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EXHIBIT 10.53
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered
into as of July 7, 2000, by and between DATUM INC., a Delaware corporation
("Borrower"), and WELLS FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
A. Borrower and Bank have executed and entered into an Amended
and Restated Credit Agreement dated as of September 27, 1996, which Amended and
Restated Credit Agreement heretofore has been amended from time to time,
including amendments evidenced by (i) that certain First Amendment to Amended
and Restated Credit Agreement dated as of October 30, 1998, (ii) that certain
Second Amendment to Amended and Restated Credit Agreement dated as of December
18, 1998 and (iii) that certain Third Amendment to Amended and Restated Credit
Agreement dated as of June 15, 1999 (as so amended, the "Existing Credit
Agreement"). The Existing Credit Agreement amended and restated that certain
Credit Agreement dated as of December 16, 1994 between Borrower and Bank.
B. Pursuant to the Existing Credit Agreement, Borrower has
executed and delivered to the order of Bank that certain Amended and Restated
Revolving Line of Credit Note dated June 15, 1999 in the original principal
amount of up to $10,000,000.00 (the "Existing Note").
C. Concurrently with Borrower's execution and delivery to Bank
of the Existing Credit Agreement, Borrower entered into that certain Note and
Warrant Purchase Agreement dated as of September 27, 1996 (as amended, the "Note
Agreement") with The Prudential Insurance Company of America ("Prudential"),
pursuant to which Borrower issued its Series A Secured Notes and Series B
Secured Notes (collectively, the "Prudential Notes"). Bank, together with
Borrower, Efratom, Austron, Systems, the holders of the Prudential Notes (the
"Noteholders") and Wells Fargo Bank, National Association, as collateral agent
("Collateral Agent") for Bank and the Noteholders, entered into an Intercreditor
and Collateral Agency Agreement dated as of September 27, 1996 (as amended, the
"Intercreditor Agreement") which provided for, among other things, the
appointment of the Collateral Agent and the application of payments received by
the Collateral Agent with respect to the obligations owing to Bank and the
Noteholders.
D. In connection with the credit accommodations made by Bank
pursuant to the Existing Credit Agreement and the Existing Note, Borrower and
its Subsidiaries have executed and delivered to Collateral Agent or Bank, as
applicable, numerous other loan and security documents, including the "Existing
Collateral Documents" (as defined below), the "Existing Guaranty" (as defined
below), letter of credit agreements and the like. Such documents, together with
the Existing Credit Agreement and the Existing Note are collectively referred to
herein as the "Existing Loan Documents."
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E. Borrower has represented to Bank that Borrower desires to
repay in full the indebtedness evidenced by the Prudential Notes and to
terminate the Note Agreement. Bank is willing to amend the Existing Credit
Agreement and the other Existing Loan Documents to reflect the termination of
the credit facilities provided pursuant to the Note Agreement, the termination
of the Intercreditor Agreement and certain other modifications agreed to between
Borrower and Bank.
F. This Agreement is intended by Borrower and Bank as an
amendment and restatement of the Existing Credit Agreement as of the "Effective
Date" (as defined below). To the extent not repaid on the Effective Date,
amounts outstanding under the Existing Note shall be deemed to be outstanding
hereunder and evidenced by the "Line of Credit Note" (as defined below).
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as
follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATION
Section 1.1. DEFINED TERMS. The following definitions are in
addition to those stated elsewhere in this Agreement:
"Advance" means an advance under the Line of Credit.
"Austron" means Austron, Inc., a Texas corporation.
"Borrowing Base" means, as of any date of determination, an
amount determined by Bank with reference to the most recent Borrowing Base
Certificate to be equal to the Eligible Receivables Component; provided,
however, that if on such date the most recent Borrowing Base Certificate is as
of a date more than 60 days prior to such date, the Borrowing Base shall mean
such amount as may be determined by Bank in its sole discretion.
"Borrowing Base Certificate" means a borrowing base
certificate in the form of Exhibit A, properly completed and executed by an
officer of Borrower, on behalf of all of the Borrowing Base Parties.
"Borrowing Base Parties" means, for purposes of determining
the Borrowing Base and for certain reporting requirements, Borrower, Austron,
Efratom, Systems and Digital.
"Collateral" means all property, real or personal, in which
Bank is granted a Lien in accordance with this Agreement and the other Loan
Documents.
"Credit" means the credit accommodation described in Article 2
hereof.
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"Digital" means Digital Delivery, Inc., a Massachusetts
corporation.
"Efratom" means Efratom Time and Frequency Products, Inc., a
Colorado corporation.
"Eligible Receivables" means, as of any date of determination,
accounts receivable of the Borrowing Base Parties as to which Bank holds a first
priority perfected Lien, provided that such accounts receivable have been
created in the ordinary course of business of such Borrowing Base Parties, as
applicable, and shall not include:
(a) any account which is past due more than twice the
applicable Borrowing Base Party's standard selling terms, except with
respect to any account for which a Borrowing Base Party has provided
extended payment terms not to exceed one hundred eighty (180) days, any
such account which is more than thirty (30) days past due;
(b) any account with respect to which payment is or
may be contingent or conditional in any respect;
(c) any account for which there exists any right of
setoff, defense or discount (except regular discounts allowed in the
ordinary course of business to promote prompt payment) or for which any
defense or counterclaim has been asserted;
(d) to the extent such accounts exceed ten percent
(10%) of the Borrowing Base Parties' total Eligible Receivables,
accounts representing obligations of state or municipal governments or
of the United States government or political subdivisions thereof
unless such accounts represent obligations of the United States
government and Bank's forms N-138 and N-139 have been duly executed and
acknowledged with respect thereto;
(e) to the extent such accounts exceed five percent
(5%) of the Borrowing Base Parties' total Eligible Receivables,
accounts representing obligations of account debtors located in foreign
countries, except to the extent any such account, in Bank's
determination, is supported by a letter of credit or insured under a
policy of foreign credit insurance, in each case in form, substance and
issued by a party acceptable to Bank;
(f) any account which arises from the sale or lease
to or performance of services for, or represents an obligation of, an
employee, affiliate, partner, member, parent or Subsidiary of any
Borrowing Base Party;
(g) that portion of any account which represents
interim or progress billings or retention rights on the part of the
account debtor;
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(h) any account which represents an obligation of any
account debtor when twenty percent (20%) or more of the combined
accounts owing from such account debtor to the Borrowing Base Parties
are not eligible pursuant to item (a) above;
(i) that portion of any account from an account
debtor other than Lucent Technologies Inc. (successor to AT&T Corp.)
("Lucent") which represents the amount by which the Borrowing Base
Parties' total accounts from said account debtor on a combined basis
exceeds twenty-five percent (25%) of the Borrowing Base Parties' total
accounts on a combined basis; that portion of any account from Lucent
which represents the amount by which the Borrowing Base Parties' total
accounts from Lucent exceeds thirty-five percent (35%) of the Borrowing
Base Parties' total accounts on a combined basis; and/or
(j) any account deemed ineligible by Bank when Bank,
in its sole discretion, deems the creditworthiness or financial
condition of the account debtor, or the industry in which the account
debtor is engaged, to be unsatisfactory.
"Eligible Receivables Component" means, in calculating the
Borrowing Base (but subject to Section 2.1(b)), eighty percent (80%) of the
aggregate book value of the Borrowing Base Parties' then existing Eligible
Receivables, as determined by Bank upon receipt and review of such collateral
reports and other documents as Bank may require.
"Existing Collateral Documents" means, collectively, the
Existing Security Agreements, Tozer Road Mortgage Documents, and Vision Drive
Mortgage, in each case as the same may from time to time have been amended,
supplemented, restated or otherwise modified.
"Existing Guaranty" means the Amended, Restated and
Consolidated Guaranty dated as of September 27, 1996 by Austron, Efratom and
Systems in favor of the Collateral Agent for the purpose of guarantying, among
other things, Borrower's obligations under the Existing Credit Agreement and
Existing Note and Borrower's obligations under the Note Agreement and the
Prudential Notes.
"Existing Letters of Credit" means the existing Letters of
Credit described in Section 2.1(d).
"Existing Security Agreements" means, collectively, the
security agreements, pledge agreements, assignments, UCC-1 financing statements,
fixture filings, consents and other collateral security documents heretofore
executed and delivered to Bank in connection with the Existing Credit Agreement
granting Liens to Collateral Agent, or perfecting, effecting, facilitating,
consenting to, providing notice of, or otherwise evidencing such Liens, in each
case as the same may have been amended, supplemented, restated or otherwise
modified.
"Guarantors" means, collectively, Austron, Efratom, Systems,
Digital and any other person or entity which at any time furnishes Bank (or
Collateral Agent, on Bank's behalf) with a guaranty in accordance with this
Agreement.
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"Letter of Credit" or "Letters of Credit" means any one or
more of the standby letters of credit described in Section 2.1(d).
"Leverage Ratio" shall have the meaning specified for such
term in Section 5.9(b).
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law
or otherwise, affecting any property, including any agreement to grant any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a security interest, and/or the filing of or agreement to
give any financing statement (other than a precautionary financing statement
with respect to a lease that is not in the nature of a security interest) under
the Uniform Commercial Code or comparable law of any jurisdiction with respect
to any property.
"Line of Credit" means the revolving line of credit described
in Section 2.1(a).
"Line of Credit Note" means the promissory note described in
Section 2.1(a).
"Line of Credit Termination Date" means June 15, 2001.
"Loans" means, collectively, the Line of Credit and the Term
Loan.
"Loan Documents" shall have the meaning set forth for such
term in Section 3.2.
"Loan Party" means Borrower, Austron, Efratom, Systems,
Digital, any other Guarantor, any other person or entity which at any applicable
time furnishes Bank with any Collateral and any other person or entity which at
any applicable time becomes a party to any of the Loan Documents.
"Real Property Collateral" means, as of any date of
determination, the real property owned by the Borrowing Base Parties in which
the Bank has a first priority perfected Lien. As of the Effective Date, the Real
Property Collateral consists solely of the Tozer Road Property and the Vision
Drive Property.
"Subsidiary" means any corporation fifty percent (50%) or more
of whose securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) are at any applicable time owned, directly or indirectly, by
Borrower and/or one or more Subsidiaries of Borrower.
"Systems" means Frequency & Time Systems, Inc., a Delaware
corporation.
"Term Loan" shall mean the term loan described in Section 2.2
hereof.
"Term Note" shall have the meaning set forth in Section 2.2
hereof.
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"Tozer Road Mortgage Documents" means, collectively, (a) the
Mortgage Deed and Security Agreement dated March 17, 1995, executed by Systems
in favor of Bank and recorded April 21, 1995 in Book 12992, Page 70, with the
Essex South Registry of Deeds, Essex County, Massachusetts, and filed as
Document No. 307740 with the Essex South Registry District of the Land Court,
Essex County, Massachusetts and (b) the Collateral Assignment of Leases and
Rents dated March 17, 1995, executed by Systems in favor of Bank and recorded
April 21, 1995, in Book 12992, Page 89, with the Essex South Registry of Deeds,
Essex County, Massachusetts, and filed as Document No. 307741 with Essex South
Registry District of the Land Court, Essex County, Massachusetts.
"Tozer Road Real Property" means that certain real property
owned by Systems located in the City of Beverly, County of Essex, State of
Massachusetts, more particularly described in Exhibit A to the Tozer Road
Mortgage.
"Vision Drive Mortgage" means that certain Deed of Trust,
Assignment of Rents and Security Agreement dated March 17, 1995, executed by
Austron in favor of Bank and recorded March 20, 1995, in the real property
records of Travis County, Texas in Volume 12397, Page 1130.
"Vision Drive Real Property" means that certain real property
owned by Austron located in the City of Pflugerville, County of Travis, State of
Texas, more particularly described in Exhibit A to the Vision Drive Mortgage.
Section 1.2. SINGULAR AND PLURAL TERMS. Any defined term used
in the plural in any Loan Document shall refer to all members of the relevant
class and any defined term used in the singular shall refer to any number of the
members of the relevant class.
Section 1.3. ACCOUNTING PRINCIPLES. Any accounting term used
and not specifically defined in any Loan Document shall be construed in
conformity with, and all financial data required to be submitted under any Loan
Document shall be prepared in conformity with, generally accepted accounting
principles applied on a consistent basis.
Section 1.4. EXHIBITS INCORPORATED. All exhibits to this
Agreement, as now existing and as the same may from time to time be modified,
are incorporated herein by this reference.
Section 1.5. REFERENCES. Any reference to any Loan Document or
other document shall include such document both as originally executed and as it
may from time to time be supplemented, modified, amended, restated or extended.
References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the
reference appears.
Section 1.6. OTHER TERMS. The term "document" is used in its
broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terms "including" and
"include" mean "including (include) without limitation." The requirement that
any party "deliver" any item to another party shall be
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construed to require that the first party "deliver or cause to be delivered"
such item to the second party. The term "any," as a modifier to any noun, shall
be construed to mean "any and/or all" preceding the same noun in the plural. The
terms "modify" and "modification," when used with reference to any document or
obligation, include amendments, supplements, renewals, extensions, waivers,
terminations and other modifications of every kind. The terms "law" and "laws,"
unless otherwise modified, mean, collectively, all federal, state and local
laws, rules, regulations, codes and administrative and judicial precedents. The
terms "herein," "hereunder" and other similar compounds of the word "here" refer
to the entire document in which the term appears and not to any particular
provision or section of the document. This Section 1.6 shall apply to all of the
Loan Documents.
Section 1.7. HEADINGS. Article and section headings are
included in the Loan Documents for convenience of reference only and shall not
be used in construing the Loan Documents.
ARTICLE 2.
THE CREDITS
Section 2.1. LINE OF CREDIT.
2.1.0.0.0.1. Line of Credit. Subject to the terms and
conditions of this Agreement, Bank hereby agrees to make Advances to Borrower
from time to time up to and including the Line of Credit Termination Date, not
to exceed at any time the aggregate principal amount of Ten Million and No/100
Dollars ($10,000,000.00)("Line of Credit"), the proceeds of which shall be used
to repay the Prudential Notes and for general working capital purposes.
Borrower's obligation to repay Advances under the Line of Credit shall be
evidenced by a promissory note substantially in the form of Exhibit B attached
hereto ("Line of Credit Note"), all terms of which are incorporated herein by
this reference.
2.1.0.0.0.2. Limitation on Borrowings. Notwithstanding any
other provision of this Agreement, the aggregate amount of all outstanding
borrowings under the Loans shall at no time exceed the Borrowing Base as
determined by Bank.
2.1.0.0.0.3. Borrowing and Repayment. Borrower may from time
to time during the term of the Line of Credit borrow, partially or wholly repay
its outstanding borrowings, and reborrow, subject to all of the limitations,
terms and conditions contained herein or in the Line of Credit Note; provided,
however, that the total outstanding borrowings under the Loans shall not at any
time exceed the maximum principal amount available thereunder, as set forth in
this Agreement, and Borrower shall immediately repay the amount, if any, by
which the total outstanding borrowings under the Loans exceeds such maximum
available principal amount.
2.1.0.0.0.4. Letter of Credit Subfeature.
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2.1.0.0.0.4.1. As a subfeature under the Line of
Credit, Bank agrees from time to time up to and including the Line of
Credit Termination Date to issue standby letters of credit for the
account of Borrower (each, a "Letter of Credit" and collectively,
"Letters of Credit"); provided, however, that the form and substance of
each Letter of Credit shall be subject to approval by Bank, in its sole
discretion, and provided further, that the aggregate undrawn amount of
all outstanding Letters of Credit under this subfeature shall not at
any time exceed Five Hundred Thousand Dollars ($500,000.00). Each
Letter of Credit shall be issued for a term not to exceed three hundred
sixty-five (365) days, as designated by Borrower; provided, however,
that no Letter of Credit under this subfeature shall have an expiration
date subsequent to June 15, 2002 unless otherwise approved by Bank.
2.1.0.0.0.4.2. The undrawn amount of all Letters of
Credit under this subfeature shall be reserved under the Line of Credit
and shall not be available for Advances thereunder. Each Letter of
Credit shall be subject to the additional terms and conditions of the
Letter of Credit Agreement and related documents, if any, required by
Bank in connection with the issuance of such Letter of Credit (each
individually, a "Letter of Credit Agreement" and collectively, "Letter
of Credit Agreements"). Each draft paid by Bank under a Letter of
Credit under this subfeature (including under the "Existing Letters of
Credit", as such term is defined below) shall be deemed an Advance
under the Line of Credit and shall repaid in accordance with the terms
and conditions of this Agreement applicable to such Advances; provided,
however, that if the Line of Credit is not available, for any reason
whatsoever, at the time any draft is paid by Bank, or if Advances are
not available under the Line of Credit at such time due to any
limitation on borrowings set forth herein, then the full amount of such
draft shall be immediately due and payable, together with interest
thereon, from the date such amount is paid by Bank to the date such
amount is fully repaid by Borrower at the rate of interest applicable
to Advances under the Line of Credit. In such event Borrower agrees
that Bank, in its sole discretion, may debit any demand deposit account
maintained by Borrower with Bank for the amount of any draft. As of the
Effective Date, there are Letters of Credit outstanding in the face
amount of (A) One Hundred Twenty Thousand Dollars ($120,000.00) in
favor of PT Aditech Matra and (B) Eighteen Thousand Sixty-Nine Dollars
and Forty-Five Cents ($18,069.45) in favor of China Unicom
Import/Export Company Limited (collectively, the "Existing Letters of
Credit"); however, there are no outstanding drafts or Advances paid
under this subfeature by Bank. The face amount of the Existing Letters
of Credit shall be deemed to be outstanding under this subfeature
subject to all terms and conditions applicable hereto.
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Section 2.2. TERM LOAN.
(a) Term Loan. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make a loan to Borrower in the principal amount
of Six Million and No/100 Dollars ($6,000,000.00)("Term Loan"), the proceeds of
which shall be used to repay the Prudential Notes. Borrower's obligation to
repay the Term Loan shall be evidenced by a promissory note substantially in the
form of Exhibit C attached hereto ("Term Note"), all terms of which are
incorporated herein by this reference. Lender's commitment to grant the Term
Loan shall terminate on the date of execution of this Agreement.
(b) Limitation on Borrowings. Notwithstanding any other
provision of this Agreement, the aggregate amount of all outstanding borrowings
under the Loans shall at no time exceed the Borrowing Base as determined by
Bank.
(c) Repayment. The principal amount of the Term Loan shall be
repaid in accordance with the provisions of the Term Note; provided, however,
that Borrower shall immediately repay the amount, if any, by which the total
outstanding borrowings under the Loans exceeds the maximum principal amount
available thereunder, as set forth in this Agreement.
(d) Prepayment. Borrower may prepay principal on the Term Loan
solely in accordance with the provisions of the Term Note.
Section 2.3. LIMITATION ON BORROWINGS. With respect to Section 2.1(b)
and Section 2.2(b), Borrower acknowledges and agrees that Bank may from time to
time, in its sole and absolute discretion (i) establish such reserves against
the various components of the Borrowing Base as Bank deems necessary and proper
and (ii) increase or decrease the percentage applicable to any Borrowing Base
component. Without in any way limiting the foregoing, Borrower acknowledges that
the advance rate against Eligible Receivables was established by Bank with the
understanding that, among other items, the aggregate of all returns, rebates,
discounts, credits and allowances for the immediately preceding three (3) months
at all times shall be less than five percent (5%) of the Borrowing Base Parties'
aggregate gross sales for said period. If such dilution of such accounts of the
Borrowing Base Parties for the immediately preceding three (3) months at any
time exceeds five percent (5%) of the Borrowing Base Parties' aggregate gross
sales for said period, or if there at any time exists any other matter, event,
condition or contingency that Bank reasonably believes may affect payment of any
portion of the Borrowing Base Parties' accounts, Bank, in its sole discretion,
may reduce said advance rate to a percentage appropriate to reflect such
additional dilution and/or establish additional reserves against the Borrowing
Base Parties' Eligible Receivables.
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Section 2.4. INTEREST/FEES.
2.4.0.0.0.1. Interest. The outstanding principal balances of
the Line of Credit and the Term Loan shall bear interest at the rate(s) of
interest set forth in the Line of Credit Note and the Term Note, respectively.
2.4.0.0.0.2. Computation and Payment. Interest shall be
computed on the basis of a 360-day year, actual days elapsed. Interest shall be
payable at the times and places set forth in the Line of Credit Note and the
Term Note.
2.4.0.0.0.3. Line of Credit Fee. On or before the Effective
Date, Borrower shall pay to Bank a nonrefundable line of credit fee equal to Ten
Thousand Dollars ($10,000.00).
2.4.0.0.0.4. Term Loan Fee. On or before the Effective Date,
Borrower shall pay to Bank a non-refundable term loan fee equal to Fifteen
Thousand Dollars ($15,000.00).
2.4.0.0.0.5. Unused Commitment Fee. From and after the
Effective Date, Borrower shall pay to Bank a commitment fee equal to one-half
percent (0.50%) per annum times the average daily unused portion of the Line of
Credit. Such commitment fee shall be payable quarterly in arrears on the last
day of each calendar quarter and on the Line of Credit Termination Date.
2.4.0.0.0.6. Letter of Credit Fees. Borrower shall pay to Bank
fees upon the issuance of each Letter of Credit, upon the payment or negotiation
by Bank of each draft under any Letter of Credit and upon the occurrence of any
other activity with respect to any Letter of Credit (including the transfer,
amendment or cancellation of any Letter of Credit) determined in accordance with
Bank's standard fees and charges then in effect for such activity. In addition
to the foregoing Borrower shall pay to Bank a standby Letter of Credit fee in
connection with standby Letter(s) of Credit issued hereunder equal to two
percent (2.0%) per annum (computed on the basis of a 360-day year, actual days
elapsed) of the amount of such Letter(s) of Credit. Such fees shall be payable
upon the issuance of each such standby Letter of Credit.
Section 2.5. COLLECTION OF PAYMENTS. Borrower authorizes Bank to
collect all principal, interest and fees due under the Line of Credit and with
respect to the Term Loan by charging Borrower's demand deposit account number
4643-084544 with Bank, or any other demand deposit account maintained by
Borrower with Bank, for the full amount thereof. Should there be insufficient
funds in any such demand deposit account to pay all such sums when due, the full
amount of such deficiency shall be immediately due and payable by Borrower.
Section 2.6. FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by
Bank not to require payment of any interest (including default interest), fee,
cost
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or other amount payable under any "Loan Document" (as defined below) upon any
occasion shall in no way limit or be deemed a waiver of Bank's right to require
full payment of any interest (including default interest), fee, cost or other
amount payable under any Loan Document on any other or subsequent occasion.
Section 2.7. COLLATERAL.
2.7.0.0.0.1. Borrower Collateral. As security for all
indebtedness of Borrower to Bank under this Agreement and the other Loan
Documents, Borrower hereby grants to Bank Liens of first priority in all
Borrower's personal property, including all accounts, rights to payment, general
intangibles (including patents and patent applications), chattel paper, deposit
accounts, instruments, documents, inventory, equipment, furniture, fixtures and
products and proceeds of all of the foregoing.
2.7.0.0.0.2. Subsidiary Collateral. As further security for
all indebtedness of Borrower to Bank under this Agreement and the other Loan
Documents, Borrower shall cause:
2.7.0.0.0.2.1. Austron, Efratom, Systems and Digital
to grant to Bank Liens of first priority in all of their respective
personal property including all accounts, rights to payment, general
intangibles (including patents and patent applications), chattel paper,
deposit accounts, instruments, inventory, equipment, furniture,
fixtures and products and proceeds of all of the foregoing;
2.7.0.0.0.2.2. Austron to grant to Bank a Lien of not
less than first priority on the Vision Drive Real Property (which Lien
shall secure only Austron's obligations under its guaranty to Bank);
and
2.7.0.0.0.2.3. Systems to grant to Bank a Lien of not
less than first priority on the Tozer Road Real Property (which Lien
shall secure only Systems' obligations under its guaranty to Bank).
2.7.0.0.0.3. Documentation; Reimbursement of Costs. All of the
foregoing shall be evidenced by and subject to the terms of such deeds of trust,
mortgages, security agreements, pledge agreements, assignments, financing
statements and other documents as Bank shall reasonably require, all in form and
substance satisfactory to Bank. Borrower shall reimburse Bank immediately upon
demand for all costs and expenses incurred by Bank in connection with any of the
foregoing security, including filing and recording fees and costs of appraisals,
audits and title insurance.
Section 2.8. GUARANTIES. All indebtedness of Borrower to Bank under
this Agreement and the other Loan Documents, shall be guaranteed by each of the
Guarantors, as evidenced by and subject to the terms of one or more guaranties
in form and substance satisfactory to Bank.
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Section 2.9. LOAN ADMINISTRATION. From and after the Effective Date,
Bank may establish certain procedures and administrative requirements to be
satisfied from time to time by Borrower in connection with Borrower's requests
for Advances and the issuance of Letters of Credit under the Line of Credit and
the administration of the Term Loan. Such procedures may include the periodic
submission of information not otherwise described herein. In connection with the
foregoing and, in particular, with respect to the periodic calculation of the
Borrowing Base and the various components thereof, Borrower acknowledges that
Bank may conduct periodic audits and appraisals of the Collateral, at such
intervals as Bank may reasonably require and that such audits and appraisals may
be performed by employees of Bank or by independent parties. The costs and
expenses of such loan monitoring and administration, including audits and
appraisals, shall be reimbursed by Borrower upon demand by Bank.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to
Bank, which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
Section 3.1. LEGAL STATUS. Borrower is a corporation, duly organized
and existing and in good standing under the laws of the State of Delaware, and
is qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower. Austron, Efratom, Systems and
Digital are corporations, duly organized and existing and in good standing under
the laws of their state of incorporation, and are qualified or licensed to do
business (and are in good standing as foreign corporations, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on any of them.
Section 3.1. AUTHORIZATION AND VALIDITY. This Agreement, the Line of
Credit Note, the Term Note and each other document, contract and instrument
required hereby or at any time hereafter delivered to Bank in connection
herewith (collectively and, in each case either as originally executed or as the
same may from time to time be amended, supplemented, restated or otherwise
modified, the "Loan Documents") have been duly authorized, and upon their
execution and delivery in accordance with the provisions hereof will constitute
legal, valid and binding agreements and obligations of Borrower or the other
Loan Party which executes the same, enforceable in accordance with their
respective terms.
Section 3.2. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws or result in any breach of or default under any contract, obligation,
indenture or other instrument to
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which Borrower is a party or by which Borrower may be bound. The execution,
delivery and performance by each other Loan Party of each of the Loan Documents
to which it may be a party do not violate any provision of any law or
regulation, or contravene any provision of any formation document of any Loan
Party, or result in a breach or constitute a default under any contract,
obligation, indenture or other instrument to which any Loan Party is a party or
by which any Loan Party may be bound.
Section 3.3. LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower or any other Loan Party other than
those disclosed by Borrower to Bank in writing prior to the date hereof.
Section 3.4. CORRECTNESS OF FINANCIAL STATEMENT. The consolidated and
consolidating financial statement of Borrower and its Subsidiaries dated as of
March 31, 2000, a true copy of which has been delivered by Borrower to Bank
prior to the date hereof, (a) is complete and correct and presents fairly the
financial condition of Borrower and its Subsidiaries, (b) discloses all
liabilities of Borrower and its Subsidiaries that are required to be reflected
or reserved against under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent, and (c) has been prepared in
accordance with generally accepted accounting principles consistently applied.
Since the date of such financial statement there has been no material adverse
change in the financial condition of Borrower and its Subsidiaries, nor has
Borrower or any Subsidiary of Borrower mortgaged, pledged, granted a Lien in or
otherwise encumbered any of its assets or properties except (i) in favor of
Bank, (ii) pursuant to the Note Agreement or (iii) as otherwise permitted by
Bank in writing.
Section 3.5. INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its or any other Loan Party's income tax
payable with respect to any year.
Section 3.6. NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower or any other Loan Party is a party or
by which Borrower or any other Loan Party may be bound that requires the
subordination in right of payment of any of Borrower's or such Loan Party's
obligations subject to this Agreement to any other obligation of Borrower or any
other Loan Party.
Section 3.7. PERMITS, FRANCHISES. Borrower and each other Loan Party
possess, and will hereafter possess, all permits, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable each of them to conduct the business in which
they are now engaged in compliance with applicable law, and without conflict
with the rights of others.
Section 3.8. ERISA. Borrower and each other Loan Party are in
compliance in all material respects with all applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended or recodified from
time to time ("ERISA"); neither Borrower nor any other Loan Party has violated
any provision of any defined employee pension benefit plan
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(as defined in ERISA) maintained or contributed to by any of them (each, a
"Plan"); no Reportable Event as defined in ERISA has occurred and is continuing
with respect to any Plan initiated by Borrower or any other Loan Party; Borrower
and each Loan Party have met their minimum funding requirements under ERISA with
respect to each Plan; and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
generally accepted accounting principles.
Section 3.9. OTHER OBLIGATIONS. Neither Borrower nor any other Loan
Party is in default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract, instrument or
obligation.
Section 3.10. DIVISIONS, TRADE NAMES, ETC. Schedule 3.11 to this
Agreement sets forth all trade names and trade styles (including all so-called
"divisions") used by Borrower or any of its Subsidiaries at any time within the
five (5) year period ending on the date of this Agreement.
Section 3.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower
to Bank in writing prior to the date hereof, Borrower a__ each other Loan Party
are in compliance in all material respects with all applicable Federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
operations and/or properties, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Toxic Substances Control Act and the California Health and
Safety Code, as any of the same may be amended, modified or supplemented from
time to time. None of the operations of Borrower or any other Loan Party is the
subject of any Federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment. Neither Borrower nor
any other Loan Party has any material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.
ARTICLE 4.
CONDITIONS
Section 4.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation
of Bank to grant any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions (with the
date all such conditions are satisfied (or waived by Bank in writing) being the
"Effective Date"):
4.1.0.0.0.1. Approval of Bank Counsel. All legal matters
incidental to the extension of credit by Bank shall be satisfactory to Bank's
counsel.
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4.1.0.0.0.2. Documentation. Bank shall have received, in form
and substance satisfactory to Bank, each of the following, duly executed:
4.1.0.0.0.2.1. This Agreement, the Line of Credit
Note and the Term Note.
4.1.0.0.0.2.2. With respect to Letters of Credit, a
Letter of Credit Agreement and Fax Agreement.
4.1.0.0.0.2.3. From each Loan Party, such assignments
of, and amendments to, the Existing Collateral Documents as Bank may
require, pursuant to which, among other things, Bank shall be assigned
the secured party's interest thereunder.
4.1.0.0.0.2.4. Without limiting the foregoing
subsection (iii), assignments and amendments of the Tozer Road Mortgage
Documents and the Vision Drive Mortgage, in each case in form suitable
for recording in the applicable county records, pursuant to which,
among other things, Bank shall be assigned the lienholder's interest
thereunder.
4.1.0.0.0.2.5. Such UCC-1 financing statements and
UCC-2 financing statement amendments as Bank may require.
4.1.0.0.0.2.6. A deposit account agreement executed
by Borrower and each financial institution (other than Bank) with whom
any Loan Party maintains depository relationships.
4.1.0.0.0.2.7. A Second Amended and Restated Guaranty
executed by each Guarantor.
4.1.0.0.0.2.8. Documentation evidencing repayment in
full of the Prudential Notes and termination of the Note Agreement and
the Intercreditor Agreement.
4.1.0.0.0.2.9. Policies of title insurance (or
endorsements to existing title insurance policies, if available)
insuring the continued priority of the Liens granted Bank on the Tozer
Road Real Property and the Vision Drive Real Property (as such Liens
are assigned to Bank in connection herewith) after giving effect to
recordation of the assignments and amendments described in subsection
(iv) above.
4.1.0.0.0.2.10. With respect to each Loan Party, such
documentation as Bank may require to establish the due organization,
valid existence and good standing of such parties, their qualification
to engage in business in each jurisdiction in which they are engaged in
business or required to be so qualified, their
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authority to execute, deliver and perform any Loan Documents to which
they are a party, and the identity, authority and capacity of each
responsible official thereof authorized to act on their behalf,
including certified copies of articles of incorporation and amendments
thereto, bylaws and amendments thereto, certificates of good standing
and/or qualifications to engage in business, certified corporate
resolutions, incumbency certificates, certificates of responsible
officials, and the like.
4.1.0.0.0.2.11. Such other certificates, documents,
instruments, consents and opinions as Bank may require.
4.1.0.0.0.3. Delivery of Pledged Collateral. Each applicable
Loan Party shall have delivered, or caused to be delivered, to Bank, all
Collateral pledged to Bank pursuant to the Loan Documents, including any and all
capital stock required to be pledged to Bank according to the terms of the Loan
Documents, together with executed stock powers (in blank) relating thereto.
4.1.0.0.0.4. Recordation of Assignment Documents. The
assignments and amendments described in subsection (b)(iv) above shall have been
recorded in the applicable real estate records where the Real Property
Collateral is located and any financing statements or amendments to financing
statements shall have been recorded or filed, as appropriate, where required to
perfect Bank's Liens on the Collateral contemplated by the terms hereof and of
the other Loan Documents.
4.1.0.0.0.5. Financial Condition. There shall have been no
material adverse change, as determined by Bank, in the financial condition or
business of Borrower or any other Loan Party hereunder, nor any material
decline, as determined by Bank, in the market value of any Collateral required
hereunder or a substantial or material portion of the assets of Borrower or any
such other Loan Party.
4.1.0.0.0.6. Insurance. Borrower shall have delivered to Bank
evidence of insurance coverage on all Loan Parties' property, in form,
substance, amounts, covering risks and issued by companies satisfactory to Bank,
with loss payable endorsements (on Form BFU-438) in favor of Bank.
4.1.0.0.0.7. Collateral Audit. Bank shall have completed, at
Borrower's cost, a collateral audit and examination from an auditor acceptable
to Bank and in form, substance and reflecting collateral values satisfactory to
Bank in its sole discretion.
4.1.0.0.0.8. No Event of Default. No Event of Default, and no
event or act which with the giving of notice or the passage of time or both
would constitute an Event of Default, shall have occurred hereunder or under the
Existing Credit Agreement.
4.1.0.0.0.9. Bank's Fees. Borrower shall have paid Bank's
costs and expenses as required by this Agreement, including (i) the estimated
fees and disbursements (subject to adjustment upon final accounting of outside
counsel to Bank and the allocated
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costs of Bank's in-house counsel), and (ii) costs and expenses incurred by Bank
in connection with all diligence, appraisals and audits, as well as recording
and filing fees related hereto.
ARTICLE 5.
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing:
Section 5.1. PUNCTUAL PAYMENTS. Punctually pay all principal,
interest, fees or other liabilities due under any of the Loan Documents at the
times and places and in the manner specified therein, and immediately upon
demand by Bank, the amount by which the outstanding principal balance of the
Line of Credit at any time exceeds any limitation on borrowings applicable
thereto.
Section 5.2. ACCOUNTING RECORDS. Maintain, and cause each other Loan
Party to maintain, adequate books and records in accordance with generally
accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower and of each other Loan Party.
Section 5.2.1. FINANCIAL STATEMENTS. Provide to Bank all of the
following, in form and detail satisfactory to Bank:
5.2.0.0.0.1. As soon as available, but in no event later than
120 days after and as of the end of each fiscal year, (i) the consolidated
balance sheet of Borrower and its Subsidiaries as of the end of such fiscal year
and the consolidated statements of income, stockholders' equity and cash flows
of Borrower and its Subsidiaries for such fiscal year, and (ii) consolidating
balance sheets and statements of income and cash flows, in each case as at the
end of and for such fiscal year, all in reasonable detail, and presented in a
manner comparing such financial statements to corresponding figures from the
preceding annual financial statements. Such financial statements shall be
prepared in accordance with generally accepted accounting principles,
consistently applied, and such consolidated balance sheet and consolidated
statements shall be accompanied by a report of independent public accountants of
recognized standing selected by Borrower and reasonably satisfactory to Bank,
which report shall be prepared in accordance with generally accepted auditing
standards as at such date, and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any other qualification or
exception determined by Bank to be adverse to the interest of Bank;
5.2.0.0.0.2. As soon as available, but in no event later than
45 days after and as of the end of each fiscal quarter, (i) the consolidated
balance sheet of Borrower and its
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Subsidiaries as at the end of such fiscal quarter and the consolidated
statements of income, stockholders' equity and cash flows of Borrower and its
Subsidiaries for the period from the beginning of the fiscal year to the end of
such fiscal quarter, and (ii) the consolidating balance sheets and statements of
income and cash flows of Borrower and its Subsidiaries as at the end of such
fiscal quarter, all in reasonable detail, and presented in a manner comparing
such figures for the corresponding period in the preceding fiscal year, and
certified by an authorized financial officer of Borrower as fairly presenting
the financial condition, results of operations and cash flows of Borrower and
its Subsidiaries in accordance with generally accepted accounting principles,
consistently applied, as at such date and for such periods, subject only to
normal year-end-accruals and audit adjustments;
5.2.0.0.0.3. (i) As soon as available, but in no event later
than 15 days after and as of the end of each month, a Borrowing Base
Certificate, an aged listing of accounts receivable and accounts payable, and a
reconciliation of accounts; provided, however, that, except as specified below,
Bank waives receipt of the foregoing information for any particular month with
respect to which no Advance (or portion thereof) shall be outstanding at any
time during such month, provided further that in any event such reports shall be
due not later than 15 days after and as of the end of each fiscal quarter.
Notwithstanding the foregoing, at any time an Advance is made under the Line of
Credit, Borrower shall immediately provide to Bank in connection with its
request for such Advance the foregoing information for the most recently ended
month for which such information is available (to the extent such information
shall not have been previously provided to Bank) and, regardless of whether such
Advance remains outstanding as of any such date, for and as of the last day of
the month in which such Advance is made and for any month thereafter during
which all or any portion of such Advance remains outstanding. (ii) Not later
than 90 days after and as of the end of each fiscal year, a list of the names
and addresses of all account debtors of each Borrowing Base Party;
5.2.0.0.0.4. contemporaneously with each annual and quarterly
financial statement of Borrower required hereby, a certificate of the president
or chief financial officer of Borrower that said financial statements are
accurate and that there exists no Event of Default nor any condition, act or
event which with the giving of notice or the passage of time or both would
constitute an Event of Default;
5.2.0.0.0.5. As soon as available, but in no event later than
30 days after the first day of each fiscal year, a budget and projection by
fiscal quarter for that fiscal year including projected consolidated and
consolidating balance sheets, statements of income and cash flows of Borrower
and its Subsidiaries, all in reasonable detail, and setting forth in each case
in comparative form, consolidating and consolidated figures from the
corresponding period in the prior fiscal year;
5.2.0.0.0.6. Promptly after the same are available, copies of
each annual report, proxy or financial statement or other report or
communication sent to the stockholders of Borrower, and copies of all annual,
regular, periodic and special reports and registration statements which Borrower
may file or be required to file with the Securities and Exchange
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Commission (or any other governmental agency or authority succeeding to the
function and operations of the Securities and Exchange Commission);
5.2.0.0.0.7. Promptly upon receipt thereof, copies of any
audit reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of Borrower or any
Subsidiary by independent accountants in connection with the accounts or books
of Borrower of any of its Subsidiaries, or any annual, interim or special audit
of any of them; and
5.2.0.0.0.8. from time to time such other information as Bank
may reasonably request.
Section 5.3. COMPLIANCE. Preserve and maintain, and cause each other
Loan Party to preserve and maintain, all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; conduct, and cause each Guarantor to conduct, its business in an
orderly and regular manner; and comply, and cause such Guarantor to comply, with
the provisions of all documents pursuant to which it is organized and/or which
govern its continued existence and with the requirements of all laws, rules,
regulations and orders of any governmental authority applicable to it and/or its
business.
Section 5.4. INSURANCE. Maintain and keep in force, and cause each
other Loan Party to maintain and keep in force, insurance of the types and in
amounts customarily carried in lines of business similar to that of Borrower and
the Guarantors, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.
Section 5.5. FACILITIES. Keep, and cause each other Loan Party to
keep, all properties useful or necessary to keep its business in good repair and
condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
Section 5.6. TAXES AND OTHER LIABILITIES. Pay and discharge when due,
and cause each other Loan Party to pay and discharge when due, any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including Federal and state income taxes and state and local property taxes and
assessments, except such (a) as Borrower or any other Loan Party may in good
faith contest or as to which a bona fide dispute may arise, and (b) for which
Borrower or any other Loan Party has made provision, to Bank's satisfaction, for
eventual payment thereof in the event Borrower or any other Loan Party is
obligated to make such payment.
Section 5.7. LITIGATION. Promptly give notice in writing to Bank of
any litigation pending or threatened against Borrower or any other Loan Party
with a claim in excess of $150,000.00.
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Section 5.8. FINANCIAL CONDITION. Maintain the consolidated financial
condition of Borrower and its Subsidiaries as follows using generally accepted
accounting principles consistently applied and used consistently with prior
practices (except to the extent modified by the definitions herein):
5.8.0.0.0.1. Quick Ratio not at any time less than 1.2:1.0,
with "Quick Ratio" defined as the aggregate of unrestricted cash, unrestricted
marketable securities and receivables readily convertible into cash divided by
total current liabilities. In calculating the foregoing, outstanding Advances on
the Line of Credit and amortization payments on the Term Loan shall be deemed
current liabilities.
5.8.0.0.0.2. Leverage Ratio not greater than 0.75 to 1.00 at
any time, with "Leverage Ratio" defined as Total Liabilities divided by Tangible
Net Worth. For purposes of the foregoing, "Total Liabilities" shall mean the
aggregate of current liabilities and non-current liabilities less subordinated
debt and "Tangible Net Worth" shall mean the aggregate of consolidated
stockholders' equity of Borrower and its Subsidiaries plus subordinated debt
less any intangible assets.
5.8.0.0.0.3. EBITDA Coverage Ratio not less than (i) 1.25 to
1.00 as of the end of the fiscal quarter ending June 30, 2000, and (ii) 1.75 to
1.00 as of the end of each fiscal quarter thereafter, with "EBITDA" defined as
net profit before tax plus interest expense (net of capitalized interest
expense), depreciation expense and amortization expense, and with "EBITDA
Coverage Ratio", defined as EBITDA for the four fiscal quarter period ending as
of the date of determination (the "Test Period") divided by the aggregate of
total interest expense plus the amount of scheduled amortization on long-term
debt (including, without limitation, the Term Loan) and the amount of scheduled
amortization on subordinated debt paid during the Test Period. For purposes of
the foregoing, outstanding Advances on the Line of Credit and the undrawn amount
of Letters of Credit shall be excluded from the computation of current maturity
of long-term debt.
(d) Achieve net income of not less than $1 for each fiscal
quarter, as of the end of such fiscal quarter.
Section 5.9. NOTICE TO BANK. Promptly (but in no event more than five
(5) days after the occurrence of each such event or matter) give written notice
to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower or any other Loan Party; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan; (d) any
termination or cancellation of any insurance policy which Borrower or any other
Loan Party is required to maintain, or any uninsured or partially uninsured loss
through liability or property damage, or through fire, theft or any other cause
affecting Borrower's or any other Loan Party's property in excess of an
aggregate of $100,000.00; or (e) the acquisition by Borrower or any other Loan
Party of any other Loan Party or Subsidiary or other affiliate.
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ARTICLE 6.
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to Bank
under any of the Loan Documents remain outstanding, and until payment in full of
all obligations of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
Section 6.1. USE OF FUNDS. Use any of the proceeds of any of the Line
of Credit or the Term Loan except for the purposes stated in Article 2 hereof.
Section 6.2. CAPITAL EXPENDITURES. Make, or permit any Guarantor to
make, any additional investment in fixed assets in any fiscal year in excess of
an aggregate of $5,000,000.00 for Borrowers and all Guarantors combined.
Section 6.3. LEASE EXPENDITURES. Incur, or permit any Guarantor to
incur, operating lease expense in any fiscal year which, in the aggregate,
exceeds the consolidated operating lease expense of Borrower and all Guarantors
for the previous fiscal year by more than $500,000.00.
Section 6.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist, or permit any other Loan Party to create, incur, assume or permit to
exist, any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank
and (b) any other liabilities of Borrower or any other Loan Party existing as
of, and disclosed to Bank prior to, the date hereof.
Section 6.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with, or permit any other Loan Party to merge into or consolidate
with, any other entity; make, or permit any other Loan Party to make, any
substantial change in the nature of its business as conducted as of the date
hereof; acquire all or substantially all of the assets of any other entity; nor
sell, lease, transfer or otherwise dispose of all or a substantial or material
portion of its assets except (a) in the ordinary course of its business and (b)
any of the foregoing by and among the Loan Parties with one another so long as
after giving effect thereto the Liens of Bank on any assets affected thereby
shall remain in full force and effect and with the same priority as immediately
before such action.
Section 6.6. GUARANTIES. Guarantee or become liable, or permit any
other Loan Party to guarantee or become liable, in any way as surety, endorser
(other than as endorser of negotiable instruments for deposit or collection in
the ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities or
obligations of any other person or entity, except any of the foregoing in favor
of Bank.
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Section 6.7. LOANS, ADVANCES, INVESTMENTS. Make, or permit any other
Loan Party to make, any loans or advances to or investments in any person or
entity, except (i) any of the foregoing existing as of, and disclosed to Bank
prior to, the date hereof and (ii) any of the foregoing made by Borrower or any
other Loan Party not to exceed an aggregate principal amount of $1,000,000 at
any time outstanding (with investments for this purpose valued at their original
cost or book value, whichever is higher).
Section 6.8. PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist, or permit any other Loan Party to mortgage, pledge, grant or permit to
exist, a security interest in, or Lien upon, all or any portion of its assets
now owned or hereafter acquired, except any of the foregoing (a) in favor of
Bank or (b) which is existing as of, and disclosed to Bank in writing prior to,
the date hereof.
Section 6.9. DIVIDENDS: DISTRIBUTIONS. Declare or pay, or permit any
other Loan Party to declare or pay, any dividend or distribution either in cash,
stock or any other property, on Borrower's or such Loan Party's stock now or
hereafter outstanding; except for dividends, distributions and redemptions which
(a) are made in compliance with applicable law, (b) are made when no Event of
Default exists hereunder, and when no condition, event or act exists which, with
the giving of notice or the passage of time, or both, would constitute such an
Event of Default, and (c) would not result in an Event of Default hereunder.
ARTICLE 7.
EVENTS OF DEFAULT
Section 7.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
7.1.0.0.0.1. Borrower shall fail to pay within five (5) days
of when due any principal, interest, fees or other amounts payable under any of
the Loan Documents.
7.1.0.0.0.2. Any financial statement or certificate furnished
to Bank in connection with, or any representation or warranty made by Borrower
or any other Loan Party under this Agreement or any other Loan Document shall
prove to be incorrect, false or misleading in any material respect when
furnished or made.
7.1.0.0.0.3. Any default in the performance of or compliance
with any obligation, agreement or other provision contained herein or in any
other Loan Document (other than those referred to in subsections (a) and (b)
above), and with respect to any such default which by its nature can be cured,
such default shall continue for a period of twenty (20) days from its
occurrence.
7.1.0.0.0.4. Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of any contract or
instrument (other than any of the Loan Documents) pursuant to which Borrower or
any other Loan Party has incurred any debt or other liability to Bank.
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7.1.0.0.0.5. Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of any contract or
instrument pursuant to which Borrower or any other Loan Party has incurred any
debt or other liability to any person or entity, whether such debt or other
liability shall be for borrowed money, the purchase or lease of property or the
guaranty of any present or future indebtedness for borrowed money or the
purchase or lease of property, on its part to be paid and the effect of such
default is to cause, or to permit such person or entity to cause, such debt or
other liability to become due prior to any stated maturity, provided that the
aggregate amount of all such debt and other liabilities as to which such a
default shall occur and be continuing exceeds $100,000.00.
7.1.0.0.0.6. The filing of a notice of judgment Lien against
Borrower or any other Loan Party; or the recording of any abstract of judgment
against Borrower or any other Loan Party in any county in which Borrower or such
Loan Party has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any other Loan Party; or the entry of a judgment against
Borrower or any other Loan Party; provided, however, that such judgments, Liens,
levies, writs, executions and other process involve debts of or claims against
Borrower or such Loan Party in excess of $100,000.00, individually or in the
aggregate, for all such judgments, Liens, levies, writs, executions and other
process against Borrower and other Loan Parties combined, and within twenty (20)
days after the creation thereof, or at least ten (10) days prior to the date on
which any assets could be lawfully sold in satisfaction thereof, such debt or
claim is not satisfied but stayed pending appeal and insured against in a manner
satisfactory to Bank.
7.1.0.0.0.7. Borrower or any other Loan Party shall become
insolvent, or shall suffer or consent to or apply for the appointment of a
receiver, trustee, custodian or liquidator of itself or any of its property, or
shall generally fail to pay its debts as they become due, or shall make a
general assignment for the benefit of creditors; Borrower or any other Loan
Party shall file a voluntary petition in bankruptcy, or seeking reorganization,
in order to effect a plan or other arrangement with creditors or any other
relief under the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time ("Bankruptcy Code"), or under any state
or Federal law granting relief to debtors, whether now or hereafter in effect;
or any involuntary petition or proceeding pursuant to the Bankruptcy Code or any
other applicable state or Federal law relating to bankruptcy, reorganization or
other relief for debtors is filed or commenced against Borrower or any other
Loan Party, or Borrower or any such Loan Party shall file an answer admitting
the jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any other Loan Party shall be adjudicated a bankrupt,
or an order for relief shall be entered against Borrower or any other Loan Party
by any court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or Federal law relating to bankruptcy, reorganization or other
relief for debtors.
7.1.0.0.0.8. There shall exist or occur any event or condition
which Bank in good faith believes impairs, or is substantially likely to impair,
the prospect of payment or
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performance by Borrower or any other Loan Party of its respective obligations
under any of the Loan Documents.
7.1.0.0.0.9. The dissolution or liquidation of Borrower or any
other Loan Party or any of their directors, stockholders or members shall take
action seeking to effect the dissolution or liquidation of Borrower or such Loan
Party.
7.1.0.0.0.10. The sale, transfer, hypothecation, assignment or
encumbrance, whether voluntary, involuntary or by operation of law, without
Bank's prior written consent, of all or any part of or interest in any Real
Property Collateral required hereby.
Section 7.2. REMEDIES. Upon the occurrence of any Event of Default:
(a) all indebtedness of Borrower under each of the Loan Documents, any term
thereof to the contrary notwithstanding, shall at Bank's option and without
notice become immediately due and payable without presentment, demand, protest
or notice of dishonor, all of which are hereby expressly waived by Borrower; (b)
the obligation, if any, of Bank to extend any further credit under any of the
Loan Documents shall immediately cease and terminate; and (c) Bank shall have
all rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including the right to resort to any or all security for the
Line of Credit and the Term Loan and to exercise any or all of the rights of a
beneficiary or secured party pursuant to applicable law. In addition, Bank shall
have no obligation to permit further borrowings hereunder if Borrower fails to
pay when due any principal, interest, fees or other amounts payable under any of
the Loan Documents, notwithstanding that an Event of Default has not yet
occurred under Section 6.1(a) above. All rights, powers and remedies of Bank may
be exercised at any time by Bank and from time to time after the occurrence of
an Event of Default, are cumulative and not exclusive, and shall be in addition
to any other rights, powers or remedies provided by law or equity.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
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Section 8.2. NOTICES. All notices, requests and demands which any
party is required or may desire to give to any other party under any provision
of this Agreement must be in writing delivered to each party at the following
address:
BORROWER:
DATUM INC.
9975 Toledo Way
Irvine, California 92618
Attention: David A. Young
Vice President/Chief Financial Officer
Telecopier: (949) 598-7555
Telephone: (949) 598-7575
BANK:
WELLS FARGO BANK, NATIONAL ASSOCIATION
2030 Main Street, Suite 900
Irvine, California 92614
Attention: Datum Account Officer
Telecopier: (949) 261-1830
Telephone: (949) 251-4489
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
Section 8.2.1. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay
to Bank immediately upon demand the full amount of all payments, advances,
charges, costs and expenses, including reasonable attorneys' fees (to include
outside counsel fees and all allocated costs of Bank's in-house counsel),
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank's continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents and/or the
Existing Loan Documents, and (c) the prosecution or defense of any action in any
way related to any of the Loan Documents and/or the Existing Loan Documents,
including any action for declaratory relief, and including any of the foregoing
incurred in connection with any bankruptcy proceeding relating to Borrower or
any other Loan Party.
Section 8.3. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire
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relating to the Line of Credit, the Term Loan, Borrower or its business, any
other Loan Party or the business of such Loan Party, or any Collateral required
hereunder.
Section 8.4. ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to the Line of Credit and the Term Loan and supersede all prior
negotiations, communications, discussions and correspondence concerning the
subject matter hereof. This Agreement may be amended or modified only by a
written instrument executed by each party hereto.
Section 8.5. NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
Section 8.6. TIME. Time is of the essence of each and every provision
of this Agreement and each other of the Loan Documents.
Section 8.7. SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
Section 8.7.1. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same Agreement.
Section 8.8. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Section 8.9. INDEMNITY BY BORROWER. Borrower agrees to indemnify, save
and hold harmless Bank and its directors, officers, agents, attorneys and
employees (collectively, the "Indemnitees") from and against: (a) Any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee if the claim, demand, action or cause of action arises out of or
relates to the relationship between Borrower and Bank under any of the Loan
Documents or the transactions contemplated thereby; (b) Any and all
administrative or investigative proceedings by any governmental agency or
authority arising out of or related to any claim, demand, action or cause of
action described in clause (a) above; and (c) Any and all liabilities, losses,
costs or expenses (including reasonable attorneys' fees and disbursements and
other professional services) that any Indemnitee suffers or incurs as a result
of the assertion of any of the foregoing; provided that no Indemnitee shall be
entitled to indemnification for any loss caused by its own or its employees' or
agents' gross negligence or willful misconduct. Each Indemnitee is authorized to
employ counsel in enforcing its rights hereunder and in defending against any
claim, demand, action, cause of action or administrative or investigative
proceeding covered by this Section 8.11; provided that the
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Indemnitees as a group may retain only one law firm to represent them with
respect to any such matter unless there is, under applicable standards of
professional conduct, conflict on any significant issue between the positions of
any two or more Indemnitees. Any obligation or liability of Borrower to any
Indemnitee under this Section 8.11 shall be and hereby is covered and secured by
the Loan Documents and the Collateral referred to in Section 2.7 and shall
survive the expiration or termination of this Agreement and the repayment of the
Line of Credit and the Term Loan and the payment and performance of all other
obligations owed to Bank.
Section 8.10. NONLIABILITY OF BANK. Borrower acknowledges and agrees
that:
8.10.0.0.0.1. Any inspections of Collateral made by Bank are
for purposes of administration of the Line of Credit and the Term Loan only and
Borrower is not entitled to rely upon the same;
8.10.0.0.0.2. By accepting or approving anything required to
be observed, performed, fulfilled or given to Bank pursuant to the Loan
Documents, including any certificate, financial statement, insurance policy or
other document, Bank shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not constitute a warranty or representation to anyone with respect thereto
by Bank;
8.10.0.0.0.3. The relationship between Borrower and Bank in
connection with this Agreement and the other Loan Documents is, and shall at all
times remain, solely that of a borrower and lender; Bank shall not under any
circumstance be construed to be a partner or joint venturer of Borrower; Bank
shall not under any circumstances be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with Borrower, or to owe any
fiduciary duty to Borrower as a result of the transactions arising under this
Agreement and the other Loan Documents; Bank does not undertake or assume any
responsibility or duty to Borrower to select, review, inspect, supervise, pass
judgment upon or inform Borrower of any matter in connection with its property,
any Collateral held by Bank or the operations of Borrower; Borrower shall rely
entirely upon its own judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Bank in connection with such matters is solely for the
protection of Bank and neither Borrower nor any other person or entity is
entitled to rely thereon; and
8.10.0.0.0.4. Bank shall not be responsible or liable to any
person or entity for any loss, damage, liability or claim of any kind relating
to injury or death to persons or damage to property caused by the actions,
inaction or negligence of Borrower and Borrower hereby indemnifies and holds
Bank harmless from any such loss, damage, liability or claim.
Section 8.11. FURTHER ASSURANCES. Borrower shall, at its expense and
without expense to Bank, do, execute and deliver such further acts and documents
as Bank from time to time reasonably requires for the assuring and confirming
unto Bank of the rights hereby created or intended now or hereafter so to be, or
for carrying out the intention or
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facilitating the performance of the terms of any Loan Document, or for assuring
the validity, perfection, priority or enforceability of any Lien under any Loan
Document.
Section 8.12. CONFLICTING PROVISIONS. The provisions of this Agreement
are not intended to supersede the provisions of the other Loan Documents but
shall be construed as supplemental thereto. However, in the event of any actual
irreconcilable conflict between the provisions hereof and any provisions of the
other Loan Documents, it is intended that the provisions of this Agreement shall
control; provided that the inclusion of provisions in such other Loan Documents
which are not addressed in this Agreement shall not be deemed a conflict with
this Agreement. The foregoing shall apply with respect to all Loan Documents,
whether executed and delivered by Borrower or by any third-party.
Section 8.13. CONTINUED EXISTING EFFECTIVENESS OF CERTAIN EXISTING LOAN
DOCUMENTS. Each of the Existing Loan Documents (other than the Existing Credit
Agreement, Existing Note and any other Existing Loan Document that has been (or
will be) expressly superseded, replaced or otherwise restated by a "Loan
Document", either as previously executed in connection with a prior amendment or
as executed in connection herewith) shall continue in full force and effect and
shall, as of the effective date hereof, be deemed to be a "Loan Document" as
such term is used and defined in this Agreement.
Section 8.14. ARBITRATION.
8.14.0.0.0.1. Arbitration. Upon the demand of any party, any
Dispute shall be resolved by binding arbitration (except as set forth in (e)
below) in accordance with the terms of this Agreement. A "Dispute" shall mean
any action, dispute, claim or controversy of any kind, whether in contract or
tort, statutory or common law, legal or equitable, now existing or hereafter
arising under or in connection with, or in any way pertaining to, any of the
Loan Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including any of the foregoing arising
in connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
8.14.0.0.0.2. Governing Rules. Arbitration proceedings shall
be administered by the American Arbitration Association ("AAA") or such other
administrator as the parties shall mutually agree upon in accordance with the
AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be
resolved in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the Loan Documents. The arbitration shall be conducted at a location in
California selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation applicable
to any Dispute shall apply to any arbitration
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proceeding. All discovery activities shall be expressly limited to matters
directly relevant to the Dispute being arbitrated. Judgment upon any award
rendered in an arbitration may be entered in any court having jurisdiction;
provided however, that nothing contained herein shall be deemed to be a waiver
by any party that is a bank of the protections afforded to it under 12 U.S.C.
Section 91 or any similar applicable state law.
8.14.0.0.0.3. No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property Collateral or security, or to obtain provisional or ancillary
remedies, including injunctive relief, sequestration, attachment, garnishment or
the appointment of a receiver, from a court of competent jurisdiction before,
after or during the pendency of any arbitration or other proceeding. The
exercise of any such remedy shall not waive the right of any party to compel
arbitration or reference hereunder.
8.14.0.0.0.4. Arbitrator Qualifications and Powers; Awards.
Arbitrators must be active members of the California State Bar or retired judges
of the state or federal judiciary of California, with expertise in the
substantive laws applicable to the subject matter of the Dispute. Arbitrators
are empowered to resolve Disputes by summary rulings in response to motions
filed prior to the final arbitration hearing. Arbitrators (i) shall resolve all
Disputes in accordance with the substantive law of the state of California, (ii)
may grant any remedy or relief that a court of the state of California could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award, and (iii) shall have the power to award recovery of
all costs and fees, to impose sanctions and to take such other actions as they
deem necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
8.14.0.0.0.5. Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall be submitted
to arbitration if the Dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, Lien or security interest specifically elects in writing to
proceed with the arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations of
the parties, and all mortgages, Liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant to the
AAA's selection procedures. Judgment upon the decision rendered by
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a referee shall be entered in the court in which such proceeding was commenced
in accordance with California Code of Civil Procedure Sections 644 and 645.
8.14.0.0.0.6. Miscellaneous. To the maximum extent
practicable, the AAA, the arbitrators and the parties shall take all action
required to conclude any arbitration proceeding within 180 days of the filing of
the Dispute with the AAA. No arbitrator or other party to an arbitration
proceeding may disclose the existence, content or results thereof, except for
disclosures of information by a party required in the ordinary course of its
business, by applicable law or regulation, or to the extent necessary to
exercise any judicial review rights set forth herein. If more than one agreement
for arbitration by or between the parties potentially applies to a Dispute, the
arbitration provision most directly related to the Loan Documents or the subject
matter of the Dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
DATUM INC.,
a Delaware corporation
By: /s/ David A. Young
-----------------------------------
Name: David A. Young
Title: Chief Financial Officer
By: /s/ Erik H. van der Kaay
-----------------------------------
Name: Erik H. van der Kaay
Title: Chairman and CEO
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Timothy R. Sandel
-----------------------------------
Timothy R. Sandel, Vice President
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SCHEDULE 3.11
DIVISIONS, TRADE NAMES, ETC.
A. TRADE NAMES AND TRADE STYLES
Datum Timing
Bancomm
Efratom
Datum - Irvine
Datum - Austin
Datum - Beverly
Datum - San Jose
Datum - Lexington
E - Business Solutions
B. DIVISIONS
Bancomm - Timing Division
