If such notice is given by the
Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest and accrued Utilization Fee to each
such date on the amount prepaid and any amounts required pursuant to Section
4.04.
2.07 Cash Collateralization and Mandatory Prepayments of Loans. If
at any time (a) the Effective Amount of Outstanding Loans and L/C Obligations
shall exceed the lower of: (i) the then applicable Aggregate Borrowing Base,
(ii) the combined Commitments, or (iii) the L/C Commitment, the Company shall
immediately (x) prepay such amount of the outstanding principal amount of the
Loans and/or (y) Cash Collateralize such amount of the outstanding L/C
Obligations, as is necessary to make the then applicable Effective Amount less
than or equal to the lower of: (i) the then Applicable Aggregate Borrowing
Base, (ii) the Combined Commitments, or (iii) the L/C Commitment, as
appropriate.
2.08 Repayment. The Company shall repay to the Banks on the
Revolving Termination Date the aggregate principal amount of Loans outstanding
on such date.
2.09 Interest.
(a) Each Revolving Loan shall bear interest on the
outstanding principal amount thereof from the applicable Borrowing Date at a
rate per annum equal to the Offshore Rate or the Base Rate as appropriate
(subject to the Company's right to convert to other Types of Loans under
Section 2.04) plus the Applicable Margin. Applicable Margin shall equal an
interest rate per annum specified in basis points to be added to the Offshore
Rate or the Base Rate, as applicable, which shall be determined in accordance
with the following table:
29
<PAGE> 37
<TABLE>
<CAPTION>
Date Offshore Rate Base Rate
---- ------------- ---------
<S> <C> <C>
Closing Date through February 28, 1997 125 0
March 1, 1997 through September 30, 1997 250 50
October 1, 1997 and thereafter 200 0
</TABLE>
(b) Interest on each Revolving Loan shall be paid in
arrears on each Interest Payment Date. Interest shall also be paid on the date
of any prepayment of Loans under Section 2.06 or 2.07 for the portion of the
Loans so prepaid and upon payment (including prepayment) in full thereof and,
during the existence of any Event of Default, interest shall be paid on demand
of the Agent at the request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, if
any amount of principal of or interest on any Loan, or any other amount payable
hereunder or under any other Loan Document is not paid in full when due
(whether at stated maturity, by acceleration, demand or otherwise), the Company
agrees to pay interest on such unpaid principal or other amount, from the date
such amount becomes due until the date such amount is paid in full, and after
as well as before any entry of judgment thereon to the extent permitted by law,
payable on demand, at a fluctuating rate per annum equal to the Base Rate plus
2%.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary
to the provisions of any law applicable to such Bank limiting the highest rate
of interest that may be lawfully contracted for, charged or received by such
Bank, and in such event the Company shall pay such Bank interest at the highest
rate permitted by applicable law.
2.10 Fees. In addition to certain fees described in Section 3.08:
(a) Arrangement and Agency Fees. The Company shall pay
an arrangement fee to the Agent for the Arranger's own account, and shall pay
an agency fee to the Agent for the Agent's own account, as required by the
letter agreement ("Fee Letter") between the Company and the Arranger and Agent
dated December 23, 1996.
(b) Commitment Fees. The Company shall pay to the Agent
for the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Commitment, computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily utilization
for that quarter as calculated by the Agent, equal to the rate per annum
specified in the table in subsection 2.10(c). For purposes of calculating
utilization under this subsection, the Commitments shall be deemed used only to
the extent of the Effective Amount of Revolving Loans plus the Effective Amount
of L/C Obligations then outstanding. Such commitment fee shall accrue from the
Closing Date to the
30
<PAGE> 38
Revolving Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter commencing on December 31, 1996
through the Revolving Termination Date, with the final payment to be made on
the Revolving Termination Date; provided that, in connection with any
termination of Commitments under Section 2.05, the accrued commitment fee
calculated for the period ending on such date shall also be paid on the date of
such termination. The commitment fees provided in this subsection shall accrue
at all times after the Closing Date, including at any time during which one or
more conditions in Article V are not met.
(c) Fee Rates. Commitment fees and letter of credit fees
shall equal a percentage rate per annum specified in basis points which shall
be determined in accordance with the following table:
<TABLE>
<CAPTION>
Performance Financial
----------- ---------
Date Commitment Fee L/C Fees L/C Fees
---- -------------- -------- --------
<S> <C> <C> <C>
Closing Date through February 28, 1997 37.5 62.5 125
March 1, 1997 through September 30, 1997 50 125 250
October 1, 1997 and thereafter 50 100 200
</TABLE>
(d) Utilization Fee. The Company shall pay to the Agent,
for the ratable benefit of the Banks, a utilization fee (the "Utilization Fee")
which shall accrue daily on the average daily Effective Amount of Loans
outstanding on or after February 28, 1997 (provided that such outstanding
amounts shall equal or exceed $10,000,000 at any time during the relevant
quarter), computed on a quarterly basis in arrears as calculated by the Agent,
equal to the rate of 0.5% per annum and which shall be payable quarterly in
arrears and on the Revolving Termination Date beginning with the first calendar
quarter ending after February 28, 1997.
(e) Amendment Fees. The Company shall pay to the Agent,
for the ratable benefit of the Banks, an amendment fee equal to $25,000 for
each Bank payable upon the Closing Date together with an additional fee equal
to $10,000 for each Bank payable on March 1, 1997 provided that the facility
granted pursuant to this Agreement is still in effect on such date.
2.11 Computation of Fees and Interest.
(a) All computations of interest for Base Rate Loans when
the Base Rate is determined by BofA's "reference rate" shall be made on the
basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more interest
being paid than if computed on the basis of a 365-day year). Interest and fees
shall
31
<PAGE> 39
accrue during each period during which interest or such fees are computed from
the first day thereof to the last day thereof.
(b) Each determination of an interest rate by the Agent
shall be conclusive and binding on the Company and the Banks in the absence of
manifest error.
2.12 Payments by the Company.
(a) All payments to be made by the Company shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Company shall be made to the Agent for the
account of the Banks at the Agent's Payment Office, and shall be made in
dollars and in immediately available funds, no later than 11:00 a.m. (San
Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Agent later than 11:00 a.m. (San Francisco time) shall
be deemed to have been received on the following Business Day and any
applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition
of "Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Company
prior to the date on which any payment is due to the Banks that the Company
will not make such payment in full as and when required, the Agent may assume
that the Company has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Bank on such due date an
amount equal to the amount then due such Bank. If and to the extent the
Company has not made such payment in full to the Agent, each Bank shall repay
to the Agent on demand such amount distributed to such Bank, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
2.13 Payments by the Banks to the Agent.
(a) Unless the Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the Agent for
the account of the Company the amount of that Bank's Pro Rata Share of the
Borrowing, the Agent may assume that each Bank has made such amount available
to the Agent in immediately available funds on the Borrowing Date and the Agent
may (but shall not be so required), in reliance upon such assumption, make
available to the Company on such date a corresponding amount. If and to the
extent any Bank shall not have made its full amount available to the Agent in
immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the
32
<PAGE> 40
Business Day following such Borrowing Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each day during
such period. A notice of the Agent submitted to any Bank with respect to
amounts owing under this subsection (a) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Agent on the Business
Day following the Borrowing Date, the Agent will notify the Company of such
failure to fund and, upon demand by the Agent, the Company shall pay such
amount to the Agent for the Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such
Borrowing.
(b) The failure of any Bank to make any Loan on any
Borrowing Date shall not relieve any other Bank of any obligation hereunder to
make a Loan on such Borrowing Date, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on any
Borrowing Date.
2.14 Sharing of Payments, Etc. If, other than as expressly
provided elsewhere herein, any Bank shall obtain on account of the Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its ratable share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment pro rata with each of them; provided, however, that if all
or any portion of such excess payment is thereafter recovered from the
purchasing Bank, such purchase shall to that extent be rescinded and each other
Bank shall repay to the purchasing Bank the purchase price paid therefor,
together with an amount equal to such paying Bank's ratable share (according to
the proportion of (i) the amount of such paying Bank's required repayment to
(ii) the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.10) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation.
The Agent will keep records (which shall be conclusive and binding in the
absence of manifest error) of participations purchased under this Section and
will in each case notify the Banks following any such purchases or repayments.
2.15 Security. All obligations of the Company and the Guarantors
under the Loan Documents shall be secured in accordance with the Collateral
Documents.
33
<PAGE> 41
ARTICLE III
THE LETTERS OF CREDIT
3.01 The Letter of Credit Subfacility.
(a) On the terms and conditions set forth herein (i) the
Issuing Bank agrees, (A) from time to time on any Business Day during the
period from the Closing Date to the Revolving Termination Date to issue Letters
of Credit for the account of the Company, and to amend or renew Letters of
Credit previously issued by it, in accordance with subsections 3.02(c) and
3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the
Banks severally agree to participate in Letters of Credit Issued for the
account of the Company; provided, that the Issuing Bank shall not be obligated
to Issue, and no Bank shall be obligated to participate in, any Letter of
Credit if as of the date of Issuance of such Letter of Credit (the "Issuance
Date") (1) the Effective Amount of all L/C Obligations plus the Effective
Amount of all Revolving Loans exceeds the lesser of (x) the combined
Commitments, or (y) the then applicable Aggregate Borrowing Base, (2) the
participation of any Bank in the Effective Amount of all L/C Obligations plus
the Effective Amount of the Revolving Loans of such Bank exceeds the lesser of
(x) such Bank's Commitment or (y) the then applicable Aggregate Borrowing Base,
(3) the Effective Amount of L/C Obligations exceeds the L/C Commitment, or (4)
the Effective Amount of L/C Obligations with respect to Letters of Credit which
may be drawn in support of the performance of financial obligations exceeds
$5,000,000. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company's ability to obtain Letters of Credit shall be
fully revolving, and, accordingly, the Company may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have
expired or which have been drawn upon and reimbursed.
(b) The Issuing Bank is under no obligation to Issue any
Letter of Credit if: (i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain the
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from,
the Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon the Issuing Bank with respect to such Letter of
Credit any restriction, reserve or capital requirement (for which the Issuing
Bank is not otherwise compensated hereunder) not in effect on the Closing Date,
or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense
which was not applicable on the Closing Date and which the Issuing Bank in good
faith deems material to it; (ii) the Issuing Bank has received written notice
from any Bank, the Agent or the Company, on or prior to the Business Day prior
to the requested date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied; (iii)
the expiry date of any requested Letter of Credit is (i) more than 27 months
after the Closing Date, or (ii) more than 365 days after the requested date of
the Issuance of such Letter of Credit; (iv) the expiry date of any requested
Letter of Credit is prior to the maturity date of any financial obligation to
be supported by the requested Letter of Credit; (v) any
34
<PAGE> 42
requested Letter of Credit does not provide for drafts, or is not otherwise in
form and substance acceptable to the Issuing Bank, or the Issuance of a Letter
of Credit shall violate any applicable policies of the Issuing Bank; or (vi)
any standby Letter of Credit is for the purpose of supporting the issuance of
any letter of credit by any other Person.
3.02 Issuance, Amendment and Renewal of Letters of Credit.
(a) Each Letter of Credit shall be issued upon the
irrevocable written request of the Company received by the Issuing Bank (with a
copy sent by the Company to the Agent) at least four days (or such shorter time
as the Issuing Bank may agree in a particular instance in its sole discretion)
prior to the proposed date of issuance. Each such request for issuance of a
Letter of Credit shall be in the form of an L/C Application, and shall specify
in form and detail satisfactory to the Issuing Bank: (i) the face amount of the
Letter of Credit denominated in Dollars or an Offshore Currency; (ii) the
expiry date of the Letter of Credit (which date shall not exceed either of the
limits specified in Section 3.01(b)(iii)); (iii) the name and address of the
beneficiary thereof; (iv) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder; (v) the full text of
any certificate to be presented by the beneficiary in case of any drawing
thereunder; and (vi) such other matters as the Issuing Bank may require. The
Company may delegate authority to designated officers of the Company or of its
wholly owned Subsidiaries to execute such requests for the Issuance under this
subsection or the amendment under subsection 3.02(c) of Letters of Credit to be
issued in the name of the Company or such Subsidiaries but for the account of
the Company pursuant to Article III of this Agreement. In addition, if the
Letter of Credit being requested is to be issued in support of the performance
of financial obligations, the request for its Issuance must also include a
certification that the Letter of Credit is a financial Letter of Credit and
that the total of all such financial Letters of Credit outstanding plus the
requested financial Letter of Credit does not exceed the Dollar Equivalent
amount of $5,000,000. The Agent will promptly notify the Banks upon the
issuance of a Letter of Credit.
(b) At least two Business Days prior to the Issuance of
any Letter of Credit (or if the Issuing Bank has agreed to a shorter notice
period than two Business Days promptly upon receipt of the L/C Application or
L/C Amendment), the Issuing Bank will confirm with the Agent (by telephone or
in writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, the Issuing Bank will
provide the Agent with a copy thereof. Unless the Issuing Bank has received
notice from the Agent (A) directing the Issuing Bank not to Issue such Letter
of Credit because such Issuance is not then permitted under subsection 3.01(a)
as a result of the limitations set forth in clauses (1) through (3) thereof or
subsection 3.01(b)(ii); or (B) that one or more conditions specified in Article
V are not then satisfied; then, subject to the terms and conditions hereof, the
Issuing Bank shall, on the requested date, Issue a Letter of Credit for the
account of the Company in accordance with the Issuing Bank's usual and
customary business practices.
(c) From time to time while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, the Issuing Bank will,
upon the written request of the Company received by the Issuing Bank (with a
copy sent by the Company to the Agent) at
35
<PAGE> 43
least four days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
amendment, amend any Letter of Credit issued by it. Each such request for
amendment of a Letter of Credit shall be made by facsimile, confirmed
immediately in an original writing, made in the form of an L/C Amendment
Application and shall specify in form and detail satisfactory to the Issuing
Bank: (i) the Letter of Credit to be amended; (ii) the nature of the proposed
amendment; and (iii) such other matters as the Issuing Bank may require. The
Issuing Bank shall be under no obligation to amend any Letter of Credit if:
(A) the Issuing Bank would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such letter of Credit does not accept the proposed amendment
to the Letter of Credit. The Agent will promptly notify the Banks of the
amendment of a Letter of Credit.
(d) The Issuing Bank and the Banks agree that, while a
Letter of Credit is outstanding and prior to the Revolving Termination Date,
unless the Company delivers to the Issuing Bank a written request not to renew
a Letter of Credit (with a copy sent by the Company to the Agent) at least five
days (or such shorter time as the Issuing Bank may agree in a particular
instance in its sole discretion) prior to the scheduled date of notification of
nonrenewal, the Issuing Bank shall be entitled to authorize the automatic
renewal of any Letter of Credit issued by it. Each such request not to renew a
Letter of Credit shall be made by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of
Credit not to be renewed; (ii) the expiry date of the Letter of Credit; and
(iii) such other matters as the Issuing Bank may require. The Issuing Bank
shall be under no obligation so to renew any Letter of Credit if: (A) the
Issuing Bank would have no obligation at such time to issue or amend such
Letter of Credit in its renewed form under the terms of this Agreement; or (B)
the beneficiary of any such Letter of Credit does not accept the proposed
renewal of the Letter of Credit. If any outstanding Letter of Credit shall
provide that it shall be automatically renewed unless the beneficiary thereof
receives notice from the Issuing Bank that such Letter of Credit shall not be
renewed, and if at the time of renewal the Issuing Bank would be entitled to
authorize the automatic renewal of such Letter of Credit in accordance with
this subsection 3.02(e) upon the request of the Company but the Issuing Bank
shall not have received any L/C Amendment Application from the Company with
respect to such renewal or other written direction by the Company with respect
thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter
of Credit to renew, and the Company and the Banks hereby authorize such
renewal, and, accordingly, the Issuing Bank shall be deemed to have received an
L/C Amendment Application from the Company requesting such renewal.
(e) The Issuing Bank may, at its election (or as required
by the Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(f) This Agreement shall control in the event of any
conflict with any L/C-Related Document (other than any Letter of Credit).
36
<PAGE> 44
(g) The Issuing Bank will also deliver to the Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or
amendment of a Letter of Credit.
3.03 Existing BofA Letters of Credit; Risk Participations, Drawings
and Reimbursements.
(a) On and after the Closing Date, those letters of
credit issued by BofA for the account of the Company which are listed in
Schedule 3.03 (the "Existing BofA Letters of Credit") shall be deemed for all
purposes, including for purposes of the fees to be collected pursuant to
subsections 3.08(a) and 3.08(c), and reimbursement of costs and expenses to the
extent provided herein, Letters of Credit outstanding under this Agreement and
entitled to the benefits of this Agreement and the other Loan Documents, and
shall be governed by the applications and agreements pertaining thereto and by
this Agreement. Each Bank shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the Issuing Bank on the Closing Date a
participation in each such Letter of Credit and each drawing thereunder in an
amount equal to the product of (i) such Bank's Pro Rata Share times (ii) the
maximum amount available to be drawn under such Letter of Credit and the amount
of such drawing, respectively. For purposes of Section 2.01 and subsection
2.10(b), the Existing BofA Letters of Credit shall be deemed to utilize pro
rata the Commitment of each Bank.
(b) Immediately upon the Issuance of each Letter of
Credit in addition to those described in subsection 3.03(a), each Bank shall be
deemed to, and hereby irrevocably and unconditionally agrees to, purchase from
the Issuing Bank a participation in such Letter of Credit and each drawing
thereunder in an amount equal to the product of (i) the Pro Rata Share of such
Bank, times (ii) the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively. For purposes of Section
2.01, each Issuance of a Letter of Credit shall be deemed to utilize the
Commitment of each Bank by an amount equal to the amount of such participation.
(c) "Upon the receipt of any request for a drawing under
a Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank
will promptly notify the Company. Immediately upon reaching a determination
that it will pay a drawing under a Letter of Credit and, in the case of a
Letter of Credit denominated in an Offshore Currency, upon also determining the
Dollar Equivalent amount of the drawing, the Issuing Bank shall notify the
Company and the Agent of (i) its determination to pay the drawing, (ii) the
date the drawing will be paid (the "Honor Date"), (iii) the Dollar Equivalent
amount of the drawing, and (iv) in the case of a Letter of Credit denominated
in an Offshore Currency, the amount to be paid in the Offshore Currency. The
Issuing Bank will endeavor to provide such notice at least one Business Day
prior to the Honor Date, but the delivery of such notice shall neither be a
condition to the payment of the drawing nor to the Company's obligation to
reimburse the amount paid on the Honor Date. The Company shall reimburse the
Issuing Bank in Dollars in Same Day Funds no later than 10:00 a.m. (San
Francisco time) on the Honor Date, the Dollar Equivalent amount equal to the
amount so to be paid by the Issuing Bank. In the event the
37
<PAGE> 45
Company fails to reimburse the Issuing Bank in Same Day Funds for the full
Dollar Equivalent amount of any drawing under any Letter of Credit by 10:00
a.m. (San Francisco time) on the Honor Date, the Issuing Bank will promptly
notify the Agent and the Agent will promptly notify each Bank thereof, and the
Company shall be deemed to have requested that Base Rate Loans in the Dollar
Equivalent amount equal to the amount to be reimbursed on the Honor Date, which
Base Rate Loans shall be made by the Banks to be disbursed on the Honor Date
under such Letter of Credit, subject to the amount of the unutilized portion of
the Revolving Commitment and subject to the conditions set forth in Section
5.02. The Issuing Bank shall be authorized to apply the proceeds of such Base
Rate Loans to the purchase of funds in the Applicable Currency to pay each
drawing due to be paid on the Honor Date. Any notice given by the Issuing Bank
or the Agent pursuant to this subsection 3.03(c) may be oral if immediately
confirmed in writing (including by facsimile); provided that the lack of such
an immediate confirmation shall not affect the conclusiveness or binding effect
of such notice."
(d) Each Bank shall upon any notice pursuant to
subsection 3.03(c) make available to the Agent for the account of the Issuing
Bank an amount in Dollars and in immediately available funds equal to its Pro
Rata Share of the amount of the drawing, whereupon the participating Banks
shall (subject to subsection 3.03(e)) each be deemed to have made a Revolving
Loan consisting of a Base Rate Loan to the Company in that amount. If any Bank
so notified fails to make available to the Agent for the account of the Issuing
Bank the amount of such Bank's Pro Rata Share of the amount of the drawing by
no later than 12:00 noon (San Francisco time) on the Honor Date, then interest
shall accrue on such Bank's obligation to make such payment, from the Honor
Date to the date such Bank makes such payment, at a rate per annum equal to the
Federal Funds Rate in effect from time to time during such period. The Agent
will promptly give notice of the occurrence of the Honor Date, but failure of
the Agent to give any such notice on the Honor Date or in sufficient time to
enable any Bank to effect such payment on such date shall not relieve such Bank
from its obligations under this Section 3.03.
(e) With respect to any unreimbursed drawing that is not
converted into Revolving Loans consisting of Base Rate Loans to the Company in
whole or in part, because of the Company's failure to satisfy the conditions
set forth in Section 5.02 or for any other reason, the Company shall be deemed
to have incurred from the Issuing Bank an L/C Borrowing denominated in Dollars
in the Dollar Equivalent amount of such drawing as determined by the Issuing
Bank, which L/C Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the Base Rate
plus 2% per annum, and each Bank's payment to the Issuing Bank pursuant to
subsection 3.03(d) shall be deemed payment in respect of its participation in
such L/C Borrowing and shall constitute an L/C Advance from such Bank in
satisfaction of its participation obligation under this Section 3.03.
(f) Each Bank's obligation in accordance with this
Agreement to make the Revolving Loans or L/C Advances, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall be
absolute and unconditional and without recourse to the Issuing Bank and shall
not be affected by any circumstance, including (i) any set-off,
38
<PAGE> 46
counterclaim, recoupment, defense or other right which such Bank may have
against the Issuing Bank, the Company or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of a Default, an Event of
Default or a Material Adverse Effect; or (iii) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing;
provided, however, that each Bank's obligation to make Revolving Loans under
this Section 3.03 is subject to the conditions set forth in Section 5.02.
3.04 Repayment of Participations.
(a) Upon (and only upon) receipt by the Agent for the
account of the Issuing Bank of immediately available funds from the Company (i)
in reimbursement of any payment made by the Issuing Bank under the Letter of
Credit with respect to which any Bank has paid the Agent for the account of the
Issuing Bank for such Bank's participation in the Letter of Credit pursuant to
Section 3.03 or (ii) in payment of interest thereon, the Agent will pay to each
Bank, in the same funds as those received by the Agent for the account of the
Issuing Bank, the amount of such Bank's Pro Rata Share of such funds, and the
Issuing Bank shall receive the amount of the Pro Rata Share of such funds of
any Bank that did not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any
time to return to the Company, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Company to the Agent for the account of the Issuing Bank
pursuant to subsection 3.04(a) in reimbursement of a payment made under the
Letter of Credit or interest or fee thereon, each Bank shall, on demand of the
Agent, forthwith return to the Agent or the Issuing Bank the amount of its Pro
Rata Share of any amounts so returned by the Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent or the Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.
3.05 Role of the Issuing Bank.
(a) Each Bank and the Company agree that, in paying any
drawing under a Letter of Credit, the Issuing Bank shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person nor any of the respective
correspondents, participants or assignees of the Issuing Bank shall be liable
to any Bank for: (i) any action taken or omitted in connection herewith at the
request or with the approval of the Banks (including the Majority Banks, as
applicable); (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any L/C-Related Document.
39
<PAGE> 47
(c) The Company hereby assumes all risks of the acts or
omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Company's pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective correspondents,
participants or assignees of the Issuing Bank, shall be liable or responsible
for any of the matters described in clauses (i) through (vii) of Section 3.06;
provided, however, anything in such clauses to the contrary notwithstanding,
that the Company may have a claim against the Issuing Bank, and the Issuing
Bank may be liable to the Company, to the extent, but only to the extent, of
any direct, as opposed to consequential or exemplary, damages suffered by the
Company which the Company proves were caused by the Issuing Bank's willful
misconduct or gross negligence or the Issuing Bank's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) the Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) the Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
3.06 Obligations Absolute. The obligations of the Company under
this Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any
drawing under a Letter of Credit converted into Revolving Loans, shall be
unconditional and irrevocable, and shall be paid strictly in accordance with
the terms of this Agreement and each such other L/C-Related Document under all
circumstances, including the following: (i) any lack of validity or
enforceability of this Agreement or any L/C-Related Document; (ii) any change
in the time, manner or place of payment of, or in any other term of, all or any
of the obligations of the Company in respect of any Letter of Credit or any
other amendment or waiver of or any consent to departure from all or any of the
L/C- Related Documents; (iii) the existence of any claim, set-off, defense or
other right that the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction; (iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit; (v)
any payment by the Issuing Bank under any Letter of Credit against presentation
of a draft or certificate that does not strictly comply with the terms of any
Letter of Credit; or any payment made by the Issuing Bank under any Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with
any Insolvency
40
<PAGE> 48
Proceeding; (vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or (vii) any circumstance that might otherwise constitute a
defense available to, or a discharge of, the Company or a guarantor.
3.07 Cash Collateral Pledge. (i) Upon the request of the Agent,
(A) if the Issuing Bank has honored any full or partial drawing request on any
Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder,
or (B) if, as of 10 days prior to the Revolving Termination Date or at any time
during such 10-day period or on or at any time after the Revolving Termination
Date, any Letters of Credit may for any reason remain outstanding and partially
or wholly undrawn, or (ii) the occurrence of the circumstances described in
subsection 2.07 requiring the Company to Cash Collateralize Letters of Credit,
then, the Company shall immediately Cash Collateralize the L/C Obligations in
an amount equal to such L/C Obligations. The Company hereby grants the Agent,
for the benefit of the Agent, the Issuing Bank and the Banks, a security
interest in all such cash and deposit account balances. Cash collateral shall
be maintained in blocked, non-interest bearing deposit accounts at BofA. After
the Revolving Termination Date the Issuing Bank may exercise a right of set-off
with respect to any cash collateral it holds and may use such funds to satisfy
drawings under Letters of Credit.
3.08 Letter of Credit Fees.
(a) The Company shall pay to the Agent for the account of
each of the Banks a letter of credit fee with respect to the Letters of Credit
equal to the percentage rate per annum specified in the table in subsection
2.10(c) of the average daily maximum Dollar Equivalent amount available to be
drawn of the outstanding Letters of Credit, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon Letters of
Credit outstanding for that quarter as calculated by the Agent; provided
however that the Dollar Equivalent amount of any such Letters of Credit which
are denominated in any Offshore Currency shall be determined based upon the
Spot Rate for the purchase of such Offshore Currency with Dollars at Issuance
and as of the last Business Day of each month for the quarter in question.
Such letter of credit fees shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
Closing Date, through the Revolving Termination Date (or such later date upon
which the outstanding Letters of Credit shall expire), with the final payment
to be made on the Revolving Termination Date (or such later expiration date).
(b) The Company shall pay to the Issuing Bank, for its
account, a letter of credit fronting fee for each Letter of Credit Issued by
the Issuing Bank equal to that percentage of the Dollar Equivalent face amount
(or increased face amount, as the case may be) of such Letter of Credit
specified in the Fee Letter. Such Letter of Credit fronting fee shall be due
and payable on each date of Issuance of a Letter of Credit.
41
<PAGE> 49
(c) The Company shall pay to the Issuing Bank from time
to time on demand the normal presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters
of credit as from time to time in effect.
3.09 Uniform Customs and Practice. The Uniform Customs and
Practice for Documentary Credits as published by the International Chamber of
Commerce most recently at the time of issuance of any Letter of Credit shall
(unless otherwise expressly provided in the Letters of Credit) apply to the
Letters of Credit.
3.10 Letters of Credit Denominated in Offshore Currencies.
(a) The Agent will determine the Dollar Equivalent amount
with respect to any (i) Letter of Credit denominated in an Offshore Currency as
of the date of Issuance, (ii) outstanding L/C Obligations from time to time as
necessary to compute availability under the L/C Commitment, the Commitments,
and (iii) other amount necessary for the administration of this Agreement (each
such date under clauses (i) through (iii) a "Computation Date"). Each
determination of a Dollar Equivalent amount by the Agent shall be conclusive
and binding on the Company and the Banks in the absence of manifest error.
(b) Subject to Section 4.04, if on any Computation Date
the Agent shall have determined that, due to a change in applicable rates of
exchange between Dollars and Offshore Currencies, either (a) the Effective
Amount of all L/C Obligations exceeds the lower of: (i) the L/C Commitment,
and (ii) the Aggregate Borrowing Base, or (b) the aggregate Dollar Equivalent
principal amount of all Loans and L/C Obligations then outstanding exceeds the
lower of: (i) the combined Commitments of the Banks, and (ii) the Aggregate
Borrowing Base, then the Agent shall give notice to the Company which states
the Dollar Equivalent amount of any such excess and requires the Company to
Cash Collateralize or to make such mandatory prepayments as required by Section
2.07.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.01 Taxes.
(a) Any and all payments by the Company to each Bank or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for, any Taxes. In
addition, the Company shall pay all Other Taxes.
(b) If the Company shall be required by law to deduct or
withhold any Taxes, Other Taxes or Further Taxes from or in respect of any sum
payable hereunder to any Bank or the Agent, then: (i) the sum payable shall be
increased as necessary so that, after making all required deductions and
withholdings (including deductions and withholdings
42
<PAGE> 50
applicable to additional sums payable under this Section), such Bank or the
Agent, as the case may be, receives and retains an amount equal to the sum it
would have received and retained had no such deductions or withholdings been
made; (ii) the Company shall make such deductions and withholdings; (iii) the
Company shall pay the full amount deducted or withheld to the relevant taxing
authority or other authority in accordance with applicable law; and (iv) the
Company shall also pay to each Bank or the Agent for the account of such Bank
at the time interest is paid, Further Taxes in the amount that the respective
Bank specifies as necessary to preserve the after-tax yield the Bank would have
received if such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Company agrees to indemnify and hold harmless
each Bank and the Agent for the full amount of i) Taxes, ii) Other Taxes, and
iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising
therefrom or with respect thereto, whether or not such Taxes, Other Taxes or
Further Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Bank or the
Agent makes written demand therefor.
(d) Within 30 days after the date of any payment by the
Company of Taxes, Other Taxes or Further Taxes, the Company shall furnish to
each Bank or the Agent the original or a certified copy of a receipt evidencing
payment thereof, or other evidence of payment satisfactory to such Bank or the
Agent.
(e) If the Company is required to pay any amount to any
Bank or the Agent pursuant to subsection (b) or (c) of this Section, then such
Bank or Agent shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office or
take such reasonable action consistent with applicable regulatory requirements
so as to eliminate any such additional payment by the Company which may
thereafter accrue, if such change in the sole judgment of such Bank or Agent is
not otherwise disadvantageous to such Bank or Agent.
4.02 Illegality.
(a) If any Bank determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for any Bank or its applicable Lending Office to make
Offshore Rate Loans, then, on notice thereof by the Bank to the Company through
the Agent, any obligation of that Bank to make Offshore Rate Loans shall be
suspended until the Bank notifies the Agent and the Company that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful to maintain
any Offshore Rate Loan, the Company shall, upon its receipt of notice of such
fact and demand from such Bank
43
<PAGE> 51
(with a copy to the Agent), prepay in full such Offshore Rate Loans of that
Bank then outstanding, together with interest and Utilization Fees accrued
thereon and amounts required under Section 4.04, either on the last day of the
Interest Period thereof, if the Bank may lawfully continue to maintain such
Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully
continue to maintain such Offshore Rate Loan. If the Company is required to so
prepay any Offshore Rate Loan, then concurrently with such prepayment, the
Company shall borrow from the affected Bank, in the amount of such repayment, a
Base Rate Loan.
(c) Before giving any notice to the Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.
4.03 Increased Costs and Reduction of Return.
(a) If any Bank determines that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance by that Bank with any guideline or request
from any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such Bank of
agreeing to make or making, funding or maintaining any Offshore Rate Loans or
participating in Letters of Credit, or, in the case of the Issuing Bank, any
increase in the cost to the Issuing Bank of agreeing to issue, issuing or
maintaining any Letter of Credit or of agreeing to make or making, funding or
maintaining any unpaid drawing under any Letter of Credit, then the Company
shall be liable for, and shall from time to time, upon demand (with a copy of
such demand to be sent to the Agent), pay to the Agent for the account of such
Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration
of any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Bank (or its Lending Office) or any corporation controlling
the Bank with any Capital Adequacy Regulation, affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and (taking into consideration such Bank's or
such corporation's policies with respect to capital adequacy and such Bank's
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits or obligations
under this Agreement, then, upon demand of such Bank to the Company through the
Agent, the Company shall pay to the Bank, from time to time as specified by the
Bank, additional amounts sufficient to compensate the Bank for such increase.
4.04 Funding Losses. The Company shall reimburse each Bank and
hold each Bank harmless from any loss or expense which the Bank may sustain or
incur as a consequence of:
44
<PAGE> 52
(a) the failure of the Company to make on a timely basis
any payment of principal of any Offshore Rate Loan;
(b) the failure of the Company to borrow, continue or
convert a Loan after the Company has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment in
accordance with any notice delivered under Section 2.06;
(d) the prepayment (including pursuant to Section 2.06 or
Section 2.07) or other payment (including after acceleration thereof) of an
Offshore Rate Loan on a day that is not the last day of the relevant Interest
Period; or
(e) the automatic conversion under Section 2.04 of any
Offshore Rate Loan to a Base Rate Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees
payable to terminate the deposits from which such funds were obtained. For
purposes of calculating amounts payable by the Company to the Banks under this
Section and under subsection 4.03(a), each Offshore Rate Loan made by a Bank
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the IBOR used in determining the
Offshore Rate for such Offshore Rate Loan by a matching deposit or other
borrowing in the interbank eurodollar market for a comparable amount and for a
comparable period, whether or not such Offshore Rate Loan is in fact so funded.
4.05 Inability to Determine Rates. If the Agent determines that
for any reason adequate and reasonable means do not exist for determining the
Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to subsection
2.09(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will promptly so notify the Company and each Bank.
Thereafter, the obligation of the Banks to make or maintain Offshore Rate Loans
hereunder shall be suspended until the Agent revokes such notice in writing.
Upon receipt of such notice, the Company may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Company does
not revoke such Notice, the Banks shall make, convert or continue the Loans, as
proposed by the Company, in the amount specified in the applicable notice
submitted by the Company, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Offshore Rate Loans.
4.06 Reserves on Offshore Rate Loans. The Company shall pay to
each Bank, as long as such Bank shall be required under regulations of the FRB
to maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency funds or deposits (currently known as "Eurocurrency
liabilities"), additional costs on the unpaid principal
45
<PAGE> 53
amount of each Offshore Rate Loan equal to the actual costs of such reserves
allocated to such Loan by the Bank (as determined by the Bank in good faith,
which determination shall be conclusive), payable on each date on which
interest is payable on such Loan, provided the Company shall have received at
least 15 days' prior written notice (with a copy to the Agent) of such
additional interest from the Bank. If a Bank fails to give notice 15 days
prior to the relevant Interest Payment Date, such additional interest shall be
payable 15 days from receipt of such notice.
4.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation under this Article IV shall deliver to the Company (with a copy to
the Agent) a certificate setting forth in reasonable detail the amount payable
to the Bank hereunder and such certificate shall be conclusive and binding on
the Company in the absence of manifest error.
4.08 Survival. The agreements and obligations of the Company in
this Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.01 Conditions of Initial Credit Extensions. The obligation of
each Bank to make its initial Credit Extension hereunder is subject to the
condition that the Agent shall have received on or before the Closing Date all
of the following, in form and substance satisfactory to the Agent and each
Bank, and in sufficient copies for each Bank:
(a) Credit Agreement. This Agreement executed by each
party thereto;
(b) Resolutions; Incumbency. The following documents:
(i) copies of the resolutions of the board of directors of each of the Company
and the Guarantors authorizing the transactions contemplated hereby and under
the other Loan Documents respectively, certified as of the Closing Date by the
Secretary or an Assistant Secretary of each of the Company or Guarantor
(respectively); and (ii) a certificate of the Secretary or Assistant Secretary
of each of the Company and the Guarantors (respectively) certifying the names
and true signatures of the officers of the Company or Guarantor (respectively)
authorized to execute, deliver and perform, as applicable, this Agreement, and
all other Loan Documents to be delivered by it hereunder;
(c) Organization Documents; Good Standing. Each of the
following documents: (i) the articles or certificate of incorporation and the
bylaws of each of the Company and the Guarantors as in effect on the Closing
Date, certified by the Secretary or Assistant Secretary of each of the Company
or Guarantors (respectively) as of the Closing Date; and (ii) a good standing
certificate for each of the Company and the Guarantors from the Secretary of
State (or similar, applicable Governmental Authority) of their state of
incorporation and each state where the Company or Guarantor is qualified to do
business as a
46
<PAGE> 54
foreign corporation as of a recent date, together with a bring-down certificate
by facsimile, dated the Closing Date;
(d) Legal Opinions. An opinion of Howard Rice Nemerovski
Canady Falk & Rabkin, counsel to the Company, addressed to the Agent and the
Banks, together with opinions of local counsel as appropriate, all in a form
and substance satisfactory to the Banks.
(e) Payment of Fees. Evidence of payment by the Company
of all accrued and unpaid fees, costs and expenses to the extent then due and
payable on the Closing Date, together with Attorney Costs of BofA to the extent
invoiced prior to or on the Closing Date, plus such additional amounts of
Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs
incurred or to be incurred by it through the closing proceedings (provided that
such estimate shall not thereafter preclude final settling of accounts between
the Company and BofA); including any such costs, fees and expenses arising
under or referenced in Sections 2.10 and 10.04;
(f) Certificate. A certificate signed by a Responsible
Officer, dated as of the Closing Date, stating: (i) that the representations
and warranties contained in Article VI are true and correct on and as of such
date, as though made on and as of such date; (ii) that no Default or Event of
Default exists or would result from the Credit Extension; and (iii) that there
has occurred since September 30, 1996 no event or circumstance that has
resulted or could reasonably be expected to result in a Material Adverse Effect
except as disclosed in writing to the Agent and the Banks prior to the Closing
Date.
(g) Collateral Documents. The Collateral Documents,
executed by the appropriate parties thereto, in appropriate forms for
recording, where necessary, together with: (i) acknowledgment copies of
filings, registrations and recordings necessary and advisable to perfect the
Liens of the Agent for the benefit of the Banks and the Agent in accordance
with applicable law; (ii) evidence that all other actions necessary or, in the
opinion of the Agent or the Banks, desirable to perfect and protect the
security interest created by the Collateral Documents have been taken; and
(iii) evidence that all other actions necessary or, in the opinion of the Agent
or the Banks, desirable to perfect and protect the first priority Lien created
by the Collateral Documents, and to enhance the Agent's ability to preserve and
protect its interests in and access to the Collateral, have been taken.
(h) Guarantees. The Guarantees, executed by each of the
Guarantors.
(i) Repayments and Other Payments. All principal and
interest with respect to any Swingline Loans (as defined in the Prior Credit
Agreement) shall have been repaid or converted into other Types of Revolving
Loans permitted hereunder. No Revolving Loan outstanding prior to the Closing
Date shall be an Offshore Rate Loan on the Closing Date.
(j) Borrowing Base Certificate. The Company shall have
delivered a Borrowing Base Certificate to the Agent, executed by a Responsible
Officer of the Company.
47
<PAGE> 55
(k) Other Documents. Such other approvals, opinions,
documents or materials as the Agent or any Bank may request.
5.02 Conditions to All Credit Extensions. The obligation of each
Bank to make any Revolving Loan to be made by it (including, save in respect of
paragraph (f) below, its initial Revolving Loan) and the obligation to continue
or convert any Revolving Loan under Section 2.04, as well as the obligation of
the Issuing Bank to Issue any Letter of Credit (including, save in respect of
paragraph (f) below, the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant Borrowing
Date, Conversion/Continuation Date or Issuance Date:
(a) Notice, Application. The Agent shall have received
(with, in the case of the initial Revolving Loan only, a copy for each Bank) a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable or in
the case of any Issuance of any Letter of Credit, the Issuing Bank and the
Agent shall have received an L/C Application or L/C Amendment Application, as
required under Section 3.02;
(b) Continuation of Representations and Warranties. The
representations and warranties in Article VI shall be true and correct on and
as of such Borrowing Date or Conversion/Continuation Date or Issuance Date with
the same effect as if made on and as of such Borrowing Date or
Conversion/Continuation Date or Issuance Date; and
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing or continuation or conversion
or Issuance.
(d) Cash Collateral. With regard to any Letter of Credit
such Letter of Credit has been cash collateralized to the extent required by
this Agreement.
(e) Foreign Collateral. With regard to any Credit
Extension to be made after the date occurring eight months after the Closing
Date, the conditions in Section 7.17 shall have been fulfilled.
(f) Waived Conditions. Should the Agent and Banks choose
to extend the time for delivery or performance of any of the conditions set
forth in Section 5.01, the Borrower shall have delivered or performed such
conditions in accordance with the terms of the agreement by which the Agent and
the Banks have granted such extension.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C Application
or L/C Amendment Application submitted by the Company hereunder shall
constitute a representation and warranty by the Company hereunder, as of the
date of each such notice and as of each Borrowing Date, Conversion/Continuation
Date, or Issuance Date, as applicable, that the conditions in this Section 5.02
are satisfied.
48
<PAGE> 56
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
6.01 Corporate Existence and Power. The Company and each of its
Subsidiaries:
(a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation;
(b) has the power and authority and all governmental
licenses, authorizations, consents and approvals to own its assets, carry on
its business and to execute, deliver, and perform its obligations under the
Loan Documents;
(c) is duly qualified as a foreign corporation and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license; and
(d) is in compliance with all Requirements of Law;
except, in each case referred to in clause (c) or clause (d), to the extent
that the failure to do so could not reasonably be expected to have a Material
Adverse Effect.
6.02 Corporate Authorization; No Contravention. The execution,
delivery and performance by the Company and its Subsidiaries of this Agreement
and each other Loan Document to which such Person is party, have been duly
authorized by all necessary corporate action, and do not and will not:
(a) contravene the terms of any of that Person's
Organization Documents;
(b) conflict with or result in any breach or
contravention of, or the creation of any Lien under, any document evidencing
any Contractual Obligation to which such Person is a party or any order,
injunction, writ or decree of any Governmental Authority to which such Person
or its property is subject; or
(c) violate any Requirement of Law.
6.03 Governmental Authorization. Except for actions and filings
required herein (or with respect to perfection of any Foreign Collateral), no
approval, consent, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority (except for recordings or filings in
connection with the Liens granted under the Collateral Documents) is necessary
or required in connection with the execution, delivery or performance by, or
enforcement against, the Company or any of its Subsidiaries of the Agreement or
any other Loan Document.
49
<PAGE> 57
6.04 Binding Effect. This Agreement and each other Loan Document
to which the Company is a party constitute the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability.
6.05 Litigation. Except as specifically disclosed in Schedule
6.05, there are no actions, suits, proceedings, claims or disputes pending, or
to the best knowledge of the Company, threatened or contemplated, at law, in
equity, in arbitration or before any Governmental Authority, against the
Company, or its Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any
other Loan Document, or any of the transactions contemplated hereby or thereby;
or
(b) if determined adversely to the Company or its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.
6.06 No Default. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company or from the grant
or perfection of the Liens granted under the Collateral Documents. As of the
Closing Date, neither the Company nor any Subsidiary is in default under or
with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, could reasonably be expected to have a
Material Adverse Effect or create an Event of Default under subsection 9.01(e).
6.07 ERISA Compliance. Schedule 6.07 lists all Plans and except as
specifically disclosed in Schedule 6.07:
(a) Each Plan is in compliance in all material respects
with the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the Code
has received a favorable determination letter from the IRS and to the best
knowledge of the Company, nothing has occurred which would cause the loss of
such qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
50
<PAGE> 58
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Company nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Company nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
6.08 Use of Proceeds; Margin Regulations. The proceeds of the
Loans are to be used solely for the purposes set forth in and permitted by
Section 7.12 and Section 8.06. Neither the Company nor any Subsidiary is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.09 Title to Properties. The Company and each Subsidiary have
good record and marketable title in fee simple to, or valid leasehold interests
in, all real property necessary or used in the ordinary conduct of their
respective businesses, except for such defects in title as could not,
individually or in the aggregate, have a Material Adverse Effect. As of the
Closing Date, the property of the Company and its Subsidiaries is subject to no
Liens, other than Permitted Liens.
6.10 Taxes. The Company and its Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
the Company or any Subsidiary that would, if made, have a Material Adverse
Effect.
6.11 Financial Condition.
(a) The audited consolidated financial statements of the
Company and its Subsidiaries dated June 30, 1996, and the related consolidated
statements of income or
51
<PAGE> 59
operations, shareholders' equity and cash flows for the fiscal year ended on
that date: (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein; (ii) fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations for the period
covered thereby; and (iii) except as specifically disclosed in Schedule 6.11,
show all material indebtedness and other liabilities, direct or contingent, of
the Company and its consolidated Subsidiaries as of the date thereof, including
liabilities for taxes, material commitments and Contingent Obligations.
(b) Since September 30, 1996, there has been no Material
Adverse Effect except as disclosed in writing by the Company to the Agent and
the Banks prior to the Closing Date.
6.12 Environmental Matters.
(a) The on-going operations of the Company and each of
its Subsidiaries comply in all respects with all Environmental Laws, except
such non-compliance which would not (if enforced in accordance with applicable
law) result in liability in excess of $1,000,000 in the aggregate.
(b) The Company and each of its Subsidiaries has obtained
all licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for its ordinary
course operations; all such Environmental Permits are in good standing; and the
Company and each of its Subsidiaries is in compliance with all material terms
and conditions of such Environmental Permits except such Environmental permits
failure with which to comply would not have a Material Adverse Effect.
(c) Except as specifically disclosed in Schedule 6.12,
none of the Company, any of its Subsidiaries or any of their respective present
Property or operations is subject to any outstanding written order from or
agreement with any Governmental Authority nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material.
(d) There are no Hazardous Materials or other conditions
or circumstances existing with respect to any Property, or arising from
operations prior to the Closing Date, of the Company or any of its Subsidiaries
that would reasonably be expected to give rise to Environmental Claims with a
potential liability of the Company and its Subsidiaries in excess of $5,000,000
in the aggregate for any such condition, circumstance or Property. In
addition, (i) neither the Company nor any of its Subsidiaries has any
underground storage tanks (x) that are not properly registered or permitted
under applicable Environmental Laws, or (y) that are leaking or disposing of
Hazardous Materials off-site, and (ii) the Company and its Subsidiaries, to the
extent required by applicable Environmental Laws, have notified all of
52
<PAGE> 60
their employees of the existence, if any, of any health hazard arising from the
conditions of their employment and have met all notification requirements under
Title III of CERCLA and all other Environmental Laws.
6.13 Regulated Entities. None of the Company, any Person
controlling the Company, or any Subsidiary, is an "Investment Company" within
the meaning of the Investment Company Act of 1940. The Company is not subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
6.14 No Burdensome Restrictions. Neither the Company nor any
Subsidiary is a party to or bound by any Contractual Obligation, or subject to
any restriction in any Organization Document, or any Requirement of Law, which
could reasonably be expected to have a Material Adverse Effect.
6.15 Copyrights, Patents, Trademarks and Licenses, Etc. The
Company or its Subsidiaries own or are licensed or otherwise have the right to
use all of the patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the best knowledge of the Company, no
slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by the
Company or any Subsidiary infringes upon any rights held by any other Person.
Except as specifically disclosed in Schedule 6.05, no claim or litigation
regarding any of the foregoing is pending or threatened, and no patent,
invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
6.16 Subsidiaries. As of the Closing Date, the Company has no
Subsidiaries other than those specifically disclosed in part (a) of Schedule
6.16 hereto and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of Schedule 6.16.
6.17 Insurance. Except as specifically disclosed in Schedule 6.17,
the properties of the Company and its Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Company, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where the Company or such Subsidiary operates.
6.18 Swap Obligations. Neither the Company nor any of its
Subsidiaries has incurred any outstanding obligations under any Rate Contracts,
other than Permitted Swap Obligations. The Company has undertaken its own
independent assessment of its consolidated
53
<PAGE> 61
assets, liabilities and commitments and has considered appropriate means of
mitigating and managing risks associated with such matters and has not relied
on any swap counterparty or any Affiliate of any swap counterparty in
determining whether to enter into any Rate Contract.
6.19 Solvency. The Company is and each of its Subsidiaries are
solvent.
6.20 Labor Relations. There are no strikes, lockouts or other
labor disputes against the Company or any of its Subsidiaries, or, to the best
of the Company's knowledge, threatened against or affecting the Company or any
of its Subsidiaries, and no significant unfair labor practice complaint is
pending against the Company or any of its Subsidiaries or, to the best
knowledge of the Company, threatened against any of them before any
Governmental Authority.
6.21 Full Disclosure. None of the representations or warranties
made by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Company or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Company to the Banks prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.
6.22 Collateral Documents.
(a) The provisions of each of the Collateral Documents
are effective to create in favor of the Agent, for the benefit of the Banks, a
legal, valid and enforceable, and, subject to Permitted Liens, first priority
security interest in all right, title and interest of the Company and the
Guarantors in the collateral described therein.
(b) All representations and warranties of the Company and
the Guarantors contained in the Collateral Documents are true and correct in
all material respects on or as of the date made or deemed made.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:
54
<PAGE> 62
7.01 Financial Statements. The Company shall deliver to the Agent,
in form and detail satisfactory to the Agent and the Majority Banks, with
sufficient copies for each Bank:
(a) as soon as available, but not later than 100 days
after the end of each fiscal year, a copy of the audited consolidated balance
sheet of the Company and its Subsidiaries as at the end of such year and the
related consolidated statements of income or operations, shareholders' equity
and cash flows for such year, setting forth in each case in comparative form
the figures for the previous fiscal year, and accompanied by the opinion of a
nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such consolidated financial statements
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion shall
not be qualified or limited because of a restricted or limited examination by
the Independent Auditor of any material portion of the Company's or any
Subsidiary's records;
(b) as soon as available, but not later than 50 days
after the end of each fiscal quarter of each fiscal year, a copy of the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as being complete and correct and fairly presenting, in accordance with
GAAP (subject to ordinary, good faith year-end audit adjustments), the
financial position and the results of operations of the Company and the
Subsidiaries;
(c) as soon as available, but not later than 100 days
after the end of each fiscal year, a copy of an unaudited consolidating balance
sheet of the Company and its Subsidiaries as at the end of such year and the
related consolidating statement of income, shareholders' equity and cash flows
for such year, certified by a Responsible Officer as having been developed and
used in connection with the preparation of the financial statements referred to
in subsection 7.01(a);
(d) as soon as available, but not later than 50 days
after the end of each of the first three fiscal quarters of each fiscal year, a
copy of the unaudited consolidating balance sheets of the Company and its
Subsidiaries and the related consolidating statements of income for such
quarter, all certified by a Responsible Officer as having been developed and
used in connection with the preparation of the financial statements referred to
in subsection 7.01(b).
(e) not later than the 15th day of each month (or, if
there exists an Event of Default and the Agent and the Majority Banks so
require, more frequently), together with such other information as the Agent or
the Majority Banks desire in connection therewith, commencing with the month
preceding the date hereof (except in the case of the Borrowing Base Certificate
to be delivered on or immediately prior to the Closing Date, which shall only
be required to have such information complete through October 31, 1996), a
completed
55
<PAGE> 63
Borrowing Base Certificate with such additional detail as the Agent or the
Majority Banks may reasonably request, setting forth the amounts of the
Eligible Hardware Accounts Receivable, the Hardware Borrowing Base, the
Eligible Hardware+Installation/Integration Accounts Receivable, the
Hardware+Installation/Integration Borrowing Base, the Eligible Government
Accounts Receivable and Government Borrowing Base, each as of the end of the
preceding calendar month (or such other dates as may be required by the Agent
or the Majority Banks during the existence of an Event of Default), and showing
the Company's calculations of the then applicable Aggregate Borrowing Base.
7.02 Certificates; Other Information. The Company shall furnish to
the Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial
statements referred to in subsection 7.01(a), a certificate of the Independent
Auditor stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial
statements referred to in subsections 7.01(a) and (b), a Compliance Certificate
executed by a Responsible Officer;
(c) promptly, copies of all financial statements and
reports that the Company sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports (including Forms 10K, 10Q
and 8K) that the Company or any Subsidiary may make to, or file with, the SEC;
and
(d) promptly, such additional information regarding the
business, financial or corporate affairs of the Company or any Subsidiary as
the Agent, at the request of any Bank, may from time to time request.
7.03 Notices. The Company shall promptly notify the Agent and each
Bank:
(a) of the occurrence of any Default or Event of Default,
and of the occurrence or existence of any event or circumstance that
foreseeably will become a Default or Event of Default;
(b) of any matter that has resulted or may result in a
Material Adverse Effect, including (i) breach or non-performance of, or any
default under, a Contractual Obligation of the Company or any Subsidiary; (ii)
any dispute, litigation, investigation, proceeding or suspension between the
Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary; including pursuant to any applicable
Environmental Laws;
56
<PAGE> 64
(c) of the occurrence of any of the following events
affecting the Company or any ERISA Affiliate (but in no event more than 10 days
after such event), and deliver to the Agent and each Bank a copy of any notice
with respect to such event that is filed with a Governmental Authority and any
notice delivered by a Governmental Authority to the Company or any ERISA
Affiliate with respect to such event: (i) an ERISA Event; (ii) a material
increase in the Unfunded Pension Liability of any Pension Plan; (iii) the
adoption of, or the commencement of contributions to, any Plan subject to
Section 412 of the Code by the Company or any ERISA Affiliate; or (iv) the
adoption of any amendment to a Plan subject to Section 412 of the Code, if such
amendment results in a material increase in contributions or Unfunded Pension
Liability; and
(d) of any material change in accounting policies or
financial reporting practices by the Company or any of its consolidated
Subsidiaries.
Each notice under this Section shall be accompanied by a
written statement by a Responsible Officer setting forth details of the
occurrence referred to therein, and stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time.
Each notice under subsection 7.03(a) shall describe with particularity any and
all clauses or provisions of this Agreement or other Loan Document that have
been (or foreseeably will be) breached or violated.
7.04 Preservation of Corporate Existence, Etc. Except in
connection with sales of assets permitted by Section 8.02 and transactions
permitted by Section 8.03, the Company shall, and shall cause each Subsidiary
to:
(a) preserve and maintain in full force and effect its
corporate existence and good standing under the laws of its state or
jurisdiction of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business;
(c) use reasonable efforts, in the ordinary course of
business, to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents,
trademarks, trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
7.05 Maintenance of Property. The Company shall maintain, and
shall cause each Subsidiary to maintain, and preserve all its property which is
used or useful in its business in good working order and condition, ordinary
wear and tear excepted and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could
57
<PAGE> 65
not reasonably be expected to have a Material Adverse Effect, except as
permitted by Section 8.02.
7.06 Insurance. The Company (a) shall maintain insurance with
respect to the payment of all receivables sold or to be sold in accordance with
subsection 8.02(d) in amounts and upon terms satisfactory to the Agent and to
all Banks; and (b) the Company shall maintain, and shall cause each Subsidiary
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons; including workers' compensation
insurance, public liability and property and casualty insurance. Upon request
of the Agent or any Bank, the Company shall furnish the Agent and each of the
Banks at reasonable intervals (but not more than once per calendar year) a
certificate of a Responsible Officer of the Company (and, if requested, a
certificate of any insurance broker of the Company) setting forth the nature
and extent of all insurance maintained by the Company and its Subsidiaries in
accordance with this Section 7.06 (and which, in the case of a certificate of a
broker, were placed through such broker).
7.07 Payment of Obligations. The Company shall, and shall cause
each Subsidiary to, pay and discharge as the same shall become due and payable,
all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are
being contested in good faith by appropriate proceedings and adequate reserves
in accordance with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or
agreement evidencing such Indebtedness.
7.08 Compliance with Laws. The Company shall comply, and shall
cause each Subsidiary to comply, in all material respects with all Requirements
of Law of any Governmental Authority having jurisdiction over it or its
business (including the Federal Fair Labor Standards Act), except such as may
be contested in good faith or as to which a bona fide dispute may exist.
7.09 Compliance with ERISA. The Company shall, and shall cause
each of its ERISA Affiliates to: (a) maintain each Plan in compliance in all
material respects with the applicable provisions of ERISA, the Code and other
federal or state law; (b) cause each Plan
58
<PAGE> 66
which is qualified under Section 401(a) of the Code to maintain such
qualification; and (c) make all required contributions to any Plan subject to
Section 412 of the Code.
7.10 Inspection of Property and Books and Records. The Company
shall maintain and shall cause each Subsidiary to maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such Subsidiary.
The Company shall permit, and shall cause each Subsidiary to permit,
representatives and independent contractors of the Agent or any Bank to visit
and inspect any of their respective properties, to examine and audit their
respective corporate, financial and operating records (including, without
limitation, any information relating to calculations in any Borrowing Base
Certificate), and make copies thereof or abstracts therefrom, and to discuss
their respective affairs, finances and accounts with their respective
directors, officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; provided, however, when an Event of Default exists the Agent or any
Bank may do any of the foregoing at the expense of the Company at any time
during normal business hours and without advance notice.
7.11 Environmental Laws.
(a) The Company shall, and shall cause each Subsidiary
to, conduct its operations and keep and maintain its property in compliance
with all Environmental Laws.
(b) Upon the written request of the Agent or any Bank the
Company shall submit and cause each of its Subsidiaries to submit, to the Agent
and each of the Banks, at the Company's sole cost and expense, at reasonable
intervals, a report providing an update of the status of any environmental,
health or safety compliance, hazard or liability issue, that could,
individually or in the aggregate, result in liability in excess of $5,000,000.
7.12 Use of Proceeds. The Company shall use the proceeds of the
Loans and the Letters of Credit for working capital and other general corporate
purposes not in contravention of any Requirement of Law or of any Loan
Document.
7.13 Solvency. The Company shall at all times be, and shall cause
each of its Subsidiaries to be, solvent.
7.14 Further Assurances.
(a) The Company shall ensure that all written
information, exhibits and reports furnished to the Agent and the Banks do not
and will not contain any untrue statement of a material fact and do not and
will not omit to state any material fact or any fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which
59
<PAGE> 67
made, and will promptly disclose to the Agent and the Banks and correct any
defect or error that may be discovered therein or in any Loan Document or in
the execution, acknowledgment or recordation thereof.
(b) Promptly upon request by the Agent, the Company shall
(and shall cause any of its Subsidiaries to) do, execute, acknowledge, deliver,
file, any and all such further acts, notices of assignment, transfers,
certificates, assurances and other instruments as the Agent may reasonably
require from time to time in order (i) to carry out more effectively the
purposes of this Agreement or any other Loan Document, (ii) to subject to the
Liens created by any of the Collateral Documents any of the properties, rights
or interests covered by any of such Collateral Documents, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Agent and Banks the rights granted or now or hereafter granted to the Banks (or
the Agent on behalf of the Banks) under any Loan Document or under any other
document executed in connection therewith.
7.15 Action Under Collateral Documents. The Company will, and will
cause the Guarantors to, undertake and perform all obligations, covenants,
undertakings or other actions required by such person pursuant to any
Collateral Document. The Company will promptly notify the Agent of any deposit
or other bank accounts of the Company or any Subsidiary which at any time hold
more than $250,000 and, if required by the Agent, procure that a first priority
security interest in such account is granted to the Agent (on behalf of the
Agent and the Banks).
7.16 Borrowing Base Audit. Upon the date eight months after the
Closing Date, the Company shall commence the process of promptly thereafter
providing the Agent with a report (with sufficient copies for each of the
Banks) detailing the conclusions of a thorough review of the Company's system
for the identification, collection, control and administration of its Accounts
Receivable (the "Borrowing Base Audit"). The report shall be prepared by an
auditor selected by the Agent on behalf of the Banks (or such other Person as
the Agent on behalf of the Banks may specify, including, without limitation,
any Affiliate of the Agent or the Banks). The Company shall assist the
author(s) of the report in all ways (including with respect to access to
premises, documents, personnel and information). The report shall set out in
reasonable detail all supporting evidence for its conclusions. The Agent and
each Bank shall be entitled to review the information used to support the
report and to question the author(s) of the report and anyone interviewed or
otherwise assisting in the preparation of such report (and for such purposes
shall be permitted access to the premises, employees and records of the Company
in accordance with Section 7.10). The costs of the Borrowing Base Audit
(including the preparation of the report) and the cost of the Banks and Agent
associated with review and following up on the report shall be borne solely by
the Company.
60
<PAGE> 68
7.17 Foreign Collateral. Commencing upon or before the date eight
months after the Closing Date (with completion to occur no later than six weeks
after such date that is eight months after the Closing Date) the Company shall
provide and shall cause its Subsidiaries to provide: (a) Foreign Security
Agreements duly executed and delivered by the Company and/or relevant
Subsidiary, granting a first priority perfected security interest in the
Foreign Collateral; (b) Foreign Guarantees from such of the Company's
Subsidiaries holding, owning, or otherwise having an interest in any of the
Foreign Collateral as the Banks may designate; and (c) legal opinions relating
to the Foreign Security Agreements and Foreign Guarantees of legal counsel, in
the case of all such documents delivered pursuant to this Section 7.17,
acceptable to the Agent and the Banks, in such of the jurisdictions where
Foreign Collateral is located as the Banks may designate and in a form and
substance satisfactory to the Agent and the Banks.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan
or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, unless the Majority Banks waive compliance in
writing:
8.01 Limitation on Liens.
(i) The Company shall not, and shall not suffer or permit any
Subsidiary to, directly or indirectly, make, create, incur, assume or suffer to
exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following ("Permitted Liens"):
(a) any Lien (other than a Lien on the Collateral)
existing on property of the Company or any Subsidiary on the Closing Date and
set forth in Schedule 8.01 securing Indebtedness outstanding on such date;
(b) any Lien created under any Loan Document;
(c) Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without
penalty, or to the extent that non-payment thereof is permitted by Section
7.07, provided that no notice of lien has been filed or recorded under the
Code;
(d) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and
61
<PAGE> 69
by appropriate proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property subject thereto and which are adequately
reserved for in accordance with GAAP;
(e) Liens (other than any Lien imposed by ERISA or a Lien
on the Collateral) consisting of pledges or deposits required in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(f) Liens (other than Liens on the Collateral) on the
property of the Company or its Subsidiary securing (i) the non- delinquent
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, (ii) contingent obligations on surety and appeal bonds,
and (iii) other non-delinquent obligations of a like nature; in each case,
incurred in the ordinary course of business, provided all such Liens in the
aggregate would not (even if enforced) cause a Material Adverse Effect;
(g) Liens (other than Liens on the Collateral) consisting
of judgment or judicial attachment liens, provided that the enforcement of such
Liens is effectively stayed and all such liens in the aggregate at any time
outstanding for the Company and its Subsidiaries do not exceed $5,000,000;
(h) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Company and its
Subsidiaries;
(i) Liens on assets of corporations which become
Subsidiaries after the date of this Agreement, provided, however, that such
Liens existed at the time the respective corporations became Subsidiaries and
were not created in anticipation thereof;
(j) purchase money security interests on any property
acquired or held by the Company or its Subsidiaries in the ordinary course of
business (other than Collateral), securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
property; provided that (i) such Property is not a Consolidated Current Asset,
(ii) any such Lien attaches to such property concurrently with or within 20
days after the acquisition thereof, (iii) such Lien attaches solely to the
property so acquired in such transaction, and (iv) the principal amount of the
debt secured thereby does not exceed 100% of the cost of such property.
(k) Liens securing obligations in respect of capital
leases on assets (other than Collateral), subject to such leases, provided that
such capital leases are otherwise permitted hereunder;
62
<PAGE> 70
(l) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; provided that (i) such deposit account is not
a dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated
by the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
(m) a Lien or trust imposed upon the proceeds of any
receivable for the benefit a Bank purchasing that receivable in accordance with
all of the conditions for the disposition of a receivable pursuant to
subsection 8.02(d);
(n) Liens granted as part of any Permitted Equipment
Sales Financing; and
(o) Liens granted in connection with the ABN AMRO
Accounts Receivable Facility, provided that such Liens shall at no time extend
to collateral with a value in excess of the amount equal (from time to time) to
15% multiplied by the total available program amount of such facility (the "ABN
Limit"). Notwithstanding anything to the contrary in the preceding sentence,
any such Lien will be permitted only after the Agent and the Majority Banks
have given their written consent to the form of any security documentation
(including financing statements) putting into effect a Lien in favor of ABN
AMRO.
(ii) The Company shall not, and shall not permit any Subsidiary
to, enter into any agreement (other than a Loan Document) which would prohibit
or restrict the granting of any Lien upon or with respect to any part of its
property, whether now owned or hereafter acquired, except where such an
agreement is made between the Company and one of the Banks hereunder and
relates solely to a receivable purchase by that Bank which meets all of the
conditions for the disposition of a receivable pursuant to subsection 8.02(d).
8.02 Disposition of Assets. The Company shall not, and shall not
suffer or permit any Subsidiary to, directly or indirectly, sell, assign,
lease, convey, transfer or otherwise dispose of (whether in one or a series of
transactions) any property (including accounts and notes receivable, with or
without recourse) or enter into any agreement to do any of the foregoing,
except:
(a) dispositions of inventory, or used, worn-out or
surplus equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such
equipment is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are reasonably promptly
applied to the purchase price of such replacement equipment;
63
<PAGE> 71
(c) dispositions as described in that certain Agreement
for Maturity Factoring Accounts Receivable dated July 31, 1987 between
Microwave Radio Corporation and BancBoston Financial Company as amended by that
letter agreement dated April 19, 1995, between Microwave Radio Corporation and
BNY Financial Corporation attached as Exhibit F;
(d) dispositions of accounts receivable to a Bank upon
the following conditions: (i) the term to maturity at the time of disposition
is more than 60 days; (ii) the account debtor is located in a country other
than the United States; (iii) payment of the receivable is insured during the
full term of the receivable upon terms satisfactory to the Agent and all of the
Banks; (iv) recourse from the purchaser of any receivable to the Company shall
be in an amount and upon terms satisfactory to the Agent and all of the Banks;
(v) the documentation of each such disposition shall be satisfactory to the
Agent and all of the Banks; and (vi) the aggregate amount of all such
receivables sold and outstanding (including any receivables sold pursuant to
the ABN AMRO Accounts Receivable Facility) at any time will not exceed
$20,000,000; and
(e) sales of equipment, receivables and/or contract
rights as part of any Permitted Equipment Sales Financing or ABN AMRO Accounts
Receivable Facility (provided that the total amount of receivables sold
pursuant to the ABN AMRO Accounts Receivable Facility together with receivables
sold pursuant to subsection 8.02(d) shall at no time exceed $20,000,000).
8.03 Consolidations and Mergers. The Company shall not, and shall
not suffer or permit any Subsidiary to, merge, consolidate with or into, or
convey, transfer, lease or otherwise dispose of (whether in one transaction or
in a series of transactions) all or substantially all of its assets (whether
now owned or hereafter acquired) to or in favor of any Person, except:
(a) any Subsidiary may merge with the Company, provided
that the Company shall be the continuing or surviving corporation, or with any
one or more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly-Owned Subsidiary, the Wholly-Owned Subsidiary shall be
the continuing or surviving corporation; and
(b) any Subsidiary may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to the Company or another
Wholly-Owned Subsidiary.
8.04 Loans and Investments. The Company shall not purchase or
acquire, or suffer or permit any Subsidiary to purchase or acquire, or make any
commitment therefor, any capital stock, equity interest, or any obligations or
other securities of, or any interest in, any Person, or make or commit to make
any Acquisitions, or make or commit to make any advance, loan, extension of
credit or capital contribution to or any other investment in, any Person
including any Affiliate of the Company (together, "Investments"), except for:
64
<PAGE> 72
(a) Investments held by the Company or Subsidiary in the
form of Cash Equivalents;
(b) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sale or lease of goods or
services in the ordinary course of business; and
(c) Investments incurred in order to consummate
Acquisitions provided that the aggregate amount of cash invested in such
Acquisitions permitted under this subsection 8.04(c) and in all transactions
permitted under Section 8.03 shall not exceed in any fiscal year $25,000,000
plus (or minus) 20% of (a) the amount by which consolidated Tangible Net Worth
as calculated at the end of the immediately preceding fiscal quarter exceeds
(or is less than) Tangible Net Worth as of June 30, 1995, plus (b) the
aggregate intangible assets related to Acquisitions completed after October 1,
1995, and on or prior to the Revolving Termination Date in an amount which does
not exceed $20,000,000.
8.05 Transactions with Affiliates. The Company shall not, and
shall not suffer or permit any Subsidiary to, enter into any transaction with
any Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of the Company or such
Subsidiary.
8.06 Use of Proceeds. The Company shall not, and shall not suffer
or permit any Subsidiary to, use any portion of the Loan proceeds or any Letter
of Credit, directly or indirectly, (i) to purchase or carry Margin Stock, (ii)
to repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
8.07 Contingent Obligations. The Company shall not, and shall not
suffer or permit any Subsidiary to, create, incur, assume or suffer to exist
any Contingent Obligations except:
(a) endorsements for collection or deposit in the
ordinary course of business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Company and its
Subsidiaries existing as of the Closing Date and listed in Schedule 8.07;
(d) Contingent Obligations created hereunder;
65
<PAGE> 73
(e) Contingent Obligations with respect to Surety
Instruments incurred in the ordinary course of business and not exceeding at
any one time $30,000,000 in the aggregate in respect of the Company and its
subsidiaries together; and
(f) Contingent Obligations undertaken as a part of any
Permitted Equipment Sales Financing or as a part of the ABN AMRO Accounts
Receivable Facility (provided that at no time shall the amount of recourse to
the Company under the ABN AMRO Accounts Receivable Facility exceed an amount
equal to 15% of the total available program amount of the ABN AMRO Accounts
Receivable Facility).
8.08 Joint Ventures. The Company shall not, and shall not suffer
or permit any Subsidiary to enter into any Joint Venture, other than in the
ordinary course of business.
8.09 Compliance with ERISA. The Company shall not, and shall not
suffer or permit any of its Subsidiaries to, (i) terminate any Plan subject to
Title IV of ERISA so as to result in any material (in the opinion of the Agent
acting upon the instruction of the Majority Banks) liability to the Company or
any ERISA Affiliate, (ii) permit to exist any ERISA Event or any other event or
condition, which presents the risk of a material (in the opinion of the Agent
acting upon the instruction of the Majority Banks) liability to any member of
the Controlled Group, (iii) make a complete or partial withdrawal (within the
meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in
any material (in the opinion of the Agent acting upon the instruction of the
Majority Banks) liability to the Company or any ERISA Affiliate, (iv) enter
into any new Plan or modify any existing Plan so as to increase its obligations
thereunder which could result in any material (in the opinion of the Agent
acting upon the instruction of the Majority Banks) liability to any member of
the Controlled Group, or (v) permit the present value of all nonforfeitable
accrued benefits under any Plan (using the actuarial assumptions utilized by
the PBGC upon termination of a Plan) materially (in the opinion of the Agent
acting upon the instruction of the Majority Banks) to exceed the fair market
value of Plan assets allocable to such benefits, all determined as of the most
recent valuation date for each such Plan.
8.10 Restricted Payments. The Company shall not, and shall not
suffer or permit any Subsidiary to, declare or make any dividend payment or
other distribution of assets, properties, cash, rights, obligations or
securities on account of any shares of any class of its capital stock, or
purchase, redeem or otherwise acquire for value any shares of its capital stock
or any warrants, rights or options to acquire such shares, now or hereafter
outstanding; except that the Company and any Wholly Owned Subsidiary may
declare and make dividend payments or other distributions payable solely in its
common stock. The Company shall not make any payments under the ABN AMRO
Accounts Receivable Facility to ABN AMRO to the extent that such payments are
made from the proceeds of Collateral on which both ABN AMRO and the Agent have
a Lien and such payments exceed the ABN Limit.
66
<PAGE> 74
8.11 Change in Business. The Company shall not, and shall not
suffer or permit any Subsidiary to, engage in any material line of business
substantially different from those lines of business carried on by the Company
and its Subsidiaries on the date hereof.
8.12 Quick Ratio. The Company shall not suffer or permit its Quick
Ratio to be less than 1.0 to 1.0.
8.13 Leverage Ratio. The Company shall not suffer or permit its
Leverage Ratio to be greater than 1.0 to 1.0.
8.14 Adjusted Tangible Net Worth. The Company shall not permit its
Adjusted Tangible Net Worth (determined on a consolidated basis) to be less
than the sum of (a) $155,582,000, plus (b) seventy-five percent (75%) of
quarterly net income for each fiscal quarter subsequent to the quarter ended
September 30, 1995, with no reduction for net losses, plus (c) the net proceeds
of any equity securities and subordinated debt issued by the Company after the
fiscal quarter ended September 30, 1995, less (d) the aggregate intangible
assets related to Acquisitions completed after October 1, 1995, and on or prior
to the Revolving Termination Date in an amount which does not exceed
$20,000,000.
8.15 Funded Debt to EBITDA Ratio. The Company shall not permit its
Funded Debt to EBITDA Ratio to be greater than the number set forth below as of
the last day of each fiscal quarter as follows:
<TABLE>
<CAPTION>
Fiscal Quarter Ending Funded Debt to EBITDA Ratio
--------------------- ---------------------------
<S> <C>
December 31, 1996 3.25 to 1.0
March 31, 1997 3.25 to 1.0
June 30, 1997 3.25 to 1.0
Each quarter's end thereafter 2.50 to 1.0
</TABLE>
8.16 Consecutive Quarterly Losses. The Company, on a consolidated
basis, shall not incur or suffer or permit to be incurred (a) any quarterly
operating loss or any quarterly net loss, or any combination thereof, in two
consecutive fiscal quarters, or (b) any quarterly operating loss or any
quarterly net loss in excess of five percent (5%) of Tangible Net Worth.
8.17 Change in Structure. Except as expressly permitted under
Section 8.03, the Company shall not and shall not permit any of its
Subsidiaries to, make any changes in its equity capital structure (including in
the terms of its outstanding stock), or amend its certificate of incorporation
or by-laws in any material respect.
67
<PAGE> 75
8.18 Accounting Changes. The Company shall not, and shall not
suffer or permit any Subsidiary to, make any significant change in accounting
treatment or reporting practices, except as required by GAAP, or change the
fiscal year of the Company or of any Subsidiary.
8.19 Limitations on Subordinated Indebtedness.
(a) The Company shall not, and shall not suffer or permit
any Subsidiary to, create, incur, assume, suffer to exist, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness which
by its terms is subordinated in right of payment or in priority upon
liquidation to the Loans or other senior debt of the Company or any Subsidiary
except that Indebtedness incurred under or evidenced by those instruments or
agreements listed on Schedule 8.19 ("Permitted Subordinated Indebtedness").
(b) The Company shall not amend or modify any provision
of any Approved Subordinated Indebtedness and shall not directly or indirectly
make any prepayment (whether by reason of acceleration thereof or otherwise) of
any principal of or premium on, or in respect of the redemption, retirement,
purchase or other acquisition of any Approved Subordinated Indebtedness.
ARTICLE IX
EVENTS OF DEFAULT
9.01 Event of Default. Any of the following shall constitute an
"Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and
as required to be paid herein, any amount of principal of any Loan or of any
L/C Obligation (including, without limitation, failure to provide cash
collateral as required by this Agreement), or (ii) within three days after the
same becomes due, any interest, fee or any other amount payable hereunder or
under any other Loan Document; or
(b) Representation or Warranty. Any representation or
warranty by the Company or any Subsidiary made or deemed made herein, in any
other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any Subsidiary, or any Responsible
Officer, furnished at any time under this Agreement, or in or under any other
Loan Document, is incorrect in any material respect on or as of the date made
or deemed made; or
(c) Specific Defaults. The Company fails to perform or
observe any term, covenant or agreement contained in any of Section 7.10 or in
Article VIII; or
68
<PAGE> 76
(d) Other Defaults. The Company fails to perform or
observe any other term or covenant contained in this Agreement or any other
Loan Document and such default shall continue unremedied for a period of 10
days; or
(e) Cross-Default. The Company or any Subsidiary (A)
fails to make any payment in respect of any Indebtedness or Contingent
Obligation; or (B) fails to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation; if the
effect of such failure, event or condition described in (A) or (B), above, is
to cause, or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause such
Indebtedness in an amount in excess of $1,000,000 to be declared to be due and
payable prior to its stated maturity, or such Contingent Obligation in an
amount in excess of $1,000,000 to become payable or cash collateral in respect
thereof to be demanded;
(f) Insolvency; Voluntary Proceedings. The Company or
any Subsidiary (i) ceases or fails to be solvent, or generally fails to pay, or
admits in writing its inability to pay, its debts as they become due, subject
to applicable grace periods, if any, whether at stated maturity or otherwise;
(ii) voluntarily ceases to conduct its business in the ordinary course; (iii)
commences any Insolvency Proceeding with respect to itself; or (iv) takes any
action to effectuate or authorize any of the foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company or any
Subsidiary, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of the Company's or any
Subsidiary's properties, and any such proceeding or petition shall not be
dismissed, or such writ, judgment, warrant of attachment, execution or similar
process shall not be released, vacated or fully bonded within 60 days after
commencement, filing or levy; (ii) the Company or any Subsidiary admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company or any Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect
to a Pension Plan or Multiemployer Plan which has resulted or could reasonably
be expected to result in liability of the Company or any Subsidiary under Title
IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate
amount in excess of $5,000,000; (ii) the aggregate amount of Unfunded Pension
Liability among all Pension Plans at any time exceeds $5,000,000; or (iii) the
Company or any Subsidiary or any ERISA Affiliate shall fail to pay when due,
after the expiration of any applicable grace period, any installment payment
with
69
<PAGE> 77
respect to its withdrawal liability under Section 4201 of ERISA under a
Multiemployer Plan in an aggregate amount in excess of $5,000,000; or
(i) Monetary Judgments. One or more non-interlocutory
judgments, non-interlocutory orders, decrees or arbitration awards is entered
against the Company or any Subsidiary involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions, of $5,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment,
order or decree is entered against the Company or any Subsidiary which does or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Change of Control. There occurs any Change of
Control; or
(l) Receivables Insurance Coverage. At a time when a
receivable which has been sold pursuant to the terms of subsection 8.02(d) and
not fully paid by the account debtor, the insurance of such receivable required
by subsection 7.06(a) shall be repudiated, invalidated or otherwise cease to be
in full force; or
(m) Collateral. (i) Any Collateral Document shall for
any reason cease to be valid and binding on or enforceable against the Company
or any Guarantor party thereto or any Company or any Guarantor shall so state
in writing or bring an action to limit its obligations or liabilities
thereunder; or (ii) any Collateral Document shall for any reason cease to
create a valid security interest in the Collateral purported to be covered
thereby or such security interest shall for any reason cease to be a perfected
and first priority security interest (subject only to Permitted Liens); or
(n) Adverse Change. There occurs a Material Adverse
Effect; or
(o) ABN Facility Default. There occurs any event of
default under the ABN AMRO Accounts Receivable Facility; or
(p) Guarantor Defaults. Any Guarantor fails in any
material respect to perform or observe any term, covenant or agreement
contained in any Guaranty; or any term, covenant or agreement in any Guaranty
is for any reason partially (including with respect to future advances) or
wholly revoked or invalidated by any Guarantor, or any Guaranty otherwise
ceases to be in full force and effect, or any Guarantor or any other Person
contests
70
<PAGE> 78
in any manner the validity or enforceability thereof or denies that it has any
further liability or obligation thereunder.
9.02 Remedies. If any Event of Default occurs, the Agent shall, at
the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans and
any obligation of the Issuing Bank to Issue Letters of Credit to be terminated,
whereupon such commitments and obligation shall be terminated;
(b) declare an amount equal to the maximum aggregate
amount that is or at any time thereafter may become available for drawing under
any outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights
and remedies available to it and the Banks under the Loan Documents or
applicable law;
provided, however, that upon the occurrence of any event specified in
subsection (f) or (g) of Section 9.01 (in the case of clause (i) of subsection
(g) upon the expiration of the 60-day period mentioned therein), the obligation
of each Bank to make Loans and any obligation of the Issuing Bank to Issue
Letters of Credit shall automatically terminate and the unpaid principal amount
of all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Agent, the
Issuing Bank or any Bank.
9.03 Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE X
THE AGENT
71
<PAGE> 79
10.01 Appointment and Authorization; "Agent".
(a) Each Bank hereby irrevocably (subject to Section
10.09) appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to
it by the terms of this Agreement or any other Loan Document, together with
such powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in any other
Loan Document, the Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks
with respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Lenders to act for such Issuing Bank with respect
thereto; provided, however, that the Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article X with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent," as used in this Article X,
included the Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Bank.
10.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
10.03 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them under
or in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by the Company or
any Subsidiary or Affiliate of the Company, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document
72
<PAGE> 80
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document or for the value of or title to
any Collateral, or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document, or for any failure of
the Company or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Bank to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the properties, books or records of the
Company or any of the Company's Subsidiaries or Affiliates.
10.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Banks and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 5.01, each Bank that has executed this
Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter either sent by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank.
10.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Agent for the account of the Banks, unless the Agent
shall have received written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." The Agent will notify the Banks of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Banks in
accordance with Article IX; provided, however, that unless and until the Agent
has received any such request, the Agent may (but shall not be
73
<PAGE> 81
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Banks.
10.06 Credit Decision. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Company and its Subsidiaries, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Bank. Each Bank
represents to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of the Company and its Subsidiaries, the value of and title to
any Collateral, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Bank also
represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Agent, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of
the Agent-Related Persons.
10.07 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Banks shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata,
from and against any and all Indemnified Liabilities; provided, however, that
no Bank shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Bank shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Company. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.08 Agent in Individual Capacity. BofA and its Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and
74
<PAGE> 82
generally engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its Subsidiaries and
Affiliates as though BofA were not the Agent or the Issuing Bank hereunder and
without notice to or consent of the Banks. The Banks acknowledge that,
pursuant to such activities, BofA or its Affiliates may receive information
regarding the Company or its Affiliates (including information that may be
subject to confidentiality obligations in favor of the Company or such
Affiliate) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to its Loans, BofA shall have
the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent or the Issuing Bank.
10.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon 30 days' notice to the Banks. If
the Agent resigns under this Agreement, the Majority Banks shall appoint from
among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the
Agent may appoint, after consulting with the Banks and the Company, a successor
agent from among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to all the
rights, powers and duties of the retiring Agent and the term "Agent" shall mean
such successor agent and the retiring Agent's appointment, powers and duties as
Agent shall be terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of the
Agent hereunder until such time, if any, as the Majority Banks appoint a
successor agent as provided for above. Notwithstanding the foregoing, however,
BofA may not be removed as the Agent at the request of the Majority Banks
unless BofA shall also simultaneously be replaced as "Issuing Bank" hereunder
pursuant to documentation in form and substance reasonably satisfactory to
BofA.
10.10 Withholding Tax.
(a) If any Bank is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code,
such Bank agrees with and in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty, two
properly completed and executed copies of IRS Form 1001 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year during
which interest may be paid under this Agreement;
75
<PAGE> 83
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such
Bank, two properly completed and executed copies of IRS Form 4224
before the payment of any interest is due in the first taxable year of
such Bank and in each succeeding taxable year of such Bank during
which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to
exemption from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing IRS Form 1001 and
such Bank sells, assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such Bank agrees to
notify the Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Company to such Bank. To the extent of
such percentage amount, the Agent will treat such Bank's IRS Form 1001 as no
longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Company to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any interest payment to
such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the Agent, then
the Agent may withhold from any interest payment to such Bank not providing
such forms or other documentation an amount equivalent to the applicable
withholding tax imposed by Sections 1441 and 1442 of the Code, without
reduction.
(e) If the IRS or any other Governmental Authority of the
United States or other jurisdiction asserts a claim that the Agent did not
properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed,
or because such Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Bank shall indemnify the Agent fully
for all amounts paid, directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed by any
jurisdiction on the amounts payable to the Agent
76
<PAGE> 84
under this Section, together with all costs and expenses (including Attorney
Costs). The obligation of the Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the Agent.
10.11 Collateral Matters.
(a) The Agent is authorized on behalf of all the Banks,
without the necessity of any notice to or further consent from the Banks, from
time to time to take any action with respect to any Collateral or the
Collateral Documents which may be necessary to perfect and maintain perfected
the security interest in and Liens upon the Collateral granted pursuant to the
Collateral Documents.
(b) The Banks irrevocably authorize the Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Agent upon any Collateral (provided, that the Agent shall retain all cash
collateral received in respect of Letters of Credit until and unless such
Letters of Credit are subsequently surrendered) (i) upon termination of the
Commitments, the surrender of all Letters of Credit not Cash Collateralized and
payment in full of all Loans and all other Obligations known to the Agent and
payable under this Agreement or any other Loan Document; (ii) constituting
property sold or to be sold or disposed of as part of or in connection with any
disposition permitted hereunder; (iii) constituting property in which the
Company, any Guarantor or any of their Subsidiaries owned no interest at the
time the Lien was granted or at any time thereafter; (iv) constituting property
leased to the Company, any Guarantor or any of their Subsidiaries under a lease
which has expired or been terminated in a transaction permitted under this
Agreement or is about to expire and which has not been, and is not intended by
the Company, any Guarantor or any of their Subsidiaries to be, renewed or
extended; (v) consisting of an instrument evidencing Indebtedness or other debt
instrument, if the indebtedness evidenced thereby has been paid in full. Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
subsection 10.11(b), provided that the absence of any such confirmation for
whatever reason shall not affect the Agent's rights under this Section 10.11.
(c) Each of the Banks acknowledges that, in connection
with creating, taking, perfecting or enforcing security interests in foreign
countries or jurisdictions, the Agent may need to be denominated as "security
trustee" or named or designated by some title or description other than
"agent." Each of the Banks, therefore, agrees that, in the event the Agent
uses the designation "security trustee" or some other designation, the use of
such name, designation or phrase shall not in any way alter, amend or modify
the nature and scope of the Agent's duties and obligations as set forth in this
Agreement. Without limiting the generality of the foregoing, the use of the
designation "security trustee" or any other phrase utilizing the word "trustee"
shall not create or impose on the Bank any fiduciary or heightened obligation
for the benefit of the Banks. In all instances, regardless of (i) the
description or name used by the Agent or (ii) any statements about, or
descriptions of, the Agent contained in any
77
<PAGE> 85
Collateral Documents, the express terms of this Agreement shall exclusively
define and govern the Agent's duties and obligations to the Banks.
ARTICLE XI
MISCELLANEOUS
11.01 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no consent with
respect to any departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Banks (or by the Agent
at the written request of the Majority Banks) and the Company and acknowledged
by the Agent, and then any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing
and signed by all the Banks and the Company and acknowledged by the Agent, do
any of the following:
(a) increase or extend the Commitment of any Bank (or
reinstate any Commitment terminated pursuant to Section 8.02);
(b) postpone or delay any date fixed by this Agreement or
any other Loan Document for any payment of principal, interest, fees or other
amounts due to the Banks (or any of them) hereunder or under any other Loan
Document, including any mandatory prepayments;
(c) reduce the principal of, or the rate of interest
specified herein on any Loan, or (subject to clause (iii) below) any fees or
other amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder;
(e) amend subsection 8.01(i)(m), 8.01(ii), 8.02(d) or
9.01(l); or
(f) amend this Section, or Section 2.14, or any provision
herein providing for consent or other action by all Banks;
(g) increase any applicable percentage advance rate set
forth in the definitions of "Hardware Borrowing Base,"
"Hardware+Installment/Integration Borrowing Base" or "Government Borrowing
Base," or amend the definition of "Eligible Hardware Accounts Receivable,"
"Eligible Hardware+Installment/Integration Accounts Receivable," "Eligible
Government Accounts Receivable," or "Aggregate Borrowing Base" in any respect
78
<PAGE> 86
that would reasonably be anticipated to increase the Aggregate Borrowing Base,
or waive any provision thereof that would reasonably be expected to have such
effect;
(h) release any portion of the Collateral otherwise then
pursuant to Section 10.11 or the Collateral Documents (except where release
upon the consent of the Majority Banks is specifically provided for);
and, provided further, that (i) no amendment, waiver or consent shall, unless
in writing and signed by the Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent
shall, unless in writing and signed by the Agent in addition to the Majority
Banks or all the Banks, as the case may be, affect the rights or duties of the
Agent under this Agreement or any other Loan Document, and (iii) the Fee Letter
may be amended, or rights or privileges thereunder waived, in a writing
executed by the parties thereto.
11.02 Notices.
(a) All notices, requests, consents, approvals, waivers
and other communications shall be in writing (including, unless the context
expressly otherwise provides, by facsimile transmission, provided that any
matter transmitted by the Company by facsimile (i) shall be immediately
confirmed by a telephone call to the recipient at the number specified on
Schedule 11.02, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or facsimile
number specified for notices on Schedule 11.02; or, as directed to the Company
or the Agent, to such other address as shall be designated by such party in a
written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Company and the Agent.
(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when delivered
for overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II, III or X to the Agent shall not be effective
until actually received by the Agent, and notices pursuant to Article III to
the Issuing Bank shall not be effective until actually received by the Issuing
Bank at the address specified for the "Issuing Bank" on the applicable
signature page hereof.
(c) Any agreement of the Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Company. The Agent and the Banks shall be entitled
to rely on the authority of any Person purporting to be a Person authorized by
the Company to give such notice and the Agent and the Banks shall not have any
liability to the Company or other Person on account of any action
79
<PAGE> 87
taken or not taken by the Agent or the Banks in reliance upon such telephonic
or facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure by
the Agent and the Banks to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Agent and the Banks of a confirmation
which is at variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
11.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
11.04 Costs and Expenses. The Company shall:
(a) whether or not the transactions contemplated hereby
are consummated, pay or reimburse BofA (including in its capacity as Agent and
Issuing Bank) and each Bank within five Business Days after demand (subject to
subsection 5.01(e)) for all costs and expenses incurred by BofA (including in
its capacity as Agent and Issuing Bank) and each Bank in connection with the
development, preparation, delivery, administration, registration, filing,
recording and execution of, and any amendment, supplement, waiver or
modification to (in each case, whether or not consummated), this Agreement, any
Loan Document and any other documents prepared in connection herewith or
therewith, and the consummation of the transactions contemplated hereby and
thereby, including reasonable Attorney Costs incurred by BofA (including in its
capacity as Agent and Issuing Bank) and any Bank with respect thereto; and
(b) pay or reimburse the Agent, the Arranger and each
Bank within five Business Days after demand (subject to subsection 5.01(e)) for
all costs and expenses (including Attorney Costs) incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies under this Agreement or any other Loan Document during the
existence of an Event of Default or after acceleration of the Loans (including
in connection with any "workout" or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).
11.05 Company Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Company shall indemnify, defend and
hold the Agent-Related Persons, and each Bank and each of its respective
officers, directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans, the termination of the Letters of Credit and the
termination, resignation or replacement of the
80
<PAGE> 88
Agent or replacement of any Bank) be imposed on, incurred by or asserted
against any such Person in any way relating to or arising out of this
Agreement, the Collateral Documents, the Guarantees or any document
contemplated by or referred to therein, or the transactions contemplated
thereby, or any action taken or omitted by any such Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or Letters of Credit or the use of the proceeds thereof, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"Indemnified Liabilities"); provided, that the Company shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section shall survive payment of all
other Obligations. At the election of any Indemnified Person, the Company
shall defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the sole cost and
expense of the Company. All amounts owing under this Section 11.05 shall be
paid within 30 days after demand.
11.06 Payments Set Aside. Neither the Agent nor the Banks shall be
under any obligation to marshall any assets in favor of the Company or any
other Person or against or in payment of any or all of the Obligations. To the
extent that the Company makes a payment to the Agent or the Banks, or the Agent
or the Banks exercise their right of set-off, and such payment or the proceeds
of such set-off or any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Agent or such Bank in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
Insolvency Proceeding or otherwise, then (a) to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such set-off had not occurred, and (b) each Bank severally agrees to pay to the
Agent upon demand its pro rata share of any amount so recovered from or repaid
by the Agent.
11.07 Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that the Company may not assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Agent and each Bank.
11.08 Assignments, Participations, Etc.
(a) Any Bank may, with the written consent of the
Company, at all times other than during the existence of an Event of Default,
the Agent and the Issuing Bank, which consents shall not be unreasonably
withheld, at any time assign and delegate to one or more Eligible Assignees
(provided that no written consent of the Company, the Agent or the Issuing Bank
shall be required in connection with any assignment and delegation by a Bank to
an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee")
all, or any ratable
81
<PAGE> 89
part of all, of the Loans, the Commitments, the L/C Obligations and the other
rights and obligations of such Bank hereunder, in a minimum amount of
$5,000,000 or any lesser amount that constitutes the entire remaining
Commitment; provided, however, that the Company and the Agent may continue to
deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (i) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the Agent by such Bank
and the Assignee; (ii) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance in the form of Exhibit D
("Assignment and Acceptance") together with any Note or Notes subject to such
assignment and (iii) the assignor Bank or Assignee has paid to the Agent a
processing fee in the amount of $3,500.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent with respect to)
an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) 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, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice
by the Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee, the Company shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and Commitment and,
if the assignor Bank has retained a portion of its Loans and its Commitment,
replacement Notes in the principal amount of the Loans retained by the assignor
Bank (such Notes to be in exchange for, but not in payment of, the Notes held
by such Bank). Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the Company (a
"Participant") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "originating Bank") hereunder
and under the other Loan Documents; provided, however, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company, the Issuing Bank and the Agent shall continue
to deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant
82
<PAGE> 90
any participating interest under which the Participant has rights to approve
any amendment to, or any consent or waiver with respect to, this Agreement or
any other Loan Document, except to the extent such amendment, consent or waiver
would require unanimous consent of the Banks as described in the first proviso
to Section 11.01. In the case of any such participation, the Participant shall
not have any rights under this Agreement, or any of the other Loan Documents,
and all amounts payable by the Company hereunder shall be determined as if such
Bank had not sold such participation; except that, if amounts outstanding under
this Agreement are due and unpaid, or shall have been declared or shall have
become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Bank under this Agreement.
(e) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement and any
Note held by it in favor of any Federal Reserve Bank in accordance with
Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14, and
such Federal Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
11.09 Confidentiality. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as "company private"
by the Company and provided to it by the Company or any Subsidiary, or by the
Agent on the Company's or such Subsidiary's behalf, under this Agreement or any
other Loan Document, and neither it nor any of its Affiliates shall use any
such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents or in connection with other business now
or hereafter existing or contemplated with the Company or any Subsidiary;
except to the extent such information (i) was or becomes generally available to
the public other than as a result of disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than the
Company, provided that such source is not bound by a confidentiality agreement
with the Company known to the Bank; provided, however, that any Bank may
disclose such information (A) at the request or pursuant to any requirement of
any Governmental Authority to which the Bank is subject or in connection with
an examination of such Bank by any such authority; (B) pursuant to subpoena or
other court process; (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Bank or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Bank's independent auditors and
other professional advisors; (G) to any Participant or Assignee, actual or
potential, provided that such Person agrees in writing to keep such information
confidential to the same extent required of the Banks hereunder; (H) as to any
Bank or its Affiliate, as expressly permitted under the terms of any other
document or
83
<PAGE> 91
agreement regarding confidentiality to which the Company or any Subsidiary is
party or is deemed party with such Bank or such Affiliate; and (I) to its
Affiliates.
11.10 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not the Agent or such
Bank shall have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application.
11.11 Automatic Debits of Fees. With respect to any commitment fee,
arrangement fee, letter of credit fee or other fee, or any other cost or
expense (including Attorney Costs) due and payable to the Agent, the Issuing
Bank, BofA or the Arranger under the Loan Documents, the Company hereby
irrevocably authorizes BofA to debit any deposit account of the Company with
BofA in an amount such that the aggregate amount debited from all such deposit
accounts does not exceed such fee or other cost or expense. If there are
insufficient funds in such deposit accounts to cover the amount of the fee or
other cost or expense then due, such debits will be reversed (in whole or in
part, in BofA's sole discretion) and such amount not debited shall be deemed to
be unpaid. No such debit under this Section shall be deemed a set-off.
11.12 Notification of Addresses, Lending Offices, Etc. Each Bank
shall notify the Agent in writing of any changes in the address to which
notices to the Bank should be directed, of addresses of any Lending Office, of
payment instructions in respect of all payments to be made to it hereunder and
of such other administrative information as the Agent shall reasonably request.
11.13 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.14 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
84
<PAGE> 92
11.15 No Third Parties Benefited. This Agreement is made and
entered into for the sole protection and legal benefit of the Company, the
Banks, the Agent and the Agent-Related Persons, and their permitted successors
and assigns, and no other Person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any of the other Loan Documents.
11.16 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENT
AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENT AND
THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
COMPANY, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
11.17 Waiver of Jury Trial. THE COMPANY, THE BANKS AND THE AGENT
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT- RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.
THE COMPANY, THE BANKS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE
85
<PAGE> 93
THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR
ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS.
11.18 Entire Agreement. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding among the
Company, the Banks and the Agent, and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof.
11.19 ABN Facility. The Company and ABN AMRO agree not to amend the
ABN AMRO Accounts Receivable Facility in any way that might adversely impact
the rights and remedies of the Agent or any Bank hereunder without obtaining
the prior written consent of the Agent and the Banks. ABN AMRO agrees not to
take any action that would cause the Company to violate its obligations under
Section 8.10 or otherwise hereunder without obtaining the prior written consent
of the Agent and the Banks.
11.20 Certain Closing Date Transitional Matters.
(a) On the Closing Date, each Bank hereby sells and
assigns, without recourse, an amount of Loans and L/C Obligations equal to the
product of (i) the excess (if any) of its Original Percentage over its Closing
Date Percentage times (ii) the aggregate principal amount of Loans and L/C
Obligations outstanding on such date and each Bank hereby purchases an amount
of Loans and L/C Obligations equal to the product of (i) the excess (if any) of
its Closing Date Percentage over its Original Percentage times (ii) the
aggregate principal amount of Loans and L/C Obligations outstanding on such
date. Each Bank selling Loans and L/C Obligations hereunder shall be deemed to
have sold (and each Bank purchasing Loans and L/C Obligations shall be deemed
to have purchased) a pro rata portion (based on the aggregate principal amount
of Loans and L/C Obligations then outstanding) of each of such selling Bank's
Loans and L/C Obligations. Payments by each Bank purchasing Loans and L/C
Obligations hereunder shall be made to the Agent not later than 12:00 noon,
(San Francisco time) in immediately available funds, without setoff, deduction
or counterclaim, for the pro rata account (based upon the outstanding principal
amount of Loans and L/C Obligations being sold) of each selling Bank in an
amount equal to the aggregate principal amount of outstanding Loans and L/C
Obligations purchased by such Bank.
(b) On and after the Closing Date, each Bank shall be
entitled to receive commitment fees under Section 2.10(b) of the Agreement and
interest and fees on Loans and L/C Obligations and on any other amount due
under any Loan Document, in each case, (i) accrued and unpaid before the
Closing Date in accordance with its Original Percentage and (ii) accrued on and
after the Closing Date in accordance with its Closing Date Percentage.
86
<PAGE> 94
(c) On and after the Closing Date, to the extent that any
commitment and the other rights and obligations of any Bank existing at the
time immediately preceding the Closing Date have been assigned or delegated, as
applicable, to any Bank hereunder, such assignee Bank hereby assumes such
commitment and other obligations and shall have the rights and obligations of a
Bank hereunder and under the other Loan Documents and, to the extent that any
commitment and other obligations of any Bank existing at the time immediately
preceding the Closing Date have been delegated by any Bank pursuant to this
Agreement, such assignor Bank shall be released from such commitment and its
obligations thereunder and under the other Loan Documents.
For purposes of this Section, (i) "Original Percentage" means,
relative to any Bank, the percentage set forth with respect to such Bank on the
schedule attached hereto as Schedule 11.20 and (ii) "Closing Date Percentage"
means, relative to any Bank, the percentage set forth with respect to such Bank
on the schedule attached hereto as Schedule 11.20.
[Intentionally left blank]
87
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in San Francisco by their proper and duly
authorized officers as of the day and year first above written.
CALIFORNIA MICROWAVE, INC.
By: /s/
Title: EXECUTIVE VICE PRESIDENT &
CHIEF FINANCIAL OFFICER
By: /s/ MICHAEL FOSTER
Title: VICE PRESIDENT & TREASURER
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ DIETMAR SCHIEL
Title: VICE PRESIDENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Issuing Bank
By: /s/ MICHAEL J. MCCUTCHIN
Title: VICE PRESIDENT
(SIGNATURES CONTINUED NEXT PAGE)
88
<PAGE> 96
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/ MICHAEL J. MCCUTCHIN
Title: VICE PRESIDENT
ABN AMRO BANK N.V., SAN FRANCISCO
INTERNATIONAL BRANCH BY:
ABN AMRO NORTH AMERICA, INC. AS
AGENT
By: /s/ R. CLAY JACKSON
Title: SENIOR VICE PRESIDENT
By: /s/ GINA M. BRUSATORI
Title: VICE PRESIDENT & DIRECTOR
CANADIAN IMPERIAL BANK OF COMMERCE
By: /s/ STAN SAKAI
Title: DIRECTOR
89
<PAGE> 97
SCHEDULE 1.01
to First Amended and Restated Credit Agreement
PERMITTED ACCOUNTS RECEIVABLE
Lucent Technologies
Motorola
AT&T
U.S. Army
U.S. Air Force
Pacific Bell
NATO
Telefonica, Spain
Lockhead - Martin
Nokia
90
<PAGE> 98
SCHEDULE 2.01
COMMITMENTS
AND PRO RATA SHARES
<TABLE>
<CAPTION>
Pro Rata
Bank Commitment Share
---- ---------- -----
<S> <C> <C>
Bank of America National
Trust and Savings
Association $12,500,000 41.666666666%
ABN AMRO Bank N.V., $8,750,000 29.166666667%
San Francisco
International Branch
Canadian Imperial Bank
of Commerce $8,750,000 29.166666667%
TOTAL $30,000,000 100%
</TABLE>
91
<PAGE> 99
SCHEDULE 3.03
to First Amended and Restated Credit Agreement
LETTERS OF CREDIT
Outstanding Letters of Credit
As of: 27-Dec-96
<TABLE>
<CAPTION>
L/C # USD Amount Issued Expires
- ------ ---------- ---------- ---------
<S> <C> <C> <C>
128608 139,800.00 22-Dec-95 31-Jan-97
132896 220,000.00 22-Dec-95 01-Nov-97
135933 223,450.00 22-Dec-95 30-Jun-97
136665 390,929.00 22-Dec-95 31-Jan-97
136844 7,440.00 22-Dec-95 03-Feb-97
137273 114,200.00 22-Dec-95 10-Aug-97
138180 40,000.00 22-Dec-95 01-Jan-97
138479 171,658.77 30-Aug-96 14-Jun-97
139161 181,425.00 22-Dec-95 14-Mar-97
220247 1,308,643.60 29-Nov-96 30-Apr-97
220517 9,948.00 22-Dec-95 28-Mar-97
221160 30,096.43 22-Dec-95 31-Dec-96
221627 203,688.00 22-Dec-95 19-Oct-97
221628 164,678.00 22-Dec-95 19-Oct-97
221787 72,273.00 22-Dec-95 03-Apr-97
223281 485.29 30-Aug-96 17-Feb-97
223913 27,820.00 22-Dec-95 30-May-97
224757 24,700.00 22-Dec-95 30-Jul-97
224882 6,016.00 22-Dec-95 30-Sep-97
224883 10,222.00 22-Dec-95 30-Sep-97
224990 65,000.00 22-Dec-95 15-Feb-97
</TABLE>
92
<PAGE> 100
<TABLE>
<CAPTION>
L/C # USD Amount Issued Expires
- ------ ---------- ---------- ---------
<S> <C> <C> <C>
225216 205,000.00 22 Dec 95 14-Aug-97
225249 17,317.50 22-Dec-95 31-Aug-98
225454 8,759.00 22-Dec-95 30-Jan-97
226085 146,883.00 22-Dec-95 31-Oct-97
226347 11,322.00 22-Dec-95 03-Jun-97
226639 120,000.00 22-Dec-95 15-Jan-98
227397 7,978.00 02-Feb-96 20-Feb-98
227565 27,995.52 29-Nov-96 20-Feb-97
228278 40,000.00 03-Apr-96 15-Feb-97
228602 100,000.00 18-Apr-96 18-Apr-97
228741 95,304.60 06-May-96 30-Jul-97
228858 25,000.00 24-May-96 18-Feb-97
229227 54,000.00 24-Jun-96 21-Jan-98
229255 51,940.00 01-Jul-96 29-Apr-97
229341 16,900.00 29-Aug-96 28-Jul-98
229355 45,743.00 24-Oct-96 31-Jul-99
3001458 482,168.00 19-Sep-96 30-Jan-98
3001624 46,227.60 27-Sep-96 30-Apr-97
3001741 450.00 04-Oct-96 26-Apr-97
3002047 11,385.61 22-Oct-96 28-Mar-97
3002082 49,400.28 28-Oct-96 30-Jan-98
3002083 85,926.52 28-Oct-96 30-Jan-98
3002412 10,000.00 20-Nov-96 16-Jun-97
3002524 900.00 02-Dec-96 31-Jul-97
3002412 30,653.00 06-Dec-96 19-Dec-97
3002729 15,587.00 17-Dec-96 15-Mar-98
3002610 47,500.00 20-Dec-96 30-Apr-97
</TABLE>
93
<PAGE> 101
<TABLE>
<CAPTION>
L/C # USD Amount Issued Expires
- ------ ---------- ---------- ---------
<S> <C> <C> <C>
3002412 672,377.00 23 Dec 96 31-Jan-98
------------
5,839,190.72
============
</TABLE>
94
<PAGE> 102
SCHEDULE 6.05
to First Amended and Restated Credit Agreement
LITIGATION
In November and December 1995, two class action lawsuits were filed against
California Microwave, Inc. and certain of its executive officers in the United
States District Court for the Northern District of California. The plaintiffs
purport to represent a class of all persons who purchased California Microwave
common stock between September 6, 1994 and June 29, 1995. The complaints
allege that defendants violated various federal securities laws through
material misrepresentations and omissions during such period of time.
95
<PAGE> 103
SCHEDULE 6.07
to First Amended and Restated Credit Agreement
ERISA
All company 401(k) plan assets consolidated into California Microwave Tax
Deferred Savings Plan.
Various Health, Life Insurance and Disability Plans
No exceptions.
96
<PAGE> 104
SCHEDULE 6.11
to First Amended and Restated Credit Agreement
MATERIAL OBLIGATIONS NOT
ON BALANCE SHEET
1. Standby letters of credit issued by Bank of America in the approximate
amount (as of December 23, 1996) of $5.8 million.
2. Standby letters of credit issued by Banca Nazionale del Lavoro in the
approximate amount (as of December 23, 1996) of $2.8 million.
3. Surety bonds issued by CIGNA in the approximate amount of $17.0
million (as of December 23, 1996).
4. Standby letter of credit issued by Bank of Tokyo in the approximate
amount of $1.7 million enhancing the credit of the industrial
development bonds issued in 1982 in Suffolk County, NY.
5. Standby letter of credit issued by Marine Midland Bank in the
approximate amount of $2.3 million enhancing the credit of the
industrial development bonds issued in 1982 in Monroe County, NY.
6. Under the terms of the Shareholder's Agreement dated March 8, 1994,
the company is obligated to purchase the minority interests of
California Microwave Navigation Systems, Inc. for a price based upon
its financial results.
7. Under the terms of a Master Purchase Agreement with ABN-Amro Bank,
dated June 24, 1996, the bank is purchasing certain insured export
receivables with recourse to the company for the 5% uninsured portion.
As of December 24, 1996, the outstanding balance of this 5% portion
was approximately $750,000.
97
<PAGE> 105
SCHEDULE 6.12
to First Amended and Restated Credit Agreement
ENVIRONMENTAL MATTERS
Relative to the property at 985 Almanor Ave., Sunnyvale, CA,
formerly leased by the company, the Regional Water Quality
Review Board has required that the company sample the
underground water at several locations around the property and
report the results. The report has been submitted but the
matter remains open.
98
<PAGE> 106
SCHEDULE 6.16
to First Amended and Restated Credit Agreement
(a) SUBSIDIARIES
<TABLE>
<S> <C>
EF Data Corporation 100% owned
California Microwave Navigation Systems, Inc. 87% owned
California Microwave Foreign Sales Corporation 100% owned
</TABLE>
(b) EQUITY INVESTMENTS
Less than 2% ownership of the capital stock of DIVA Communications, Inc.
99
<PAGE> 107
SCHEDULE 6.17
to First Amended and Restated Credit Agreement
INSURANCE
None.
100
<PAGE> 108
SCHEDULE 8.01
to First Amended and Restated Credit Agreement
PERMITTED LIENS
1. Security interest in the property located at 125
Kennedy Dr., Hauppauge, NY, granted in favor of
Suffolk County Industrial Development Agency.
2. Security interests in the property located at 175
Science Parkway, Rochester, NY, granted in favor of
County of Monroe Industrial Development Agency.
3. Security interest related to equipment leases
acquired in the acquisition of Microwave Networks,
Inc. with a remaining value of under $700,000.
4. Security interest granted by Microwave Radio
Corporation relating to accounts of KLXV-TV and
described in a UCC-1 bearing MA filing no. 059373.
5. Security interest granted by Microwave Radio
Corporation relating to accounts of High Tech Support
Group and described in a UCC-1 bearing MA filing no.
064744.
6. Security interest granted by Microwave Radio
Corporation relating to accounts of Lansing 53 Inc.
or Landy Associates and described in a UCC-1 bearing
MA filing no. 100021.
7. Security interest granted by Microwave Radio
Corporation relating to accounts of KSBS-TV and
described in a UCC-1 bearing MA filing no. 109481.
8. Security interest granted by Microwave Radio
Corporation relating to accounts of Life Anew
Ministries Inc. and described in a UCC-1 bearing MA
filing no. 125777
9. Security interest granted by Microwave Radio
Corporation relating to accounts of Grand Canyon
101
<PAGE> 109
Television Co. and described in a UCC-1 bearing MA
filing no. 131056.
10. Security interest granted by Microwave Radio
Corporation relating to accounts of WHLL-TV and
described in a UCC-1 bearing MA filing no. 138475.
11. Security interest granted by Microwave Radio
Corporation relating to accounts of Bear Valley
Communications Inc. and described in a UCC-1 bearing
MA filing no. 147414.
12. Security interest granted by Microwave Radio
Corporation relating to accounts of WPXT-TV and
described in a UCC-1 bearing MA filing no. 168877.
13. Security interest granted by Microwave Radio
Corporation relating to accounts of WOCC-TV and
described in a UCC-1 bearing MA filing no. 171696.
14. Security interest granted by Microwave Radio
Corporation relating to accounts of Advanced
Communications and described in a UCC-1 bearing MA
filing no. 188609.
15. Security interest granted by Microwave Radio
Corporation relating to accounts of K49DH-TV and
described in a UCC-1 bearing MA filing no. 212781.
16. Security interest granted by Microwave Radio
Corporation relating to accounts of WVFT-TV and
described in a UCC-1 bearing MA filing no.
240502/240503.
17. Security interest granted by Microwave Radio
Corporation relating to accounts of BNYH Financial
Corporation and described in a UCC-1 bearing MA
filing no. 214620.
102
<PAGE> 110
SCHEDULE 8.07
to First Amended and Restated Credit Agreement
CONTINGENT OBLIGATIONS
1. Standby letters of credit issued by Bank of America in the approximate
amount (as of December 23, 1996) of $5.8 million.
2. Standby letters of credit issued by Banca Nazionale del Lavoro in the
approximate amount (as of December 23, 1996) of $2.8 million.
3. Surety bonds issued by CIGNA in the approximate amount of $17.0
million (as of December 23, 1996).
4. Standby letter of credit issued by Bank of Tokyo in the approximate
amount of $1.7 million enhancing the credit of the industrial
development bonds issued in 1982 in Suffolk County, NY.
5. Standby letter of credit issued by Marine Midland Bank in the
approximate amount of $2.3 million enhancing the credit of the
industrial development bonds issued in 1982 in Monroe County, NY.
6. Under the terms of the Shareholder's Agreement dated March 8, 1994,
the company is obligated to purchase the minority interests of
California Microwave Navigation Systems, Inc. for a price based upon
its financial results.
7. Under the terms of a Master Purchase Agreement with ABN-Amro Bank,
dated June 24, 1996, the bank is purchasing certain insured export
receivables with recourse to the company for the 5% uninsured portion.
As of December 24, 1996, the outstanding balance of this 5% portion
was approximately $750,000.
103
<PAGE> 111
SCHEDULE 8.19
to First Amended and Restated Credit Agreement
PERMITTED SUBORDINATED INDEBTEDNESS
1. $57,500,000 California Microwave, Inc. 5.25%
Convertible Subordinated Notes Due December 15, 2003
2. $5,700,000 California Microwave, Inc. 5% Convertible
Subordinated Notes Due October 1, 1998
104
<PAGE> 112
SCHEDULE 11.02
to First Amended and Restated Credit Agreement
LENDING OFFICES
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
For Notices of Borrowing, Notices of Prepayment,
Notices of Conversion/Continuation
Bank of America National Trust
and Savings Association
Agency Administrative Services #5596
1455 Market Street, 13th Floor
San Francisco, California 94103
Attention: Stephen Eiring
Telephone: (415) 436-2782
Facsimile: (415) 436-2700
For all other notices
Bank of America National Trust
and Savings Association
Agency Management #10831
1455 Market Street, 12th Floor
San Francisco, California 94103
Attention: Wendy Young
Telephone: (415) 436-3420
Facsimile: (415) 436-3425
AGENT'S PAYMENT OFFICE:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
ABA No. 121-000-358
For Credit to Acct. No. 12339-14874
Ref: California Microwave, Inc.
105
<PAGE> 113
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Bank
Domestic and Offshore Lending Office:
1850 Gateway Boulevard, Fourth Floor
Concord, California 94520
Notices (other than Borrowing notices and Notices of
Conversion/Continuation):
Bank of America National Trust
and Savings Association
555 California Street, 41st Floor
San Francisco, California 94104
Attention: Corporate Banking
High Technology
Michael C. McCutchin
Telephone: (415) 622-4589
Facsimile: (415) 622-2514
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Issuing Bank
Address for Notices:
International Trade
Banking Division #5655
333 S. Beaudry Avenue, 19th Floor
Los Angeles, California 90017
ABN AMRO BANK N.V.
101 California Street, Suite 4550
San Francisco, California 94111-5812
Attention: Dianne Waggoner
Telephone: (415) 984-3706
Facsimile: (415) 362-3524
106
<PAGE> 114
CANADIAN IMPERIAL BANK OF COMMERCE
Two Paces West
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Clare Coyne
Telephone: (770) 319-4836
Facsimile: (770) 319-4850
107
<PAGE> 115
SCHEDULE 11.20
to First Amended and Restated Credit Agreement
TRANSITIONAL COMMITMENTS
<TABLE>
<CAPTION>
Bank (1) (2) (3)
Original Percentage Closing Percentage Product of (1) minus (2)
<S> <C> <C> <C>
Bank of America National 41.666666666% 41.666666666% 0%
Trust and Savings
Association
ABN AMRO Bank N.V. 29.1666666667% 29.166666667% 0%
Canadian Imperial Bank 29.1666666667% 29.166666667% 0%
of Commerce
TOTAL 100% 100% 0%
</TABLE>
108
<PAGE> 116
EXHIBIT A
to the First Amended and Restated Credit Agreement
NOTICE OF BORROWING
Date: _________________, 19___
To: Bank of America National Trust and Savings Association as Agent for
the Banks parties to the First Amended and Restated Credit Agreement
dated as of December ___, 1996 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among California
Microwave, Inc., certain Banks which are signatories thereto and Bank
of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, California Microwave, Inc. (the "Company"), refers to
the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.03 of
the Credit Agreement, of the Revolving Loan Borrowing specified below:
8. The Business Day of the proposed Borrowing is _______________,
19___.
9. The aggregate amount of the proposed Borrowing is
_______________, 19___.
10. The Borrowing is to be comprised of $_____________ of [Base
Rate] [Offshore Rate] Loans.
11. The duration of the Interest Period for the Offshore Rate
Loans included in the Borrowing shall be ______ months.
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the proposed
Borrowing, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties of the Company contained in
Article VI of the Credit Agreement are true and correct as though made on and
as of such date (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct as of such
date);
A-1
<PAGE> 117
(b) no Default or Event of Default exists, or would result from
such proposed Borrowing; and
(c) The proposed Borrowing will not cause the aggregate Effective
Amount of all outstanding Loans and all L/C Obligations to exceed either (i)
the combined Commitments of the Banks, or (ii) the Aggregate Borrowing Base.
CALIFORNIA MICROWAVE, INC.
By:_____________________________________
Title:__________________________________
A-2
<PAGE> 118
EXHIBIT B
to the First Amended and Restated Credit Agreement
NOTICE OF CONVERSION/CONTINUATION
Date: _________________, 19___
To: Bank of America National Trust and Savings Association, as Agent for
the Banks parties to the First Amended and Restated Credit Agreement
dated as of December ___, 1996 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among California
Microwave, Inc., certain Banks which are signatories thereto and Bank
of America National Trust and Savings Association, as Agent
Ladies and Gentlemen:
The undersigned, California Microwave, Inc. (the "Company"), refers to
the Credit Agreement, the terms defined therein being used herein as therein
defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of
the Credit Agreement, of the [conversion] [continuation] of the Loans specified
herein, that:
1. The Conversion/Continuation Date is _____________, 19___.
2. The aggregate amount of the Loans to be [converted]
[continued] is $__________.
3. The Loans are to be [converted into] [continued as] [Offshore
Rate] [Base Rate] Loans.
4. [If applicable:] The duration of the Interest Period for the
Loans included in the [conversion] [continuation] shall be [____ days] [___
months].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Conversion/Continuation
Date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) the representations and warranties of the Company contained in
Article VI of the Credit Agreement are true and correct as though made on and
as of such date (except to the extent such representations and warranties
relate to an earlier date, in which case they are true and correct as of such
date);
B-1
<PAGE> 119
(b) no Default or Event of Default exists or would result from
such proposed [conversion] [continuation]; and
(c) as of the date of [conversion] [continuation] the aggregate
Effective Amount of all outstanding Loans and all L/C Obligations will not
exceed either (i) the combined Commitments or (ii) the Aggregate Borrowing
Base.
CALIFORNIA MICROWAVE, INC.
By:_____________________________________
Title:__________________________________
B-2
<PAGE> 120
EXHIBIT C
to the First Amended and Restated Credit Agreement
CALIFORNIA MICROWAVE, INC.
COMPLIANCE CERTIFICATE
Financial
Statement Date: _______________, 199___
Reference is made to that certain First Amended and Restated Credit
Agreement dated as of December __, 1996 (as extended, renewed, amended or
restated from time to time, the "Credit Agreement") among California Microwave,
Inc., a Delaware corporation (the "Company"), the several financial
institutions from time to time parties to this Credit Agreement (the "Banks")
and Bank of America National Trust and Savings Association, as agent for the
Banks (in such capacity, the "Agent"). Unless otherwise defined herein,
capitalized terms used herein have the respective meanings assigned to them in
the Credit Agreement.
The undersigned Responsible Officer of the Company hereby certifies as
of the date hereof that he/she is the _______________________ of the Company,
and that, as such, he/she is authorized to execute and deliver this Certificate
to the Banks and the Agent on the behalf of the Company and its consolidated
Subsidiaries, and that:
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 7.01(a) of the Credit
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy
of the audited consolidated balance sheet of the Company and its Subsidiaries
as at the end of the fiscal year ended _______________, 199__ and (b) the
related consolidated statements of income or operations, shareholders' equity
and cash flows for such fiscal year, setting forth in each case in comparative
form the figures for the previous fiscal year, and accompanied by the
unqualified opinion of _________________ [a nationally-recognized certified
independent public accounting firm] which report states that such consolidated
financial statements have been prepared in accordance with GAAP, and fairly
present, in all material respects, the financial position of the Company and
its Subsidiaries for the periods indicated and on a basis consistent with prior
periods.
or
C-1
<PAGE> 121
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 7.01(b) of the Credit
Agreement.]
1. Attached as Schedule 1 hereto are (a) a true and correct copy
of the unaudited consolidated balance sheet of the Company and its Subsidiaries
as of the end of the fiscal quarter ended __________, 199__, and (b) the
related unaudited consolidated statements of income, shareholders' equity, and
cash flows for the period commencing on the first day and ending on the last
day of such quarter. Such financial statements were prepared in accordance
with GAAP (subject only to ordinary, good faith year-end audit adjustments) and
fairly present, in all material respects, the financial position and the
results of operations of the Company and its Subsidiaries.
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 7.01(c) of the Credit
Agreement.]
2. Attached as Schedule 1 hereto are (a) a true and correct copy
of the unaudited consolidating balance sheet of the Company and its
consolidated Subsidiaries as of the end of the fiscal year ended
______________, 199__ and (b) the related consolidating statements of income,
shareholders' equity, and cash flows for such fiscal year. Such financial
statements were developed and used in connection with the preparation of the
financial statements referred to in subsection 7.01(a) of the Credit Agreement.
or
[Use the following paragraph if this Certificate is delivered in connection
with the financial statements required by subsection 7.01(d) of the Credit
Agreement.]
2. Attached as Schedule 1 hereto are (a) a true and correct copy
of the unaudited consolidating balance sheets of the Company and its
Subsidiaries as of the end of the fiscal quarter ended ______________, 199__
and (b) the related consolidating statements of income. Such financial
statements were developed and used in connection with the preparation of the
financial statements referred to in subsection 7.01(b) of the Credit Agreement.
3. The undersigned has reviewed and is familiar with the terms of
the Credit Agreement and has made, or has caused to be made under his/her
supervision, a detailed review of the transactions and conditions (financial or
otherwise) of the Company during the accounting period covered by the attached
financial statements.
4. To the best of the undersigned's knowledge, the Company,
during such period, has observed, performed or satisfied all of its covenants
and other agreements, and satisfied every condition in the Credit Agreement to
be observed, performed or satisfied by the Company, and the undersigned has no
knowledge of any Default or Event of Default.
C-2
<PAGE> 122
5. The following financial covenant analyses and information set
forth on Schedule 2 attached hereto are true and accurate on and as of the date
of this Certificate. All amounts and ratios in Schedule 2 refer to the
financial statements attached as Schedule 1 hereto and are determined in
accordance with the specifications set forth in the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as
of _________________, 199___.
CALIFORNIA MICROWAVE, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
C-3
<PAGE> 123
Date: ______________, 199__
For the fiscal quarter/year
ended ______________, 199__
SCHEDULE 2
to the Compliance Certificate
($ in 000's)
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C>
1. Section 8.12 Quick Ratio.
-------------------------
A. The ratio(1) of:
(i) cash
--------------
plus
----
(ii) Cash Equivalents(2)
--------------
plus
----
(iii) Eligible Receivables (net of
allowance for doubtful
accounts)
--------------
= (i) + (ii) + (iii) =
--------------
B. Consolidated Current Liabilities
--------------
A
---
= B = Not less than 1.00 to 1.00
==============
</TABLE>
__________________________________
(1) Determined on a consolidated basis.
(2) Valued in accordance with GAAP.
C-4
<PAGE> 124
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C>
2. Section 8.13 Leverage Ratio.
---------------------------
The ratio1 of:
A. Adjusted Total Liabilities:
(i) Total GAAP liabilities
(including Indebtedness)2
--------------
less
----
(ii) subordinated liabilities
--------------
plus
----
(iii) Contingent Obligations
(excluding up to $20,000 of
obligations with respect to
outstanding Surety
Instruments)
--------------
plus
----
(iv) the Letters of Credit
--------------
(i)-(ii)+(iii)+(iv) =
--------------
B. Adjusted Tangible Net Worth
--------------
(from #3 below)
A
---
= B = Not greater than 1.00 to 1.00
==============
</TABLE>
__________________________________
1 Determined on a consolidated basis.
2 Without duplication.
C-5
<PAGE> 125
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C>
3. Section 8.14 Minimum Adjusted
Tangible Net Worth.
------------------------------
Adjusted Tangible Net Worth(1)
A. gross book value of assets ______________
less
----
B. goodwill, patents, trademarks, trade
names, organization expense, and other
like intangibles ______________
less
----
C. applicable reserves ______________
less
----
D. liabilities (including accrued and ______________
deferred income taxes)
plus
----
E. subordinated liabilities ______________
= A - B - C - D + E = Not to be less than the sum of:
==============
A. 90% of Adjusted Tangible
Net Worth as of 9/30/95 $155,582
plus
----
B. 75% of quarterly net
income for each fiscal
quarter, commencing with
the fiscal quarter begin-
ning 10/1/95 and there-
after (not reduced by
any quarterly loss) _______________
plus
----
C. 100% of the net proceeds
of any equity securities
and subordinated debt
issued by the Company
on or after 10/1/95 _______________
less
----
</TABLE>
__________________________________
(1) Determined on a consolidated basis.
C-6
<PAGE> 126
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C>
D. intangible assets (up
to $20,000 in the
aggregate) related to
Acquisitions completed
after 10/1/95 and on or
before the Revolving
Termination Date
---------------
= A + B + C - D =
===============
</TABLE>
C-7
<PAGE> 127
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C>
4. Section 8.15 Funded Debt to EBITDA
----------------------------------
The ratio1 of:
A. Total Indebtedness for borrowed money
(including the Loans)
--------------
B. EBITDA (calculated on a four quarter
trailing basis for such fiscal quarter
and the three immediately preceding
fiscal quarters)
The sum of:
(i) Net income (or net loss)2
plus
---- --------------
(ii) depreciation
--------------
plus
----
(iii) amortization of intangibles
--------------
plus
----
(iv) interest
--------------
plus
----
(v) accrued income taxes
--------------
= (i) + (ii) + (iii)
+ (iv) + (v) =
==============
A
---
= B = Not greater than [3.25] [2.50] to 1.00
==============
</TABLE>
__________________________________
1 Determined on a consolidated basis
2 Without giving effect to extraordinary losses or extraordinary gains
C-8
<PAGE> 128
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C>
5. Section 8.16(a) Losses in
Two Consecutive Quarters.
-------------------------
A. (i) Operating loss for fiscal
quarter just ended
Not to exceed 0 if (ii) shows a loss.
==============
(ii) Operating loss for the fiscal
quarter immediately preceding
the fiscal quarter just ended
==============
B. (i) Net loss for fiscal quarter
just ended Not to exceed 0 if (ii) shows a loss.
==============
(ii) Net loss for the fiscal
quarter immediately preceding
the fiscal quarter just ended
==============
6. Section 8.16(b) Losses in One Quarter.
-------------------------------------
Operating loss for the quarter just ended Not to exceed $_____________ (5% of Adjusted Tangible
Net Worth (from #3 above))
==============
Net loss for the quarter just ended Not to exceed $_____________ (5% of Adjusted Tangible
Net Worth (from #3 above))
==============
</TABLE>
C-9
<PAGE> 129
<TABLE>
<CAPTION>
Actual Required/Permitted
------ ------------------
<S> <C> <C> <C> <C>
7. Section 8.03 and 8.04 Consolidations,
Mergers and Acquisitions.
------------------------------------
A. Cash invested in all mergers permitted
under Section 8.03
--------------
B. Cash invested in Acquisitions
permitted under Section 8.04(c)
--------------
= A + B = Not to exceed the sum of:
==============
C. $ 25,000
plus or minus1
-------------
the product of 20% of the arithmetic sum
of D and E;
where D. is (i) Tangible Net Worth for
fiscal quarter just ended
(from #3 above)
------------
less
----
(ii) Tangible Net Worth as of
6/30/95 $164,905
(i) - (ii) =
------------
and where E. is the amount of intangible assets
(up to $20,000 in the aggregate) related
to Acquisitions completed after 10/1/95
and on or before the Revolving
Termination Date.
</TABLE>
__________________________________
1 Add a positive number; subtract a negative number.
C-10
<PAGE> 130
EXHIBIT D
to the First Amended and Restated Credit Agreement
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Assignment and
Acceptance") dated as of __________, 199__ is made between
______________________________ (the "Assignor") and __________________________
(the "Assignee").
RECITALS
WHEREAS, the Assignor is party to that certain First Amended and
Restated Credit Agreement dated as of December __, 1996 (as amended, amended
and restated, modified, supplemented or renewed, the "Credit Agreement") among
California Microwave, Inc., a Delaware corporation (the "Company"), the several
financial institutions from time to time party thereto (including the Assignor,
the "Banks"), and Bank of America National Trust and Savings Association, as
letter of credit issuing bank ("Issuing Bank") and as agent for the Banks (the
"Agent"). Any terms defined in the Credit Agreement and not defined in this
Assignment and Acceptance are used herein as defined in the Credit Agreement;
WHEREAS, as provided under the Credit Agreement, the Assignor has
committed to making Loans (the "Committed Loans") to the Company in an
aggregate amount not to exceed $__________ (the "Commitment");
WHEREAS, [the Assignor has made Committed Loans in the aggregate
principal amount of $__________ to the Company] [no Committed Loans are
outstanding under the Credit Agreement];
WHEREAS, [the Assignor has acquired a participation in the Issuing
Bank's liability under Letters of Credit in an aggregate principal amount of
$____________ (the "L/C Obligations")] [no Letters of Credit are outstanding
under the Credit Agreement]; and
WHEREAS, the Assignor wishes to assign to the Assignee [part of the]
[all] rights and obligations of the Assignor under the Credit Agreement in
respect of its Commitment, [together with a corresponding portion of each of
its outstanding Committed Loans and L/C Obligations,] in an amount equal to
$__________ (the "Assigned Amount") on the terms and subject to the conditions
set forth herein and the Assignee wishes to accept assignment of such rights
and to assume such obligations from the Assignor on such terms and subject to
such conditions;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
D-1
<PAGE> 131
1. Assignment and Acceptance.
(a) Subject to the terms and conditions of this
Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns
to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes
from the Assignor, without recourse and without representation or warranty
(except as provided in this Assignment and Acceptance) __% (the "Assignee's
Percentage Share") of (A) the Commitment [and the Committed Loans and the L/C
Obligations] of the Assignor and (B) all related rights, benefits, obligations,
liabilities and indemnities of the Assignor under and in connection with the
Credit Agreement and the Loan Documents.
[If appropriate, add paragraph specifying payment to Assignor by
Assignee of outstanding principal of, accrued interest on, and fees with
respect to, Committed Loans and L/C Obligations assigned.]
(b) With effect on and after the Effective Date (as
defined in Section 5 hereof), the Assignee shall be a party to the Credit
Agreement and succeed to all of the rights and be obligated to perform all of
the obligations of a Bank under the Credit Agreement, including the
requirements concerning confidentiality and the payment of indemnification,
with a Commitment in an amount equal to the Assigned Amount. The Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Bank. It is the intent of the parties hereto that the
Commitment of the Assignor shall, as of the Effective Date, be reduced by an
amount equal to the Assigned Amount and the Assignor shall relinquish its
rights and be released from its obligations under the Credit Agreement to the
extent such obligations have been assumed by the Assignee; provided, however,
the Assignor shall not relinquish its rights under Sections 11.04 and 11.05 of
the Credit Agreement to the extent such rights relate to the time prior to the
Effective Date.
(c) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignee's Commitment will be
$__________.
(d) After giving effect to the assignment and assumption
set forth herein, on the Effective Date the Assignor's Commitment will be
$__________.
2. Payments.
(a) As consideration for the sale, assignment and
transfer contemplated in Section 1 hereof, the Assignee shall pay to the
Assignor on the Effective Date in immediately available funds an amount equal
to $__________, representing the Assignee's Pro Rata Share of the principal
amount of all Committed Loans.
(b) The [Assignor] [Assignee] further agrees to pay to
the Agent a processing fee in the amount specified in Section 11.08(a) of the
Credit Agreement.
D-2
<PAGE> 132
3. Reallocation of Payments.
Any interest, fees and other payments accrued to the Effective Date
with respect to the Commitment, Committed Loans and L/C Obligations shall be
for the account of the Assignor. Any interest, fees and other payments accrued
on and after the Effective Date with respect to the Assigned Amount shall be
for the account of the Assignee. Each of the Assignor and the Assignee agrees
that it will hold in trust for the other party any interest, fees and other
amounts which it may receive to which the other party is entitled pursuant to
the preceding sentence and pay to the other party any such amounts which it may
receive promptly upon receipt.
4. Independent Credit Decision.
The Assignee (a) acknowledges that it has received a copy of the
Credit Agreement and the Schedules and Exhibits thereto, together with copies
of the most recent financial statements referred to in Section 7.01 of the
Credit Agreement, and such other documents and information as it has deemed
appropriate to make its own credit and legal analysis and decision to enter
into this Assignment and Acceptance; and (b) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Bank and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit and legal decisions in taking or not taking
action under the Credit Agreement.
5. Effective Date; Notices.
(a) As between the Assignor and the Assignee, the
effective date for this Assignment and Acceptance shall be __________, 199__
(the "Effective Date"); provided that the following conditions precedent have
been satisfied on or before the Effective Date:
(i) this Assignment and Acceptance shall be
executed and delivered by the Assignor and the Assignee;
(ii) the consent of the Company, the Issuing Bank
and the Agent to the extent required for an effective assignment of the
Assigned Amount by the Assignor to the Assignee under Section 11.08(a) of the
Credit Agreement shall have been duly obtained and shall be in full force and
effect as of the Effective Date;
(iii) the Assignee shall pay to the Assignor all
amounts due to the Assignor under this Assignment and Acceptance;
(iv) the Assignee shall have complied with Section
10.10 of the Credit Agreement (if applicable);
(v) the processing fee referred to in Section 2(b)
hereof and in Section 11.08(a) of the Credit Agreement shall have been paid to
the Agent; and
D-3
<PAGE> 133
(vi) the Assignor shall have assigned and the
Assignee shall have assumed a percentage equal to the Assignee's Percentage
Share of the rights and obligations of the Assignor under the Credit Agreement
(if such agreement exists).
(b) Promptly following the execution of this Assignment
and Acceptance, the Assignor shall deliver to the Company, the Issuing Bank and
the Agent for acknowledgement by the Agent, a Notice of Assignment
substantially in the form attached hereto as Schedule 1.
6. Agent.
(a) The Assignee hereby appoints and authorizes the
Assignor to take such action as agent on its behalf and to exercise such powers
under the Credit Agreement as are delegated to the Agent by the Banks pursuant
to the terms of the Credit Agreement.
[(b) The Assignee shall assume no duties or obligations
held by the Assignor in its capacity as Agent under the Credit Agreement.]
[INCLUDE ONLY IF ASSIGNOR IS AGENT]
7. Withholding Tax.
The Assignee (a) represents and warrants to the Bank, the Agent and
the Company that under applicable law and treaties no tax will be required to
be withheld by the Bank with respect to any payments to be made to the Assignee
hereunder, (b) agrees to furnish (if it is organized under the laws of any
jurisdiction other than the United States or any State thereof) to the Agent
and the Company prior to the time that the Agent or Company is required to make
any payment of principal, interest or fees hereunder, duplicate executed
originals of either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 (wherein the Assignee claims entitlement to the
benefits of a tax treaty that provides for a complete exemption from U.S.
federal income withholding tax on all payments hereunder) and agrees to provide
new Forms 4224 or 1001 upon the expiration of any previously delivered form or
comparable statements in accordance with applicable U.S. law and regulations
and amendments thereto, duly executed and completed by the Assignee, and (c)
agrees to comply with all applicable U.S. laws and regulations with regard to
such withholding tax exemption.
8. Representations and Warranties.
(a) The Assignor represents and warrants that (i) it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any Lien or other adverse claim;
(ii) it is duly organized and existing and it has the full power and authority
to take, and has taken, all action necessary to execute and deliver this
Assignment and Acceptance and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment and Acceptance
and to fulfill its obligations hereunder; (iii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance, and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; and
D-4
<PAGE> 134
(iv) this Assignment and Acceptance has been duly executed and delivered by it
and constitutes the legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with the terms hereof, subject,
as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and
other laws of general application relating to or affecting creditors' rights
and to general equitable principles.
(b) The Assignor makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto. The Assignor makes no representation or warranty in
connection with, and assumes no responsibility with respect to, the solvency,
financial condition or statements of the Company, or the performance or
observance by the Company, of any of its respective obligations under the
Credit Agreement or any other instrument or document furnished in connection
therewith.
(c) The Assignee represents and warrants that (i) it is
duly organized and existing and it has full power and authority to take, and
has taken, all action necessary to execute and deliver this Assignment and
Acceptance and any other documents required or permitted to be executed or
delivered by it in connection with this Assignment and Acceptance, and to
fulfill its obligations hereunder; (ii) no notices to, or consents,
authorizations or approvals of, any Person are required (other than any already
given or obtained) for its due execution, delivery and performance of this
Assignment and Acceptance; and apart from any agreements or undertakings or
filings required by the Credit Agreement, no further action by, or notice to,
or filing with, any Person is required of it for such execution, delivery or
performance; (iii) this Assignment and Acceptance has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. Further Assurances.
The Assignor and the Assignee each hereby agree to execute and deliver
such other instruments, and take such other action, as either party may
reasonably request in connection with the transactions contemplated by this
Assignment and Acceptance, including the delivery of any notices or other
documents or instruments to the Company or the Agent, which may be required in
connection with the assignment and assumption contemplated hereby.
10. Miscellaneous.
(a) Any amendment or waiver of any provision of this
Assignment and Acceptance shall be in writing and signed by the parties hereto.
No failure or delay by either party hereto in exercising any right, power or
privilege hereunder shall operate as a waiver thereof and any waiver of any
breach of the provisions of this Assignment and Acceptance shall be without
prejudice to any rights with respect to any other or further breach thereof.
D-5
<PAGE> 135
(b) All payments made hereunder shall be made without any
set-off or counterclaim.
(c) The Assignor and the Assignee shall each pay its own
costs and expenses incurred in connection with the negotiation, preparation,
execution and performance of this Assignment and Acceptance.
(d) This Assignment and Acceptance may be executed in any
number of counterparts and all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
(e) THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The
Assignor and the Assignee each irrevocably submits to the non-exclusive
jurisdiction of any State or Federal court sitting in California over any suit,
action or proceeding arising out of or relating to this Assignment and
Acceptance and irrevocably agrees that all claims in respect of such action or
proceeding may be heard and determined in such California State or Federal
court. Each party to this Assignment and Acceptance hereby irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding.
(f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY
RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
OR STATEMENTS (WHETHER ORAL OR WRITTEN).
[Other provisions to be added as may be negotiated between the
Assignor and the Assignee, provided that such provisions are not inconsistent
with the Credit Agreement.]
D-6
<PAGE> 136
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Assignment and Acceptance to be executed and delivered by their duly authorized
officers as of the date first above written.
[ASSIGNOR]
By:
-------------------------------------
Title:
---------------------------------
By:
-------------------------------------
Title:
---------------------------------
Address:
[ASSIGNEE]
By:
-------------------------------------
Title:
---------------------------------
By:
-------------------------------------
Title:
---------------------------------
Address:
D-7
<PAGE> 137
SCHEDULE 1
NOTICE OF ASSIGNMENT AND ACCEPTANCE
_______________, 19__
Bank of America National Trust
and Savings Association, as Agent
1455 Market Street, 12th Floor
San Francisco, CA 94103
Attn: Agency Management Services #5596
[Bank of America National Trust
and Savings Association, as Issuing Bank
International Trade
Banking Division #5655
333 S. Beaudry Ave., 19th Floor
Los Angeles, CA 90017]
[Name and Address of Company]
Ladies and Gentlemen:
We refer to the First Amended and Restated Credit Agreement dated as
of December __, 1996 (as amended, amended and restated, modified, supplemented
or renewed from time to time the "Credit Agreement") among California
Microwave, Inc. (the "Company"), the Banks referred to therein and Bank of
America National Trust and Savings Association, as letter of credit issuing
bank ("Issuing Bank") and as agent for the Banks (the "Agent"). Terms defined
in the Credit Agreement are used herein as therein defined.
1. We hereby give you notice of, and request your consent to, the
assignment by __________________ (the "Assignor") to _______________ (the
"Assignee") of _____% of the right, title and interest of the Assignor in and
to the Credit Agreement (including, without limitation, the right, title and
interest of the Assignor in and to the Commitments of the Assignor[,] [and] all
outstanding Loans made by the Assignor and the Assignor's participation in the
Letters of Credit) pursuant to the Assignment and Acceptance Agreement attached
hereto (the "Assignment and Acceptance"). Before giving effect to such
assignment the Assignor's Commitment is $ ___________[,] [and] the aggregate
amount of its outstanding Loans is $_____________[, and its participation in
L/C Obligations is $_____________].
D-8
<PAGE> 138
2. The Assignee agrees that, upon receiving the consent of the
Agent, the Issuing Bank and, if applicable, California Microwave, Inc. to such
assignment, the Assignee will be bound by the terms of the Credit Agreement as
fully and to the same extent as if the Assignee were the Bank originally
holding such interest in the Credit Agreement.
3. The following administrative details apply to the Assignee:
(A) Notice Address:
Assignee name: ____________________________________
Address: ____________________________________
____________________________________
____________________________________
Attention: ____________________________________
Telephone: (___) ______________________________
Telecopier: (___) ______________________________
Telex (Answerback): ______________________________
(B) Payment Instructions:
Account No.: ______________________________________
At: ______________________________________
______________________________________
______________________________________
Reference: ___________________________________
Attention: ___________________________________
4. You are entitled to rely upon the representations, warranties
and covenants of each of the Assignor and Assignee contained in the Assignment
and Acceptance.
D-9
<PAGE> 139
IN WITNESS WHEREOF, the Assignor and the Assignee have caused this
Notice of Assignment and Acceptance to be executed by their respective duly
authorized officials, officers or agents as of the date first above mentioned.
Very truly yours,
[NAME OF ASSIGNOR]
By:
-------------------------------------
Title:
---------------------------------
By:
-------------------------------------
Title:
---------------------------------
[NAME OF ASSIGNEE]
By:
-------------------------------------
Title:
---------------------------------
By:
-------------------------------------
Title:
---------------------------------
D-10
<PAGE> 140
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
[COMPANY]
By: ______________________________________________
Title: ___________________________________________
By: ______________________________________________
Title: ___________________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: ______________________________________________
Its: _____________________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank
By: ______________________________________________
Its: _____________________________________________
D-11
<PAGE> 141
EXHIBIT E
to the First Amended and Restated Credit Agreement
FORM OF NOTE
$__________________ _____________, 199___
FOR VALUE RECEIVED, the undersigned, California Microwave, Inc., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
_______________________________ (the "Bank"), at the Agent's Payment Office,
the principal sum of ____________________________________ Dollars
($_______________) or, if less, the aggregate unpaid principal amount of all
Loans made by the Bank to the Company pursuant to the First Amended and
Restated Credit Agreement, dated as of December ___, 1996 (such agreement, as
it may be amended, restated, supplemented or otherwise modified from time to
time, being hereinafter called the "Credit Agreement"), among the Company, the
Bank, the other banks parties thereto, Bank of America National Trust and
Savings Association, as Agent for the Banks, on the dates and in the amounts
provided in the Credit Agreement. The Company further promises to pay interest
on the unpaid principal amount of the Loans evidenced hereby from time to time
at the rates, on the dates, and otherwise as provided in the Credit Agreement.
The Bank is authorized to endorse the amount and the date on which
each Loan is made, the maturity date therefor and each payment of principal
with respect thereto on the schedules annexed hereto and made a part hereof, or
on continuations thereof which shall be attached hereto and made a part hereof;
provided, that any failure to endorse such information on such schedule or
continuation thereof shall not in any manner affect any obligation of the
Company under the Credit Agreement and this Promissory Note (the "Note").
This Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement, which Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein
specified.
This Note is secured by certain Collateral more specifically described
in the Credit Agreement and the Collateral Documents.
Terms defined in the Credit Agreement are used herein with their
defined meanings therein unless otherwise defined herein. This Note shall be
governed by, and
E-1
<PAGE> 142
construed and interpreted in accordance with, the laws of the State of
California applicable to contracts made and to be performed entirely within
such State.
CALIFORNIA MICROWAVE, INC.
By:
-------------------------------------
Title:
---------------------------------
By:
-------------------------------------
Title:
---------------------------------
E-2
<PAGE> 143
Schedule A to Note
BASE RATE LOANS
AND REPAYMENT OF BASE RATE LOANS
<TABLE>
<S> <C> <C> <C> <C>
(3) (4)
(2) Maturity Date Amount of Base (5)
(1) Amount of Base of Base Rate Rate Loan Notation Made
Date Rate Loan Loan Repaid By
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
- ----------- -------------- ------------- -------------- -------------
</TABLE>
E-3
<PAGE> 144
Schedule B to Note
OFFSHORE RATE LOANS
AND REPAYMENT OF OFFSHORE RATE LOANS
<TABLE>
<S> <C> <C> <C> <C>
(2) (3) (4)
Amount of Maturity Date Amount of (5)
(1) Offshore Rate of Offshore Offshore Rate Notation Made
Date Loan Rate Loan Loan Repaid By
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
- --------- ------------- ------------- -------------- -------------
</TABLE>
E-4
<PAGE> 145
EXHIBIT F
to the First Amended and Restated Credit Agreement
FACTORING AGREEMENT
See attached.
F-1
<PAGE> 146
EXHIBIT G
to the First Amended and Restated Credit Agreement
NOTICE OF PREPAYMENT
Date: _________________, 199___
Bank of America National Trust and Savings Association ("BofA"), as
Agent (the "Agent") for the financial institutions party to the
First Amended and Restated Credit Agreement, dated as of
December ___, 1996 (as amended, modified or supplemented from
time to time, the "Credit Agreement") among California
Microwave, Inc., BofA, as letter of credit issuing bank, and the
other financial institutions party thereto and the Agent
Ladies and Gentlemen:
The undersigned, California Microwave, Inc., a Delaware corporation (the
"Borrower"), refers to the Credit Agreement (capitalized terms not otherwise
defined herein being used herein as defined in the Credit Agreement), and
hereby gives you notice irrevocably, pursuant to Section 2.06 of the Credit
Agreement, of the prepayment of one or more Loans made under the Credit
Agreement:
1. The aggregate amount of the proposed prepayment is
$_____________.
2. The Business Day of the proposed prepayment is ______________,
199___.
3. The prepayment is with respect to $_____________ of [Offshore
Rate] [Base Rate] Loans which are [Revolving Loans].
[The undersigned hereby irrevocably authorizes the Agent to debit the
amount of the prepayment from the following deposit account maintained by the
Company with BofA: Account #_______________ at ____________________ Branch.]
The undersigned hereby certifies that the following statements are true
and correct on the date hereof, and will be true and correct on the date of the
proposed prepayment, before and after giving effect thereto:
(a) the representations and warranties of the Company and the
Borrower contained in Article VI of the Credit Agreement are true and correct
as though made on and as of the date hereof; and
G-1
<PAGE> 147
(b) no Default or Event of Default exists or shall result from the
proposed prepayment.
CALIFORNIA MICROWAVE, INC.
By:
-------------------------------------
Title:
---------------------------------
G-2
<PAGE> 148
EXHIBIT H
to the Credit Agreement
FORM OF BORROWING BASE CERTIFICATE
Bank of America National Trust and
Savings Association, as Agent
Re: California Microwave, Inc.
Gentlemen:
This Borrowing Base Certificate is made and delivered pursuant
to the First Amended and Restated Credit Agreement dated as of December ___,
1996 (as amended, modified, renewed or extended from time to time, the "Credit
Agreement") among California Microwave, Inc. (the "Borrower"), certain
financial institutions named therein as Banks and Bank of America National
Trust and Savings Association as Agent, and reference is made thereto for full
particulars of the matters described herein. All capitalized terms used in
this Borrowing Base Certificate and not otherwise defined herein shall have the
meanings assigned to them in the Credit Agreement.
I am the treasurer of the Borrower and hereby certify that the
information set forth on Schedule 1 hereto is true, accurate and complete as of
_____________, 19__.
IN WITNESS WHEREOF, the undersigned officer has signed this
Borrowing Base Certificate this ____ day of ______________, 19__.
________________________________________
Treasurer
H-1
<PAGE> 149
SCHEDULE 1
to the Borrowing Base Certificate
Date of Calculation ____________, 199_
A. Eligible Hardware Accounts Receivables
<TABLE>
<S> <C> <C>
1. Aggregate amount of the Borrower's Hardware Accounts Receivables for Accounts
Receivable Debtors made under Borrower's ordinary and usual terms of trade
without retentions $
==========
2. Less ineligible Hardware Accounts Receivables:
----
(a) Hardware Accounts Receivable which are unbilled or for which the Borrower's right
to receive payment has not been fully earned by performance or is contingent upon
the fulfillment of any condition whatsoever or which otherwise do not arise from
a bona fide completed transaction; $
----------
(b) Hardware Accounts Receivable against which there are asserted any defenses,
counterclaims, discounts (other than normal trade discounts granted in the
ordinary course of business) or offsets of any nature whether well-founded or
otherwise, but only to the extent of such defense, counterclaim, discount or
offset; $
----------
(c) Hardware Accounts Receivable that do not comply with all applicable legal
requirements, including all laws, rules, regulations and orders of any
Governmental Authority; $
----------
(d) Hardware Accounts Receivable which represent a prepayment or progress payment or
arising out of the placement of goods on consignment, guaranteed sale or other
arrangement by reason of which the payment by the Account Receivable Debtor may
be conditional or contingent; $
----------
(e) Hardware Accounts Receivable which are not owned by the Borrower free and clear
of all Liens and rights of others (other than the Liens in favor of the Agent or
the Banks); $
----------
(f) Hardware Accounts Receivable in which the Agent shall not have a valid,
enforceable and perfected first priority Lien; $
----------
</TABLE>
H-2
<PAGE> 150
<TABLE>
<S> <C> <C>
(g) Hardware Accounts Receivable owing by any officer, director, employee, agent,
partner, Subsidiary or Affiliate of the Borrower; $
----------
(h) Hardware Accounts Receivable not paid in full within 90 days from the original
date of invoice other than Permitted Accounts Receivable; $
----------
(i) Hardware Accounts Receivable owing by any Account Receivable Debtor who is the
subject of an Insolvency Proceeding; $
----------
(j) Hardware Accounts Receivable which are evidenced by a promissory note or other
instrument; $
----------
(k) Hardware Accounts Receivable with respect to which the terms or conditions
prohibit or restrict assignment or collection rights; $
----------
(l) Hardware Accounts Receivable owing by any Account Receivable Debtor who resides
or who is located in New Jersey, Minnesota or Indiana (or any other state with
any law materially impairing the collectibility or enforceability of accounts
receivable), unless the Borrower has filed a Notice of Business Activities
Report, or taken other appropriate action, with the appropriate office or agency
of the states of New Jersey, Minnesota, Indiana or such other state, as
applicable, for the then current year (except if the Borrower is exempt from such
requirement); $
----------
(m) Hardware Accounts Receivable to the extent that reserves have been created in the
Borrower's accounts in respect of such receivables or otherwise provisions have
been made against such Accounts Receivables; or $
----------
(n) Hardware Accounts Receivable with respect to which the Agent and the Majority
Banks, in their reasonable discretion, deem the creditworthiness or financial
condition of the Account Receivable Debtor to be unsatisfactory or the prospect
of payment or performance to be impaired, and other Hardware Accounts Receivable
which, in the Banks' reasonable discretion, are otherwise ineligible. $
----------
3. Total ineligible Receivables (sum of (a) through (n) of 2) $
==========
4. Total Eligible Receivables (1 minus 3) $
==========
</TABLE>
H-3
<PAGE> 151
<TABLE>
<S> <C> <C>
5. Eligible Receivables Borrowing Base (65% of 4) $
==========
B. Eligible Hardware + Installment/Integration Accounts Receivables
----------------------------------------------------------------
1. Aggregate amount of the Borrower's Hardware + Installment/Integration Accounts
Receivables for Accounts Receivable Debtors made under Borrower's ordinary and
usual terms of trade without retentions $
==========
2. Less ineligible Hardware + Installment/Integration Accounts Receivables:
----
(a) Hardware + Installment/Integration Accounts Receivable which are unbilled or for
which the Borrower's right to receive payment has not been fully earned by
performance or is contingent upon the fulfillment of any condition whatsoever or
which otherwise do not arise from a bona fide completed transaction; $
----------
(b) Hardware + Installment/Integration Accounts Receivable against which there are
asserted any defenses, counterclaims, discounts (other than normal trade
discounts granted in the ordinary course of business) or offsets of any nature
whether well-founded or otherwise, but only to the extent of such defense,
counterclaim, discount or offset; $
----------
(c) Hardware + Installment/Integration Accounts Receivable that do not comply with
all applicable legal requirements, including all laws, rules, regulations and
orders of any Governmental Authority; $
----------
(d) Hardware + Installment/Integration Accounts Receivable which represent a
prepayment or progress payment or arising out of the placement of goods on
consignment, guaranteed sale or other arrangement by reason of which the payment
by the Account Receivable Debtor may be conditional or contingent; $
----------
(e) Hardware + Installment/Integration Accounts Receivable which are not owned by the
Borrower free and clear of all Liens and rights of others (other than the Liens
in favor of the Agent or the Banks); $
----------
</TABLE>
H-4
<PAGE> 152
<TABLE>
<S> <C> <C>
(f) Hardware + Installment/Integration Accounts Receivable in which the Agent shall
not have a valid, enforceable and perfected first priority Lien; $
----------
(g) Hardware + Installment/Integration Accounts Receivable owing by any officer,
director, employee, agent, partner, Subsidiary or Affiliate of the Borrower; $
----------
(h) Hardware + Installment/Integration Accounts Receivable not paid in full within 90
days from the original date of invoice other than Permitted Accounts Receivable; $
----------
(i) Hardware + Installment/Integration Accounts Receivable owing by any Account
Receivable Debtor who is the subject of an Insolvency Proceeding; $
----------
(j) Hardware + Installment/Integration Accounts Receivable which are evidenced by a
promissory note or other instrument; $
----------
(k) Hardware + Installment/Integration Accounts Receivable with respect to which the
terms or conditions prohibit or restrict assignment or collection rights; $
----------
(l) Hardware + Installment/Integration Accounts Receivable owing by any Account
Receivable Debtor who resides or who is located in New Jersey, Minnesota or
Indiana (or any other state with any law materially impairing the collectibility
or enforceability of accounts receivable), unless the Borrower has filed a Notice
of Business Activities Report, or taken other appropriate action, with the
appropriate office or agency of the states of New Jersey, Minnesota, Indiana or
such other state, as applicable, for the then current year (except if the
Borrower is exempt from such requirement); $
----------
(m) Hardware + Installment/Integration Accounts Receivable to the extent that
reserves have been created in the Borrower's accounts in respect of such
receivables or otherwise provisions have been made against such Accounts
Receivables; or $
----------
(n) Hardware + Installment/Integration Accounts Receivable with respect to which the
Agent and the Majority Banks, in their reasonable discretion, deem the
creditworthiness or financial condition of the Account Receivable Debtor to be
</TABLE>
H-5
<PAGE> 153
<TABLE>
<S> <C>
unsatisfactory or the prospect of payment or performance to be impaired, and other Hardware and
Installment/Integration Accounts Receivable which, in the Banks' reasonable discretion, are
otherwise ineligible. $
----------
3. Total ineligible Receivables (sum of (a) through (n) of 2) $
==========
4. Total Eligible Receivables (1 minus 3) $
==========
5. Eligible Receivables Borrowing Base (55% of 4) $
==========
C. Eligible Government Accounts Receivables
----------------------------------------
1. Aggregate amount of the Borrower's Government Accounts Receivables for Accounts
Receivable Debtors made under Borrower's ordinary and usual terms of trade
without retentions $
==========
2. Less ineligible Government Accounts Receivables:
(a) Government Accounts Receivable which are unbilled or for which the Borrower's
right to receive payment has not been fully earned by performance or is
contingent upon the fulfillment of any condition whatsoever or which otherwise do
not arise from a bona fide completed transaction; $
----------
(b) Government Accounts Receivable against which there are asserted any defenses,
counterclaims, discounts (other than normal trade discounts granted in the
ordinary course of business) or offsets of any nature whether well-founded or
otherwise, but only to the extent of such defense, counterclaim, discount or
offset; $
----------
(c) Government Accounts Receivable that do not comply with all applicable legal
requirements, including all laws, rules, regulations and orders of any
Governmental Authority; $
----------
(d) Government Accounts Receivable which represent a prepayment or progress payment
or arising out of the placement of goods on consignment, guaranteed sale or other
arrangement by reason of which the payment by the Account Receivable Debtor may
be conditional or contingent; $
----------
</TABLE>
H-6
<PAGE> 154
<TABLE>
<S> <C> <C>
(e) Government Accounts Receivable which are not owned by the Borrower free and clear
of all Liens and rights of others (other than the Liens in favor of the Agent or
the Banks); $
----------
(f) Government Accounts Receivable in which the Agent shall not have a valid,
enforceable and perfected first priority Lien; $
----------
(g) Government Accounts Receivable owing by any officer, director, employee, agent,
partner, Subsidiary or Affiliate of the Borrower; $
----------
(h) Government Accounts Receivable not paid in full within 90 days from the original
date of invoice other than Permitted Accounts Receivable; $
----------
(i) Government Accounts Receivable owing by any Account Receivable Debtor who is the
subject of an Insolvency Proceeding; $
----------
(j) Government Accounts Receivable which are evidenced by a promissory note or other
instrument; $
----------
(k) Government Accounts Receivable with respect to which the terms or conditions
prohibit or restrict assignment or collection rights; $
----------
(l) Government Accounts Receivable owing by any Account Receivable Debtor who resides
or who is located in New Jersey, Minnesota or Indiana (or any other state with
any law materially impairing the collectibility or enforceability of accounts
receivable), unless the Borrower has filed a Notice of Business Activities
Report, or taken other appropriate action, with the appropriate office or agency
of the states of New Jersey, Minnesota, Indiana or such other state, as
applicable, for the then current year (except if the Borrower is exempt from such
requirement); $
----------
(m) Government Accounts Receivable to the extent that reserves have been created in
the Borrower's accounts in respect of such receivables or otherwise provisions
have been made against such Accounts Receivables; or $
----------
(n) Government Accounts Receivable with respect to which the Agent and the Majority
Banks, in their reasonable
</TABLE>
H-7
<PAGE> 155
<TABLE>
<S> <C>
discretion, deem the creditworthiness or financial condition of the Account Receivable Debtor to
be unsatisfactory or the prospect of payment or performance to be impaired, and other Government
Accounts Receivable which, in the Banks' reasonable discretion, are
otherwise ineligible
$
----------
3. Total ineligible Receivables (sum of (a) through (n) of 2) $
==========
4. Total Eligible Receivables (1 minus 3) $
==========
5. Eligible Receivables Borrowing Base (55% of 4) $
==========
D. Aggregate Borrowing Base and Availability
-----------------------------------------
1. Sum of A.5, B.5 and C.5 $
==========
2. Amount equal to 15% of the total available
program amount of the ABN AMRO
Accounts Receivable Facility $
==========
3. Aggregate Borrowing Base (1 minus 2) $
==========
4. Effective Amount of outstanding Revolving Loans $
==========
5. Effective Amount of outstanding L/C Obligations $
==========
6. Sum of 4 and 5 $
==========
7. Combined Commitments $
==========
8. Aggregate principal Amount of Revolving Loans or Letters of Credit available
for borrowing or issue respectively (lesser of (i) 3 minus 6 or (ii) 7 minus 6) $
==========
9. Aggregate principal Amount of Revolving Loans or L/C Obligations to be prepaid
or cash collateralized (as appropriate) (if 3 is less than 6, or 7 is less
than 6)
$
==========
</TABLE>
H-8
<PAGE> 156
EXHIBIT I
to the Credit Agreement
FORM OF GUARANTY
THIS GUARANTY (this "Guaranty"), dated as of December 31, 1996,
is made by [EF Data Corporation] [California Microwave Navigation Systems,
Inc.], [a California] [a Delaware] corporation (the "Guarantor"), in favor of
the Banks referred to in the Credit Agreement described below and Bank of
America National Trust and Savings Association, as agent for the Banks (in such
capacity, the "Agent").
WHEREAS:
E. The parent company of the Guarantor, California Microwave, Inc.,
a Delaware corporation (the "Borrower"), the Banks (as lenders and, as
appropriate, issuer of certain letters of credit for the account of the
Borrower) and the Agent are parties to that certain First Amended and Restated
Credit Agreement dated as even date herewith (as amended, modified, renewed or
extended from time to time, the "Credit Agreement").
F. It is a condition precedent to the borrowings and issuances of
letters of credit under the Credit Agreement that the Guarantor guarantee the
indebtedness and other obligations of the Borrower to the Agent and the Banks
under or in connection with the Credit Agreement as set forth herein.
G. The Guarantor, as the [wholly] [87%] owned subsidiary of the
Borrower, will derive substantial direct and indirect benefits from the making
of the loans to the Borrower and the issuances of letters of credit pursuant to
the Credit Agreement (which benefits are hereby acknowledged by the Guarantor).
H. Accordingly, to induce the Agent and the Banks to make such
loans and to issue the letters of credit, and in consideration thereof, the
Guarantor hereby agrees as follows:
SECTION 1 Definitions; Interpretation.
(a) Terms Defined in Credit Agreement. All capitalized
terms used in this Guaranty (including in the recitals hereof) and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement.
(b) UCC shall mean the Uniform Commercial Code as the same
may, from time to time, be in effect in the State of California; provided,
however, in the event that, by reason of mandatory provisions of law, any or
all of the attachment, perfection or priority of the security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of California, the term "UCC" shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions
I-1
<PAGE> 157
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(c) Accounting Terms. Unless the context otherwise
requires, all accounting terms not expressly defined herein shall be construed
and all financial computations required under this Guaranty made, in accordance
with GAAP, consistently applied.
(d) Interpretation. The rules of interpretation set forth
in Section 1.02 of the Credit Agreement shall be applicable to this Guaranty
and are incorporated herein by this reference.
SECTION 2 Guaranty.
(a) Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees to the Agent and the Banks, and their respective
successors, endorsees, transferees and assigns, the full and prompt payment and
performance when due (whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise) of the Obligations; including,
without limitation, all unpaid principal of the Loans, all unpaid L/C
Obligations, all interest and fees accrued thereon, and all other amounts
payable by the Borrower to the Agent and the Banks thereunder or in connection
therewith. "Obligations" is used herein in its most comprehensive sense and
includes any and all Obligations now existing or hereafter arising, whether
voluntary or involuntary and whether due or not due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, and whether recovery
upon such indebtedness, liabilities and obligations may be or hereafter become
unenforceable or shall be an allowed or disallowed claim under the Bankruptcy
Code or other applicable law. The foregoing indebtedness, liabilities and
other obligations of the Borrower, and all other indebtedness, liabilities and
obligations to be paid or performed by the Guarantor in connection with this
Guaranty (including any and all amounts due under Section 16), shall
hereinafter be collectively referred to as the "Guaranteed Obligations."
(b) Limitation of Guaranty. To the extent that any court
of competent jurisdiction shall impose by final judgment under applicable law
(including the California Uniform Fraudulent Transfer Act and Section Section
544 and 548 of the Bankruptcy Code) any limitations on the amount of the
Guarantor's liability with respect to the Guaranteed Obligations which the
Agent or the Banks can enforce under this Guaranty, the Agent and the Banks by
their acceptance hereof accept such limitation on the amount of the Guarantor's
liability hereunder to the extent needed to make this Guaranty and the
Guarantor Documents fully enforceable and nonavoidable.
SECTION 3 Liability of Guarantor. The liability of the
Guarantor under this Guaranty shall be irrevocable, absolute, independent and
unconditional, and shall not be affected by any circumstance which might
constitute a discharge of a surety or guarantor other than the indefeasible
payment and performance in full of all Guaranteed Obligations. In furtherance
of the foregoing and without limiting the generality thereof, the Guarantor
agrees as follows:
I-2
<PAGE> 158
(i) the Guarantor's liability hereunder shall be the immediate,
direct, and primary obligation of the Guarantor and shall not be contingent
upon the Agent's or any Bank's exercise or enforcement of any remedy it may
have against the Borrower or any other Person, or against any Collateral or
other security for any Guaranteed Obligations;
(ii) this Guaranty is a guaranty of payment when due and not
merely of collectibility;
(iii) the Agent and the Banks may enforce this Guaranty upon
the occurrence of a Default notwithstanding the existence of any dispute among
the Agent, the Banks and the Borrower with respect to the existence of such
Default;
(iv) the Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge the
Guarantor's liability for any portion of the Guaranteed Obligations remaining
unsatisfied; and
(v) the Guarantor's liability with respect to the Guaranteed
Obligations shall remain in full force and effect without regard to, and shall
not be impaired or affected by, nor shall the Guarantor be exonerated or
discharged by, any of the following events:
(A) any insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition, assignment for the benefit of creditors,
liquidation, winding up or dissolution of the Borrower, the Guarantor, any
other Subsidiary of the Borrower or other guarantor or any other Person;
(B) any limitation, discharge, or cessation of the
liability of the Borrower, the Guarantor, any other Subsidiary of the Borrower
or other guarantor or any other Person for any Guaranteed Obligations due to
any statute, regulation or rule of law, or any invalidity or unenforceability
in whole or in part of any of the Guaranteed Obligations or the Loan Documents;
(C) any merger, acquisition, consolidation or change
in structure of the Borrower, the Guarantor, any other Subsidiary of the
Borrower or other guarantor or Person, or any sale, lease, transfer or other
disposition of any or all of the assets or shares of the Borrower, the
Guarantor, any other guarantor or other Person;
(D) any assignment or other transfer, in whole or in
part, of the Agent's or any Bank's interests in and rights under this Guaranty
or the other Loan Documents, including the Agent's or any Bank's right to
receive payment of the Guaranteed Obligations, or any assignment or other
transfer, in whole or in part, of the Agent's or any Bank's interests in and to
any of the Collateral or other collateral securing the Guaranteed Obligations;
(E) any claim, defense, counterclaim or setoff,
other than that of prior performance, that the Borrower, the Guarantor, any
other guarantor or other Person may have or assert, including any defense of
incapacity or lack of corporate or other authority to execute any of the Loan
Documents;
I-3
<PAGE> 159
(F) the Agent's or any Bank's amendment,
modification, renewal, extension, cancellation or surrender of any Loan
Document, any Guaranteed Obligations, any Collateral or other collateral
securing the Guaranteed Obligations, or the Agent's or any Bank's exchange,
release, or waiver of any Collateral or of any other collateral securing the
Guaranteed Obligations;
(G) the Agent's or any Bank's exercise or
nonexercise of any power, right or remedy with respect to any of the
Collateral, or any other collateral securing any of the Guaranteed Obligations,
including the Agent's or any Bank's compromise, release, settlement or waiver
with or of the Borrower, the Guarantor, any other guarantor or any other
Person;
(H) the Agent's or any Bank's vote, claim,
distribution, election, acceptance, action or inaction in any bankruptcy case
related to the Guaranteed Obligations;
(I) any impairment or invalidity of any of the
Collateral or any other collateral securing any of the Guaranteed Obligations
or any failure to perfect any of the Liens of the Agent and the Banks thereon
or therein; and
(J) any other guaranty, whether by the Guarantor or
any other Person, of all or any part of the Guaranteed Obligations or any other
indebtedness, obligations or liabilities of the Borrower to the Agent or the
Banks.
SECTION 4 Consents of Guarantor. The Guarantor hereby
unconditionally consents and agrees that, without notice to or further assent
from the Guarantor:
(i) the principal amount of the Guaranteed Obligations may be
increased or decreased and additional indebtedness or obligations of the
Borrower under the Loan Documents may be incurred, by one or more amendments,
modifications, renewals or extensions of any Loan Document or otherwise;
(ii) the time, manner, place or terms of any payment under any
Loan Document may be extended or changed, including by an increase or decrease
in the interest rate on any Guaranteed Obligation or any fee or other amount
payable under such Loan Document, by an amendment, modification or renewal of
any Loan Document or otherwise;
(iii) the time for the Borrower's (or any other Person's)
performance of or compliance with any term, covenant or agreement on its part
to be performed or observed under any Loan Document may be extended, or such
performance or compliance waived, or failure in or departure from such
performance or compliance consented to, all in such manner and upon such terms
as the Agent and the Banks may deem proper;
(iv) the Agent or the Banks may discharge or release, in whole
or in part, any other guarantor or any other Person liable for the payment and
performance of all or any part of the Guaranteed Obligations, and may permit or
consent to any such action or any result of such action, and shall not be
obligated to demand or enforce payment upon any of the
I-4
<PAGE> 160
Collateral or any other collateral, nor shall the Agent or the Banks be liable
to the Guarantor for any failure to collect or enforce payment or performance
of the Guaranteed Obligations from any Person or to realize on the Collateral
or other collateral therefor;
(v) in addition to the Collateral, the Agent and the Banks may
take and hold other security (legal or equitable) of any kind, at any time, as
collateral for the Guaranteed Obligations, and may, from time to time, in whole
or in part, exchange, sell, surrender, release, subordinate, modify, waive,
rescind, compromise or extend such security and may permit or consent to any
such action or the result of any such action, and may apply such security and
direct the order or manner of sale thereof;
(vi) the Agent and the Banks may request and accept other
guaranties of the Guaranteed Obligations and any other indebtedness,
obligations or liabilities of the Borrower to the Agent or the Banks and may,
from time to time, in whole or in part, surrender, release, subordinate,
modify, waive, rescind, compromise or extend any such guaranty and may permit
or consent to any such action or the result of any such action; and
(vii) the Agent and the Banks may exercise, or waive or
otherwise refrain from exercising, any other right, remedy, power or privilege
(including the right to accelerate the maturity of any Loan and any power of
sale) granted by any Loan Document or other security document or agreement, or
otherwise available to the Agent and the Banks, with respect to the Guaranteed
Obligations, any of the Collateral or other security for any or all of the
Guaranteed Obligations, even if the exercise of such right, remedy, power or
privilege affects or eliminates any right of subrogation or any other right of
the Guarantor against the Borrower;
all as the Agent and the Banks may deem advisable, and all without impairing,
abridging, releasing or affecting this Guaranty.
SECTION 5 Guarantor's Waivers.
(a) Certain Waivers. The Guarantor waives and agrees not
to assert:
(i) any right to require the Agent or any Bank to marshal
assets in favor of the Borrower, the Guarantor, any other guarantor or any
other Person, to proceed against the Borrower, any other guarantor or any other
Person, to proceed against or exhaust any of the Collateral or any other
security held for the Guaranteed Obligations, to give notice of the terms, time
and place of any public or private sale of personal property security
constituting the Collateral or other collateral for the Guaranteed Obligations
or comply with any other provisions of Section 9504 of the UCC (or any
equivalent provision of any other applicable law) or to pursue any other right,
remedy, power or privilege of the Agent or any Bank whatsoever;
(ii) the defense of the statute of limitations in any action
hereunder or for the collection or performance of the Guaranteed Obligations;
(iii) any defense arising by reason of any lack of corporate or
other authority or any other defense of the Borrower, the Guarantor or any
other Person;
I-5
<PAGE> 161
(iv) any defense based upon the Agent's or any Bank's errors or
omissions in the administration of the Guaranteed Obligations;
(v) any rights to set-offs and counterclaims;
(vi) any defense based upon an election of remedies (including,
if available, an election to proceed by nonjudicial foreclosure) which destroys
or impairs the subrogation rights of the Guarantor or the right of the
Guarantor to proceed against the Borrower or any other obligor of the
Guaranteed Obligations for reimbursement; and
(vii) without limiting the generality of the foregoing, to the
fullest extent permitted by law, any defenses or benefits that may be derived
from or afforded by applicable law limiting the liability of or exonerating
guarantors or sureties, or which may conflict with the terms of this Guaranty,
including any and all benefits that otherwise might be available to the
Guarantor under California Civil Code Section Section 1432, 2809, 2810, 2815,
2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and California Code of Civil
Procedure Section Section 580a, 580b, 580d and 726 (or equivalent provisions
under the laws of any other relevant jurisdiction).
(b) Additional Waivers. The Guarantor waives any and all
notice of the acceptance of this Guaranty, and any and all notice of the
creation, renewal, modification, extension or accrual of the Guaranteed
Obligations, or the reliance by the Agent, and the Banks upon this Guaranty, or
the exercise of any right, power or privilege hereunder. The Guaranteed
Obligations shall conclusively be deemed to have been created, contracted,
incurred and permitted to exist in reliance upon this Guaranty. The Guarantor
waives promptness, diligence, presentment, protest, demand for payment, notice
of default, dishonor or nonpayment and all other notices to or upon the
Borrower, the Guarantor or any other Person with respect to the Guaranteed
Obligations.
(c) Independent Obligations. The obligations of the
Guarantor hereunder are independent of and separate from the obligations of the
Borrower and any other guarantor and upon the occurrence and during the
continuance of any Event of Default, a separate action or actions may be
brought against the Guarantor, whether or not the Borrower or any such other
guarantor is joined therein or a separate action or actions are brought against
the Borrower or any such other guarantor.
(d) Financial Condition of Borrower. The Guarantor shall
not have any right to require the Agent or the Banks to obtain or disclose any
information with respect to: (i) the financial condition or character of the
Borrower or the ability of the Borrower to pay and perform the Guaranteed
Obligations; (ii) the Guaranteed Obligations; (iii) the Collateral or other
security for any or all of the Guaranteed Obligations; (iv) the existence or
nonexistence of any other guarantees of all or any part of the Guaranteed
Obligations; (v) any action or inaction on the part of the Agent or the Banks
or any other Person; or (vi) any other matter, fact or occurrence whatsoever.
I-6
<PAGE> 162
SECTION 6 Subrogation.
The Guarantor shall not have, and shall not directly or
indirectly exercise, (i) any rights that it may acquire by way of subrogation
under this Guaranty, by any payment hereunder or otherwise, (ii) any rights of
contribution, indemnification, reimbursement or similar suretyship claims
arising out of this Guaranty, or (iii) any other right which it might otherwise
have or acquire (in any way whatsoever) which could entitle it at any time to
share or participate in any right, remedy or security of the Banks or the Agent
as against the Borrower or other guarantors, whether in connection with this
Guaranty, any of the other Loan Documents or otherwise. If any amount shall be
paid to the Guarantor on account of the foregoing rights at any time when all
the Guaranteed Obligations shall not have been paid in full, such amount shall
be held in trust for the benefit of the Agent and the Banks and shall forthwith
be paid to the Agent to be credited and applied to the Guaranteed Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.
SECTION 7 Subordination.
(a) Subordination to Payment of Guaranteed Obligations.
All payments on account of all indebtedness, liabilities and other obligations
of the Borrower to the Guarantor, whether created under, arising out of or in
connection with any documents or instruments evidencing any credit extensions
to Borrower or otherwise, including all principal on any such credit
extensions, all interest accrued thereon, all fees and all other amounts
payable by the Borrower to the Guarantor under or in connection therewith,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or undetermined
(the "Subordinated Debt") shall be subject, subordinate and junior in right of
payment and exercise of remedies, to the extent and in the manner set forth
herein, to the prior payment in full in cash or cash equivalents of the
Guaranteed Obligations.
(b) No Payments. As long as any of the Guaranteed
Obligations shall remain outstanding and unpaid, the Guarantor shall not accept
or receive any payment or distribution by or on behalf of the Borrower,
directly or indirectly, of assets of the Borrower of any kind or character,
whether in cash, property or securities, including on account of the purchase,
redemption or other acquisition of Subordinated Debt, as a result of any
collection, sale or other disposition of collateral, or by setoff, exchange or
in any other manner, for or on account of the Subordinated Debt ("Subordinated
Debt Payments"), except that prior to the occurrence of any Event of Default,
the Guarantor shall be entitled to accept and receive regularly scheduled
payments on the Subordinated Debt, in accordance with the terms of the
documents and instruments governing the Subordinated Debt. In the event that,
notwithstanding the provisions of this Section 7, any Subordinated Debt
Payments shall be received in contravention of this Section 7 by the Guarantor
before all Guaranteed Obligations are paid in full in cash or cash equivalents,
such Subordinated Debt Payments shall be held in trust for the benefit of the
Agent and the Banks and shall be paid over or delivered to the Agent for
application to the payment in full in cash or cash equivalents of all
Guaranteed Obligations remaining unpaid to the extent necessary to give effect
to this Section 7, after giving effect to
I-7
<PAGE> 163
any concurrent payments or distributions to the Agent, and the Banks in respect
of the Guaranteed Obligations.
(c) Subordination of Remedies. As long as any Guaranteed
Obligations shall remain outstanding and unpaid, the Guarantor shall not,
without the prior written consent of the Agent:
(i) accelerate, make demand or otherwise make due and payable
prior to the original stated maturity thereof any Subordinated Debt or bring
suit or institute any other actions or proceedings to enforce its rights or
interests under or in respect of the Subordinated Debt;
(ii) exercise any rights under or with respect to (A) any
guaranties of the Subordinated Debt, or (B) any collateral held by it,
including causing or compelling the pledge or delivery of any collateral, any
attachment of, levy upon, execution against, foreclosure upon or the taking of
other action against or institution of other proceedings with respect to any
collateral held by it, notifying any account debtors of the Borrower or
asserting any claim or interest in any insurance with respect to any
collateral, or attempt to do any of the foregoing;
(iii) exercise any rights to set-offs and counterclaims in
respect of any indebtedness, liabilities or obligations of the Guarantor to the
Borrower against any of the Subordinated Debt; or
(iv) commence, or cause to be commenced, or join with any
creditor other than the Agent and the Banks in commencing, any bankruptcy,
insolvency or receivership proceeding against the Borrower.
(d) Subordination Upon Any Distribution of Assets of the
Borrower. In the event of any payment or distribution of assets of the Borrower
of any kind or character, whether in cash, property or securities, upon the
dissolution, winding up or total or partial liquidation or reorganization,
readjustment, arrangement or similar proceeding relating to the Borrower or its
property, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership, arrangement or similar proceedings or upon an assignment for the
benefit of creditors, or upon any other marshalling or composition of the
assets and liabilities of the Borrower, or otherwise (i) all amounts owing on
account of the Guaranteed Obligations, including all interest accrued thereon
at the contract rate both before and after the initiation of any such
proceeding, whether or not an allowed claim in any such proceeding, shall first
be paid in full in cash, or payment provided for in cash or in cash
equivalents, before any Subordinated Debt Payment is made; and (ii) to the
extent permitted by applicable law, any Subordinated Debt Payment to which the
Guarantor would be entitled except for the provisions hereof, shall be paid or
delivered by the trustee in bankruptcy, receiver, assignee for the benefit of
creditors or other liquidating agent making such payment or distribution
directly to the Agent (on behalf of the Banks) for application to
the payment of the Guaranteed Obligations in accordance with clause (i), after
giving effect to any concurrent payment or
I-8
<PAGE> 164
distribution or provision therefor to the Agent or the Banks in respect of such
Guaranteed Obligations.
(e) Authorization to Agent. If, while any Subordinated
Debt is outstanding, any bankruptcy, insolvency, reorganization, receivership,
arrangement, marshalling of assets and liabilities or similar proceeding is
commenced by or against the Borrower or its property:
(i) the Agent, when so instructed by the Majority Banks, is
hereby irrevocably authorized and empowered (in the name of the Banks or in the
name of the Guarantor or otherwise), but shall have no obligation, to demand,
sue for, collect and receive every payment or distribution in respect of the
Subordinated Debt and give acquittance therefor and to file claims and proofs
of claim and take such other action (including voting the Subordinated Debt) as
it may deem necessary or advisable for the exercise or enforcement of any of
the rights or interests of the Agent and the Banks; and
(ii) the Guarantor shall promptly take such action as the Agent
(on instruction from the Majority Banks) may reasonably request (A) to collect
the Subordinated Debt for the account of the Banks and to file appropriate
claims or proofs of claim in respect of the Subordinated Debt, (B) to execute
and deliver to the Agent, such powers of attorney, assignments and other
instruments as it may request to enable it to enforce any and all claims with
respect to the Subordinated Debt, and (C) to collect and receive any and all
Subordinated Debt Payments.
SECTION 8 Continuing Guaranty; Reinstatement.
(a) Continuing Guaranty. This Guaranty is a continuing
guaranty and agreement of subordination and shall continue in effect and be
binding upon the Guarantor until termination of the Commitments and payment and
performance in full of the Guaranteed Obligations.
(b) Reinstatement. This Guaranty shall continue to be
effective or shall be reinstated and revived, as the case may be, if, for any
reason, any payment of the Guaranteed Obligations by or on behalf of the
Borrower (or receipt of any proceeds of Collateral) shall be rescinded,
invalidated, declared to be fraudulent or preferential, set aside, voided or
otherwise required to be repaid to the Borrower, its estate, trustee, receiver
or any other Person (including under the Bankruptcy Code or other state or
federal law), or must otherwise be restored by the Agent or any Bank, whether
as a result of proceedings in bankruptcy or reorganization or otherwise. To
the extent any payment is so rescinded, set aside, voided or otherwise repaid
or restored, the Guaranteed Obligations shall be revived in full force and
effect without reduction or discharge for such payment. All losses, damages,
costs and expenses that the Agent or the Banks may suffer or incur as a result
of any voided or otherwise set aside payments shall be specifically covered by
the indemnity in favor of the Banks and the Agent contained in Section 16.
I-9
<PAGE> 165
SECTION 9 Payments. The Guarantor hereby agrees, in
furtherance of the foregoing provisions of this Guaranty and not in limitation
of any other right which the Agent or any Bank or any other Person may have
against the Guarantor by virtue hereof, upon the failure of the Borrower to pay
or perform any of the Guaranteed Obligations when and as the same shall become
due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), the Guarantor shall forthwith pay, or cause to be paid, in cash, to the
Agent an amount equal to the amount of the Guaranteed Obligations then due as
aforesaid (including interest which, but for the filing of a petition in
bankruptcy with respect to the Borrower, would have accrued on such Guaranteed
Obligations, whether or not a claim is allowed against the Borrower for such
interest in any such bankruptcy proceeding). The Guarantor shall make each
payment hereunder, unconditionally in full without set-off, counterclaim or
other defense, or deduction for any Taxes, on the day when due in Dollars and
in same day or immediately available funds, to the Agent at the Agent's Payment
Office. All such payments shall be promptly applied from time to time by the
Agent (i) first, to the payment of any fees, costs, expenses and other amounts
due from the Guarantor to the Agent hereunder and under the other Loan
Documents to which the Guarantor is party, and (ii) second, to the payment of
the other Guaranteed Obligations in such order of application as the Agent and
the Majority Banks in their sole discretion may choose.
SECTION 10 Representations and Warranties. The Guarantor
represents and warrants to the Agent and each Bank that:
(a) Organization and Powers. The Guarantor is a
corporation duly organized, validly existing and in good standing under the law
of the jurisdiction of its incorporation, is qualified and licensed to do
business and is in good standing in each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires such
qualification or license or approval and has all requisite power and authority
and all governmental licenses, authorizations, consents and approvals to own
its assets and carry on its business and to execute, deliver and perform its
obligations under this Guaranty and the other Loan Document to which it is
party.
(b) Authorization; No Conflict. The execution, delivery
and performance by the Guarantor of this Guaranty and the other Loan Document
to which it is party have been duly authorized by all necessary corporate
action of the Guarantor, and do not and will not: (i) contravene the terms of
the certificate or articles, as the case may be, of incorporation and the
bylaws of the Guarantor or result in a breach of or constitute a default, or
result in the creation of a Lien under any document evidencing any Contractual
Obligation to which the Guarantor is a party or by which it or its properties
may be bound or affected; or (ii) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree or the like binding on or
affecting the Guarantor.
(c) Binding Obligation. This Guaranty and the other Loan
Documents to which it is party constitute, or when delivered under the Credit
Agreement will constitute, the legal, valid and binding obligations of the
Guarantor, enforceable against the Guarantor in
I-10
<PAGE> 166
accordance with their respective terms except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
(d) Governmental Consents. No authorization, consent,
approval, license, exemption of, or filing or registration with, any
Governmental Authority, or approval or consent of any other Person, is required
for the due execution, delivery or performance by the Guarantor of this
Guaranty and the other Loan Document to which it is party.
(e) No Prior Assignment. The Guarantor has not previously
assigned any interest in the Subordinated Debt referred to in Section 7 or any
collateral relating thereto, no Person other than the Guarantor owns an
interest in the Subordinated Debt or any such collateral (whether as joint
holders of the Subordinated Debt, participants or otherwise), and the entire
Subordinated Debt is owing only to the Guarantor.
(f) Solvency. Immediately prior to and after and giving
effect to the incurrence of the Guarantor's obligations under this Guaranty the
Guarantor will be Solvent.
(g) Consideration. The Guarantor has received at least
"reasonably equivalent value" (as such phrase is used in Section 548 of the
Bankruptcy Code, in Section 3439.04 of the California Uniform Fraudulent
Transfer Act and in comparable provisions of other applicable law) and more
than sufficient consideration to support its obligations hereunder in respect
of the Guaranteed Obligations and under any of the Collateral Documents to
which it is a party.
(h) Independent Investigation. The Guarantor hereby
acknowledges that it has undertaken its own independent investigation of the
financial condition of the Borrower and all other matters pertaining to this
Guaranty and further acknowledges that it is not relying in any manner upon any
representation or statement of the Agent or any Bank with respect thereto. The
Guarantor represents and warrants that it has received and reviewed copies of
the Loan Documents and that it is in a position to obtain, and it hereby
assumes full responsibility for obtaining, any additional information
concerning the financial condition of the Borrower and any other matters
pertinent hereto that the Guarantor may desire. The Guarantor is not relying
upon or expecting the Agent or any Bank to furnish to the Guarantor any
information now or hereafter in the Agent's or any such Bank's possession
concerning the financial condition of the Borrower or any other matter.
(i) Litigation. There are no actions, suits proceedings,
claims or disputes or other contingent liabilities pending, or to the best of
the knowledge of the Guarantor, threatened or contemplated at law, in equity,
in arbitration or before any Governmental Authority, against the Guarantor or
its properties which if determined adversely would reasonably be expected to
have a material adverse effect on the operations, business, properties or
condition (financial or otherwise) or prospects of the Guarantor.
I-11
<PAGE> 167
SECTION 11 Reporting Covenants. So long as any Guaranteed
Obligations shall remain unsatisfied or any Bank shall have any Commitment, the
Guarantor agrees that it will furnish to the Agent in sufficient copies for
distribution to the Banks:
(a) Additional Information. The Guarantor will furnish to
the Agent: (i) prompt written notice of any condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; and (ii) such other information respecting the operations, properties,
business or condition (financial or otherwise) of the Guarantor or its
Subsidiaries as any Bank (through the Agent) may from time to time reasonably
request.
SECTION 12 Additional Affirmative Covenants. So long as any
Guaranteed Obligations shall remain unsatisfied or any Bank shall have any
Commitment, the Guarantor agrees that:
(a) Preservation of Existence, Etc. The Guarantor will,
and will cause each of its Subsidiaries to, maintain and preserve its corporate
existence, its rights to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its business and
operations and the ownership of its properties.
(b) Foreign Collateral. Upon or before the date eight
months after the Closing Date the Guarantor shall provide: (i) Foreign
Security Agreements duly executed and delivered by the Guarantor, granting a
first priority perfected security and interest in the Foreign Collateral; and
(ii) legal opinions relating to the Foreign Security Agreements of legal
counsel, acceptable to the Agent and the Banks, in such of the jurisdictions
where Foreign Collateral is located as the Agent and the Banks may designate
and in a form and substance satisfactory to the Agent and the Banks.
(c) Further Assurances and Additional Acts. The Guarantor
will execute, acknowledge, deliver, file, notarize and register at its own
expense all such further agreements, instruments, certificates, documents and
assurances and perform such acts as the Agent or the Majority Banks shall deem
necessary or appropriate to effectuate the purposes of this Guaranty and the
other Loan Documents to which the Guarantor is a party, and promptly provide
the Agent with evidence of the foregoing satisfactory in form and substance to
the Agent and the Majority Banks.
(d) Credit Agreement Covenants. The Guarantor will
observe, perform and comply with all covenants applicable to the Guarantor set
forth in Articles VII and VIII of the Credit Agreement, which by their terms
the Borrower is required to cause the Guarantor to observe, perform and comply
with, as if such covenants were set forth in full herein.
SECTION 13 Negative Covenants. So long as any Guaranteed
Obligations shall remain unsatisfied or any Bank shall have any Commitment, the
Guarantor agrees that:
(a) Restrictions on Fundamental Changes. The Guarantor
will not, and will not permit any of its Subsidiaries to, (i) liquidate, wind
up or dissolve itself (or suffer any liquidation or dissolution), or (ii) merge
with or consolidate into, or acquire all or substantially
I-12
<PAGE> 168
all of the assets of, any Person, or sell, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of transactions) all or
substantially all of its assets, except that the Guarantor may merge with or
consolidate into any other Person, provided that (1) the Guarantor is the
surviving corporation and (2) no such merger or consolidation shall be made
while there exists a Default or if a Default would occur as a result thereof.
(b) Distributions. The Guarantor will not grant or otherwise
agree to or suffer to exist any consensual restrictions on its ability to pay
dividends and make other distributions to the Borrower, or to pay any
Indebtedness owed to the Borrower or transfer properties and assets to the
Borrower, except arising under the Loan Documents.
SECTION 14 Notices. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including by facsimile) and shall be mailed, sent or delivered (i) if to the
Agent or any Bank, at or to its address or facsimile number set forth in the
Credit Agreement, and (ii) if to the Guarantor, at or to its address or
facsimile number set forth below its name on the signature page hereof, or at
or to such other address or facsimile number as such party shall have
designated in a written notice to the other party. All such notices and
communications shall be delivered and shall be effective in the manner
specified in Section 11.02 of the Credit Agreement.
SECTION 15 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank to exercise, and no delay in exercising, any
right, remedy, power or privilege hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, remedy, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights and remedies under this Guaranty and the other Loan
Documents are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Agent or any Bank.
SECTION 16 Costs and Expenses; Indemnification.
(a) Costs and Expenses. The Guarantor agrees to pay on
demand:
(i) the reasonable out-of-pocket costs and expenses of the
Agent and any of its Affiliates, and the reasonable fees and disbursements of
counsel to the Agent (including allocated costs of internal counsel), in
connection with the negotiation, preparation, execution, delivery and
administration of this Guaranty or any other Loan Document to which the
Guarantor is party, and any amendments, modifications or waivers of the terms
thereof; and
(ii) all costs and expenses of the Agent, its Affiliates and
each of the Banks, and fees and disbursements of counsel (including allocated
costs of internal counsel), in connection with the enforcement or attempted
enforcement, or preservation of any rights or interests under, this Guaranty
and any other Loan Document to which the Guarantor is a party, and any
out-of-court workout or other refinancing or restructuring or any bankruptcy
case, including any losses, costs and expenses sustained by the Agent and any
of the Banks as a result of any
I-13
<PAGE> 169
failure by the Guarantor to perform or observe its obligations contained in
this Guaranty or any other Loan Document to which the Guarantor is a party.
(b) Indemnification. In addition, whether or not the
transactions contemplated by the Loan Documents shall be consummated, the
Guarantor hereby agrees to indemnify the Agent and each Bank, any Affiliate
thereof, and their respective directors, officers, employees, agents, counsel
and other advisors (each an "Indemnified Person"), against and hold each of
them harmless from any and all liabilities, obligations, losses, claims,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including the reasonable fees and
disbursements of counsel to an Indemnified Person (including allocated costs of
internal counsel), which may be imposed on, incurred by, or asserted against
any Indemnified Person, (i) in any way relating to or arising out of this
Guaranty or any other Loan Document, the Guaranteed Obligations, or the
transactions contemplated hereby or thereby, or (ii) with respect to any
investigation, litigation or other proceeding relating to any of the foregoing,
irrespective of whether the Indemnified Person shall be designated a party
thereto (the "Indemnified Liabilities"); provided that the Guarantor shall not
be liable to any Indemnified Person for any portion of such Indemnified
Liabilities resulting solely from such Indemnified Person's gross negligence or
willful misconduct. If and to the extent that the foregoing indemnification is
for any reason held unenforceable, the Guarantor agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(c) Defense. At the election of any Indemnified Person,
the Guarantor shall defend such Indemnified Person using legal counsel
satisfactory to such Indemnified Person in such Person's sole discretion, at
the sole cost and expense of the Guarantor.
(d) Interest. Any amounts payable to the Agent or any Bank
under this Section 16 if not paid upon demand shall bear interest from the date
of such demand until paid in full, at the rate of interest set forth in Section
2.09(c) of the Credit Agreement.
SECTION 17 Right of Set-Off. If an Event of Default exists
each Bank is hereby authorized at any time and from time to time, without
notice to the Guarantor (any such notice being expressly waived by the
Guarantor), to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at any
time owing by such Bank to or for the credit or the account of the Guarantor
against any and all of the obligations of the Guarantor now or hereafter
existing under this Guaranty, irrespective of whether or not such Bank shall
have made any demand upon the Borrower or the Guarantor under the Loan
Documents and although such obligations may be contingent and unmatured. Each
Bank shall promptly notify the Guarantor (through the Agent) after any such
set-off and application made by it; provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of the Banks under this Section 17 are in addition to other rights and
remedies (including other rights of set-off) which the Banks may have.
I-14
<PAGE> 170
SECTION 18 Survival. All covenants, agreements,
representations and warranties made in this Guaranty shall survive the
execution and delivery of this Guaranty, and shall continue in full force and
effect so long as any Bank has any Commitment or any Guaranteed Obligations
remain unsatisfied. Without limiting the generality of the foregoing, the
obligations of the Guarantor under Section 16 shall survive the satisfaction of
the Guaranteed Obligations and the termination of the Commitments.
SECTION 19 Benefits of Guaranty. This Guaranty is entered into
for the sole protection and benefit of the Agent and each Bank and its
successors and assigns, and no other Person shall be a direct or indirect
beneficiary of, or shall have any direct or indirect cause of action or claim
in connection with, this Guaranty. The Agent and the Banks, by their
acceptance of this Guaranty, shall not have any obligations under this Guaranty
to any Person other than the Guarantor, and such obligations shall be limited
to those expressly stated herein.
SECTION 20 Binding Effect; Assignment.
(a) Binding Effect. This Guaranty shall be binding upon
the Guarantor and its successors and assigns, and inure to the benefit of and
be enforceable by the Agent and each Bank and their respective successors,
endorsees, transferees and assigns.
(b) Assignment. The Guarantor shall not have the right to
assign or transfer its rights and obligations hereunder or under any other Loan
Documents to which it is a party without the prior written consent of the
Banks. Each Bank may, without notice to or consent by the Guarantor, sell,
assign, transfer or grant participations in all or any portion of such Bank's
rights and obligations hereunder in connection with any sale, assignment,
transfer or grant of a participation by such Bank under Section 11.08 of the
Credit Agreement of or in its rights and obligations thereunder and under the
other Loan Documents. The Guarantor agrees that in connection with any such
sale, assignment, transfer or grant by any Bank, such Bank may deliver to the
prospective participant or assignee financial statements and other relevant
information relating to the Guarantor and its Subsidiaries. In the event of
any grant of a participation, the participant (i) shall be deemed to have a
right of setoff under Section 17 in respect of its participation to the same
extent as if it were such "Bank"; and (ii) shall also be entitled to the
benefits of Section 16.
SECTION 21 Governing Law. THIS GUARANTY SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
SECTION 22 Submission to Jurisdiction. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR
THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH OF THE GUARANTOR, THE AGENT AND THE BANKS CONSENTS, FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE
COURTS. EACH OF THE GUARANTORS, THE AGENT
I-15
<PAGE> 171
AND THE BANKS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE
GUARANTOR, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS,
COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY
CALIFORNIA LAW.
(a) Appointment of Process Agent. The Guarantor hereby
irrevocably appoints the Borrower (in such capacity the "Process Agent"), as
its authorized agent with all powers necessary to receive on its behalf service
of copies of the summons and complaint and any other process which may be
served in any action or proceeding arising out of or relating to this Guaranty
and the other Loan Documents in any of the courts in and of the State of
California. Such service may be made by mailing or delivering a copy of such
process to the Guarantor in care of the Process Agent at the Process Agent's
address set forth in the Credit Agreement address and the Guarantor hereby
irrevocably authorizes and directs the Process Agent to accept such service on
its behalf and agrees that the failure of the Process Agent to give any notice
of any such service to the Guarantor shall not impair or affect the validity of
such service or of any judgment rendered in any action or proceeding based
thereon. As an alternative method of service, the Guarantor also irrevocably
consents to the service of any and all process in any such action or proceeding
by the mailing of copies of such process to the Guarantor at its address
specified below its signature. If for any reason the Borrower shall cease to
act as Process Agent, the Guarantor shall appoint forthwith, in the manner
provided for herein, a successor Process Agent qualified to act as an agent for
service of process with respect to all courts in and of the State of California
and acceptable to the Agent.
(b) No Limitation. Nothing in this Section 22 shall affect
the right of the Agent and the Banks to serve legal process in any other manner
permitted by law or limit the right of the Agent and the Banks to bring any
action or proceeding against the Guarantor or its property in the courts of
other jurisdictions.
SECTION 23 Waiver of Jury Trial. THE GUARANTOR HEREBY AGREES
TO WAIVE, AND THE AGENT AND THE BANKS BY THEIR ACCEPTANCE HEREOF HEREBY AGREE
TO WAIVE, THEIR RESPECTIVE RIGHTS TO A TRAIL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER
GUARANTOR DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GUARANTOR HEREBY AGREES, AND THE AGENT
AND THE BANKS BY THEIR
I-16
<PAGE> 172
ACCEPTANCE HEREOF HEREBY AGREE, THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE
FOREGOING, THE GUARANTOR FURTHER AGREES, AND THE AGENT AND THE BANKS BY THEIR
ACCEPTANCE HEREOF FURTHER AGREE, THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS GUARANTY OR THE OTHER GUARANTOR DOCUMENTS OR ANY
PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE
OTHER GUARANTOR DOCUMENTS. A COPY OF THIS SECTION 23 MAY BE FILED WITH ANY
COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND
CONSENT TO TRIAL BY COURT.
SECTION 24 Entire Agreement; Amendments and Waivers.
(a) Entire Agreement. This Guaranty and the other Loan
Documents constitute the entire agreement of the Guarantor with respect to the
matters set forth herein and supersede any prior agreements, commitments,
drafts, communications, discussions and understandings, oral or written, with
respect thereto conditions to the full effectiveness of this Guaranty.
(b) Amendments and Waivers. Except to the extent otherwise
provided in the Credit Agreement, this Guaranty and the other Loan Documents
may not be amended except by a writing signed by the Guarantor and the Agent,
with the written consent of the Majority Banks. No waiver of any rights of the
Agent and the Banks under any provision of this Guaranty or consent to any
departure by the Guarantor therefrom shall be effective unless in writing and
signed by the Agent, with the written consent of the Majority Banks. Any such
amendment, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 25 Limitation on Liability. No claim shall be made by
the Guarantor or its Affiliates against the Agent, the Banks or any of their
respective Affiliates, directors, employees, attorneys or agents for any
special, indirect, exemplary, consequential or punitive damages in respect of
any breach or wrongful conduct (whether or not the claim therefor is based on
contract, tort or duty imposed by law), in connection with, arising out of or
in any way related to the transactions contemplated by this Guaranty or the
other Guarantor Documents or any act or omission or event occurring in
connection therewith; and the Guarantor hereby waives, releases and agrees not
to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
SECTION 26 Interpretation. This Guaranty and the other Loan
Documents to which the Guarantor is a party are the result of negotiations
between and have been reviewed by counsel to the Agent, the Guarantor and other
parties, and are the product of all parties hereto. Accordingly, this Guaranty
and the other Guarantor Documents shall not be construed against any of the
Banks or the Agent merely because of the Agent's or any Bank's involvement in
the preparation thereof.
I-17
<PAGE> 173
SECTION 27 Knowing and Explicit Waivers. THE GUARANTOR
ACKNOWLEDGES THAT IT HAS EITHER OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD
THE OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND
PROVISIONS OF THIS GUARANTY. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT EACH
OF THE WAIVERS AND CONSENTS SET FORTH HEREIN, INCLUDING THOSE CONTAINED IN
SECTIONS 3 THROUGH 5, ARE MADE WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE AND
CONSEQUENCES. ADDITIONALLY, THE GUARANTOR ACKNOWLEDGES AND AGREES THAT BY
EXECUTING THIS GUARANTY, IT IS WAIVING CERTAIN RIGHTS, BENEFITS, PROTECTIONS
AND DEFENSES TO WHICH IT MAY OTHERWISE BE ENTITLED UNDER APPLICABLE LAW,
INCLUDING UNDER THE PROVISIONS OF THE CALIFORNIA CIVIL CODE AND CALIFORNIA CODE
OF CIVIL PROCEDURE REFERRED TO IN SECTION 5, AND THAT ALL SUCH WAIVERS HEREIN
ARE EXPLICIT, KNOWING WAIVERS. THE GUARANTOR FURTHER ACKNOWLEDGES AND AGREES
THAT THE AGENT AND THE BANKS ARE RELYING ON SUCH WAIVERS IN CREATING THE
GUARANTEED OBLIGATIONS, AND THAT SUCH WAIVERS ARE A MATERIAL PART OF THE
CONSIDERATION WHICH THE AGENT AND THE BANKS ARE RECEIVING FOR CREATING THE
GUARANTEED OBLIGATIONS.
SECTION 28 Severability. Whenever possible, each provision of
this Guaranty and the other Loan Documents to which the Guarantor is party
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Guaranty
or any other Loan Document to which the Guarantor is party shall be prohibited
by or invalid under any such law or regulation in any jurisdiction, it shall,
as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining
I-18
<PAGE> 174
provisions of this Guaranty or such Loan Document, as the case may be, or the
validity or effectiveness of such provision in any other jurisdiction.
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty, as
of the date first above written.
[EF DATA CORPORATION/
CALIFORNIA MICROWAVE
NAVIGATION SYSTEMS, INC.]
By __________________________
Title:
Address:
_____________________________
_____________________________
_____________________________
Attn.: ______________________
Fax No.: ____________________
I-19
<PAGE> 175
EXHIBIT J
to the Credit Agreement
FORM OF COMPANY'S SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of
December 31, 1996, is made between California Microwave, Inc., a corporation
incorporated in the State of Delaware (the "Borrower"), and Bank of America
National Trust & Savings Association, as agent for the Banks (in such capacity,
the "Agent").
WHEREAS:
(A) Pursuant to that certain First Amended and Restated Credit
Agreement dated of even date herewith among Parent, certain financial
institutions as lenders (together with the bank issuing letter of credits, the
"Banks"), Bank of America National Trust & Savings Association, as issuer of a
letters of credit from time to time for the account of the Borrower, and as
Agent (as amended, modified, renewed or extended from time to time, the "Credit
Agreement") the Banks have agreed to make available to the Borrower a facility
for the extension of certain credits.
(B) It is a condition precedent to the borrowings and the
issuance of letters of credit under the Credit Agreement that the Borrower
enter into this Agreement and grant to the Agent, for itself and for the
ratable benefit of the Banks the security interests hereinafter provided to
secure the obligations of the Borrower under the Credit Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1 Definitions; Interpretation.
(a) Terms Defined in Credit Agreement. All capitalized
terms used in this Agreement (included in the recitals hereof) and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement.
(b) Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Accounts" means any and all accounts of the Borrower, whether
now existing or hereafter acquired or arising, and in any event includes all
accounts receivable, contract rights, rights to payment and other obligations
of any kind owed to the Borrower arising out of or in connection with the sale
or lease of merchandise, goods or commodities or the rendering of services or
arising from any other transaction, however evidenced, and whether or not
earned by performance, all guaranties, indemnities and security with respect to
the foregoing, and all letters of credit relating thereto, in each case whether
now existing or hereafter acquired or arising.
J-1
<PAGE> 176
"Books" means all books, records and other written, electronic
or other documentation in whatever form maintained now or hereafter by or for
the Borrower in connection with the ownership of its assets or the conduct of
its business or evidencing or containing information relating to the
Collateral, including: (i) ledgers; (ii) records indicating, summarizing, or
evidencing the Borrower's assets (including Inventory and Rights to Payment),
business operations or financial condition; (iii) computer programs and
software; (iv) computer discs, tapes, files, manuals, spreadsheets; (v)
computer printouts and output of whatever kind; (vi) any other computer
prepared or electronically stored, collected or reported information and
equipment of any kind; and (vii) any and all other rights now or hereafter
arising out of any contract or agreement between the Borrower and any service
bureau, computer or data processing company or other Person charged with
preparing or maintaining any of the Borrower's books or records or with credit
reporting, including with regard to the Borrower's Accounts.
"Chattel Paper" means all writings of whatever sort which
evidence a monetary obligation and a security interest in or lease of specific
goods, whether now existing or hereafter arising.
"Collateral" has the meaning set forth in Section 2.
"Deposit Account" means any demand, time, savings, passbook or
like account now or hereafter maintained by or for the benefit of the Borrower
with a bank, savings and loan association, credit union or like organization
(including the Agent and each Bank) and all funds and amounts therein, whether
or not restricted or designated for a particular purpose.
"Documents" means any and all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other documents of
the Borrower, whether or not negotiable, and includes all other documents which
purport to be issued by a bailee or agent and purport to cover goods in any
bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made
available to the Borrower for the purpose of ultimate sale or exchange of goods
or for the purpose of loading, unloading, storing, shipping, transshipping,
manufacturing, processing or otherwise dealing with goods in a manner
preliminary to their sale or exchange, in each case whether now existing or
hereafter acquired or arising.
"Financing Statements" has the meaning set forth in Section 3.
"General Intangibles" means all general intangibles of the
Borrower, now existing or hereafter acquired or arising, and in any event
includes: (i) all tax and other refunds, rebates or credits of every kind and
nature to which the Borrower is now or hereafter may become entitled; (ii) all
good will, choses in action and causes of action, whether legal or equitable,
whether in contract or tort and however arising; (iii) all uncertificated
securities and interests in limited and general partnerships, and all money
market and mutual fund accounts, and all margin deposits and other credit
balances and accounts maintained with brokers and custodians; (iv) all rights
of stoppage in transit, replevin and reclamation; (v) all licenses, permits,
consents, indulgences and rights of whatever kind issued in favor of or
otherwise
J-2
<PAGE> 177
recognized as belonging to the Borrower by any Governmental Authority; and (vi)
all indemnity agreements, guaranties, insurance policies and other contractual,
equitable and legal rights of whatever kind or nature; in each case whether now
existing or hereafter acquired or arising.
"Instruments" means any and all negotiable instruments,
certificated securities and every other writing which evidences a right to the
payment of money, whether held directly or through a financial intermediary, in
each case whether now existing or hereafter acquired.
"Inventory" means any and all of the Borrower's inventory in
all of its forms, wherever located, whether now owned or hereafter acquired,
and in any event includes all goods (including goods in transit) which are held
for sale, lease or other disposition, including those held for display or
demonstration or out on lease or consignment or to be furnished under a
contract of service, or which are raw materials, work in process, finished
goods or materials used or consumed in the Borrower's business, and the
resulting product or mass, and all repossessed, returned, rejected, reclaimed
and replevied goods, together with all parts, components, supplies and other
materials used or usable in connection with the manufacture, production,
packing, shipping, advertising, selling or furnishing of such goods; and all
other items hereafter acquired by the Borrower by way of substitution,
replacement, return, repossession or otherwise, and all additions and
accessions thereto, and any Document representing or relating to any of the
foregoing at any time.
"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of the
Borrower, including "proceeds" as defined at UCC Section 9306, any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to or for
the account of the Borrower from time to time with respect to any of the
Collateral, any and all payments (in any form whatsoever) made or due and
payable to the Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or for or on account
of any damage or injury to or conversion of any Collateral by any Person, any
and all other tangible or intangible property received upon the sale or other
disposition of Collateral, and all proceeds of proceeds.
"Rights to Payment" means all Accounts and any and all rights
and claims to the payment or receipt of money or other forms of consideration
of any kind in, to and under all Chattel Paper, Documents, General Intangibles,
Instruments, and Proceeds.
"Secured Obligations" means all liabilities and other
obligations of the Borrower to the Agent and the Banks, whether created under,
arising out of or in connection with the Guaranty or any of the other Loan
Documents or otherwise, including all unpaid principal of the Loans, all unpaid
L/C Obligations, all interest accrued thereon, all fees due under the Credit
Agreement and all other amounts payable by the Parent to the Agent, the
J-3
<PAGE> 178
Banks thereunder or in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated
or unliquidated, determined or undetermined.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of California; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(c) Terms Defined in UCC. Where applicable and except as
otherwise defined herein, terms used in this Agreement shall have the meanings
assigned to them in the UCC.
(d) Interpretation. The rules of interpretation set
forth in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement and are incorporated herein by this reference.
SECTION 2 Security Interest.
(a) Grant of Security Interest. As security for the
payment and performance of the Secured Obligations, the Borrower hereby
pledges, assigns, transfers, hypothecates and sets over to the Agent, for
itself and on behalf of and for the ratable benefit of the Banks, and hereby
grants to the Agent, for itself and on behalf of and for the ratable benefit of
the Banks, a security interest in all of the Borrower's right, title and
interest in, to and under the following property, wherever located and whether
now existing or owned or hereafter acquired or arising (collectively, the
"Collateral"): (i) all Accounts; (ii) all Books; (iii) all Chattel Paper; (iv)
all Deposit Accounts; (v) all Documents; (vi) all General Intangibles; (vii)
all Instruments; (viii) all Inventory; (ix) all Rights to Payment; and (x) all
products and Proceeds of any and all of the foregoing.
(b) Borrower Remains Liable. Anything herein to the
contrary notwithstanding, (i) the Borrower shall remain liable under any
contracts, agreements and other documents included in the Collateral, to the
extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Agent of any of the rights hereunder shall not release the
Borrower from any of its duties or obligations under such contracts, agreements
and other documents included in the Collateral, and (iii) the Agent shall not
have any obligation or liability under any contracts, agreements and other
documents included in the Collateral by reason of this Agreement, nor shall the
Agent be obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any such contract,
agreement or other document included in the Collateral hereunder.
J-4
<PAGE> 179
(c) Continuing Security Interest. The Borrower agrees
that this Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 22.
SECTION 3 Perfection Procedures.
(a) Financing Statements. The Borrower shall execute and
deliver to the Agent concurrently with the execution of this Agreement, and at
any time and from time to time thereafter, all financing statements,
continuation financing statements, termination statements, security agreements,
chattel mortgages, assignments, patent, copyright and trademark collateral
assignments, fixture filings, warehouse receipts, documents of title,
affidavits, reports, notices, schedules of account, letters of authority and
all other documents and instruments, in form satisfactory to the Agent (the
"Financing Statements"), and take all other action, as the Agent may request,
to perfect and continue perfected, maintain the priority of or provide notice
of the Agent's security interest in the Collateral and to accomplish the
purposes of this Agreement.
(b) Notice of Security Interest. In accordance with Section
9302(1)(g) of the California UCC, written notice of the security interest of
the Agent, for itself and on behalf of and for the ratable benefit of the
Banks, in each Deposit Account maintained with a Bank is hereby given to such
Bank.
(c) Certain Agents. Any third person at any time and from
time to time holding all or any portion of the Collateral shall be deemed to,
and shall, hold the Collateral as the agent of, and as pledge holder for, the
Agent. At any time and from time to time, the Agent may give notice to any
third person holding all or any portion of the Collateral that such third
person is holding the Collateral as the agent of, and as pledge holder for, the
Agent.
SECTION 4 Representations and Warranties. The Borrower
represents and warrants to each Bank and the Agent that:
(a) Location of Chief Executive Office and Collateral.
The Borrower's chief executive office and principal place of business is
located at the address set forth in Schedule 1, and all other locations where
the Borrower conducts business or Collateral is kept are set forth in Schedule
1.
(b) Locations of Books. All locations where Books
pertaining to the Rights to Payment are kept, including all equipment necessary
for accessing such Books and the names and addresses of all service bureaus,
computer or data processing companies and other Persons keeping any Books or
collecting Rights to Payment for the Borrower, are set forth in Schedule 1.
(c) Trade Names and Trade Styles. All trade names and
trade styles under which the Borrower presently conducts its business
operations are set forth in Schedule 1, and, except as set forth in Schedule 1,
the Borrower has not, at any time in the past: (i) been known as or used any
other corporate, trade or fictitious name; (ii) changed its name;
J-5
<PAGE> 180
(iii) been the surviving or resulting corporation in a merger or consolidation;
or (iv) acquired through asset purchase or otherwise any business of any
Person.
(d) Ownership of Collateral. The Borrower is, and,
except as permitted by Section 5(i), will continue to be, the sole and complete
owner of the Collateral (or, in the case of after-acquired Collateral, at the
time the Borrower acquires rights in such Collateral, will be the sole and
complete owner thereof), free from any Lien other than Permitted Liens.
(e) Enforceability; Priority of Security Interest. (i)
This Agreement creates a security interest which is enforceable against the
Collateral in which the Borrower now has rights and will create a security
interest which is enforceable against the Collateral in which the Borrower
hereafter acquires rights at the time the Borrower acquires any such rights;
and (ii) the Agent has a perfected and first priority security interest in the
Collateral in which the Borrower now has rights, and will have a perfected and
first priority security interest in the Collateral in which the Borrower
hereafter acquires rights at the time the Borrower acquires any such rights, in
each case securing the payment and performance of the Secured Obligations.
(f) Other Financing Statements. Other than (i) Financing
Statements disclosed to the Agent and (ii) Financing Statements in favor of the
Agent on behalf of the Banks, no effective Financing Statement naming the
Borrower as debtor, assignor, grantor, mortgagor, pledgor or the like and
covering all or any part of the Collateral is on file in any filing or
recording office in any jurisdiction.
(g) Rights to Payment.
(i) The Rights to Payment represent valid, binding and
enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto, and are and will be genuine, free from Liens, and not subject to any
adverse claims, counterclaims, setoffs, defaults, disputes, defenses,
discounts, retainages, holdbacks or conditions precedent of any kind of
character, except to the extent reflected by the Borrower's reserves for
uncollectible Rights to Payment or to the extent, if any, that such account
debtors or other Persons may be entitled to normal and ordinary course trade
discounts, returns, adjustments and allowances in accordance with Section 5(m);
(ii) to the best of the Borrower's knowledge and belief, all
account debtors and other obligors on the Rights to Payment are solvent and
generally paying their debts as they come due;
(iii) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any U.S. federal or state consumer credit laws;
(iv) the Borrower has not assigned any of its rights under
the Rights to Payment except as provided in this Agreement or as set forth in
the other Loan Documents;
J-6
<PAGE> 181
(v) with respect to the Rights to Payment constituting
Eligible Accounts Receivable the Borrower has no knowledge that any of the
criteria for eligibility are not or are no longer satisfied;
(vi) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct and in all respects what they purport to be; and
(vii) the Borrower has no knowledge of any fact or
circumstance which would impair the validity or collectibility of any of the
Rights to Payment.
(h) Inventory. No Inventory is stored with any bailee,
warehouseman or similar Person or on any premises leased to the Borrower, nor
has any Inventory been consigned to the Borrower or consigned by the Borrower
to any Person or is held by the Borrower for any Person under any "bill and
hold" or other arrangement, except as set forth in Schedule 1.
(i) Deposit Accounts. The names and addresses of all
financial institutions at which the Borrower maintains its Deposit Accounts,
and the account numbers and account names of such Deposit Accounts, are set
forth in Schedule 1.
SECTION 5 Covenants. In addition to the covenants of the
Borrower set forth in the Credit Agreement, which are incorporated herein by
this reference, so long as any of the Secured Obligations remain unsatisfied or
any Bank shall have any Commitment, the Borrower agrees that:
(a) Defense of Collateral. The Borrower will appear in
and defend any action, suit or proceeding which may affect to a material extent
its title to, or right or interest in, or the Agent's right or interest in, the
Collateral.
(b) Preservation of Collateral. The Borrower will do and
perform all reasonable acts that may be necessary and appropriate to maintain,
preserve and protect the Collateral.
(c) Compliance with Laws, Etc. The Borrower will comply
with all laws, regulations and ordinances, and all policies of insurance,
relating in a material way to the possession, operation, maintenance and
control of the Collateral.
(d) Location of Books and Chief Executive Office. The
Borrower will: (i) keep all Books pertaining to the Rights to Payment at the
locations set forth in Schedule 1; and (ii) keep the location of the
Borrower's chief executive office or principal place of business at the
location set forth in Schedule 1.
(e) Location of Collateral. The Borrower will keep the
Collateral at the locations set forth in Schedule 1 and not remove the
Collateral from such locations (other than disposals of Collateral permitted by
subsection (i)).
J-7
<PAGE> 182
(f) Change in Name, Identity or Structure. The Borrower
will give at least 30 days' prior written notice to the Agent of (i) any change
in its name, (ii) any changes in, additions to or other modifications of its
trade names and trade styles set forth in Schedule 1, and (iii) any changes in
its identity or structure in any manner which might make any Financing
Statement filed hereunder incorrect or misleading.
(g) Maintenance of Records. The Borrower will keep
separate, accurate and complete Books with respect to the Collateral,
disclosing the Agent's security interest hereunder.
(h) Invoicing of Sales. The Borrower will invoice all of
its sales upon forms customary in the industry and to maintain proof of
delivery and customer acceptance of goods.
(i) Disposition of Collateral. The Borrower will not
surrender or lose possession of (other than to the Agent), sell, lease, rent,
or otherwise dispose of or transfer any of the Collateral or any right or
interest therein, except to the extent permitted by the Credit Agreement.
(j) Liens. The Borrower will keep the Collateral free of
all Liens except Permitted Liens.
(k) Expenses. The Borrower will pay all expenses of
protecting, storing, warehousing, insuring, handling and shipping the
Collateral.
(l) Leased Premises. At the Agent's request, the
Borrower will obtain from each Person from whom the Borrower leases any
premises at which any Collateral is at any time present such subordination,
waiver, consent and estoppel agreements as the Agent may require, in form and
substance satisfactory to the Agent.
(m) Rights to Payment. The Borrower will:
(i) with such frequency as the Agent may require, furnish to
the Agent full and complete reports, in form and substance satisfactory to the
Agent, with respect to the Accounts, including information as to concentration,
aging, identity of account debtors, letters of credit securing Accounts,
disputed Accounts and other matters, as the Agent shall request;
(ii) give only normal discounts, allowances and credits as to
Accounts and other Rights to Payment, in the ordinary course of business,
according to normal trade practices utilized by the Borrower in the past, and
enforce all Accounts and other Rights to Payment strictly in accordance with
their terms, and take all such action to such end as may from time to time be
reasonably requested by the Agent, except that the Borrower may grant any
extension of the time for payment or enter into any agreement to make a rebate
or otherwise to reduce the amount owing on or with respect to, or compromise or
settle for less than the full amount thereof, any Account or other Right to
Payment, in the ordinary course of business, according to normal trade
practices utilized by the Borrower in the past, and where
J-8
<PAGE> 183
the amount involved does not exceed $500,000 or where the Account or Right to
Payment does not exceed $1,000,000 or would not be materially impaired;
(iii) if any discount, allowance, credit, extension of time
for payment, agreement to make a rebate or otherwise to reduce the amount owing
on, or compromise or settle, an Account or other Right to Payment exists or
occurs, or if, to the knowledge of the Borrower, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened with respect
to an Account or other Right to Payment (collectively such events the
"Disclosure Events"), disclose such fact fully to the Agent in the Books
relating to such Account or other Right to Payment and in connection with any
invoice or report furnished by the Borrower to the Agent relating to such
Account or other Right to Payment; provided that no such disclosure shall be
required where the Disclosure Event arises in the ordinary course of business,
according to normal trade practices utilized by the Borrower and where the
amount of the Account or Right to Payment affected by such Disclosure Events is
less than $500,000 individually or in the aggregate does not exceed $2,000,000
in any calendar year;
(iv) with respect to Accounts arising from contracts with the
United States or any department, agency or instrumentality thereof, immediately
notify the Agent thereof and execute any documents and instruments and take any
other steps requested by the Agent in order that all monies due and to become
due thereunder shall be assigned to the Agent and notice thereof given to the
Federal authorities under the Federal Assignment of Claims Act;
(v) in accordance with its sound business judgment perform
and comply in all material respects with its obligations in respect of the
Accounts and other Rights to Payment;
(vi) upon the request of the Agent (A) at any time, notify
all or any designated portion of the account debtors and other obligors on the
Rights to Payment of the security interest hereunder, and (B) upon the
occurrence of an Event of Default, notify the account debtors and other
obligors on the Rights to Payment or any designated portion thereof that
payment shall be made directly to the Agent or to such other Person or location
as the Agent shall specify; and
(vii) upon the occurrence of any Event of Default, establish
such lockbox or similar arrangements for the payment of the Accounts and other
Rights to Payment as the Agent shall require.
(n) Documents, Etc. Upon the request of the Agent, the
Borrower will (i) immediately deliver to the Agent, or an agent designated by
it, appropriately endorsed or accompanied by appropriate instruments of
transfer or assignment, all Documents, Instruments and Chattel Paper, and all
other Rights to Payment at any time evidenced by promissory notes, trade
acceptances or other instruments and (ii) mark all Documents and Chattel Paper
with such legends as the Agent shall specify.
(o) Inventory. The Borrower will:
J-9
<PAGE> 184
(i) at such times as the Agent shall request, prepare and
deliver to the Agent a report of all Inventory, in form and substance
satisfactory to the Agent;
(ii) upon the request of the Agent, take a physical listing
of the Inventory and promptly deliver a copy of such physical listing to the
Agent; and
(iii) not store any Inventory with a bailee, warehouseman or
similar Person or on premises leased to the Borrower, nor dispose of any
Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or similar basis, nor acquire any Inventory from any
Person on any such basis.
(p) Notices, Reports and Information. The Borrower will (i)
notify the Agent of any material claim made or asserted against the Collateral
by any Person and of any change in the composition of the Collateral or other
event which could materially adversely affect the value of the Collateral or
the Agent's Lien thereon; (ii) furnish to the Agent such statements and
schedules further identifying and describing the Collateral and such other
reports and other information in connection with the Collateral as the Agent
may reasonably request, all in reasonable detail; and (iii) upon request of the
Agent make such demands and requests for information and reports as the
Borrower is entitled to make in respect of the Collateral.
SECTION 6 Collection of Rights to Payment. Until the Agent
exercises its rights hereunder to collect Rights to Payment, the Borrower shall
endeavor in the first instance diligently to collect all amounts due or to
become due on or with respect to the Rights to Payment. At the request of the
Agent, upon and after the occurrence of any Event of Default, all remittances
received by the Borrower shall be held in trust for the Agent and, in
accordance with the Agent's instructions, remitted to the Agent or deposited to
an account with the Agent in the form received (with any necessary endorsements
or instruments of assignment or transfer).
SECTION 7 Authorization; Agent Appointed Attorney-in-Fact.
The Agent shall have the right to, in the name of the Borrower, or in the name
of the Agent or otherwise, without notice to or assent by the Borrower, and the
Borrower hereby constitutes and appoints the Agent (and any of the Agent's
officers or employees or agents designated by the Agent) as the Borrower's true
and lawful attorney-in-fact, with full power and authority to:
(i) sign any of the Financing Statements which must be
executed or filed to perfect or continue perfected, maintain the priority of or
provide notice of the Agent's security interest in the Collateral;
(ii) take possession of and endorse any notes, acceptances,
checks, drafts, money orders or other forms of payment or security and collect
any Proceeds of any Collateral;
(iii) sign and endorse any invoice or bill of lading relating
to any of the Collateral, warehouse or storage receipts, drafts against
customers or other obligors, assignments, notices of assignment, verifications
and notices to customers or other obligors;
J-10
<PAGE> 185
(iv) notify the U.S. Postal Service and other postal
authorities to change the address for delivery of mail addressed to the
Borrower to such address as the Agent may designate; and, without limiting the
generality of the foregoing, establish with any Person lockbox or similar
arrangements for the payment of the Rights to Payment;
(v) receive, open and dispose of all mail addressed to the
Borrower;
(vi) send requests for verification of Rights to Payment to
the customers or other obligors of the Borrower;
(vii) contact, or direct the Borrower to contact, all account
debtors and other obligors on the Rights to Payment and instruct such account
debtors and other obligors to make all payments directly to the Agent;
(viii) assert, adjust, sue for, compromise or release any
claims under any policies of insurance;
(ix) exercise dominion and control over, and refuse to permit
further withdrawals from, Deposit Accounts maintained with the Agent, any Bank
or any other bank, financial institution or other Person;
(x) notify each Person maintaining lockbox or similar
arrangements for the payment of the Rights to Payment to remit all amounts
representing collections on the Rights to Payment directly to the Agent;
(xi) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or any other rights
in respect of the Rights to Payment and other Collateral, grant consents, agree
to any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Agent may deem
necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Agent with respect to
the Collateral;
(xii) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral; and
(xiii) execute any and all such other documents and
instruments, and do any and all acts and things for and on behalf of the
Borrower, which the Agent may deem necessary or advisable to maintain, protect,
realize upon and preserve the Collateral and the Agent's security interest
therein and to accomplish the purposes of this Agreement.
The Agent agrees that, except upon and after the occurrence of
an Event of Default, it shall not exercise the power of attorney granted to
Agent pursuant to clauses (ii) through (xii). The foregoing power of attorney
is coupled with an interest and irrevocable so
J-11
<PAGE> 186
long as the Banks have any Commitments or the Secured Obligations have not been
paid and performed in full. The Borrower hereby ratifies, to the extent
permitted by law, all that the Agent shall lawfully and in good faith do or
cause to be done by virtue of and in compliance with this Section 7.
SECTION 8 Agent Performance of Borrower Obligations. The
Agent may perform or pay any obligation which the Borrower has agreed to
perform or pay under or in connection with this Agreement, and the Borrower
shall reimburse the Agent on demand for any amounts paid by the Agent pursuant
to this Section 8.
SECTION 9 Agent's Duties. Notwithstanding any provision
contained in this Agreement, the Agent shall have no duty to exercise any of
the rights, privileges or powers afforded to it and shall not be responsible to
the Borrower or any other Person for any failure to do so or delay in doing so.
Beyond the exercise of reasonable care to assure the safe custody of Collateral
in the Agent's possession and the accounting for moneys actually received by
the Agent hereunder, the Agent shall have no duty or liability to exercise or
preserve any rights, privileges or powers pertaining to the Collateral.
SECTION 10 Remedies.
(a) Remedies. Upon the occurrence of any Event of
Default, the Agent shall have, in addition to all other rights and remedies
granted to it in this Agreement, the Credit Agreement or any other Loan
Document, all rights and remedies of a secured party under the UCC and other
applicable laws. Without limiting the generality of the foregoing, the
Borrower agrees that:
(i) The Agent may peaceably and without notice enter any
premises of the Borrower, take possession of any Collateral, remove or dispose
of all or part of the Collateral on any premises of the Borrower or elsewhere,
and otherwise collect, receive, appropriate and realize upon all or any part of
the Collateral, and demand, give receipt for, settle, renew, extend, exchange,
compromise, adjust, or sue for all or any part of the Collateral, as the Agent
may determine.
(ii) The Agent may require the Borrower to assemble all or
any part of the Collateral and make it available to the Agent, at any place and
time designated by the Agent.
(iii) The Agent may secure the appointment of a receiver of
the Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(iv) The Agent may withdraw (or cause to be withdrawn) any
and all funds from Deposit Accounts.
(v) The Agent may sell, resell, lease, use, assign, transfer
or otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of the Borrower's assets, without charge or liability
to the Agent therefor) at public or private sale, by one or more
J-12
<PAGE> 187
contracts, in one or more parcels, at the same or different times, for cash or
credit or for future delivery without assumption of any credit risk, all as the
Agent deems advisable; provided, however, that the Borrower shall be credited
with the net proceeds of sale only when such proceeds are finally collected by
the Agent. The Agent and each of the Banks shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption, which right or equity of redemption the Borrower
hereby releases, to the extent permitted by law. The Borrower hereby agrees
that the sending of notice by ordinary mail, postage prepaid, to the address of
the Borrower set forth in the Credit Agreement, of the place and time of any
public sale or of the time after which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice thereof if such
notice is sent ten days prior to the date of such sale or other disposition or
the date on or after which such sale or other disposition may occur, provided
that the Agent may provide the Borrower shorter notice or no notice, to the
extent permitted by the UCC or other applicable law.
(b) Proceeds Account. To the extent that any of the
Secured Obligations may be contingent, unmatured or unliquidated (including
with respect to undrawn amounts under the Letters of Credit) at such time as
there may exist an Event of Default, the Agent may, at its election, (i) retain
the proceeds of any sale, collection, disposition or other realization upon the
Collateral (or any portion thereof) in a special purpose non-interest-bearing
restricted deposit account (the "Proceeds Account") created and maintained by
the Agent for such purpose (which shall constitute a Deposit Account included
within the Collateral hereunder) until such time as the Agent may elect to
apply such proceeds to the Secured Obligations, and the Borrower agrees that
such retention of such proceeds by the Agent shall not be deemed strict
foreclosure with respect thereto; (ii) in any manner elected by the Agent,
estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such
amount; or (iii) otherwise proceed in any manner permitted by applicable law.
The Borrower agrees that the Proceeds Account shall be a blocked account and
that upon the irrevocable deposit of funds into the Proceeds Account, the
Borrower shall not have any right of withdrawal with respect to such funds.
Accordingly, the Borrower irrevocably waives until the termination of this
Agreement in accordance with Section 22 the right to make any withdrawal from
the Proceeds Account and the right to instruct the Agent to honor drafts
against the Proceeds Account.
(c) Application of Proceeds. Subject to subsection (b),
the cash proceeds actually received from the sale or other disposition or
collection of Collateral, and any other amounts received in respect of the
Collateral the application of which is not otherwise provided for herein, shall
be applied as directed by the Agent and the Majority Banks in their sole
discretion. Any surplus thereof which exists after payment and performance in
full of the Secured Obligations shall be promptly paid over to the Borrower or
otherwise disposed of in accordance with the UCC or other applicable law. The
Borrower shall remain liable to the Agent and the Banks for any deficiency
which exists after any sale or other disposition or collection of Collateral.
J-13
<PAGE> 188
SECTION 11 Certain Waivers. The Borrower waives, to the
fullest extent permitted by law, (i) any right of redemption with respect to
the Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling of the Collateral or other collateral or security for the
Secured Obligations; (ii) any right to require the Agent or the Banks (A) to
proceed against any Person, (B) to exhaust any other collateral or security for
any of the Secured Obligations, (C) to pursue any remedy in the Agent's or any
of the Banks' power, or (D) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of protests or
notices of dishonor in connection with any of the Collateral; and (iii) all
claims, damages, and demands against the Agent or the Banks arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral.
SECTION 12 Notices. All notices or other communications
hereunder shall be given in the manner and to the addresses specified in the
Credit Agreement. All such notices and other communications shall be effective
(i) if delivered by hand, when delivered; (ii) if sent by mail, upon the
earlier of the date of receipt or five Business Days after deposit in the mail,
first class (or air mail, with respect to communications to be sent to or from
the United States), postage prepaid; and (iii) if sent by facsimile
transmission, when sent.
SECTION 13 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank to exercise, and no delay in exercising, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights and remedies under this
Agreement are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Agent or any Bank.
SECTION 14 Costs and Expenses; Indemnification; Other
Charges.
(a) Costs and Expenses. The Borrower agrees to pay on
demand:
(i) the reasonable out-of-pocket costs and expenses of the
Agent and any of its Affiliates, and the reasonable fees and disbursements of
counsel to the Agent (including allocated costs of internal counsel), in
connection with the negotiation, preparation, execution, delivery and
administration of this Agreement, and any amendments, modifications or waivers
of the terms thereof, and the custody of the Collateral;
(ii) all title, appraisal (including the allocated costs of
internal appraisal services), survey, audit, consulting, search, recording,
filing and similar fees, costs and expenses incurred or sustained by the Agent
or any of its Affiliates in connection with this Agreement or the Collateral;
and
(iii) all costs and expenses of the Agent, its Affiliates,
and the Banks, and the fees and disbursements of counsel (including the
allocated costs of internal counsel), in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under,
this Agreement, any out-of-court workout or other refinancing or restructuring
or in any bankruptcy case, and the protection, sale or collection of, or other
realization
J-14
<PAGE> 189
upon, any of the Collateral, including all expenses of taking, collecting,
holding, sorting, handling, preparing for sale, selling, or the like, and other
such expenses of sales and collections of Collateral, and any and all losses,
costs and expenses sustained by the Agent and any Bank as a result of any
failure by the Borrower to perform or observe its obligations contained herein.
(b) Indemnification. The Borrower hereby agrees to
indemnify the Agent and each Bank, any Affiliate thereof, and their respective
directors, officers, employees, agents, counsel and other advisors (each an
"Indemnified Person") against, and hold each of them harmless from, any and all
liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including the reasonable fees and disbursements of counsel to an
Indemnified Person (including allocated costs of internal counsel), which may
be imposed on, incurred by, or asserted against any Indemnified Person, in any
way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted to be taken by it hereunder
(the "Indemnified Liabilities"); provided that the Borrower shall not be liable
to any Indemnified Person for any portion of such Indemnified Liabilities to
the extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such Indemnified Person's gross negligence
or willful misconduct. If and to the extent that the foregoing indemnification
is for any reason held unenforceable, the Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
(c) Other Charges. The Borrower agrees to indemnify the
Agent and each of the Banks against and hold each of them harmless from any and
all present and future stamp, transfer, documentary and other such taxes,
levies, fees, assessments and other charges made by any jurisdiction by reason
of the execution, delivery, performance and enforcement of this Agreement.
(d) Interest. Any amounts payable to the Agent or any Bank
under this Section 14 or otherwise under this Agreement if not paid upon demand
shall bear interest from the date of such demand until paid in full, at the
rate of interest set forth in Section 2.09(c) of the Credit Agreement.
SECTION 15 Binding Effect. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Borrower, the Agent,
and each Bank and their respective successors and assigns.
SECTION 16 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA,
EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE
VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES
HEREUNDER, IN RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN CALIFORNIA.
J-15
<PAGE> 190
SECTION 17 Entire Agreement; Amendment. This Agreement
contains the entire agreement of the parties with respect to the subject matter
hereof and shall not be amended except by the written agreement of the parties
as provided in the Credit Agreement.
SECTION 18 Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. If, however, any provision of
this Agreement shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction.
SECTION 19 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same
agreement.
SECTION 20 Incorporation of Provisions of the Credit
Agreement. To the extent the Credit Agreement contains provisions of general
applicability to the Loan Documents, including any such provisions contained in
Article XI thereof, such provisions are incorporated herein by this reference.
SECTION 21 No Inconsistent Requirements. The Borrower
acknowledges that this Agreement and the other Loan Documents may contain
covenants and other terms and provisions variously stated regarding the same or
similar matters, and agrees that all such covenants, terms and provisions are
cumulative and all shall be performed and satisfied in accordance with their
respective terms.
SECTION 22 Termination. Upon the termination of the
Commitments of the Banks, the surrender of the Letters of Credit and payment
and performance in full of all Secured Obligations, this Agreement shall
terminate and the Agent shall promptly execute and deliver to the Borrower such
documents and instruments reasonably requested by the Borrower as shall be
necessary to evidence termination of all security interests given by the
Borrower to the Agent hereunder; provided, however, that the obligations of the
Borrower under Section 14 shall survive such termination.
[Intentionally left blank]
J-16
<PAGE> 191
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE BORROWER
CALIFORNIA MICROWAVE, INC.
By __________________________________
Title:
THE AGENT
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as Agent
By ___________________________________
Title:
J-17
<PAGE> 192
SCHEDULE 1
to the Security Agreement
1. LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF
COLLATERAL
a. Chief Executive Office and Principal Place of Business:
b. Other locations where Borrower conducts business or Collateral
is kept:
2. LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
3. TRADE NAMES AND TRADE STYLES; OTHER CORPORATE, TRADE OR FICTITIOUS
NAMES; ETC.
4. INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
S-1.
<PAGE> 193
5. PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
6. DEPOSIT ACCOUNTS
S-2.
<PAGE> 194
EXHIBIT K
to the Credit Agreement
FORM OF SUBSIDIARY SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement"), dated as of
December 31, 1996, is made between [EF Data Corporation, a corporation
incorporated in the State of California,] [California Microwave Navigation
Systems, Inc., a corporation incorporated in the State of Delaware,] (the
"Subsidiary"), and Bank of America National Trust & Savings Association, as
agent for the Banks (in such capacity, the "Agent").
WHEREAS:
(A) Pursuant to a Guaranty dated of even date herewith
executed by the Subsidiary in favor of the Agent on behalf of the Banks and the
Agent, (as amended, modified, renewed or extended from time to time the
"Guaranty"), the Subsidiary has guaranteed the obligations of its parent
company, California Microwave, Inc. (the "Parent"), arising pursuant to that
certain First Amended and Restated Credit Agreement dated of even date herewith
among Parent, certain financial institutions as lenders, Bank of America
National Trust & Savings Association, as issuer of a letters of credit from
time to time for the account of the Parent, and as Agent (as amended, modified,
renewed or extended from time to time, the "Credit Agreement").
(B) It is a condition precedent to the borrowings and the
issuance of letters of credit under the Credit Agreement that the Subsidiary
enter into this Agreement and grant to the Agent, for itself and for the
ratable benefit of the Banks, the security interests hereinafter provided to
secure the obligations of the Subsidiary under the Guaranty described above.
Accordingly, the parties hereto agree as follows:
SECTION 1 Definitions; Interpretation.
(a) Terms Defined in Credit Agreement. All capitalized
terms used in this Agreement (included in the recitals hereof) and not
otherwise defined herein shall have the meanings assigned to them in the Credit
Agreement.
(b) Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings:
"Accounts" means any and all accounts of the Subsidiary,
whether now existing or hereafter acquired or arising, and in any event
includes all accounts receivable, contract rights, rights to payment and other
obligations of any kind owed to the Subsidiary arising out of or in connection
with the sale or lease of merchandise, goods or commodities or the rendering of
services or arising from any other transaction, however evidenced, and whether
or not earned by performance, all guaranties, indemnities and security with
respect to the
K-1
<PAGE> 195
foregoing, and all letters of credit relating thereto, in each case whether now
existing or hereafter acquired or arising.
"Books" means all books, records and other written, electronic
or other documentation in whatever form maintained now or hereafter by or for
the Subsidiary in connection with the ownership of its assets or the conduct of
its business or evidencing or containing information relating to the
Collateral, including: (i) ledgers; (ii) records indicating, summarizing, or
evidencing the Subsidiary's assets (including Inventory and Rights to Payment),
business operations or financial condition; (iii) computer programs and
software; (iv) computer discs, tapes, files, manuals, spreadsheets; (v)
computer printouts and output of whatever kind; (vi) any other computer
prepared or electronically stored, collected or reported information and
equipment of any kind; and (vii) any and all other rights now or hereafter
arising out of any contract or agreement between the Subsidiary and any service
bureau, computer or data processing company or other Person charged with
preparing or maintaining any of the Subsidiary's books or records or with
credit reporting, including with regard to the Subsidiary's Accounts.
"Chattel Paper" means all writings of whatever sort which
evidence a monetary obligation and a security interest in or lease of specific
goods, whether now existing or hereafter arising.
"Collateral" has the meaning set forth in Section 2.
"Deposit Account" means any demand, time, savings, passbook or
like account now or hereafter maintained by or for the benefit of the
Subsidiary with a bank, savings and loan association, credit union or like
organization (including the Agent and each Bank) and all funds and amounts
therein, whether or not restricted or designated for a particular purpose.
"Documents" means any and all documents of title, bills of
lading, dock warrants, dock receipts, warehouse receipts and other documents of
the Subsidiary, whether or not negotiable, and includes all other documents
which purport to be issued by a bailee or agent and purport to cover goods in
any bailee's or agent's possession which are either identified or are fungible
portions of an identified mass, including such documents of title made
available to the Subsidiary for the purpose of ultimate sale or exchange of
goods or for the purpose of loading, unloading, storing, shipping,
transshipping, manufacturing, processing or otherwise dealing with goods in a
manner preliminary to their sale or exchange, in each case whether now existing
or hereafter acquired or arising.
"Financing Statements" has the meaning set forth in Section 3.
"General Intangibles" means all general intangibles of the
Subsidiary, now existing or hereafter acquired or arising, and in any event
includes: (i) all tax and other refunds, rebates or credits of every kind and
nature to which the Subsidiary is now or hereafter may become entitled; (ii)
all good will, choses in action and causes of action, whether legal or
equitable, whether in contract or tort and however arising; (iii) all
uncertificated securities and interests in limited and general partnerships,
and all money market and
K-2
<PAGE> 196
mutual fund accounts, and all margin deposits and other credit balances and
accounts maintained with brokers and custodians; (iv) all rights of stoppage in
transit, replevin and reclamation; (v) all licenses, permits, consents,
indulgences and rights of whatever kind issued in favor of or otherwise
recognized as belonging to the Subsidiary by any Governmental Authority; and
(vi) all indemnity agreements, guaranties, insurance policies and other
contractual, equitable and legal rights of whatever kind or nature; in each
case whether now existing or hereafter acquired or arising.
"Instruments" means any and all negotiable instruments,
certificated securities and every other writing which evidences a right to the
payment of money, whether held directly or through a financial intermediary, in
each case whether now existing or hereafter acquired.
"Inventory" means any and all of the Subsidiary's inventory in
all of its forms, wherever located, whether now owned or hereafter acquired,
and in any event includes all goods (including goods in transit) which are held
for sale, lease or other disposition, including those held for display or
demonstration or out on lease or consignment or to be furnished under a
contract of service, or which are raw materials, work in process, finished
goods or materials used or consumed in the Subsidiary's business, and the
resulting product or mass, and all repossessed, returned, rejected, reclaimed
and replevied goods, together with all parts, components, supplies and other
materials used or usable in connection with the manufacture, production,
packing, shipping, advertising, selling or furnishing of such goods; and all
other items hereafter acquired by the Subsidiary by way of substitution,
replacement, return, repossession or otherwise, and all additions and
accessions thereto, and any Document representing or relating to any of the
foregoing at any time.
"Proceeds" means whatever is receivable or received from or
upon the sale, lease, license, collection, use, exchange or other disposition,
whether voluntary or involuntary, of any Collateral or other assets of the
Subsidiary, including "proceeds" as defined at UCC Section 9306, any and all
proceeds of any insurance, indemnity, warranty or guaranty payable to or for
the account of the Subsidiary from time to time with respect to any of the
Collateral, any and all payments (in any form whatsoever) made or due and
payable to the Subsidiary from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any Governmental Authority (or any Person acting under color of
governmental authority), any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or for or on account
of any damage or injury to or conversion of any Collateral by any Person, any
and all other tangible or intangible property received upon the sale or other
disposition of Collateral, and all proceeds of proceeds.
"Rights to Payment" means all Accounts and any and all rights
and claims to the payment or receipt of money or other forms of consideration
of any kind in, to and under all Chattel Paper, Documents, General Intangibles,
Instruments, and Proceeds.
"Secured Obligations" means all liabilities and other
obligations of the Subsidiary to the Agent and the Banks, whether created
under, arising out of or in connection
K-3
<PAGE> 197
with the Guaranty or any of the other Loan Documents or otherwise, including
all unpaid principal of the Loans, all unpaid L/C Obligations, all interest
accrued thereon, all fees due under the Credit Agreement and all other amounts
payable by the Parent to the Agent, the Banks thereunder or in connection
therewith, whether now existing or hereafter arising, and whether due or to
become due, absolute or contingent, liquidated or unliquidated, determined or
undetermined.
"UCC" means the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of California; provided, however, in
the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of California, the term "UCC" shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
(c) Terms Defined in UCC. Where applicable and except as
otherwise defined herein, terms used in this Agreement shall have the meanings
assigned to them in the UCC.
(d) Interpretation. The rules of interpretation set
forth in Section 1.02 of the Credit Agreement shall be applicable to this
Agreement and are incorporated herein by this reference.
SECTION 2 Security Interest.
(a) Grant of Security Interest. As security for the
payment and performance of the Secured Obligations, the Subsidiary hereby
pledges, assigns, transfers, hypothecates and sets over to the Agent, for
itself and on behalf of and for the ratable benefit of the Banks, and hereby
grants to the Agent, for itself and on behalf of and for the ratable benefit of
the Banks, a security interest in all of the Subsidiary's right, title and
interest in, to and under the following property, wherever located and whether
now existing or owned or hereafter acquired or arising (collectively, the
"Collateral"): (i) all Accounts; (ii) all Books; (iii) all Chattel Paper; (iv)
all Deposit Accounts; (v) all Documents; (vi) all General Intangibles; (vii)
all Instruments; (viii) all Inventory; (ix) all Rights to Payment; and (x) all
products and Proceeds of any and all of the foregoing.
(b) Subsidiary Remains Liable. Anything herein to the
contrary notwithstanding, (i) the Subsidiary shall remain liable under any
contracts, agreements and other documents included in the Collateral, to the
extent set forth therein, to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed, (ii)
the exercise by the Agent of any of the rights hereunder shall not release the
Subsidiary from any of its duties or obligations under such contracts,
agreements and other documents included in the Collateral, and (iii) the Agent
shall not have any obligation or liability under any contracts, agreements and
other documents included in the Collateral by reason of this Agreement, nor
shall the Agent be obligated to perform any of the obligations or
K-4
<PAGE> 198
duties of the Subsidiary thereunder or to take any action to collect or enforce
any such contract, agreement or other document included in the Collateral
hereunder.
(c) Continuing Security Interest. The Subsidiary agrees
that this Agreement shall create a continuing security interest in the
Collateral which shall remain in effect until terminated in accordance with
Section 22.
SECTION 3 Perfection Procedures.
(a) Financing Statements. The Subsidiary shall execute
and deliver to the Agent concurrently with the execution of this Agreement, and
at any time and from time to time thereafter, all financing statements,
continuation financing statements, termination statements, security agreements,
chattel mortgages, assignments, patent, copyright and trademark collateral
assignments, fixture filings, warehouse receipts, documents of title,
affidavits, reports, notices, schedules of account, letters of authority and
all other documents and instruments, in form satisfactory to the Agent (the
"Financing Statements"), and take all other action, as the Agent may request,
to perfect and continue perfected, maintain the priority of or provide notice
of the Agent's security interest in the Collateral and to accomplish the
purposes of this Agreement.
(b) Notice of Security Interest. In accordance with Section
9302(1)(g) of the California UCC, written notice of the security interest of
the Agent, for itself and on behalf of and for the ratable benefit of the
Banks, in each Deposit Account maintained with a Bank is hereby given to such
Bank.
(c) Certain Agents. Any third person at any time and from
time to time holding all or any portion of the Collateral shall be deemed to,
and shall, hold the Collateral as the agent of, and as pledge holder for, the
Agent. At any time and from time to time, the Agent may give notice to any
third person holding all or any portion of the Collateral that such third
person is holding the Collateral as the agent of, and as pledge holder for, the
Agent.
SECTION 4 Representations and Warranties. The Subsidiary
represents and warrants to each Bank and the Agent that:
(a) Location of Chief Executive Office and Collateral.
The Subsidiary's chief executive office and principal place of business is
located at the address set forth in Schedule 1, and all other locations where
the Subsidiary conducts business or Collateral is kept are set forth in
Schedule 1.
(b) Locations of Books. All locations where Books
pertaining to the Rights to Payment are kept, including all equipment necessary
for accessing such Books and the names and addresses of all service bureaus,
computer or data processing companies and other Persons keeping any Books or
collecting Rights to Payment for the Subsidiary, are set forth in Schedule 1.
K-5
<PAGE> 199
(c) Trade Names and Trade Styles. All trade names and
trade styles under which the Subsidiary presently conducts its business
operations are set forth in Schedule 1, and, except as set forth in Schedule 1,
the Subsidiary has not, at any time in the past: (i) been known as or used any
other corporate, trade or fictitious name; (ii) changed its name; (iii) been
the surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
(d) Ownership of Collateral. The Subsidiary is, and,
except as permitted by Section 5(i), will continue to be, the sole and complete
owner of the Collateral (or, in the case of after-acquired Collateral, at the
time the Subsidiary acquires rights in such Collateral, will be the sole and
complete owner thereof), free from any Lien other than Permitted Liens.
(e) Enforceability; Priority of Security Interest. (i)
This Agreement creates a security interest which is enforceable against the
Collateral in which the Subsidiary now has rights and will create a security
interest which is enforceable against the Collateral in which the Subsidiary
hereafter acquires rights at the time the Subsidiary acquires any such rights;
and (ii) the Agent has a perfected and first priority security interest in the
Collateral in which the Subsidiary now has rights, and will have a perfected
and first priority security interest in the Collateral in which the Subsidiary
hereafter acquires rights at the time the Subsidiary acquires any such rights,
in each case securing the payment and performance of the Secured Obligations.
(f) Other Financing Statements. Other than (i) Financing
Statements disclosed to the Agent and (ii) Financing Statements in favor of the
Agent on behalf of the Banks, no effective Financing Statement naming the
Subsidiary as debtor, assignor, grantor, mortgagor, pledgor or the like and
covering all or any part of the Collateral is on file in any filing or
recording office in any jurisdiction.
(g) Rights to Payment.
(i) The Rights to Payment represent valid, binding and
enforceable obligations of the account debtors or other Persons obligated
thereon, representing undisputed, bona fide transactions completed in
accordance with the terms and provisions contained in any documents related
thereto, and are and will be genuine, free from Liens, and not subject to any
adverse claims, counterclaims, setoffs, defaults, disputes, defenses,
discounts, retainages, holdbacks or conditions precedent of any kind of
character, except to the extent reflected by the Subsidiary's reserves for
uncollectible Rights to Payment or to the extent, if any, that such account
debtors or other Persons may be entitled to normal and ordinary course trade
discounts, returns, adjustments and allowances in accordance with Section 5(m);
(ii) to the best of the Subsidiary's knowledge and belief,
all account debtors and other obligors on the Rights to Payment are solvent and
generally paying their debts as they come due;
K-6
<PAGE> 200
(iii) all Rights to Payment comply with all applicable laws
concerning form, content and manner of preparation and execution, including
where applicable any U.S. federal or state consumer credit laws;
(iv) the Subsidiary has not assigned any of its rights under
the Rights to Payment except as provided in this Agreement or as set forth in
the other Loan Documents;
(v) with respect to the Rights to Payment constituting
Eligible Accounts Receivable the Subsidiary has no knowledge that any of the
criteria for eligibility are not or are no longer satisfied;
(vi) all statements made, all unpaid balances and all other
information in the Books and other documentation relating to the Rights to
Payment are true and correct and in all respects what they purport to be; and
(vii) the Subsidiary has no knowledge of any fact or
circumstance which would impair the validity or collectibility of any of the
Rights to Payment.
(h) Inventory. No Inventory is stored with any bailee,
warehouseman or similar Person or on any premises leased to the Subsidiary, nor
has any Inventory been consigned to the Subsidiary or consigned by the
Subsidiary to any Person or is held by the Subsidiary for any Person under any
"bill and hold" or other arrangement, except as set forth in Schedule 1.
(i) Deposit Accounts. The names and addresses of all
financial institutions at which the Subsidiary maintains its Deposit Accounts,
and the account numbers and account names of such Deposit Accounts, are set
forth in Schedule 1.
SECTION 5 Covenants. In addition to the covenants of the
Subsidiary set forth in the Credit Agreement, which are incorporated herein by
this reference, so long as any of the Secured Obligations remain unsatisfied or
any Bank shall have any Commitment, the Subsidiary agrees that:
(a) Defense of Collateral. The Subsidiary will appear in
and defend any action, suit or proceeding which may affect to a material extent
its title to, or right or interest in, or the Agent's right or interest in, the
Collateral.
(b) Preservation of Collateral. The Subsidiary will do
and perform all reasonable acts that may be necessary and appropriate to
maintain, preserve and protect the Collateral.
(c) Compliance with Laws, Etc. The Subsidiary will
comply with all laws, regulations and ordinances, and all policies of
insurance, relating in a material way to the possession, operation, maintenance
and control of the Collateral.
K-7
<PAGE> 201
(d) Location of Books and Chief Executive Office. The
Subsidiary will: (i) keep all Books pertaining to the Rights to Payment at the
locations set forth in Schedule 1; and (ii) keep the location of the
Subsidiary's chief executive office or principal place of business at the
location set forth in Schedule 1.
(e) Location of Collateral. The Subsidiary will keep the
Collateral at the locations set forth in Schedule 1 and not remove the
Collateral from such locations (other than disposals of Collateral permitted by
subsection (i)).
(f) Change in Name, Identity or Structure. The
Subsidiary will give at least 30 days' prior written notice to the Agent of (i)
any change in its name, (ii) any changes in, additions to or other
modifications of its trade names and trade styles set forth in Schedule 1, and
(iii) any changes in its identity or structure in any manner which might make
any Financing Statement filed hereunder incorrect or misleading.
(g) Maintenance of Records. The Subsidiary will keep
separate, accurate and complete Books with respect to the Collateral,
disclosing the Agent's security interest hereunder.
(h) Invoicing of Sales. The Subsidiary will invoice all
of its sales upon forms customary in the industry and to maintain proof of
delivery and customer acceptance of goods.
(i) Disposition of Collateral. The Subsidiary will not
surrender or lose possession of (other than to the Agent), sell, lease, rent,
or otherwise dispose of or transfer any of the Collateral or any right or
interest therein, except to the extent permitted by the Credit Agreement.
(j) Liens. The Subsidiary will keep the Collateral free
of all Liens except Permitted Liens.
(k) Expenses. The Subsidiary will pay all expenses of
protecting, storing, warehousing, insuring, handling and shipping the
Collateral.
(l) Leased Premises. At the Agent's request, the
Subsidiary will obtain from each Person from whom the Subsidiary leases any
premises at which any Collateral is at any time present such subordination,
waiver, consent and estoppel agreements as the Agent may require, in form and
substance satisfactory to the Agent.
(m) Rights to Payment. The Subsidiary will:
(i) with such frequency as the Agent may require, furnish to
the Agent full and complete reports, in form and substance satisfactory to the
Agent, with respect to the Accounts, including information as to concentration,
aging, identity of account debtors, letters of credit securing Accounts,
disputed Accounts and other matters, as the Agent shall request;
K-8
<PAGE> 202
(ii) give only normal discounts, allowances and credits as to
Accounts and other Rights to Payment, in the ordinary course of business,
according to normal trade practices utilized by the Subsidiary in the past, and
enforce all Accounts and other Rights to Payment strictly in accordance with
their terms, and take all such action to such end as may from time to time be
reasonably requested by the Agent, except that the Subsidiary may grant any
extension of the time for payment or enter into any agreement to make a rebate
or otherwise to reduce the amount owing on or with respect to, or compromise or
settle for less than the full amount thereof, any Account or other Right to
Payment, in the ordinary course of business, according to normal trade
practices utilized by the Subsidiary in the past, and where the amount involved
does not exceed $500,000 or where the Account or Right to Payment does not
exceed $1,000,000 or would not be materially impaired;
(iii) if any discount, allowance, credit, extension of time
for payment, agreement to make a rebate or otherwise to reduce the amount owing
on, or compromise or settle, an Account or other Right to Payment exists or
occurs, or if, to the knowledge of the Subsidiary, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened with respect
to an Account or other Right to Payment (collectively such events the
"Disclosure Events"), disclose such fact fully to the Agent in the Books
relating to such Account or other Right to Payment and in connection with any
invoice or report furnished by the Subsidiary to the Agent relating to such
Account or other Right to Payment; provided that no such disclosure shall be
required where the Disclosure Events arises in the ordinary course of business
according to normal trade practices utilized by the Subsidiary and where the
amount of the Account or other Right to Payment affected by such Disclosure
Events in less than $500,000 individually or in the aggregate does not exceed
$2,000,000 in any calendar year;
(iv) with respect to Accounts arising from contracts with the
United States or any department, agency or instrumentality thereof, immediately
notify the Agent thereof and execute any documents and instruments and take any
other steps requested by the Agent in order that all monies due and to become
due thereunder shall be assigned to the Agent and notice thereof given to the
Federal authorities under the Federal Assignment of Claims Act;
(v) in accordance with its sound business judgment perform
and comply in all material respects with its obligations in respect of the
Accounts and other Rights to Payment;
(vi) upon the request of the Agent (A) at any time, notify
all or any designated portion of the account debtors and other obligors on the
Rights to Payment of the security interest hereunder, and (B) upon the
occurrence of an Event of Default, notify the account debtors and other
obligors on the Rights to Payment or any designated portion thereof that
payment shall be made directly to the Agent or to such other Person or location
as the Agent shall specify; and
(vii) upon the occurrence of any Event of Default, establish
such lockbox or similar arrangements for the payment of the Accounts and other
Rights to Payment as the Agent shall require.
K-9
<PAGE> 203
(n) Documents, Etc. Upon the request of the Agent, the
Subsidiary will (i) immediately deliver to the Agent, or an agent designated by
it, appropriately endorsed or accompanied by appropriate instruments of
transfer or assignment, all Documents, Instruments and Chattel Paper, and all
other Rights to Payment at any time evidenced by promissory notes, trade
acceptances or other instruments and (ii) mark all Documents and Chattel Paper
with such legends as the Agent shall specify.
(o) Inventory. The Subsidiary will:
(i) at such times as the Agent shall request, prepare and
deliver to the Agent a report of all Inventory, in form and substance
satisfactory to the Agent;
(ii) upon the request of the Agent, take a physical listing
of the Inventory and promptly deliver a copy of such physical listing to the
Agent; and
(iii) not store any Inventory with a bailee, warehouseman or
similar Person or on premises leased to the Subsidiary, nor dispose of any
Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or similar basis, nor acquire any Inventory from any
Person on any such basis.
(p) Notices, Reports and Information. The Subsidiary will
(i) notify the Agent of any material claim made or asserted against the
Collateral by any Person and of any change in the composition of the Collateral
or other event which could materially adversely affect the value of the
Collateral or the Agent's Lien thereon; (ii) furnish to the Agent such
statements and schedules further identifying and describing the Collateral and
such other reports and other information in connection with the Collateral as
the Agent may reasonably request, all in reasonable detail; and (iii) upon
request of the Agent make such demands and requests for information and reports
as the Subsidiary is entitled to make in respect of the Collateral.
SECTION 6 Collection of Rights to Payment. Until the Agent
exercises its rights hereunder to collect Rights to Payment, the Subsidiary
shall endeavor in the first instance diligently to collect all amounts due or
to become due on or with respect to the Rights to Payment. At the request of
the Agent, upon and after the occurrence of any Event of Default, all
remittances received by the Subsidiary shall be held in trust for the Agent
and, in accordance with the Agent's instructions, remitted to the Agent or
deposited to an account with the Agent in the form received (with any necessary
endorsements or instruments of assignment or transfer).
SECTION 7 Authorization; Agent Appointed Attorney-in-Fact.
The Agent shall have the right to, in the name of the Subsidiary, or in the
name of the Agent or otherwise, without notice to or assent by the Subsidiary,
and the Subsidiary hereby constitutes and appoints the Agent (and any of the
Agent's officers or employees or agents designated by the Agent) as the
Subsidiary's true and lawful attorney-in-fact, with full power and authority
to:
K-10
<PAGE> 204
(i) sign any of the Financing Statements which must be
executed or filed to perfect or continue perfected, maintain the priority of or
provide notice of the Agent's security interest in the Collateral;
(ii) take possession of and endorse any notes, acceptances,
checks, drafts, money orders or other forms of payment or security and collect
any Proceeds of any Collateral;
(iii) sign and endorse any invoice or bill of lading relating
to any of the Collateral, warehouse or storage receipts, drafts against
customers or other obligors, assignments, notices of assignment, verifications
and notices to customers or other obligors;
(iv) notify the U.S. Postal Service and other postal
authorities to change the address for delivery of mail addressed to the
Subsidiary to such address as the Agent may designate; and, without limiting
the generality of the foregoing, establish with any Person lockbox or similar
arrangements for the payment of the Rights to Payment;
(v) receive, open and dispose of all mail addressed to the
Subsidiary;
(vi) send requests for verification of Rights to Payment to
the customers or other obligors of the Subsidiary;
(vii) contact, or direct the Subsidiary to contact, all
account debtors and other obligors on the Rights to Payment and instruct such
account debtors and other obligors to make all payments directly to the Agent;
(viii) assert, adjust, sue for, compromise or release any
claims under any policies of insurance;
(ix) exercise dominion and control over, and refuse to permit
further withdrawals from, Deposit Accounts maintained with the Agent, any Bank
or any other bank, financial institution or other Person;
(x) notify each Person maintaining lockbox or similar
arrangements for the payment of the Rights to Payment to remit all amounts
representing collections on the Rights to Payment directly to the Agent;
(xi) ask, demand, collect, receive and give acquittances and
receipts for any and all Rights to Payment, enforce payment or any other rights
in respect of the Rights to Payment and other Collateral, grant consents, agree
to any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Agent may deem
necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Agent with respect to
the Collateral;
K-11
<PAGE> 205
(xii) execute any and all endorsements, assignments or other
documents and instruments necessary to sell, lease, assign, convey or otherwise
transfer title in or dispose of the Collateral; and
(xiii) execute any and all such other documents and
instruments, and do any and all acts and things for and on behalf of the
Subsidiary, which the Agent may deem necessary or advisable to maintain,
protect, realize upon and preserve the Collateral and the Agent's security
interest therein and to accomplish the purposes of this Agreement.
The Agent agrees that, except upon and after the occurrence of
an Event of Default, it shall not exercise the power of attorney granted to
Agent pursuant to clauses (ii) through (xii). The foregoing power of attorney
is coupled with an interest and irrevocable so long as the Banks have any
Commitments or the Secured Obligations have not been paid and performed in
full. The Subsidiary hereby ratifies, to the extent permitted by law, all that
the Agent shall lawfully and in good faith do or cause to be done by virtue of
and in compliance with this Section 7.
SECTION 8 Agent Performance of Subsidiary Obligations. The
Agent may perform or pay any obligation which the Subsidiary has agreed to
perform or pay under or in connection with this Agreement, and the Subsidiary
shall reimburse the Agent on demand for any amounts paid by the Agent pursuant
to this Section 8.
SECTION 9 Agent's Duties. Notwithstanding any provision
contained in this Agreement, the Agent shall have no duty to exercise any of
the rights, privileges or powers afforded to it and shall not be responsible to
the Subsidiary or any other Person for any failure to do so or delay in doing
so. Beyond the exercise of reasonable care to assure the safe custody of
Collateral in the Agent's possession and the accounting for moneys actually
received by the Agent hereunder, the Agent shall have no duty or liability to
exercise or preserve any rights, privileges or powers pertaining to the
Collateral.
SECTION 10 Remedies.
(a) Remedies. Upon the occurrence of any Event of
Default, the Agent shall have, in addition to all other rights and remedies
granted to it in this Agreement, the Credit Agreement or any other Loan
Document, all rights and remedies of a secured party under the UCC and other
applicable laws. Without limiting the generality of the foregoing, the
Subsidiary agrees that:
(i) The Agent may peaceably and without notice enter any
premises of the Subsidiary, take possession of any Collateral, remove or
dispose of all or part of the Collateral on any premises of the Subsidiary or
elsewhere, and otherwise collect, receive, appropriate and realize upon all or
any part of the Collateral, and demand, give receipt for, settle, renew,
extend, exchange, compromise, adjust, or sue for all or any part of the
Collateral, as the Agent may determine.
K-12
<PAGE> 206
(ii) The Agent may require the Subsidiary to assemble all or
any part of the Collateral and make it available to the Agent, at any place and
time designated by the Agent.
(iii) The Agent may secure the appointment of a receiver of
the Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(iv) The Agent may withdraw (or cause to be withdrawn) any
and all funds from Deposit Accounts.
(v) The Agent may sell, resell, lease, use, assign, transfer
or otherwise dispose of any or all of the Collateral in its then condition or
following any commercially reasonable preparation or processing (utilizing in
connection therewith any of the Subsidiary's assets, without charge or
liability to the Agent therefor) at public or private sale, by one or more
contracts, in one or more parcels, at the same or different times, for cash or
credit or for future delivery without assumption of any credit risk, all as the
Agent deems advisable; provided, however, that the Subsidiary shall be credited
with the net proceeds of sale only when such proceeds are finally collected by
the Agent. The Agent and each of the Banks shall have the right upon any such
public sale, and, to the extent permitted by law, upon any such private sale,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption, which right or equity of redemption the Subsidiary
hereby releases, to the extent permitted by law. The Subsidiary hereby agrees
that the sending of notice by ordinary mail, postage prepaid, to the address of
the Subsidiary set forth in the Credit Agreement, of the place and time of any
public sale or of the time after which any private sale or other intended
disposition is to be made, shall be deemed reasonable notice thereof if such
notice is sent ten days prior to the date of such sale or other disposition or
the date on or after which such sale or other disposition may occur, provided
that the Agent may provide the Subsidiary shorter notice or no notice, to the
extent permitted by the UCC or other applicable law.
(b) Proceeds Account. To the extent that any of the
Secured Obligations may be contingent, unmatured or unliquidated (including
with respect to undrawn amounts under the Letters of Credit) at such time as
there may exist an Event of Default, the Agent may, at its election, (i) retain
the proceeds of any sale, collection, disposition or other realization upon the
Collateral (or any portion thereof) in a special purpose non-interest-bearing
restricted deposit account (the "Proceeds Account") created and maintained by
the Agent for such purpose (which shall constitute a Deposit Account included
within the Collateral hereunder) until such time as the Agent may elect to
apply such proceeds to the Secured Obligations, and the Subsidiary agrees that
such retention of such proceeds by the Agent shall not be deemed strict
foreclosure with respect thereto; (ii) in any manner elected by the Agent,
estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such
amount; or (iii) otherwise proceed in any manner permitted by applicable law.
The Subsidiary agrees that the Proceeds Account shall be a blocked account and
that upon the irrevocable deposit of funds into the Proceeds Account, the
Subsidiary shall not have any right of withdrawal with respect to such funds.
Accordingly, the Subsidiary irrevocably waives until the termination of this
Agreement in accordance with Section 22 the right to make any withdrawal from
the Proceeds Account and the right to instruct the Agent to honor drafts
against the Proceeds Account.
K-13
<PAGE> 207
(c) Application of Proceeds. Subject to subsection (b),
the cash proceeds actually received from the sale or other disposition or
collection of Collateral, and any other amounts received in respect of the
Collateral the application of which is not otherwise provided for herein, shall
be applied as directed by the Agent and the Majority Banks in their sole
discretion. Any surplus thereof which exists after payment and performance in
full of the Secured Obligations shall be promptly paid over to the Subsidiary
or otherwise disposed of in accordance with the UCC or other applicable law.
The Subsidiary shall remain liable to the Agent and the Banks for any
deficiency which exists after any sale or other disposition or collection of
Collateral.
SECTION 11 Certain Waivers. The Subsidiary waives, to the
fullest extent permitted by law, (i) any right of redemption with respect to
the Collateral, whether before or after sale hereunder, and all rights, if any,
of marshalling of the Collateral or other collateral or security for the
Secured Obligations; (ii) any right to require the Agent or the Banks (A) to
proceed against any Person, (B) to exhaust any other collateral or security for
any of the Secured Obligations, (C) to pursue any remedy in the Agent's or any
of the Banks' power, or (D) to make or give any presentments, demands for
performance, notices of nonperformance, protests, notices of protests or
notices of dishonor in connection with any of the Collateral; and (iii) all
claims, damages, and demands against the Agent or the Banks arising out of the
repossession, retention, sale or application of the proceeds of any sale of the
Collateral.
SECTION 12 Notices. All notices or other communications
hereunder shall be given in the manner and to the addresses specified in the
Credit Agreement. All such notices and other communications shall be effective
(i) if delivered by hand, when delivered; (ii) if sent by mail, upon the
earlier of the date of receipt or five Business Days after deposit in the mail,
first class (or air mail, with respect to communications to be sent to or from
the United States), postage prepaid; and (iii) if sent by facsimile
transmission, when sent.
SECTION 13 No Waiver; Cumulative Remedies. No failure on the
part of the Agent or any Bank to exercise, and no delay in exercising, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, remedy, power or
privilege preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights and remedies under this
Agreement are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the Agent or any Bank.
SECTION 14 Costs and Expenses; Indemnification; Other
Charges.
(a) Costs and Expenses. The Subsidiary agrees to pay on
demand:
(i) the reasonable out-of-pocket costs and expenses of the
Agent and any of its Affiliates, and the reasonable fees and disbursements of
counsel to the Agent (including allocated costs of internal counsel), in
connection with the negotiation, preparation, execution, delivery and
administration of this Agreement, and any amendments, modifications or waivers
of the terms thereof, and the custody of the Collateral;
K-14
<PAGE> 208
(ii) all title, appraisal (including the allocated costs of
internal appraisal services), survey, audit, consulting, search, recording,
filing and similar fees, costs and expenses incurred or sustained by the Agent
or any of its Affiliates in connection with this Agreement or the Collateral;
and
(iii) all costs and expenses of the Agent, its Affiliates,
and the Banks, and the fees and disbursements of counsel (including the
allocated costs of internal counsel), in connection with the enforcement or
attempted enforcement of, and preservation of any rights or interests under,
this Agreement, any out-of-court workout or other refinancing or restructuring
or in any bankruptcy case, and the protection, sale or collection of, or other
realization upon, any of the Collateral, including all expenses of taking,
collecting, holding, sorting, handling, preparing for sale, selling, or the
like, and other such expenses of sales and collections of Collateral, and any
and all losses, costs and expenses sustained by the Agent and any Bank as a
result of any failure by the Subsidiary to perform or observe its obligations
contained herein.
(b) Indemnification. The Subsidiary hereby agrees to
indemnify the Agent and each Bank, any Affiliate thereof, and their respective
directors, officers, employees, agents, counsel and other advisors (each an
"Indemnified Person") against, and hold each of them harmless from, any and all
liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including the reasonable fees and disbursements of counsel to an
Indemnified Person (including allocated costs of internal counsel), which may
be imposed on, incurred by, or asserted against any Indemnified Person, in any
way relating to or arising out of this Agreement or the transactions
contemplated hereby or any action taken or omitted to be taken by it hereunder
(the "Indemnified Liabilities"); provided that the Subsidiary shall not be
liable to any Indemnified Person for any portion of such Indemnified
Liabilities to the extent they are found by a final decision of a court of
competent jurisdiction to have resulted from such Indemnified Person's gross
negligence or willful misconduct. If and to the extent that the foregoing
indemnification is for any reason held unenforceable, the Subsidiary agrees to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under applicable law.
(c) Other Charges. The Subsidiary agrees to indemnify
the Agent and each of the Banks against and hold each of them harmless from any
and all present and future stamp, transfer, documentary and other such taxes,
levies, fees, assessments and other charges made by any jurisdiction by reason
of the execution, delivery, performance and enforcement of this Agreement.
(d) Interest. Any amounts payable to the Agent or any Bank
under this Section 14 or otherwise under this Agreement if not paid upon demand
shall bear interest from the date of such demand until paid in full, at the
rate of interest set forth in Section 2.09(c) of the Credit Agreement.
K-15
<PAGE> 209
SECTION 15 Binding Effect. This Agreement shall be binding
upon, inure to the benefit of and be enforceable by the Subsidiary, the Agent,
and each Bank and their respective successors and assigns.
SECTION 16 Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA,
EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE
VALIDITY OR PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES
HEREUNDER, IN RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A
JURISDICTION OTHER THAN CALIFORNIA.
SECTION 17 Entire Agreement; Amendment. This Agreement
contains the entire agreement of the parties with respect to the subject matter
hereof and shall not be amended except by the written agreement of the parties
as provided in the Credit Agreement.
SECTION 18 Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under all applicable laws and regulations. If, however, any provision of
this Agreement shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation, or,
if for any reason it is not deemed so modified, it shall be ineffective and
invalid only to the extent of such prohibition or invalidity without affecting
the remaining provisions of this Agreement, or the validity or effectiveness of
such provision in any other jurisdiction.
SECTION 19 Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute but one and the same
agreement.
SECTION 20 Incorporation of Provisions of the Credit
Agreement. To the extent the Credit Agreement contains provisions of general
applicability to the Loan Documents, including any such provisions contained in
Article XI thereof, such provisions are incorporated herein by this reference.
SECTION 21 No Inconsistent Requirements. The Subsidiary
acknowledges that this Agreement and the other Loan Documents may contain
covenants and other terms and provisions variously stated regarding the same or
similar matters, and agrees that all such covenants, terms and provisions are
cumulative and all shall be performed and satisfied in accordance with their
respective terms.
SECTION 22 Termination. Upon the termination of the
Commitments of the Banks, the surrender of the Letters of Credit and payment
and performance in full of all Secured Obligations, this Agreement shall
terminate and the Agent shall promptly execute and deliver to the Subsidiary
such documents and instruments reasonably requested by the Subsidiary as shall
be necessary to evidence termination of all security interests given by the
K-16
<PAGE> 210
Subsidiary to the Agent hereunder; provided, however, that the obligations of
the Subsidiary under Section 14 shall survive such termination.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE SUBSIDIARY
[EF DATA CORPORATION]/
[CALIFORNIA MICROWAVE
NAVIGATION SYSTEMS, INC.]
By ___________________________________
Title:
THE AGENT
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as Agent
By ___________________________________
Title:
K-17
<PAGE> 211
SCHEDULE 1
to the Security Agreement
1. LOCATIONS OF CHIEF EXECUTIVE OFFICE AND OTHER LOCATIONS, INCLUDING OF
COLLATERAL
a. Chief Executive Office and Principal Place of Business:
b. Other locations where Subsidiary conducts business or
Collateral is kept:
2. LOCATIONS OF BOOKS PERTAINING TO RIGHTS TO PAYMENT
3. TRADE NAMES AND TRADE STYLES; OTHER CORPORATE, TRADE OR FICTITIOUS
NAMES; ETC.
4. INVENTORY STORED WITH WAREHOUSEMEN OR ON LEASED PREMISES, ETC.
S-1.
<PAGE> 212
5. PATENTS, COPYRIGHTS, TRADEMARKS, ETC.
6. DEPOSIT ACCOUNTS
S-2.
<PAGE> 1
California Microwave, Inc.
Computation of Per Share Earnings
Exhibit 11
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
March 31
------------------------
1997 1996
---- ----
<S> <C> <C>
PRIMARY - EPS:
Net income (loss), as reported $ (6,004) $ 1,325
======== ========
Average shares outstanding 16,273 15,969
Add - Common stock equivalents of Company's
stock options using the treasury stock method -- 179
-------- --------
Average shares and equivalents - Primary 16,273 16,148
======== ========
Net income (loss) per share - Primary $ (.37) $ .08
======== ========
FULLY DILUTED - EPS:
Net income, as reported $ 1,325
Add back interest, net of taxes 562
--------
Net income for fully diluted $ 1,887
========
Average shares and equivalents - primary 16,148
Add- additional common stock equivalents of
the Company's stock options 27
Add - Shares to be issued at conversion of
Convertible Debentures 2,222
--------
Average shares and equivalents - Fully Diluted 18,397
========
Net income per share - Fully Diluted NA $ .08
======== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,634
<SECURITIES> 1,795
<RECEIVABLES> 87,682
<ALLOWANCES> 1,885
<INVENTORY> 93,667
<CURRENT-ASSETS> 208,172
<PP&E> 114,688
<DEPRECIATION> 69,182
<TOTAL-ASSETS> 308,968
<CURRENT-LIABILITIES> 94,697
<BONDS> 68,348
0
0
<COMMON> 1,630
<OTHER-SE> 138,467
<TOTAL-LIABILITY-AND-EQUITY> 308,968
<SALES> 313,638
<TOTAL-REVENUES> 313,638
<CGS> 267,830
<TOTAL-COSTS> 267,830
<OTHER-EXPENSES> 93,973
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,239
<INCOME-PRETAX> (49,660)
<INCOME-TAX> (16,388)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,272)
<EPS-PRIMARY> (2.06)
<EPS-DILUTED> (2.06)
</TABLE>
