UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: August 30, 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: 012182
CALIFORNIA AMPLIFIER, INC.
(Exact name of registrant's specified in its charter)
Delaware 95-3647070
(State or Other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
460 Calle San Pablo
Camarillo, California 93012
(Address of principal executive offices) (Zip Code)
(805) 987-9000
(Registrant's telephone number including area code)
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 close of the period covered by this report.
Common Stock Outstanding as of August 30, 1997: 11,722,222
Number of pages in this Form 10-Q: 14
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1: Financial Statements
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except par value)
Aug. 30, Mar. 1,
1997 1997
-------- ------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,477 $ 3,165
Accounts receivable 9,458 7,316
Inventories 10,824 8,200
Prepaid expenses and other current assets 1,123 1,183
- ------------------------------------------------------------------------------
Total current assets 23,882 19,864
Property and equipment -- at cost, net of
accumulated depreciation and amortization 7,811 7,407
Other assets 1,092 2,265
- ------------------------------------------------------------------------------
$32,785 $ 29,536
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 4,091 $ 2,136
Accrued liabilities 2,295 1,928
Current portion of long-term debt 841 799
- ------------------------------------------------------------------------------
Total current liabilities 7,227 4,863
Long-term debt 898 525
Minority interest share in net assets of
Micro Pulse 217 ---
Stockholders' equity:
Preferred stock, 3,000 shares authorized;
no shares outstanding ---
Common stock, $.01 par value; 30,000 shares authorized;
11,722 shares outstanding in August 1997 and
11,713 in March 1997 117 117
Additional paid-in capital 14,007 13,990
Foreign currency translation adjustment (183) (127)
Retained earnings 10,502 10,168
- ------------------------------------------------------------------------------
Total stockholders' equity 24,443 24,148
- ------------------------------------------------------------------------------
$32,785 $ 29,536
- ------------------------------------------------------------------------------
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Aug. 30, Aug. 31, Aug. 30, Aug. 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Sales $13,091 $11,463 $25,104 $28,738
Cost of sales 9,135 8,033 17,477 19,265
- ------------------------------------------------------------------------------
Gross profit 3,956 3,430 7,627 9,473
Research and development 1,051 1,819 2,137 3,292
Selling 1,405 1,219 2,712 2,552
General and administrative 1,105 807 2,083 1,691
- ------------------------------------------------------------------------------
Income (loss) from operations 395 (415) 695 1,938
Interest and other income (expense),
net (8) 127 (13) 266
Minority interest share in income of
Micro Pulse (65) --- (148) ---
- ------------------------------------------------------------------------------
Income (loss) before taxes 322 (288) 534 2,204
(Provision) benefit for income taxes (118) 79 (200) (790)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net income (loss) $ 204 $ (209) $ 334 $1,414
Net income (loss) per share $ .02 $(.02) $ .03 $ .11
- --------------------------------------------------------------------------------
Weighted average number of
shares outstanding 12,034 11,607 12,009 12,665
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
Six Months Ended
Aug. 30, Aug. 31,
1997 1996
Cash flows from operating activities:
Net income $ 334 $1,414
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 1,562 1,385
(Increase) decrease in:
Accounts receivable (1,370) (2,765)
Inventories (1,990) (924)
Prepaid expenses and other assets 380 (226)
Increase (decrease) in:
Accounts payable 1,465 (967)
Accrued liabilities (232) (1,815)
- -------------------------------------------------------------------------------
Cash provided (used) by operating activities: 149 (3,898)
- -------------------------------------------------------------------------------
Cash flows provided by (used in) investing activities:
Purchases of property and equipment (1,784) (3,371)
Purchase of controlling interest in Micro Pulse 327 ---
Minority interest share in net assets of Micro Pulse 217 ---
Advance to Micro Pulse --- (148)
- -------------------------------------------------------------------------------
Cash used in investing activities: (1,240) (3,519)
- -------------------------------------------------------------------------------
Cash flows from financing activities:
Addition (repayment) of term debt 384 (519)
Issuances of common stock 19 200
- ------------------------------------------------------------------------------
Cash provided by (used in) financing activities: 403 (319)
- -------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (688) (7,736)
Cash and cash equivalents at the beginning of period 3,165 11,637
- ------------------------------------------------------------------------------
Cash and cash equivalents at end of period $2,477 $3,901
- ------------------------------------------------------------------------------
<PAGE>
CALIFORNIA AMPLIFIER, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION - The accompanying unaudited consolidated financial
statements have been prepared in accordance with the requirements of Form 10-Q
and, therefore, do not include all information and footnotes which would be
presented were such financial statements prepared in accordance with generally
accepted accounting principles. These statements should be read in conjunction
with the Company's Annual Report on Form 10-K for the year ended March 1, 1997.
In the opinion of management, these interim financial statements reflect all
adjustments necessary for a fair presentation of the financial position and
results of operations for each of the periods presented. The results of
operations and cash flows for such periods are not necessarily indicative of
results to be expected for the full fiscal year.
2. INVENTORIES- Inventories include the cost of material, labor and
manufacturing overhead and are stated at the lower of cost (first-in, first-out)
or market and consist of the following (in 000's):
Aug. 30, 1997 March 1,1997
Raw material $3,154 $2,510
Work in process 958 1,568
Finished goods 6,712 4,122
------ -----
$10,824 $8,200
------- ------
3. NET INCOME PER SHARE - Net income per share is based upon the weighted
average number of shares outstanding during each of the respective years,
including the dilutive effects of stock options and warrants using the treasury
stock method. The weighted average number of shares used in the computation of
net income per share for the three and six months ended August 30, 1997, and the
six months ended August 31, 1996, were increased by 271,000, 321,000, and
1,058,000, respectively, for the dilutive effects of stock options and warrants.
There was no share adjustment for stock options and warrants outstanding for the
three months ended August 31, 1996 since the Company incurred a net loss, and
the effect of including such stock options and warrants would be anti-dilutive.
4. CONSOLIDATION OF INVESTMENT IN MICRO PULSE, INC.. - In March 1997, the
Company acquired additional shares in Micro Pulse, Inc. ("Micro Pulse"), which
resulted in California Amplifier holding a 50.5% controlling interest in Micro
Pulse. Accordingly, as of August 30, 1997, and for the three and six month
periods ended August 30, 1997, the balance sheet, statements of income, and cash
flows of Micro Pulse are consolidated with those of the Company, reduced by the
minority interests' share in the net assets and income of Micro Pulse. Prior to
March 2, 1997 and as of March 1, 1997, the 50% investment in Micro Pulse was
accounted for using the equity method of accounting.
5. CONTINGENCIES - In June 1997, the Company and certain of its Directors and
Officers had three legal actions filed against them, one in United States
District Court, Central District of California, Western Division and two in
Superior Court for the State of California, County of Ventura. See Part II, Item
I- Legal Proceedings included elsewhere herein. Based upon the analysis
performed to date, the Company and its Directors and Officers plan to vigorously
defend themselves against these claims.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 30, 1997 AND AUGUST 31, 1996
SALES
Sales increased by $1.6, or 12% from $11.5 million for the three months ended
August 31, 1996 to $13.1 million for the three months ended August 30, 1997.
Sales of Wireless Cable products increased $312,000, or 4%, from $7.5 million,
to $7.8 million. Sales of Satellite Television products decreased $148,000, or
4%, from $3.9 million to $3.8 million. Sales of Antenna products (sales by Micro
Pusle) for the three months ended were $1.5 million, but were not included in
the sales of the Company in the prior year period since Micro Pulse was
reflected as an equity investment and not consolidated.
The increase in Wireless Cable sales results from increased sales of Wireless
reception products, primarily to Latin America, offset by a decrease in sales of
MultiCipher products. The decrease in sales of Satellite Television products
results from a continued decrease in sales of C-Band products domestically
because of the Ku-DBS alternative, and decreases in sales of C-Band products
internationally primarily because of pricing competition. The C-Band product
sales decline, however, was offset by increases in Ku-DBS products as the
Company expands the Ku-DBS product line.
The Company's future sales growth is dependent upon maintaining its Wireless
Cable market share internationally, the broad introduction of digital Wireless
Cable in the United States which the Company must participate, and continued
demand for its Ku-DBS products into niche markets.
GROSS PROFITS AND GROSS MARGINS
Gross profits increased by $526,000, or 13%, from $3.4 million to $4.0 million.
Gross margins increased from 29.9% to 30.2%. The increase in gross profits
resulted from increased sales and the slight improvement in gross margins. The
gross margin increase is primarily a result of increased sales volumes and
product sales mix.
There will be continued pressures on gross margins primarily because of
competitive pricing pressures. As a result, the Company will concentrate on
product cost reductions and product differentiation in an attempt to maintain or
increase gross margins.
OPERATING EXPENSES
Research and development expenses decreased by $768,000 from $1.8 million to
$1.1 million. The decrease resulted primarily from reduced expenditures in the
current fiscal year period as compared to the second quarter of the prior year,
relating primarily to the development and introduction of MultiCipher Plus,
offset by the research and development expenses incurred by Micro Pulse, which
is now consolidated.
Selling expenses increased by $186,000 from $1.2 million to $1.4 million. The
increase was due primarily to personnel additions, and selling expenses incurred
by Micro Pulse, which is now consolidated.
General and administrative expenses increased by $298,000 from $807,000 to $1.1
million. The increase was primarily due to increased general administrative
expenses and administrative expenses incurred by Micro Pulse, which is now
consolidated.
INCOME (LOSS) FROM OPERATIONS
Income (loss) from operations, for the reasons noted above, increased by
$810,000, from an operating loss of ($415,000) to operating income of $395,000.
INTEREST AND OTHER INCOME (EXPENSE), NET
Interest and other income (expense), net, decreased by $135,000 to $8,000
expense, net, from $127,000 income, net. The primary reason for the decrease is
reduced interest income because of lower cash balances during the current year
quarter.
MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE
The minority interest share in income of Micro Pulse represents the 49.5%
ownership interest's share of the consolidated income before tax of Micro Pulse.
In the prior year, Micro Pulse was not consolidated, however, no income was
booked during the second quarter of the prior year for California Amplifier's
then 50% ownership interest, which was accounted for using the equity method of
accounting.
PROVISION FOR TAXES
The provision for taxes for the second quarter of fiscal 1998 is based upon an
annualized tax rate of 37%. This tax rate assumes savings from benefits allowed
for export sales through a foreign sales corporation and research and
development tax credits.
NET INCOME (LOSS)
Net income (loss), for reasons outlined above, increased by $413,000, from
($209,000) to $204,000.
<PAGE>
SIX MONTHS ENDED AUGUST 30, 1997 AND AUGUST 31, 1996
SALES
Sales decreased by $3.6 million, or 13%, from $28.7 million for the six months
ended August 31, 1996 to $24.1 million for the six months ended August 30, 1997.
Sales of Wireless Cable products decreased $5.6 million, or 27%, from $20.4
million to $14.9 million. Sales of Satellite Television products decreased $1.1
million, or 14%, from $8.2 million to $7.1 million. Sales of Antenna products
(sales by Micro Pulse) for the six months ended August 30, 1997 were $3.2
million, but were not included in the sales of the Company in the prior year
period since Micro Pulse was reflected as an equity investment and not
consolidated.
The decreases in Wireless Cable sales resulted primarily from decreases in the
sales of MultiCipher products. Sales of Wireless Cable reception products
remained about flat, with increases in Latin America, offset by reductions
domestically and in Asia. The decrease in Satellite Television products resulted
from continued decreases in sales of C-Band products domestically because of the
Ku-DBS alternative, and decreased sales of C-Band product internationally
primarily because of pricing competition. The C-Band product sales decline,
however, was offset by increases in Ku-DBS products as the Company expands the
Ku-DBS product line.
The Company's future sales growth is dependent upon maintaining its Wireless
Cable market share internationally, the broad introduction of digital Wireless
Cable in the United States which the Company must participate, and continued
demand for its Ku-DBS products into niche markets.
GROSS PROFITS AND GROSS MARGINS
Gross profits decreased by $1.8 million, or 19%, from $9.5 million to $7.6
million, and gross margins decreased from 33% to 30.3%. The 19% decrease in
gross profits resulted from a 13% decrease in sales, and the 2.7% reduction in
gross margins. The gross margin decline is primarily a result of lower sales
volumes, and pricing competition in Wireless Cable reception and Ku-DBS
products.
There will be continued pressure on gross margins primarily because of
competitive pricing pressures. As a result, the Company will concentrate on
product cost reductions and product differentiation in an attempt to maintain or
increase gross margins.
OPERATING EXPENSES
Research and development expenses decreased $1.2 million from $3.3 million to
$2.1 million. The decrease resulted primarily from reduced expenditures during
the current fiscal year six month period, as compared to the prior year period,
relating to the development, introduction and rollout of MultiCipher Plus. These
reduced expenses were offset by research and development costs incurred by Micro
Pulse, which is now consolidated.
Selling expenses increased $160,000 from $2.55 million to $2.71 million. The
increase is primarily a result of personnel additions, and selling expenses
incurred by Micro Pulse, which is now consolidated.
General and Administrative expense increased $392,000 from $1.7 million to $2.1
million. The increase is due to a higher level of administrative expenses, and
the administrative costs of Micro Pulse which is now consolidated.
INCOME FROM OPERATIONS
Income from operations, for the reasons outlined above, decreased $1.2 million,
from $1.9 million to $695,000.
INTEREST AND OTHER INCOME (EXPENSE), NET
Interest and other income (expense), net, decreased by $279,000 to $13,000
expense, net from $266,000 income, net. The primary reason for the decrease is
reduced interest income because of lower cash balances during the current year
period.
MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE
The minority interest share in income of Micro Pulse represents 49.5% ownership
interest's share of the consolidated income before tax of Micro Pulse. In the
prior year, Micro Pulse was not consolidated, however, no income was booked
during the second quarter of the prior year for California Amplifier's then 50%
ownership interest which was accounted for using the equity method of
accounting.
PROVISION FOR TAXES
The provision for taxes for the second quarter of fiscal 1998 is based upon an
annualized tax rate of 37%, the same tax rate as fiscal year 1997. This tax rate
assumes savings from benefits allowed for export sales through a foreign sales
corporation and research and development tax credits.
NET INCOME
Net income, for reasons outlined above, decreased by $1.1 million, or 76% from
$1.4 million to $334,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has a $6.0 million working capital facility with California United
Bank at the bank's prime rate (8.5% at August 30, 1997). In addition, California
Amplifier s.a.r.l., its foreign subsidiary, has an informal arrangement with a
French bank to borrow up to $600,000. As of August 30, 1997, no amounts were
outstanding under any of these arrangements. The $6.0 million credit facility
with California United Bank expires in August 1998.
The Company believes that cash flow from operations, together with the funds
available under its credit facilities, are sufficient to support operations and
capital equipment requirements over the next twelve months.
The Company believes that inflation has not had a material effect on its
operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On June 11, 1997, the Company and certain of its directors and officers had two
legal actions filed against them, one in the United States District Court,
Central District of California, entitled Yourish v. California Amplifier,
Inc., et al., Case No. 97-4293 (BM (Mcx), and the other in the Superior Court
for the State of California, County of Ventura, entitled Yourish v. California
Amplifier, Inc., et al., Case No. CIV 173569. On June 30, 1997, another legal
action was filed against the same defendants in the Superior Court for the State
of California, County of Ventura, entitled Burns, et al., v. California
Amplifier, Inc., et al., Case No. CIV 173981. All three actions are purported
class actions on behalf of purchasers of the common stock of the Company
between September 12, 1995 and August 8, 1996. The actions claim that the
defendants engaged in a scheme to make false and misleading statements and omit
to disclose material adverse facts to the public concerning the Company,
allegedly causing the Company's stock price to artificially rise, and thereby
allegedly allowing the individual defendants to sell stock at inflated prices.
Plaintiffs claim that the purported stockholder class was damaged when the price
of the stock declined upon disclosure of the alleged adverse facts. The Company
and its legal counsel are currently evaluating the claims. Based upon the
analysis performed to date, the Company, its directors and officers, plan to
vigorously defend themselves against these claims.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of California Amplifier, Inc. was held
July 18, 1997.
At the annual meeting of stockholders a proposal was considered for the election
of Ira Coron, Arthur H. Hausman, William E. McKenna and Thomas L. Ringer as
directors to serve until the 1998 annual meeting of stockholders. The
director-nominees were elected. The voting results were as follows:
Proposal
1) Election of directors:
For Withheld Against
Ira Coron 10,800,072 131,998 0
Arthur H. Hausman 10,800,321 131,749 0
William E. McKenna 10,799,371 132,699 0
Thomas L. Ringer 10,804,872 127,198 0
<PAGE>
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) See exhibit index attached hereto which is incorporated herein by
this reference.
(b) No reports on Form 8-K were filed during the quarter ended August
30, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
California Amplifier, Inc.
(Registrant)
October 10, 1997 /S/ MICHAEL R. FERRON
-----------------------------
Michael R. Ferron
Vice President, Finance and
Chief Accounting Officer
<PAGE>
INDEX TO EXHIBITS
3.1 Certificate of Incorporation of the Registrant, as amended, filed as
Exhibit 3.1 to the Registrant's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a part
hereof.
3.1.1 Amendment to Certificate of Incorporation of the Registrant, as filed with
the Delaware Secretary of State on September 19, 1996, filed as Exhibit
3.1.1 to the Registrant's Interim Report on Form 10-Q for the period ended
August 31, 1996.
3.2 Bylaws of the Registrant, as amended, filed as Exhibit 3.2 to the
Registrant's Form 8-K dated February 27, 1992 and by this reference is
incorporated herein and made a part hereof.
10.1 1984 Key Employee Stock Option Plan filed as Exhibit 10.1 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.2 Form of Incentive Stock Option Agreement filed as Exhibit 10.2 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.3 Form of Nonqualified Stock Option Agreement filed as Exhibit 10.3 to the
Registrant's Registration Statement on Form S-1 (2-87042) and by this
reference is incorporated herein and made a part hereof.
10.4 1989 Key Employee Stock Option Plan filed as Exhibit 4.4 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.4.1 Amendment No. 1 to the 1989 Key Employee Stock Option Plan
filed as Exhibit 4.7 to the Registrant's Registration Statement on Form
S-8(33-36944) and by this reference is incorporated herein and made
a part hereof.
10.4.2 Amendment No. 2 to the 1989 Key Employee Stock Option Plan
filed as Exhibit 4.8 to the Registrant's Registration Statement on Form
S-8 (33-72704) and by this reference is incorporated herein and made a
part hereof.
10.4.3 Amendment No. 3 to the 1989 Key Employee Stock Option Plan
filed as Exhibit 4.10 to the Registrant's Registration Statement on Form
S-8 (33-60879) and by this reference is incorporated herein and made a
part hereof.
10.5 Form of Incentive Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.6 Form of Nonqualified Stock Option Agreement filed as Exhibit 4.6 to the
Registrant's Registration Statement on Form S-8 (33-31427) and by this
reference is incorporated herein and made a part hereof.
10.7 Form of Option Agreement for Non-Employee Directors filed as Exhibit 4.9
to the Registrant's Registration Statement on Form S-8 (33-36944) and by
this reference is incorporated herein and made a part hereof.
10.8 Letter Agreements regarding sale of the building dated July 18, 1988,
filed as an exhibit to Form 8-K, dated February 27, 1989, filed as an
exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year
ended February 28, 1989 and by this reference is incorporated herein and
made a part hereof.
<PAGE>
10.9 Building Lease and Rider on building between the Registrant and Calle San
Pablo Property Co. dated January 31, 1989, filed as an exhibit to the
Registrant's Annual Report on Form 10-K for the fiscal year ended February
28, 1989 and by this reference is incorporated herein and made a part
hereof.
10.9.1Amendment of Lease on building between the Registrant and Calle San Pablo
Property Co. dated February 9, 1995, filed as an exhibit to this Annual
Report on Form 10-K for the fiscal year ended March 4, 1995.
10.10 Form of Indemnity Agreement filed as an exhibit to the Registrant's Annual
Report on Form 10-K for the fiscal year ended February 29, 1988 and by
this reference is incorporated herein and made a part hereof.
10.11 Stockholder Rights Plan filed as an exhibit to the Registrant's Form 8-K
dated September 5, 1991 and by this reference is incorporated herein and
made a part hereof.
10.12 Distribution Agreement between Registrant and Pan Asian Systems, Ltd.,
dated July 3, 1992 filed as Exhibit 10.17 to the Company's Registration
Statement on Form S-1 (33-59702) and by this reference is incorporated
herein and made a part hereof.
10.13 Stock Purchase Agreement dated December 31, 1992 by and among Registrant,
Peter J. Connolly, Steven G. Ow and Toni Ow, and The Peter J. Connolly
Charitable Remainder Unitrust dated June 15, 1992 filed as Exhibit 10.20
to the Company's Registration Statement on Form S-1 (33-59702) and by this
reference is incorporated herein and made a part hereof.
10.14 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to The Peter J. Connolly Charitable Remainder Unitrust dated June
15, 1992 filed as Exhibit 10.21 to the Registrant's Registration Statement
on Form S-1 (33-59702) and by this reference is incorporated herein and
made a part hereof.
10.15 8% Convertible Subordinated Note dated January 20, 1993 by Registrant
payable to Steven G. Ow and Toni Ow dated June 15, 1992 filed as Exhibit
10.22 to the Registrant's Registration Statement on Form S-1 (33-59702)
and by this reference is incorporated herein and made a part hereof.
10.16 Promissory Note dated January 20, 1993 by Micro Pulse Incorporated,
payable to Registrant filed as Exhibit 10.23 to the Registrant's
Registration statement on Form S-1 (33-59702) and by this reference is
incorporated herein and made a part hereof.
10.17 Option Agreement entered into as of February 4, 1993 by and among CAMP
Acquisition Corp., Mr. Charles W. Ergen and the Registrant filed as
Exhibit 10.24 to the Registrant's Registration Statement on Form S-1
(33-59702) and by this reference is incorporated herein and made a part
hereof.
10.18 Promissory Note Agreement between Registrant and California United Bank
dated April 5, 1993, filed as Exhibit 10.18 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended February 27, 1993 and by
this reference is incorporated herein and made part hereof.
<PAGE>
10.19 Change in Terms Agreement between Registrant and California United Bank,
dated July 22, 1994, and filed as Exhibit 10.19 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 4, 1995, and by this
reference is incorporated herein and made part hereof.
10.20 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 22, 1994, filed as Exhibit 10.20 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended March 4,
1995, and by this reference is incorporated herein and made part hereof.
10.21 Second Amendment to Business Loan Agreement between Registrant and
California United Bank, dated September 13, 1994, filed as Exhibit 10.21
to the Registrant's Annual Report on Form 10-K for the fiscal year ended
March 4, 1995, and by this reference is incorporated herein and made part
hereof.
10.22 Business Loan Agreement between Registrant and California United Bank,
dated July 26, 1995, filed as Exhibit 10.22 to the Registrant's Annual
Report on Form 10-K for the fiscal year ended March 2, 1996, and by this
reference is incorporated herein and made part hereof.
10.23 Promissory Note between Registrant and California United Bank dated July
26, 1995, filed as Exhibit 10.23 to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 2, 1996, and by this reference is
incorporated herein and made part hereof.
10.24 Commercial Security Agreement between Registrant and California United
Bank dated July 26, 1995, filed as Exhibit 10.24 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended March 2, 1996, and by
this reference is incorporated herein and made part hereof.
10.25 First Amendment to Business Loan Agreement between Registrant and
California United Bank, dated July 26, 1995, filed as Exhibit 10.25 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended March 2,
1996, and by this reference is incorporated herein and made part hereof.
10.26 Promissory Note between Registrant and California United Bank dated August
6, 1996, filed as Exhibit 10.26 to the Registrant's Annual Report on Form
10-K for the fiscal year ended March 1, 1997.
10.27 Second Amendment to Business Loan Agreement between Registrant and
California United Bank, dated August 6, 1996, filed as Exhibit 10.27 to
the Registrant's Annual Report on Form 10-K for the fiscal year ended
March 1, 1997, and by this reference is incorporated herein and made part
hereof.
10.28 Building Lease on building between the Registrant and The Jennings Bypass
Trust, dated September 11, 1996, filed as Exhibit 10.28 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended March 1,
1997, and by this reference is incorporated herein and made part hereof.
10.29 Land Purchase Agreement on land between the Registrant and Rhoda-May A.
Dallas Trust, dated February 13, 1996, filed as Exhibit 10.29 to the
Registrant's Annual Report on Form 10-K for the fiscal year ended March 1,
1997, and by this reference is incorporated herein and made part hereof.
*10.30Loan Agreement between Registrant and California United Bank, dated
August 22, 1997, filed as Exhibit 10.30 to the Registrant's Quarterly
Report on Form 10-Q for the period ended August 30, 1997.
*10.31Change in Terms Agreement between Registrant and California United Bank,
dated August 22, 1997, and filed as Exhibit 10.31 to the Registrant's
Quarterly Report on Form 10-Q for the period ended August 30, 1997.
*27 Financial Data Schedule
- -------------------
* Filed herewith
LOAN AGREEMENT EXHIBIT 10.30
Borrower: California Amplifier, Inc. Lender: California United Bank
460 Calle San Pablo Encino Commercial Loan Center
Camarillo, CA 93012 16030 Ventura Boulevard
Encino, CA 91436
THIS LOAN AGREEMENT between California Amplifier, Inc. ("Borrower") and
California United Bank ("Lender") is made and executed on the following terms
and conditions. Borrower has received prior commercial loans from Lender or has
applied to Lender for a commercial loan or loans and other financial
accommodations, including those which may be described on any exhibit or
schedule attached to this Agreement. All such loans and financial
accommodations, together with all future loans and financial accommodations from
Lender to Borrower, are referred to in this Agreement individually as the "Loan"
and collectively as the "Loans." Borrower understands and agrees that: (a) in
granting, renewing, or extending any Loan, Lender is relying upon Borrower's
representations, warranties, and agreements, as set forth in this Agreement; (b)
the granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender's sole judgment and discretion; and (c) all such Loans shall
be and shall remain subject to the following terms and conditions of this
Agreement.
TERM. This Agreement shall be effective as of August 22, 1997, and shall
continue thereafter until all Indebtedness of Borrower to Lender has been
performed in full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Loan Agreement, as this Loan
Agreement may be amended or modified from time to time, together with all
exhibits and schedules attached to this Loan Agreement from time to time.
Advance. The word "Advance" means a disbursement of Loan funds under this
Agreement.
Borrower. The word "Borrower" means California Amplifier, Inc.. The word
"Borrower" also includes, as applicable, all subsidiaries and affiliates of
Borrower as provided below in the paragraph titled "Subsidiaries and
Affiliates."
<PAGE>
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real or
personal property, whether granted directly or indirectly, whether granted now
or in the future, and whether granted in the form of a security interest,
mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust,
factor's lien, equipment trust, conditional sale, trust receipt, lien, charge,
lien or title retention contract, lease or consignment intended as a security
device, or any other security or lien interest whatsoever, whether created by
law, contract, or otherwise. The word "Collateral" includes without limitation
all collateral described below in the section titled "COLLATERAL."
ERISA. The word "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section titled
"EVENTS OF DEFAULT."
Expiration Date. The words "Expiration Date" mean the date of termination of
Lender's commitment to lend under this Agreement.
Grantor. The word "Grantor" means and includes without limitation each and all
of the persons or entities granting a Security Interest in any Collateral for
the Indebtedness, including without limitation all Borrowers granting such a
Security Interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in connection
with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation all
Loans, together with all other obligations, debts and liabilities of Borrower to
Lender, or any one or more of them, as well as all claims by Lender against
Borrower, or any one or more of them; whether now or hereafter existing,
voluntary or involuntary, due or not due, absolute or contingent, liquidated or
unliquidated; whether Borrower may be liable individually or jointly with
others; whether Borrower may be obligated as a guarantor, surety, or otherwise;
whether recovery upon such Indebtedness may be or hereafter may become barred by
any statute of limitations; and whether such Indebtedness may be or hereafter
may become otherwise unenforceable.
<PAGE>
Lender. The word "Lender" means California United Bank, its successors and
assigns.
Letter of Credit. The words "Letter of Credit" mean a letter of credit
issued by Lender on behalf of Borrower as described below in the section
titled "Letter of Credit Facility."
Line of Credit. The words "Line of Credit" mean the credit facility described in
the Section titled "LINE OF CREDIT" below.
Loan. The word "Loan" or "Loans" means and includes without limitation any and
all commercial loans and financial accommodations from Lender to Borrower,
whether now or hereafter existing, and however evidenced, including without
limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time to
time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note or
notes therefor.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, and all other instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements, understandings or
other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or
title retention contract, lease or consignment intended as a security device, or
any other security or lien interest whatsoever, whether created by law,
contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act
of 1986 as now or hereafter amended.
<PAGE>
LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time
from the date of this Agreement to the Expiration Date, provided the aggregate
amount of such Advances outstanding at any time does not exceed the Line of
Credit. Within the foregoing limits, Borrower may borrow, partially or wholly
prepay, and reborrow under this Agreement as follows.
Conditions Precedent to Each Advance. Lender's obligation to make any Advance to
or for the account of Borrower under this Agreement is subject to the following
conditions precedent, with all documents, instruments, opinions, reports, and
other items required under this Agreement to be in form and substance
satisfactory to Lender:
(a) Lender shall have received evidence that this Agreement and all Related
Documents have been duly authorized, executed, and delivered by Borrower to
Lender.
(b) Lender shall have received such opinions of counsel, supplemental opinions,
and documents as Lender may request.
(c) The security interests in the Collateral shall have been duly authorized,
created, and perfected with first lien priority and shall be in full force and
effect.
(d) All guaranties required by Lender for the Line of Credit shall have been
executed by each Guarantor, delivered to Lender, and be in full force and
effect.
(e) Lender, at its option and for its sole benefit, shall have conducted an
audit of Borrower's books, records, and operations, and Lender shall be
satisfied as to their condition.
(f) Borrower shall have paid to Lender all fees, costs, and expenses specified
in this Agreement and the Related Documents as are then due and payable.
(g) There shall not exist at the time of any Advance a condition which would
constitute an Event of Default under this Agreement.
<PAGE>
Making Loan Advances. Advances under the Line of Credit may be requested orally
subject to the limitations set forth below. Lender may, but need not, require
that all oral requests be confirmed in writing. Each Advance shall be
conclusively deemed to have been made at the request of and for the benefit of
Borrower (a) when credited to any deposit account of Borrower maintained with
Lender or (b) when advanced in accordance with the instructions of an authorized
person. Lender, at its option, may set a cutoff time, after which all requests
for Advances will be treated as having been requested on the next succeeding
Business Day.
Mandatory Loan Repayments. If at any time the aggregate principal amount of the
outstanding Advances shall exceed the applicable Line of Credit, Borrower,
immediately upon written or oral notice from Lender, shall pay to Lender an
amount equal to the difference between the outstanding principal balance of the
Advances and the Line of Credit. On the Expiration Date, Borrower shall pay to
Lender in full the aggregate unpaid principal amount of all Advances then
outstanding and all accrued unpaid interest, together with all other applicable
fees, costs and charges, if any, not yet paid.
Loan Account. Lender shall maintain on its books a record of account in which
Lender shall make entries for each Advance and such other debits and credits as
shall be appropriate in connection with the credit facility. Lender shall
provide Borrower with periodic statements of Borrower's account, which
statements shall be considered to be correct and conclusively binding on
Borrower unless Borrower notifies Lender to the contrary within thirty (30) days
after Borrower's receipt of any such statement which Borrower deems to be
incorrect.
Out of Debt Provision. Borrower shall maintain a zero balance on the Line of
Credit for a period of at least thirty (30) consecutive days during the term of
this loan.
Letter of Credit Sublimit. Subject to the terms of this Agreement, Lender will
issue standby letters of credit and commercial letters of credit (each a "Letter
of Credit") on behalf of Borrower. At no time, however, shall the total face
amount of all Letters of Credit outstanding, less any partial draws paid under
the Letters of Credit exceed the sum of $100,000.00. For purposes of calculating
the amount of Advances available under the Line of Credit, 100% of the face
amount of the outstanding Letters of Credit shall be deemed Advances under the
Line of Credit and therefore subtracted from the amount available under the Line
of Credit.
(a) Upon Lender's request, Borrower promptly shall pay to Lender issuance fees
and such other fees, commissions, costs, and any out-of-pocket expenses charged
or incurred by Lender with respect to any Letter of Credit.
<PAGE>
(b) The commitment by Lender to issue Letters of Credit shall, unless earlier
terminated in accordance with the terms of this Agreement, automatically
terminate on the Expiration Date and no standby Letter of Credit shall expire on
a date which is sixty (60) days after the Expiration Date.
(c) Each Letter of Credit shall be in form and substance satisfactory to Lender
and in favor of beneficiaries satisfactory to Lender, provided that Lender may
refuse to issue a Letter of Credit due to the nature of the transaction or its
terms or in connection with any transaction where Lender, due to the beneficiary
or the nationality or residence of the beneficiary, would be prohibited by any
applicable law, regulation, or order from issuing such Letter of Credit. Under
no circumstances, however, will a commercial Letter of Credit and standby Letter
of Credit exceed one hundred twenty (120) days and three hundred sixty (360)
days from the issue date, respectively.
(d) Prior to the issuance of each Letter of Credit, and in all events prior to
any daily cutoff time Lender may have established for purposes thereof, Borrower
shall deliver to Lender a duly executed form of Lender's standard form of
application for issuance of letter of credit with proper insertions.
Lender's Rights Upon Default. Upon the occurrence of any Event of Default,
Lender may, at its sole and absolute discretion and in addition to any other
remedies available to it under this Agreement or otherwise, require Borrower to
pay immediately to Lender, for application against drawings under any
outstanding Letters of Credit, the outstanding principal amount of any such
Letters of Credit which have not expired. Any portion of the amount so paid to
Lender which is not applied to satisfy draws under any such Letters of Credit or
any other obligations of Borrower to the Lender shall be repaid to Borrower
without interest.
Lender's Costs and Expenses. Borrower shall, upon Lender's request, promptly pay
to and reimburse Lender for all costs incurred and payments made by Lender by
reason of any future assessment, reserve, deposit, or similar requirement or any
surcharge, tax, or fee imposed upon Lender or as a result of Lender's compliance
with any directive or requirement of any regulatory authority pertaining or
relating to any Letter of Credit.
<PAGE>
COLLATERAL. To secure payment of the Line of Credit and performance of all other
Loans, obligations and duties owed by Borrower to Lender, Borrower (and others,
if required) shall grant to Lender Security Interests in such property and
assets as Lender may require (the "Collateral"). Lender's Security Interests in
the Collateral shall be continuing liens and shall include the proceeds and
products of the Collateral, including without limitation the proceeds of any
insurance. With respect to the Collateral, Borrower agrees and represents and
warrants to Lender: Perfection of Security Interests. Borrower agrees to execute
such financing statements and to take whatever other actions are requested by
Lender to perfect and continue Lender's Security Interests in the Collateral.
Upon request of Lender, Borrower will deliver to Lender any and all of the
documents evidencing or constituting the Collateral, and Borrower will note
Lender's interest upon any and all chattel paper if not delivered to Lender for
possession by Lender. Contemporaneous with the execution of this Agreement,
Borrower will execute one or more UCC financing statements and any similar
statements as may be required by applicable law, and will file such financing
statements and all such similar statements in the appropriate location or
locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact
for the purpose of executing any documents necessary to perfect or to continue
any Security Interest. Lender may at any time, and without further authorization
from Borrower, file a carbon, photograph, facsimile, or other reproduction of
any financing statement for use as a financing statement. Borrower will
reimburse Lender for all expenses for the perfection, termination, and the
continuation of the perfection of Lender's security interest in the Collateral.
Borrower promptly will notify Lender of any change in Borrower's name including
any change to the assumed business names of Borrower. Borrower also promptly
will notify Lender of any change in Borrower's Social Security Number or
Employer Identification Number. Borrower further agrees to notify Lender in
writing prior to any change in address or location of Borrower's principal
governance office or should Borrower merge or consolidate with any other entity.
Collateral Records. Borrower does now, and at all times hereafter shall, keep
correct and accurate records of the Collateral, all of which records shall be
available to Lender or Lender's representative upon demand for inspection and
copying at any reasonable time.
Collateral Schedules. Concurrently with the execution and delivery of this
Agreement, Borrower shall execute and deliver to Lender a schedule of
Collateral, in form and substance satisfactory to the Lender. Thereafter and at
such frequency as Lender shall require.
<PAGE>
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Delaware and is
validly existing and in good standing in all states in which Borrower is doing
business. Borrower has the full power and authority to own its properties and to
transact the businesses in which it is presently engaged or presently proposes
to engage. Borrower also is duly qualified as a foreign corporation and is in
good standing in all states in which the failure to so qualify would have a
material adverse effect on its businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement and
all Related Documents by Borrower, to the extent to be executed, delivered or
performed by Borrower, have been duly authorized by all necessary action by
Borrower; do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a violation
of, or constitute a default under (a) any provision of its articles of
incorporation or organization, or bylaws, or any agreement or other instrument
binding upon Borrower or (b) any law, governmental regulation, court decree, or
order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to Lender
truly and completely disclosed Borrower's financial condition as of the date of
the statement, and there has been no material adverse change in Borrower's
financial condition subsequent to the date of the most recent financial
statement supplied to Lender. Borrower has no material contingent obligations
except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against Borrower in
accordance with their respective terms.
<PAGE>
Properties. Except for Permitted Liens, Borrower owns and has good title to all
of Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal name,
and Borrower has not used, or filed a financing statement under, any other name
for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5
through 7.7 of Division 20 of the California Health and Safety Code, Section
25100, et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing. Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that: (a)
During the period of Borrower's ownership of the properties, there has been no
use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any hazardous waste or substance by any person on, under,
about or from any of the properties. (b) Borrower has no knowledge of, or reason
to believe that there has been (i) any use, generation, manufacture, storage,
treatment, disposal, release, or threatened release of any hazardous waste or
substance on, under, about or from the properties by any prior owners or
occupants of any of the properties, or (ii) any actual or threatened litigation
or claims of any kind by any person relating to such matters. (c) Neither
Borrower nor any tenant, contractor, agent or other authorized user of any of
the properties shall use, generate, manufacture, store, treat, dispose of, or
release any hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances described
above. Borrower authorizes Lender and its agents to enter upon the properties to
make such inspections and tests as Lender may deem appropriate to determine
compliance of the properties with this section of the Agreement. Any inspections
or tests made by Lender shall be at Borrower's expense and for Lender's purposes
only and shall not be construed to create any responsibility or liability on the
part of Lender to Borrower or to any other person. The representations and
warranties contained herein are based on Borrower's due diligence in
investigating the properties for hazardous waste and hazardous substances.
Borrower hereby (a) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup or
other costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims, losses, liabilities, damages, penalties, and
expenses which Lender may directly or indirectly sustain or suffer resulting
from a breach of this section of the Agreement or as a consequence of any use,
generation, manufacture, storage, disposal, release or threatened release
occurring prior to Borrower's ownership or interest in the properties, whether
or not the same was or should have been known to Borrower. The provisions of
this section of the Agreement, including the obligation to indemnify, shall
survive the payment of the Indebtedness and the termination or expiration of
this Agreement and shall not be affected by Lender's acquisition of any interest
in any of the properties, whether by foreclosure or otherwise.
<PAGE>
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against Borrower
is pending or threatened, and no other event has occurred which may materially
adversely affect Borrower's financial condition or properties, other than
litigation, claims, or other events, if any, that have been disclosed to and
acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed, and all taxes,
assessments and other governmental charges have been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary
course of business and for which adequate reserves have been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or permitted
the filing or attachment of any Security Interests on or affecting any of the
Collateral directly or indirectly securing repayment of Borrower's Loan and
Note, that would be prior or that may in any way be superior to Lender's
Security Interests and rights in and to such Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly or
indirectly securing repayment of Borrower's Loan and Note and all of the Related
Documents are binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance with
their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may have
any liability complies in all material respects with all applicable requirements
of law and regulations, and (i) no Reportable Event nor Prohibited Transaction
(as defined in ERISA) has occurred with respect to any such plan, (ii) Borrower
has not withdrawn from any such plan or initiated steps to do so, (iii) no steps
have been taken to terminate any such plan, and (iv) there are no unfunded
liabilities other than those previously disclosed to Lender in writing.
<PAGE>
Location of Borrower's Offices and Records. Borrower's place of business, or
Borrower's Chief executive office, if Borrower has more than one place of
business, is located at 460 Calle San Pablo, Camarillo, CA 93012. Unless
Borrower has designated otherwise in writing this location is also the office or
offices where Borrower keeps its records concerning the Collateral.
Information. All information heretofore or contemporaneously herewith furnished
by Borrower to Lender for the purposes of or in connection with this Agreement
or any transaction contemplated hereby is, and all information hereafter
furnished by or on behalf of Borrower to Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified; and none of such information is or will be incomplete by omitting to
state any material fact necessary to make such information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees that
Lender, without independent investigation, is relying upon the above
representations and warranties in extending Loan Advances to Borrower. Borrower
further agrees that the foregoing representations and warranties shall be
continuing in nature and shall remain in full force and effect until such time
as Borrower's Indebtedness shall be paid in full, or until this Agreement shall
be terminated in the manner provided above, whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
Financial Records. Maintain its books and records in accordance with generally
accepted accounting principles, applied on a consistent basis, and permit Lender
to examine and audit Borrower's books and records at all reasonable times.
Additional Information. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables, inventory
schedules, budgets, forecasts, tax returns, and other reports with respect to
Borrower's financial condition and business operations as Lender may request
from time to time.
<PAGE>
Insurance. Maintain fire and other risk insurance, public liability insurance,
and such other insurance as Lender may require with respect to Borrower's
properties and operations, in form, amounts, coverages and with insurance
companies reasonably acceptable to Lender. Borrower, upon request of Lender,
will deliver to Lender from time to time the policies or certificates of
insurance in form satisfactory to Lender, including stipulations that coverages
will not be cancelled or diminished without at least ten (10) days' prior
written notice to Lender. Each insurance policy also shall include an
endorsement providing that coverage in favor of Lender will not be impaired in
any way by any act, omission or default of Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is offered
a security interest for the Loans, Borrower will provide Lender with such loss
payable or other endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on each
existing insurance policy showing such information as Lender may reasonably
request, including without limitation the following: (a) the name of the
insurer; (b) the risks insured; (c) the amount of the policy; (d) the properties
insured; (e) the then current property values on the basis of which insurance
has been obtained, and the manner of determining those values; and (f) the
expiration date of the policy. In addition, upon request of Lender (however not
more often than annually), Borrower will have an independent appraiser
satisfactory to Lender determine, as applicable, the actual cash value or
replacement cost of any Collateral. The cost of such appraisal shall be paid by
Borrower.
Other Agreements. Comply with all terms and conditions of all other agreements,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any other
such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
<PAGE>
Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and
obligations, including without limitation all assessments, taxes, governmental
charges, levies and liens, of every kind and nature, imposed upon Borrower or
its properties, income, or profits, prior to the date on which penalties would
attach, and all lawful claims that, if unpaid, might become a lien or charge
upon any of Borrower's properties, income, or profits. Provided however,
Borrower will not be required to pay and discharge any such assessment, tax,
charge, levy, lien or claim so long as (a) the legality of the same shall be
contested in good faith by appropriate proceedings, and (b) Borrower shall have
established on its books adequate reserves with respect to such contested
assessment, tax, charge, levy, lien, or claim in accordance with generally
accepted accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies, liens and
claims and will authorize the appropriate governmental official to deliver to
Lender at any time a written statement of any assessments, taxes, charges,
levies, liens and claims against Borrower's properties, income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions set
forth in this Agreement and in the Related Documents in a timely manner, and
promptly notify Lender if Borrower learns of the occurrence of any event which
constitutes an Event of Default under this Agreement or under any of the Related
Documents.
Operations. Maintain executive and management personnel with substantially the
same qualifications and experience as the present executive and management
personnel; provide written notice to Lender of any change in executive and
management personnel; conduct its business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, including without limitation, compliance with the
Americans With Disabilities Act and with all minimum funding standards and other
requirements of ERISA and other laws applicable to Borrower's employee benefit
plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records and
to make copies and memoranda of Borrower's books, accounts, and records. If
Borrower now or at any time hereafter maintains any records (including without
limitation computer generated records and computer software programs for the
generation of such records) in the possession of a third party, Borrower, upon
request of Lender, shall notify such party to permit Lender free access to such
records at all reasonable times and to provide Lender with copies of any records
it may request, all at Borrower's expense.
<PAGE>
Environmental Compliance and Reports. Borrower shall comply in all respects with
all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part of
any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of a
permit issued by the appropriate federal, state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, letter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission
on Borrower's part in connection with any environmental activity whether or not
there is damage to the environment and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loans and to perfect all Security
Interests.
RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law,
rule, regulation or guideline, or the interpretation or application of any
thereof by any court or administrative or governmental authority (including any
request or policy not having the force of law) shall impose, modify or make
applicable any taxes (except U.S. federal, state or local income or franchise
taxes imposed on Lender), reserve requirements, capital adequacy requirements or
other obligations which would (a) increase the cost to Lender for extending or
maintaining the credit facilities to which this Agreement relates, (b) reduce
the amounts payable to Lender under this Agreement or the Related Documents, or
(c) reduce the rate of return on Lender's capital as a consequence of Lender's
obligations with respect to the credit facilities to which this Agreement
relates, then Borrower agrees to pay Lender such additional amounts as will
compensate Lender therefor, within five (5) days after Lender's written demand
for such payment, which demand shall be accompanied by an explanation of such
imposition or charge and a calculation in reasonable detail of the additional
amounts payable by Borrower, which explanation and calculations shall be
conclusive in the absence of manifest error.
<PAGE>
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Indebtedness and Liens. (a) Except for trade debt incurred in the normal course
of business and indebtedness to Lender contemplated by this Agreement, create,
incur or assume indebtedness for borrowed money, including capital leases, (b)
sell, transfer, mortgage, assign, pledge, lease, grant a security interest in,
or encumber any of Borrower's assets, or (c) sell with recourse any of
Borrower's accounts, except to Lender.
Continuity of Operations. (a) Engage in any business activities substantially
different than those in which Borrower is presently engaged, (b) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change ownership, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, (c) pay any dividends on
Borrower's stock (other than dividends payable in its stock), provided, however
that notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends, if
Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue
Code of 1986, as amended), Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the shareholders
to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from their status as
Shareholders of a Subchapter S Corporation because of their ownership of shares
of stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other enterprise or
entity, or (c) incur any obligation as surety or guarantor other than in the
ordinary course of business.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender; or (e) Lender in good faith deems itself insecure, even
though no Event of Default shall have occurred.
<PAGE>
REPLACEMENT OF PRIOR BUSINESS LOAN AGREEMENT. This Agreement replaces and
supersedes that certain Business Loan Agreement, dated as of July 26, 1995, as
it may be amended from time to time, between Borrower and Lender.
FINANCIAL COVENANTS AND RATIOS. Borrower covenants and agrees with Lender that
while this Agreement is in effect, Borrower shall comply at all times with the
following financial covenants and ratios:
(a) Effective Tangible Net Worth. Borrower shall maintain an Effective Tangible
Net Worth (defined as the aggregate net worth plus subordinated debt, less any
intangible assets, and less any amount due from shareholders, officers and
affiliates of Borrower) of not less than $21,000,000.00.
(b) Ratio of Total Debt to Effective Tangible Net Worth. Borrower shall maintain
a Ratio of Total Debt to Effective Tangible Net Worth (defined as current
liabilities and non-current liabilities less subordinated debt divided by
Effective Tangible Net Worth) of not more than 1.00 to 1.00.
(c) Current Ratio. Borrower shall maintain a Current Ratio (defined as
total current assets divided by total current liabilities) of not less than
3.00 to 1.00.
(d) Debt Service Coverage Ratio. Borrower shall maintain a Debt Service Coverage
Ratio (defined as the aggregate net income after taxes plus depreciation and
other non-cash expenses and interest expense, less gain on sale of assets,
dividends, distributions, withdrawals and treasury stock purchases divided by
the aggregate current portion of long-term debt plus interest expense) of not
less than 1.50 to 1.00.
(e) Profitability. Borrower shall generate a net profit at the end of each
fiscal year and shall not incur two consecutive quarterly losses.
Compliance with the foregoing financial covenants and ratios shall be determined
as of the end of each fiscal quarter, except as otherwise specifically provided
above. All calculations made to determine compliance with the requirements set
forth above shall be made in accordance with generally accepted accounting
principles consistently applied and used consistently with prior practices.
<PAGE>
OTHER COVENANTS. Borrower shall not, without the prior written consent of
Lender, utilize the Line of Credit to fund legal expenses or acquisitions.
BORROWER'S FINANCIAL REPORTS. Borrower shall maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of the following financial reports in conformity with
generally accepted accounting principles. Borrower covenants and agrees with
Lender that while this Agreement is in effect, unless Lender shall otherwise
give its prior written consent, Borrower shall provide to Lender the following
financial reports, certified by Borrower as being true and correct:
(a) Annual Financial Statements. As soon as available and in any event within
one hundred twenty (120) days after the end of each fiscal year, Borrower shall
deliver to Lender the financial statements of Borrower, audited by certified
public accountants acceptable to Lender, including, but not limited to, a
balance sheet, an income statement, a statement of cash flows, appropriate
footnotes and schedules and Form 10K filed with the Securities and Exchange
Commission. Such financial statements shall present fairly the financial
condition of Borrower as at the dates indicated as well as the results of its
operations and cash flows for the periods indicated in conformity with generally
accepted accounting principles applied on a basis consistent with prior years.
(b) Quarterly Financial Statements. As soon as available and in any event within
forty-five (45) days after the end of each fiscal quarter, Borrower shall
deliver to Lender the financial statements of Borrower, prepared by Borrower,
including, but not limited to, a balance sheet, an income statement, and
appropriate schedules, and Form 10Q filed with the Securities and Exchange
Commission.
(c) Business Plan/Projections. As soon as available and in any event no later
than the end of each first fiscal quarter, Borrower shall deliver to Lender
Borrower's business plan and projections for each succeeding fiscal year.
OTHER REPORTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, unless Lender shall otherwise give its prior written
consent, Borrower shall provide to Lender the following other reports:
(a) Accounts Receivable and Accounts Payable Agings. As soon as available and in
any event within twenty (20) days after the end of each quarter, Borrower shall
deliver to Lender (i) a detailed aging, by total and by customer, of Borrower's
Accounts, and (ii) a detailed aging, by total and by vendor, of Borrower's
accounts payable, both of which shall be set forth in a form and shall contain
such information as is acceptable to Lender.
<PAGE>
(b) Inventory Report. As soon as available and in any event within twenty (20)
days after the end of each quarter, Borrower shall deliver to Lender, an
inventory report of Borrower, in such form and detail as Lender may require.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of
Default under this Agreement:
Default on Indebtedness. Failure of Borrower to make any payment when due on
the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to perform
when due any other term, obligation, covenant or condition contained in this
Agreement or in any of the Related Documents, or failure of Borrower to comply
with or to perform any other term, obligation, covenant or condition contained
in any other agreement between Lender and Borrower. Default in Favor of Third
Parties. Should Borrower or any Grantor default under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially affect any of
Borrower's property or Borrower's or any Grantor's ability to repay the Loans or
perform their respective obligations under this Agreement or any of the Related
Documents.
False Statements. Any warranty, representation or statement made or furnished to
Lender by or on behalf of Borrower or any Grantor under this Agreement or the
Related Documents is false or misleading in any material respect at the time
made or furnished, or becomes false or misleading at any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time and for
any reason.
Insolvency. The dissolution or termination of Borrower's existence as a going
business, the insolvency of Borrower, the appointment of a receiver for any part
of Borrower's property, any assignment for the benefit of creditors, any type of
creditor workout, or the commencement of any proceeding under any bankruptcy or
insolvency laws by or against Borrower.
<PAGE>
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture
proceedings, whether by judicial proceeding, self-help, repossession or any
other method, by any creditor of Borrower, any creditor of any Grantor against
any collateral securing the Indebtedness, or by any governmental agency. This
includes a garnishment, attachment, or levy on or of any of Borrower's deposit
accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect to
any Guarantor of any of the Indebtedness or any Guarantor dies or becomes
incompetent, or revokes or disputes the validity of, or liability under, any
Guaranty of the Indebtedness.
Change In Ownership. Any change in ownership of twenty-five percent (25%) or
more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
Insecurity. Lender, in good faith, deems itself insecure.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate (including any obligation to make
Loan Advances or disbursements), and, at Lender's option, all Indebtedness
immediately will become due and payable, all without notice of any kind to
Borrower, except that in the case of an Event of Default of the type described
in the "Insolvency" subsection above, such acceleration shall be automatic and
not optional. In addition, Lender shall have all the rights and remedies
provided in the Related Documents or available at law, in equity, or otherwise.
Except as may be prohibited by applicable law, all of Lender's rights and
remedies shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Borrower or of any Grantor shall not affect Lender's right to
declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part
of this Agreement:
<PAGE>
Amendments. This Agreement, together with any Related Documents, constitutes the
entire understanding and agreement of the parties as to the matters set forth in
this Agreement. No alteration of or amendment to this Agreement shall be
effective unless given in writing and signed by the party or parties sought to
be charged or bound by the alteration or amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of California. If there is a lawsuit, Borrower agrees upon
Lender's request to submit to the jurisdiction of the courts of LOS ANGELES
County, the State of California. Subject to the provisions on arbitration, this
Agreement shall be governed by and construed in accordance with the laws of the
State of California.
Arbitration. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any Collateral shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This includes, without limitation,
obtaining injunctive relief or a temporary restraining order; invoking a power
of sale under any deed of trust or mortgage; obtaining a writ of attachment or
imposition of a receiver; or exercising any rights relating to personal
property, including taking or disposing of such property with or without
judicial process pursuant to Article 9 of the Uniform Commercial Code. Any
disputes, claims, or controversies concerning the lawfulness or reasonableness
of any act, or exercise of any right, concerning any Collateral, including any
claim to rescind, reform, or otherwise modify any agreement relating to the
Collateral, shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions of
this Agreement.
<PAGE>
Multiple Parties; Corporate Authority. All obligations of Borrower under this
Agreement shall be joint and several, and all references to Borrower shall mean
each and every Borrower. This means that each of the persons signing below is
responsible for all obligations in this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's sale or
transfer, whether now or later, of one or more participation interests in the
Loans to one or more purchasers, whether related or unrelated to Lender. Lender
may provide, without any limitation whatsoever, to any one or more purchasers,
or potential purchasers, any information or knowledge Lender may have about
Borrower or about any other matter relating to the Loan, and Borrower hereby
waives any rights to privacy it may have with respect to such matters. Borrower
additionally waives any and all notices of sale of participation interests, as
well as all notices of any repurchase of such participation interests. Borrower
also agrees that the purchasers of any such participation interests will be
considered as the absolute owners of such interests in the Loans and will have
all the rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or against
any purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower's obligation under the
Loans irrespective of the failure or insolvency of any holder of any interest in
the Loans. Borrower further agrees that the purchaser of any such participation
interests may enforce its interests irrespective of any personal claims or
defenses that Borrower may have against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's expenses,
including without limitation attorneys' fees, incurred in connection with the
preparation, execution, enforcement, modification and collection of this
Agreement or in connection with the Loans made pursuant to this Agreement.
Lender may pay someone else to help collect the Loans and to enforce this
Agreement, and Borrower will pay that amount. This includes, subject to any
limits under applicable law, Lender's attorneys' fees and Lender's legal
expenses, whether or not there is a lawsuit, including attorneys' fees for
bankruptcy proceedings (including efforts to modify or vacate any automatic stay
or injunction), appeals, and any anticipated post-judgment collection services.
Borrower also will pay any court costs, in addition to all other sums provided
by law.
Notices. All notices required to be given under this Agreement shall be given in
writing, may be sent by telefacsimile (unless otherwise required by law), and
shall be effective when actually delivered or when deposited with a nationally
recognized overnight courier or deposited in the United States mail, first
class, postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties, specifying
that the purpose of the notice is to change the party's address. To the extent
permitted by applicable law, if there is more than one Borrower, notice to any
Borrower will constitute notice to all Borrowers. For notice purposes, Borrower
will keep Lender informed at all times of Borrower's current address(es).
<PAGE>
Severability. If a court of competent jurisdiction finds any provision of this
Agreement to be invalid or unenforceable as to any person or circumstance, such
finding shall not render that provision invalid or unenforceable as to any other
persons or circumstances. If feasible, any such offending provision shall be
deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects shall remain
valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without limitation
any representation, warranty or covenant, the word "Borrower" as used herein
shall include all subsidiaries and affiliates of Borrower. Notwithstanding the
foregoing however, under no circumstances shall this Agreement be construed to
require Lender to make any Loan or other financial accommodation to any
subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on behalf
of Borrower shall bind its successors and assigns and shall inure to the benefit
of Lender, its successors and assigns. Borrower shall not, however, have the
right to assign its rights under this Agreement or any interest therein, without
the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower in
this Agreement or in any certificate or other instrument delivered by Borrower
to Lender under this Agreement shall be considered to have been relied upon by
Lender and will survive the making of the Loan and delivery to Lender of the
Related Documents, regardless of any investigation made by Lender or on Lender's
behalf.
Time Is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No delay
or omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender's right
otherwise to demand strict compliance with that provision or any other provision
of this Agreement. No prior waiver by Lender, nor any course of dealing between
Lender and Borrower, or between Lender and any Grantor, shall constitute a
waiver of any of Lender's rights or of any obligations of Borrower or of any
Grantor as to any future transactions. Whenever the consent of Lender is
required under this Agreement, the granting of such consent by Lender in any
instance shall not constitute continuing consent in subsequent instances where
such consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
<PAGE>
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT,
AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF AUGUST 22,
1997.
BORROWER:
California Amplifier, Inc.
By: /s/Michael Ferron, Chief Financial Officer
LENDER:
California United Bank
By: /s/Susan Carter, Assistant Vice President
CHANGE IN TERMS AGREEMENT EXHIBIT 10.31
Borrower: California Amplifier, Inc. Lender: California United Bank
460 Calle San Pablo Encino Commercial Loan Center
Camarillo, CA 93012 16030 Ventura Boulevard
Encino, CA 91436
Principal Amount: $6,000,000.00 Date of Agreement: August 22, 1997
DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated as of August 6,
1996, in the original principal amount of $6,000,000.00, executed by Borrower in
favor of Lender.
DESCRIPTION OF COLLATERAL. This Note is secured by the Collateral as described
in that certain Commercial Security Agreement, dated as of July 26, 1995, as it
may amended, modified, supplemented, replaced or restated, from time to time,
executed by Grantor in favor of Lender.
DESCRIPTION OF CHANGE IN TERMS. The maturity date is amended from August 4, 1997
to August 3, 1998. Regularly scheduled monthly interest payments shall continue
to be due and payable as provided in said Note, commencing September 1, 1997.
PROMISE TO PAY. California Amplifier, Inc. ("Borrower") promises to pay to
California United Bank ("Lender"), or order, in lawful money of the United
States of America, the principal amount of Six Million & 00/100 Dollars
($6,000,000.00) or so much as may be outstanding, together with interest on the
unpaid outstanding principal balance of each advance. Interest shall be
calculated from the date of each advance until repayment of each advance.
ARBITRATION. Lender and Borrower agree that all disputes, claims and
controversies between them, whether individual, joint, or class in nature,
arising from this Agreement or otherwise, including without limitation contract
and tort disputes, shall be arbitrated pursuant to the Rules of the American
Arbitration Association, upon request of either party. No act to take or dispose
of any collateral securing this Agreement shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or mortgage;
obtaining a writ of attachment or imposition of a receiver; or exercising any
rights relating to personal property, including taking or disposing of such
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code. Any disputes, claims, or controversies concerning the
lawfulness or reasonableness of any act, or exercise of any right, concerning
any collateral securing this Agreement, including any claim to rescind, reform,
or otherwise modify any agreement relating to the collateral securing this
Agreement, shall also be arbitrated, provided however that no arbitrator shall
have the right or the power to enjoin or restrain any act of any party. Lender
and Borrower agree that in the event of an action for judicial foreclosure
pursuant to California Code of Civil Procedure Section 726, or any similar
provision in any other state, the commencement of such an action will not
constitute a waiver of the right to arbitrate and the court shall refer to
arbitration as much of such action, including counterclaims, as lawfully may be
referred to arbitration. Judgment upon any award rendered by any arbitrator may
be entered in any court having jurisdiction. Nothing in this Agreement shall
preclude any party from seeking equitable relief from a court of competent
jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar
doctrines which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The Federal Arbitration Act shall apply to the construction,
interpretation, and enforcement of this arbitration provision.
CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of
the original obligation or obligations, including all agreements evidenced or
securing the obligation(s), remain unchanged and in full force and effect.
Consent by Lender to this Agreement does not waive Lender's right to strict
performance of the obligation(s) as changed, nor obligate Lender to make any
future change in terms. Nothing in this Agreement will constitute a satisfaction
of the obligation(s). It is the intention of Lender to retain as liable parties
all makers and endorsers of the original obligation(s), including accommodation
parties, unless a party is expressly released by Lender in writing. Any maker or
endorser, including accommodation makers, will not be released by virtue of this
Agreement. If any person who signed the original obligation does not sign this
Agreement below, then all persons signing below acknowledge that this Agreement
is given conditionally, based on the representation to Lender that the
non-signing party consents to the changes and provisions of this Agreement or
otherwise will not be released by it. This waiver applies not only to any
initial extension, modification or release, but also to all such subsequent
actions.
PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE
PROVISIONS. BORROWER AGREES TO THE TERMS OF THE AGREEMENT AND ACKNOWLEDGES
RECEIPT OF A COMPLETED COPY OF THE AGREEMENT.
BORROWER:
California Amplifier, Inc.
By:/s/ Michael Ferron, Chief Financial Officer
LENDER:
California United Bank
By: /s/ Authorized Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED BALANCE SHEET ON PAGE 2 AND THE CONSOLIDATED STATEMENTS
OF INCOME ON PAGE 3 OF THE COMPANY'S FORM 10-q FOR THE SIX MONTHS ENDED AUGUST
30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<CIK> 0000730255
<NAME> California Amplifier, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-START> MAR-02-1997
<PERIOD-END> AUG-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 2477
<SECURITIES> 0
<RECEIVABLES> 10131
<ALLOWANCES> 673
<INVENTORY> 10824
<CURRENT-ASSETS> 23882
<PP&E> 20569
<DEPRECIATION> 12758
<TOTAL-ASSETS> 32785
<CURRENT-LIABILITIES> 7227
<BONDS> 0
0
0
<COMMON> 14124
<OTHER-SE> 10319
<TOTAL-LIABILITY-AND-EQUITY> 32785
<SALES> 25104
<TOTAL-REVENUES> 25104
<CGS> 17477
<TOTAL-COSTS> 6932
<OTHER-EXPENSES> 148
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 534
<INCOME-TAX> 200
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 334
<EPS-PRIMARY> .03
<EPS-DILUTED> 0
</TABLE>
