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EXHIBIT 10.30.5
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is entered into as
of September 27, 1996, by and between DATUM INC., a Delaware corporation
("Borrower"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION ("Bank").
RECITALS
A. Borrower and Bank have executed and entered into a Credit
Agreement dated as of December 16, 1994, which Credit Agreement heretofore has
been amended from time to time, including amendments evidenced by (i) that
certain First Amendment to Credit Agreement dated as of August 31, 1995, (ii)
that certain Second Amendment to Credit Agreement dated as of November 1, 1995,
(iii) that certain Third Amendment to Credit Agreement dated as of March 14,
1996 and (iv) that certain Fourth Amendment to Credit Agreement dated as of June
6, 1996 (as so amended, the "Existing Credit Agreement").
B. Pursuant to the Existing Credit Agreement, Borrower has
executed and delivered to the order of Bank (i) that certain Revolving Line of
Credit Note dated August 31, 1995 in the original principal amount of up to
$14,000,000.00 (the "Prior Line of Credit Note"), (ii) that certain Promissory
Note dated March 17, 1995, in the original principal amount of $2,500,000.00
("Term Note I"), (iii) that certain Promissory Note dated March 17, 1995 in the
original principal amount of $2,500,000.00 ("Term Note II"), (iv) that certain
Promissory Note dated March 17, 1995 in the original principal amount of
$6,000,000.00 ("Term Note III") and (v) that certain Term Commitment Note dated
August 31, 1995, in the original principal amount of up to $2,000,000.00 (the
"Term Commitment Note"). The Prior Line of Credit Note, Term Note I, Term Note
II, Term Note III and Term Commitment Note are collectively referred to herein
as the "Existing Notes."
C. In connection with the credit accommodations made by Bank
pursuant to the Existing Credit Agreement and the Existing Notes, Borrower and
its Subsidiaries have executed and delivered to Bank numerous other loan and
security documents, including the "Existing Collateral Documents" (as defined
below), the "Existing Guaranties" (as defined below), letter of credit
agreements and the like. Such documents, together with the Existing Credit
Agreement and the Existing Notes are collectively referred to herein as the
"Existing Loan Documents."
D. The Prior Line of Credit Note is scheduled to mature on
October 7, 1996. Borrower has requested, and subject to the terms and conditions
contained herein, Bank has agreed to (i) extend the scheduled expiration date of
the Line of Credit originally evidenced by the Prior Line of Credit Note to
November 1, 1998 (provided that such Line of Credit shall be reduced to
$12,000,000), (ii) permit Borrower to issue the Series A Secured Notes and
Series B Secured Notes (collectively, the "Prudential Notes") referenced in that
certain Note and Warrant Purchase Agreement dated as of September 27, 1996 (the
"Prudential Agreement") by and between Borrower and The Prudential Insurance
Company of America ("Prudential") and (iii) enter into an intercreditor and
collateral agency arrangement with Prudential pursuant to which Bank shall
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act as collateral agent for and on behalf of itself and the "Noteholders" (as
defined below).
E. This Agreement is intended by Borrower and Bank as an
amendment and restatement of the Existing Credit Agreement as of the "Effective
Date" (as defined below). To the extent not repaid on the Effective Date,
amounts outstanding under the Prior Line of Credit Note shall be deemed to be
outstanding hereunder and evidenced by the "Line of Credit Note" (as defined
below). Amounts outstanding under the other Existing Notes shall be repaid in
full on or before the Effective Date, such repayment to be made with Borrower's
own funds and/or with proceeds obtained in connection with Borrower's issuance
of the Prudential Notes.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Bank and Borrower hereby agree as
follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
Section 1.1 DEFINED TERMS. The following definitions are in
addition to those stated elsewhere in this Agreement:
"Advance" means an advance under the Line of Credit.
"Austron" means Austron, Inc., a Texas corporation.
"Borrowing Base" means, as of any date of determination, an
amount determined by Bank with reference to the most recent Borrowing Base
Certificate to be equal to the sum of:
(a) the Eligible Receivables Component; plus
(b) the Eligible Inventory Component, to a maximum of
$4,000,000; plus
(c) the Equipment Component; plus
(d) the Real Property Component; minus
(e) the aggregate amount outstanding under the
Prudential Notes then secured by Liens on the assets of the Borrowing
Base Parties which Liens are of equal priority as the Liens of Bank on
such assets;
provided, however, that (i) the aggregate outstanding Advances against the
Equipment Component and the Real Property Component (on a combined basis) shall
not at any time exceed $6,000,000 and (ii) if on such date the most recent
Borrowing Base Certificate is as of a date more than 60 days prior to such date,
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the Borrowing Base shall mean such amount as may be determined by Bank in its
sole discretion.
"Borrowing Base Certificate" means a borrowing base
certificate in the form of Exhibit A, properly completed and executed by an
officer of Borrower, on behalf of all of the Borrowing Base Parties.
"Borrowing Base Parties" means, for purposes of determining
the Borrowing Base and for certain reporting requirements, Borrower, Austron,
Efratom and Systems.
"Collateral" means all property, real or personal, in which
the Collateral Agent, on behalf of Bank, is granted a Lien in accordance with
the Intercreditor Agreement, this Agreement and the other Loan Documents.
"Collateral Agent" means Xxxxx Fargo Bank, National
Association, in its capacity as collateral agent for Bank and the Noteholders
pursuant to the Intercreditor Agreement, or any successor collateral agent
thereunder.
"Credit" means the credit accommodation described in Article 2
hereof.
"Efratom" means Efratom Time and Frequency Products, Inc., a
Colorado corporation.
"Eligible Inventory" means, as of any date of determination,
"inventory" (as such term is defined in the California Uniform Commercial Code)
of the Borrowing Base Parties, excluding the following:
(a) inventory that is not wholly-owned by one or more
of the Borrowing Base Parties free and clear of all Liens and claims
other than Liens in favor of the Collateral Agent on behalf of Bank;
(b) inventory that is not located at locations with
respect to which all actions necessary to perfect the Collateral
Agent's Liens on such inventory have been taken or completed (or which
is in transit via common carrier from any such location to another such
location);
(c) inventory that is not held for sale or use in the
ordinary course of a Borrowing Base Party's business or is not of good
and merchantable quality;
(d) inventory that Bank has determined to be damaged,
defective, obsolete, unsalable, slow-moving or otherwise unfit for use;
(e) inventory consisting of work-in-process,
packaging materials, bags, boxes, capitalized freight and handling
costs or supplies and discontinued inventory;
(f) inventory covered by negotiable documents of
title that have not been delivered to Bank in pledge;
(g) inventory that has been placed on consignment;
and
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(h) inventory that has otherwise been deemed by Bank
(in its sole discretion) to be ineligible for purposes of computation
of the Eligible Inventory Component of the Borrowing Base.
"Eligible Inventory Component" means, in calculating the
Borrowing Base, twenty-five percent (25%) of the aggregate value of the
Borrowing Base Parties' then existing Eligible Inventory (as determined by Bank
based on such reports and collateral audits as Bank may require or otherwise
obtain), with value in each instance defined as the lower of cost or market
value, with cost values to be determined on a "direct cost" rather than an
"allocated cost" basis.
"Eligible Receivables" means, as of any date of determination,
accounts receivable of the Borrowing Base Parties as to which the Collateral
Agent, on behalf of Bank, holds a first priority perfected Lien, provided that
such accounts receivable have been created in the ordinary course of business of
such Borrowing Base Parties, as applicable, and shall not include:
(a) any account which is past due more than twice the
applicable Borrowing Base Party's standard selling terms, except with
respect to any account for which a Borrowing Base Party has provided
extended payment terms not to exceed one hundred eighty (180) days, any
such account which is more than thirty (30) days past due;
(b) any account with respect to which payment is or
may be contingent or conditional in any respect;
(c) any account for which there exists any right of
setoff, defense or discount (except regular discounts allowed in the
ordinary course of business to promote prompt payment) or for which any
defense or counterclaim has been asserted;
(d) to the extent such accounts exceed ten percent
(10%) of the Borrowing Base Parties' total Eligible Receivables,
accounts representing obligations of state or municipal governments or
of the United States government or political subdivisions thereof
unless such accounts represent obligations of the United States
government and Bank's forms N-138 and N-139 have been duly executed and
acknowledged with respect thereto;
(e) to the extent such accounts exceed five percent
(5%) of the Borrowing Base Parties' total Eligible Receivables,
accounts representing obligations of account debtors located in foreign
countries, except to the extent any such account, in Bank's
determination, is supported by a letter of credit or insured under a
policy of foreign credit insurance, in each case in form, substance and
issued by a party acceptable to Bank;
(f) any account which arises from the sale or lease
to or performance of services for, or represents an obligation of, an
employee, affiliate, partner, member, parent or Subsidiary of any
Borrowing Base Party;
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(g) that portion of any account which represents
interim or progress xxxxxxxx or retention rights on the part of the
account debtor;
(h) any account which represents an obligation of any
account debtor when twenty percent (20%) or more of the combined
accounts owing from such account debtor to the Borrowing Base Parties
are not eligible pursuant to item (a) above;
(i) that portion of any account from an account
debtor other than Lucent Technologies Inc. (successor to AT&T Corp.)
("Lucent") which represents the amount by which the Borrowing Base
Parties' total accounts from said account debtor on a combined basis
exceeds twenty-five percent (25%) of the Borrowing Base Parties' total
accounts on a combined basis; that portion of any account from Lucent
which represents the amount by which the Borrowing Base Parties' total
accounts from Lucent exceeds thirty-five percent (35%) of the Borrowing
Base Parties' total accounts on a combined basis; and/or
(j) any account deemed ineligible by Bank when Bank,
in its sole discretion, deems the creditworthiness or financial
condition of the account debtor, or the industry in which the account
debtor is engaged, to be unsatisfactory.
"Eligible Receivables Component" means, in calculating the
Borrowing Base (but subject to Section 2.1(b)), eighty percent (80%) of the
aggregate book value of the Borrowing Base Parties' then existing Eligible
Receivables, as determined by Bank upon receipt and review of such collateral
reports and other documents as Bank may require.
"Equipment Component" means, in calculating the Borrowing
Base, eighty percent (80%) of the orderly liquidation value of the Borrowing
Base Parties' equipment and other fixed assets (other than the Real Property
Collateral) as to which the Collateral Agent, on behalf of Bank, has a first
priority perfected Lien, with such value determined by Bank upon receipt and
review of such collateral reports, appraisals, audits and other documents as
Bank may require from time to time.
"Existing Collateral Documents" means, collectively, the
Existing Security Agreements, Xxxxx Road Mortgage Documents, and Vision Drive
Mortgage, in each case as the same may from time to time have been amended,
supplemented, restated or otherwise modified.
"Existing Guaranties" means, collectively, the continuing
guaranties heretofore executed and delivered by Austron, Efratom and Systems to
Bank for the purpose of guarantying Borrower's obligations under the Existing
Credit Agreement and Existing Notes.
"Existing Letter of Credit" means the existing Letter of
Credit described in Section 2.1(d).
"Existing Security Agreements" means, collectively, the
security agreements, pledge agreements, assignments, UCC-1 financing statements,
fixture filings, consents and other collateral security documents heretofore
executed and
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delivered to Bank in connection with the Existing Credit Agreement granting
Liens to Bank, or perfecting, effecting, facilitating, consenting to, providing
notice of, or otherwise evidencing such Liens, in each case as the same may have
been amended, supplemented, restated or otherwise modified.
"Guarantors" means, collectively, Austron, Efratom, Systems
and any other person or entity which at any time furnishes Bank (or Collateral
Agent, on Bank's behalf) with a guaranty in accordance with this Agreement.
"Junior Secured Obligations" shall have the meaning specified
for such term in the Intercreditor Agreement.
"Intercreditor Agreement" means the Intercreditor and
Collateral Agency Agreement of even date herewith by and among the Noteholders,
Bank, Collateral Agent and Borrower, either as originally executed or as the
same may from time to time be amended, restated or otherwise modified.
"Letter of Credit" or "Letters of Credit" means any one or
more of the standby letters of credit described in Section 2.1(d).
"Leverage Ratio" shall have the meaning specified for such
term in Section 5.9(b).
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment for security, security interest, encumbrance, lien or
charge of any kind, whether voluntarily incurred or arising by operation of law
or otherwise, affecting any property, including any agreement to grant any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature of a security interest, and/or the filing of or agreement to
give any financing statement (other than a precautionary financing statement
with respect to a lease that is not in the nature of a security interest) under
the Uniform Commercial Code or comparable law of any jurisdiction with respect
to any property.
"Line of Credit" means the revolving line of credit described
in Section 2.1(a).
"Line of Credit Note" means the promissory note described in
Section 2.1(a).
"Line of Credit Termination Date" means November 1, 1998.
"Loan Documents" shall have the meaning set forth for such
term in Section 3.2.
"Loan Party" means Borrower, Austron, Efratom, Systems, any
other Guarantor, any other person or entity which at any applicable time
furnishes Bank with any Collateral and any other person or entity which at any
applicable time becomes a party to any of the Loan Documents.
"Noteholders" means, collectively and as of any date of
determination, the holders of the Prudential Notes as of such date.
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"Opinion of Counsel" means the favorable written legal opinion
of Stradling, Yocca, Xxxxxxx & Xxxxx, counsel to the Loan Parties, substantially
in the form of Exhibit B, together with copies of all factual certificates and
legal opinions upon which such counsel has relied.
"Real Property Collateral" means, as of any date of
determination, the real property owned by the Borrowing Base Parties in which
the Collateral Agent, on behalf of Bank, has a first priority perfected Lien. As
of the Effective Date, the Real Property Collateral consists solely of the Xxxxx
Road Property and the Vision Drive Property.
"Real Property Component" means, in calculating the Borrowing
Base, seventy-five percent (75%) of the appraised value of the Real Property
Collateral as determined from time to time by Bank in its sole judgment.
"Subsidiary" means any corporation fifty percent (50%) or more
of whose securities having ordinary voting power for the election of directors
(other than securities having such power only by reason of the happening of a
contingency) are at any applicable time owned, directly or indirectly, by
Borrower and/or one or more Subsidiaries.
"Systems" means Frequency & Time Systems, Inc., a Delaware
corporation.
"Xxxxx Road Mortgage Documents" means, collectively, (a) the
Mortgage Deed and Security Agreement dated March 17, 1995, executed by Systems
in favor of Bank and recorded April 21, 1995 in Book 12992, Page 70, with the
Essex South Registry of Deeds, Essex County, Massachusetts, and filed as
Document No. 307740 with the Essex South Registry District of the Land Court,
Essex County, Massachusetts and (b) the Collateral Assignment of Leases and
Rents dated March 17, 1995, executed by Systems in favor of Bank and recorded
April 21, 1995, in Book 12992, Page 89, with the Essex South Registry of Deeds,
Essex County, Massachusetts, and filed as Document No. 307741 with Essex South
Registry District of the Land Court, Essex County, Massachusetts.
"Xxxxx Road Real Property" means that certain real property
owned by Systems located in the City of Xxxxxxx, County of Essex, State of
Massachusetts, more particularly described in Exhibit A to the Xxxxx Road
Mortgage.
"Vision Drive Mortgage" means that certain Deed of Trust,
Assignment of Rents and Security Agreement dated March 17, 1995, executed by
Austron in favor of Bank and recorded March 20, 1995, in the real property
records of Xxxxxx County, Texas in Volume 12397, Page 1130.
"Vision Drive Real Property" means that certain real property
owned by Austron located in the City of Pflugerville, County of Xxxxxx, State of
Texas, more particularly described in Exhibit A to the Vision Drive Mortgage.
Section 1.2 SINGULAR AND PLURAL TERMS. Any defined term used
in the plural in any Loan Document shall refer to all members of the relevant
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class and any defined term used in the singular shall refer to any number of the
members of the relevant class.
Section 1.3 ACCOUNTING PRINCIPLES. Any accounting term used
and not specifically defined in any Loan Document shall be construed in
conformity with, and all financial data required to be submitted under any Loan
Document shall be prepared in conformity with, generally accepted accounting
principles applied on a consistent basis.
Section 1.4 EXHIBITS INCORPORATED. All exhibits to this
Agreement, as now existing and as the same may from time to time be modified,
are incorporated herein by this reference.
Section 1.5 REFERENCES. Any reference to any Loan Document or
other document shall include such document both as originally executed and as it
may from time to time be supplemented, modified, amended, restated or extended.
References herein to Articles, Sections and Exhibits shall be construed as
references to this Agreement unless a different document is named. References to
subparagraphs shall be construed as references to the same Section in which the
reference appears.
Section 1.6 OTHER TERMS. The term "document" is used in its
broadest sense and encompasses agreements, certificates, opinions, consents,
instruments and other written material of every kind. The terms "including" and
"include" mean "including (include) without limitation." The requirement that
any party "deliver" any item to another party shall be construed to require that
the first party "deliver or cause to be delivered" such item to the second
party. The term "any," as a modifier to any noun, shall be construed to mean
"any and/or all" preceding the same noun in the plural. The terms "modify" and
"modification," when used with reference to any document or obligation, include
amendments, supplements, renewals, extensions, waivers, terminations and other
modifications of every kind. The terms "law" and "laws," unless otherwise
modified, mean, collectively, all federal, state and local laws, rules,
regulations, codes and administrative and judicial precedents. The terms
"herein," "hereunder" and other similar compounds of the word "here" refer to
the entire document in which the term appears and not to any particular
provision or section of the document. This Section 1.6 shall apply to all of the
Loan Documents.
Section 1.7 HEADINGS. Article and section headings are
included in the Loan Documents for convenience of reference only and shall not
be used in construing the Loan Documents.
ARTICLE 2
THE CREDIT
Section 2.1 LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make Advances to Borrower from time to
time up to and including the Line of Credit Termination Date, not to exceed at
any time the aggregate principal amount of Twelve Million and No/100 Dollars
($12,000,000.00) ("Line of Credit"), the proceeds of which shall be used for
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general working capital purposes. Borrower's obligation to repay Advances under
the Line of Credit shall be evidenced by a promissory note substantially in the
form of Exhibit C attached hereto ("Line of Credit Note"), all terms of which
are incorporated herein by this reference.
(b) Limitation on Borrowings. Notwithstanding any other
provision of this Agreement, the aggregate amount of all outstanding borrowings
under the Line of Credit shall at no time exceed the Borrowing Base as
determined by Bank. In that regard, Borrower acknowledges and agrees that Bank
may from time to time, in its sole and absolute discretion (i) establish such
reserves against the various components of the Borrowing Base as Bank deems
necessary and proper and (ii) increase or decrease the percentages applicable to
each of the Borrowing Base components. Without in any way limiting the
foregoing, Borrower acknowledges that the advance rate against Eligible
Receivables was established by Bank with the understanding that, among other
items, the aggregate of all returns, rebates, discounts, credits and allowances
for the immediately preceding three (3) months at all times shall be less than
five percent (5%) of the Borrowing Base Parties' aggregate gross sales for said
period. If such dilution of such accounts of the Borrowing Base Parties' for the
immediately three (3) months at any time exceeds five percent (5%) of the
Borrowing Base Parties' aggregate gross sales for said period, or if there at
any time exists any other matter, event, condition or contingency that Bank
reasonably believes may affect payment of any portion of the Borrowing Base
Parties' accounts, Bank, in its sole discretion, may reduce said advance rate to
a percentage appropriate to reflect such additional dilution and/or establish
additional reserves against the Borrowing Base Parties' Eligible Receivables.
(c) Borrowing and Repayment. Borrower may from time to time
during the term of the Line of Credit borrow, partially or wholly repay its
outstanding borrowings, and reborrow, subject to all of the limitations, terms
and conditions contained herein or in the Line of Credit Note; provided,
however, that the total outstanding borrowings under the Line of Credit shall
not at any time exceed the maximum principal amount available thereunder, as set
forth above.
(d) Letter of Credit Subfeature.
(i) As a subfeature under the Line of Credit, Bank
agrees from time to time up to and including the Line of
Credit Termination Date to issue standby letters of credit for
the account of Borrower (each, a "Letter of Credit" and
collectively, "Letters of Credit"); provided, however, that
the form and substance of each Letter of Credit shall be
subject to approval by Bank, in its sole discretion, and
provided further, that the aggregate undrawn amount of all
outstanding Letters of Credit under this subfeature shall not
at any time exceed Two Hundred Fifty Thousand Dollars
($250,000.00). Each Letter of Credit shall be issued for a
term not to exceed three hundred sixty-five (365) days, as
designated by Borrower; provided, however, that no Letter of
Credit under this subfeature shall have an expiration date
subsequent to May 1, 1999 unless otherwise approved by Bank.
(ii) The undrawn amount of all Letters of Credit under
this subfeature shall be reserved under the Line of Credit and
shall not be available for Advances thereunder. Each Letter of
Credit shall be
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subject to the additional terms and conditions of the Letter
of Credit Agreement and related documents, if any, required by
Bank in connection with the issuance of such Letter of Credit
(each individually, a "Letter of Credit Agreement" and
collectively, "Letter of Credit Agreements"). Each draft paid
by Bank under a Letter of Credit under this subfeature
(including under the "Existing Letters of Credit", as such
term is defined below) shall be deemed an Advance under the
Line of Credit and shall repaid in accordance with the terms
and conditions of this Agreement applicable to such Advances;
provided, however, that if the Line of Credit is not
available, for any reason whatsoever, at the time any draft is
paid by Bank, or if Advances are not available under the Line
of Credit at such time due to any limitation on borrowings set
forth herein, then the full amount of such draft shall be
immediately due and payable, together with interest thereon,
from the date such amount is paid by Bank to the date such
amount is fully repaid by Borrower at the rate of interest
applicable to Advances under the Line of Credit. In such event
Borrower agrees that Bank, in its sole discretion, may debit
any demand deposit account maintained by Borrower with Bank
for the amount of any draft. As of September 27, 1996, there
is a Letter of Credit outstanding in the face amount of One
Hundred Twenty-Two Thousand Six Hundred Twenty Dollars
($122,620.00) in favor of Telstra Corporation Ltd. (the
"Existing Letter of Credit"); however, there are no
outstanding drafts or Advances paid under this subfeature by
Bank. The face amount of the Existing Letter of Credit shall
be deemed to be outstanding under this subfeature subject to
all terms and conditions applicable hereto.
Section 2.2 INTEREST/FEES.
(a) Interest. The outstanding principal balance of the Line of
Credit shall bear interest at the rate of interest set forth in the Line of
Credit Note.
(b) Computation and Payment. Interest shall be computed on the
basis of a 360-day year, actual days elapsed. Interest shall be payable at the
times and place set forth in the Line of Credit Note.
(c) Loan Fee. On or before the Effective Date, Borrower shall
pay to Bank a non-refundable loan fee of $30,000.00.
(d) Unused Commitment Fee. From the Effective Date, Borrower
shall pay to Bank a commitment fee equal to one-quarter percent (0.250%) per
annum times the average daily unused portion of the Line of Credit, provided
however, that the foregoing percentage shall be reduced to one-eighth percent
(0.125%) if Borrower's Leverage Ratio shall be less than 0.50 to 1.00 as of the
last day of any fiscal quarter ending after the Effective Date. Such commitment
fee shall be payable quarterly in arrears on the last day of each calendar
quarter and on the Maturity Date.
(e) Letter of Credit Fees. Borrower shall pay to Bank fees
upon the issuance of each Letter of Credit, upon the payment or negotiation by
Bank of each draft under any Letter of Credit and upon the occurrence of any
other activity with respect to any Letter of Credit (including the transfer,
amendment or
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cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.
Section 2.3 COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under the Line of Credit by charging
Borrower's demand deposit account number 4643-084544 with Bank, or any other
demand deposit account maintained by Borrower with Bank, for the full amount
thereof. Should there be insufficient funds in any such demand deposit account
to pay all such sums when due, the full amount of such deficiency shall be
immediately due and payable by Borrower.
Section 2.4 FAILURE TO CHARGE NOT SUBSEQUENT WAIVER. Any decision by
Bank not to require payment of any interest (including default interest), fee,
cost or other amount payable under any "Loan Document" (as defined below) upon
any occasion shall in no way limit or be deemed a waiver of Bank's right to
require full payment of any interest (including default interest), fee, cost or
other amount payable under any Loan Document on any other or subsequent
occasion.
Section 2.5 COLLATERAL.
(a) Borrower Collateral. As security for all indebtedness of
Borrower to Bank under this Agreement and the other Loan Documents, Borrower
hereby grants to the Collateral Agent, on behalf of Bank, Liens of first
priority in all Borrower's personal property, including all accounts, rights to
payment, general intangibles (including patents and patent applications),
chattel paper, deposit accounts, instruments, documents, inventory, equipment,
furniture, fixtures and products and proceeds of all of the foregoing.
(b) Subsidiary Collateral. As further security for all
indebtedness of Borrower to Bank under this Agreement and the other Loan
Documents, Borrower shall cause:
(i) Austron, Efratom and Systems to grant to the
Collateral Agent, on behalf of Bank, Liens of first priority
in all of their respective personal property including all
accounts, rights to payment, general intangibles (including
patents and patent applications), chattel paper, deposit
accounts, instruments, inventory, equipment, furniture,
fixtures and products and proceeds of all of the foregoing;
(ii) Austron to grant to the Collateral Agent, on
behalf of Bank, a Lien of not less than first priority on the
Vision Drive Real Property; and
(iii) Systems to grant to the Collateral Agent, on
behalf of Bank, a Lien of not less than first priority on the
Xxxxx Road Real Property.
(c) Documentation; Reimbursement of Costs. All of the
foregoing shall be evidenced by and subject to the terms of such deeds of trust,
mortgages, security agreements, pledge agreements, assignments, financing
statements and other documents as the Collateral Agent and Bank shall reasonably
require, all in form and substance satisfactory to the Collateral Agent and
Bank. Borrower shall
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reimburse the Collateral Agent and Bank immediately upon demand for all costs
and expenses incurred by the Collateral Agent and Bank in connection with any of
the foregoing security, including filing and recording fees and costs of
appraisals, audits and title insurance.
Section 2.6 GUARANTIES. All indebtedness of Borrower to Bank under this
Agreement and the other Loan Documents, shall be guaranteed by each of the
Guarantors, as evidenced by and subject to the terms of one or more guaranties
in form and substance satisfactory to Bank.
Section 2.7 SUBORDINATION OF DEBT. All obligations of Borrower to the
Noteholders with respect to the Series B Prudential Notes, shall be subordinated
in right of repayment to all obligations of Borrower to Bank, as evidenced by
and subject to the terms of subordination documents in form and substance
satisfactory to Bank.
Section 2.8. LOAN ADMINISTRATION. From and after the Effective Date,
Bank may establish certain procedures and administrative requirements to be
satisfied from time to time by Borrower in connection with Borrower's requests
for Advances and the issuance of Letters of Credit under the Line of Credit.
Such procedures may include the periodic submission of information not otherwise
described herein. In connection with the foregoing and, in particular, with
respect to the periodic calculation of the Borrowing Base and the various
components thereof, Borrower acknowledges that Bank may conduct periodic audits
and appraisals of the Collateral, at such intervals as Bank may reasonably
require and that such audits and appraisals may be performed by employees of
Bank or by independent parties. The costs and expenses of such loan monitoring
and administration, including audits and appraisals, shall be reimbursed by
Borrower upon demand by Bank.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to
Bank, which representations and warranties shall survive the execution of this
Agreement and shall continue in full force and effect until the full and final
payment, and satisfaction and discharge, of all obligations of Borrower to Bank
subject to this Agreement.
Section 3.1 LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower. Austron, Efratom and Systems
are corporations, duly organized and existing and in good standing under the
laws of their state of incorporation, and are qualified or licensed to do
business (and are in good standing as foreign corporations, if applicable) in
all jurisdictions in which such qualification or licensing is required or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on any of them.
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Section 3.2 AUTHORIZATION AND VALIDITY. This Agreement, the Line of
Credit Note, and each other document, contract and instrument required hereby or
at any time hereafter delivered to Bank, or to the Collateral Agent on behalf of
Bank, in connection herewith (collectively and, in each case either as
originally executed or as the same may from time to time be amended,
supplemented, restated or otherwise modified, the "Loan Documents") have been
duly authorized, and upon their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the other Loan Party which executes the same,
enforceable in accordance with their respective terms.
Section 3.3 NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Articles of Incorporation or
By-Laws or result in any breach of or default under any contract, obligation,
indenture or other instrument to which Borrower is a party or by which Borrower
may be bound. The execution, delivery and performance by each other Loan Party
of each of the Loan Documents to which it may be a party do not violate any
provision of any law or regulation, or contravene any provision of any formation
document of any Loan Party, or result in a breach or constitute a default under
any contract, obligation, indenture or other instrument to which any Loan Party
is a party or by which any Loan Party may be bound.
Section 3.4 LITIGATION. There are no pending, or to the best of
Borrower's knowledge threatened, actions, claims, investigations, suits or
proceedings by or before any governmental authority, arbitrator, court or
administrative agency which could have a material adverse effect on the
financial condition or operation of Borrower or any other Loan Party other than
those disclosed by Borrower to Bank in writing prior to the date hereof.
Section 3.5 CORRECTNESS OF FINANCIAL STATEMENT. The consolidated
financial statement of Borrower and its Subsidiaries dated June 30, 1996, a true
copy of which has been delivered by Borrower to Bank prior to the date hereof,
(a) is complete and correct and presents fairly the financial condition of
Borrower and its Subsidiaries, (b) discloses all liabilities of Borrower and its
Subsidiaries that are required to be reflected or reserved against under
generally accepted accounting principles, whether liquidated or unliquidated,
fixed or contingent, and (c) has been prepared in accordance with generally
accepted accounting principles consistently applied. Since the date of such
financial statement there has been no material adverse change in the financial
condition of Borrower and its Subsidiaries, nor has Borrower or any Subsidiary
of Borrower mortgaged, pledged, granted a Lien in or otherwise encumbered any of
its assets or properties except (i) in favor of Bank, (ii) pursuant to the terms
and conditions of the Prudential Agreement or (iii) as otherwise permitted by
Bank in writing.
Section 3.6 INCOME TAX RETURNS. Borrower has no knowledge of any
pending assessments or adjustments of its or any other Loan Party's income tax
payable with respect to any year.
Section 3.7 NO SUBORDINATION. There is no agreement, indenture,
contract or instrument to which Borrower or any other Loan Party is a party or
by which Borrower or any other Loan Party may be bound that requires the
subordination in right of payment of any of Borrower's or such Loan Party's
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obligations subject to this Agreement to any other obligation of Borrower or any
other Loan Party.
Section 3.8 PERMITS, FRANCHISES. Borrower and each other Loan Party
possess, and will hereafter possess, all permits, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable each of them to conduct the business in which
they are now engaged in compliance with applicable law, and without conflict
with the rights of others.
Section 3.9 ERISA. Borrower and each other Loan Party are in compliance
in all material respects with all applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended or recodified from time to
time ("ERISA"); neither Borrower nor any other Loan Party has violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by any of them (each, a "Plan"); no Reportable
Event as defined in ERISA has occurred and is continuing with respect to any
Plan initiated by Borrower or any other Loan Party; Borrower and each Loan Party
have met their minimum funding requirements under ERISA with respect to each
Plan; and each Plan will be able to fulfill its benefit obligations as they come
due in accordance with the Plan documents and under generally accepted
accounting principles.
Section 3.10 OTHER OBLIGATIONS. Neither Borrower nor any other Loan
Party is in default on any obligation for borrowed money, any purchase money
obligation or any other material lease, commitment, contract, instrument or
obligation.
Section 3.11 DIVISIONS, TRADE NAMES, ETC. Schedule 3.11 to this
Agreement sets forth all trade names and trade styles (including all so-called
"divisions") used by Borrower or any of its Subsidiaries at any time within the
five (5) year period ending on the date of this Agreement.
Section 3.12 ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower and each other Loan Party are
in compliance in all material respects with all applicable Federal or state
environmental, hazardous waste, health and safety statutes, and any rules or
regulations adopted pursuant thereto, which govern or affect any of Borrower's
operations and/or properties, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Toxic Substances Control Act and the California Health and
Safety Code, as any of the same may be amended, modified or supplemented from
time to time. None of the operations of Borrower or any other Loan Party is the
subject of any Federal or state investigation evaluating whether any remedial
action involving a material expenditure is needed to respond to a release of any
toxic or hazardous waste or substance into the environment. Neither Borrower nor
any other Loan Party has any material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.
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ARTICLE 4
CONDITIONS
Section 4.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation
of Bank to grant any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions on or
before September 27, 1996 (with the date all such conditions are satisfied (or
waived by Bank in writing) being the "Effective Date"):
(a) Approval of Bank Counsel. All legal matters incidental to
the extension of credit by Bank shall be satisfactory to Bank's counsel.
(b) Documentation. Bank shall have received, in form and
substance satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Line of Credit Note.
(ii) With respect to Letters of Credit, a Letter of
Credit Agreement and Fax Agreement.
(iii) From each Loan Party, such assignments of, and
amendments to, the Existing Collateral Documents as Bank or the
Collateral Agent may require, pursuant to which, among other things,
the Collateral Agent shall be assigned the secured party's interest
thereunder to act as collateral agent for and on behalf of Bank and the
Noteholders.
(iv) Without limiting the foregoing subsection (iii),
assignments and amendments of the Xxxxx Road Mortgage Documents and the
Vision Drive Mortgage, in each case in form suitable for recording in
the applicable county records, pursuant to which, among other things,
the Collateral Agent shall be assigned the lienholder's interest
thereunder to act as collateral agent for and on behalf of Bank and the
Noteholders.
(v) Such UCC-1 financing statements and UCC-2
financing statement amendments as Bank or the Collateral Agent may
require.
(vi) A deposit account agreement executed by Borrower
and each financial institution (other than Bank) with whom any Loan
Party maintains depository relationships.
(vii) An Amended, Restated and Consolidated Guaranty
executed by each Guarantor.
(viii) Policies of title insurance (or endorsements
to existing title insurance policies, if available) insuring the
continued priority of the Liens granted Bank on the Xxxxx Road Real
Property and the Vision Drive Real Property (as such Liens are assigned
to the Collateral Agent in connection herewith) after giving effect to
recordation of the assignments and amendments described in subsection
(iv) above.
(ix) With respect to each Loan Party, such
documentation as Bank may require to establish the due organization,
valid existence and good standing of such parties, their qualification
to engage in business in
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each jurisdiction in which they are engaged in business or required to
be so qualified, their authority to execute, deliver and perform any
Loan Documents to which they are a party, and the identity, authority
and capacity of each responsible official thereof authorized to act on
their behalf, including certified copies of articles of incorporation
and amendments thereto, bylaws and amendments thereto, certificates of
good standing and/or qualifications to engage in business, certified
corporate resolutions, incumbency certificates, certificates of
responsible officials, and the like.
(x) The Opinion of Counsel.
(xi) Such other certificates, documents, instruments,
consents and opinions as Bank or the Collateral Agent may require.
(c) Delivery of Pledged Collateral. Each applicable Loan Party
shall have delivered, or caused to be delivered, to the Collateral Agent, on
behalf of Bank, all Collateral pledged to the Collateral Agent pursuant to the
Loan Documents, including any and all capital stock required to be pledged to
the Collateral Agent according to the terms of the Loan Documents, together with
executed stock powers (in blank) relating thereto.
(d) Recordation of Assignments Documents. The assignments and
amendments described in subsection (b)(iv) above shall have been recorded in the
applicable real estate records where the Real Property Collateral is located and
any financing statements or amendments to financing statements shall have been
recorded or filed, as appropriate, where required to perfect the Collateral
Agent's Liens on the Collateral contemplated by the terms hereof and of the
other Loan Documents.
(e) Financial Condition. There shall have been no material
adverse change, as determined by Bank, in the financial condition or business of
Borrower or any other Loan Party hereunder, nor any material decline, as
determined by Bank, in the market value of any Collateral required hereunder or
a substantial or material portion of the assets of Borrower or any such other
Loan Party.
(f) Insurance. Borrower shall have delivered to Bank and the
Collateral Agent evidence of insurance coverage on all Loan Party's property, in
form, substance, amounts, covering risks and issued by companies satisfactory to
Bank, and where required by the Collateral Agent, with loss payable endorsements
(on Form BFU-438) in favor the Collateral Agent, on behalf of Bank.
(g) Collateral Audit. Bank shall have completed, at Borrower's
cost, a collateral audit and examination from an auditor acceptable to Bank and
in form, substance and reflecting collateral values satisfactory to Bank in its
sole discretion.
(h) No Event of Default. No Event of Default, and no event or
act which with the giving of notice or the passage of time or both would
constitute an Event of Default, shall have occurred hereunder or under the
Existing Credit Agreement.
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(i) Prudential Transaction. Borrower's issuance of the
Prudential Notes shall have been completed pursuant to the Prudential Agreement
and otherwise in accordance with all applicable laws, Borrower shall have
received not less than $18,000,000 in cash proceeds from the issuance of the
Prudential Notes, and the Intercreditor Agreement shall have been executed and
delivered by all parties thereto.
(j) Bank's Fees. Borrower shall have paid the Collateral
Agent's and Bank's costs and expenses as required by this Agreement, including
(i) the estimated fees and disbursements (subject to adjustment upon final
accounting of outside counsel to the Collateral Agent and Bank and the allocated
costs of the Collateral Agent's and Bank's in-house counsel), and (ii) costs and
expenses incurred by the Collateral Agent and Bank in connection with all
diligence, appraisals and audits, as well as recording and filing fees related
hereto.
ARTICLE 5
AFFIRMATIVE COVENANTS
Borrower covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower shall, unless Bank otherwise consents in
writing:
Section 5.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Bank,
the amount by which the outstanding principal balance of the Line of Credit at
any time exceeds any limitation on borrowings applicable thereto.
Section 5.2 ACCOUNTING RECORDS. Maintain, and cause each other Loan
Party to maintain, adequate books and records in accordance with generally
accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower and of each other Loan Party.
Section 5.3 FINANCIAL STATEMENTS. Provide to Bank all of the following,
in form and detail satisfactory to Bank:
(a) As soon as available, but in no event later than 120 days
after and as of the end of each fiscal year, (i) the consolidated balance sheet
of Borrower and its Subsidiaries as of the end of such fiscal year and the
consolidated statements of income, stockholders' equity and cash flows of
Borrower and its Subsidiaries for such fiscal year, and (ii) consolidating
balance sheets and statements of income and cash flows, in each case as at the
end of and for such fiscal year, all in reasonable detail, and presented in a
manner comparing such financial statements to corresponding figures from the
preceding annual financial statements. Such financial statements shall be
prepared in accordance with generally accepted accounting principles,
consistently applied, and such consolidated balance sheet and consolidated
statements shall be
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accompanied by a report of independent public accountants of recognized standing
selected by Borrower and reasonably satisfactory to Bank, which report shall be
prepared in accordance with generally accepted auditing standards as at such
date, and shall not be subject to any qualifications or exceptions as to the
scope of the audit nor to any other qualification or exception determined by
Bank to be adverse to the interest of Bank;
(b) As soon as available, but in no event later than 45 days
after and as of the end of each fiscal quarter, (i) the consolidated balance
sheet of Borrower and its Subsidiaries as at the end of such fiscal quarter and
the consolidated statements of income, stockholders' equity and cash flows of
Borrower and its Subsidiaries for the period from the beginning of the fiscal
year to the end of such fiscal quarter, and (ii) the consolidating balance
sheets and statements of income and cash flows of Borrower and its Subsidiaries
as at the end of such fiscal quarter, all in reasonable detail, and presented in
a manner comparing such figures for the corresponding period in the preceding
fiscal year, and certified by an authorized financial officer of Borrower as
fairly presenting the financial condition, results of operations and cash flows
of Borrowers and its Subsidiaries in accordance with generally accepted
accounting principles, consistently applied, as at such date and for such
periods, subject only to normal year-end-accruals and audit adjustments;
(c) As soon as available, but in no event later than 15 days
after and as of the end of each month, a Borrowing Base Certificate, an
inventory collateral report, an aged listing of accounts receivable and accounts
payable, and a reconciliation of accounts, and not later than 90 days after and
as of the end of each fiscal year end, a list of the names and addresses of all
account debtors of each Borrowing Base Party;
(d) As soon as available, but in no event later 45 days after
and as of the end of each fiscal quarter, a financial statement of each
Guarantor, prepared by each Guarantor, to include a balance sheet, income
statement, and a statement of cash flows;
(e) contemporaneously with each annual and quarterly financial
statement of Borrower required hereby, a certificate of the president or chief
financial officer of Borrower that said financial statements are accurate and
that there exists no Event of Default nor any condition, act or event which with
the giving of notice or the passage of time or both would constitute an Event of
Default;
(f) As soon as available, but in no event later than 30 days
after the first day of each fiscal year, a budget and projection by fiscal
quarter for that fiscal year including projected consolidated and consolidating
balance sheets, statements of income and cash flows of Borrowers and its
Subsidiaries, all in reasonable detail, and setting forth in each case in
comparative form, consolidating and consolidated figures from the corresponding
period in the prior fiscal year;
(g) Promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of Borrower, and copies of all annual, regular,
periodic and special reports and registration statements which Borrower may file
or be required to with the Securities and Exchange Commission (or any other
governmental agency or
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authority succeeding to the function and operations of the Securities and
Exchange Commission);
(h) Promptly upon receipt thereof, copies of any audit
reports, management letters or recommendations submitted to the board of
directors (or the audit committee of the board of directors) of Borrower or any
Subsidiary by independent accounts in connection with the accounts or books of
Borrower of any of its Subsidiaries, or any annual, interim or special audit or
any of them; and
(i) from time to time such other information as Bank may
reasonably request.
Section 5.4 COMPLIANCE. Preserve and maintain, and cause each other
Loan Party to preserve and maintain, all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; conduct, and cause each Guarantor to conduct, its business in an
orderly and regular manner; and comply, and cause such Guarantor to comply, with
the provisions of all documents pursuant to which it is organized and/or which
govern its continued existence and with the requirements of all laws, rules,
regulations and orders of any governmental authority applicable to it and/or its
business.
Section 5.5 INSURANCE. Maintain and keep in force, and cause each other
Loan Party to maintain and keep in force, insurance of the types and in amounts
customarily carried in lines of business similar to that of Borrower and the
Guarantors, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect.
Section 5.6 FACILITIES. Keep, and cause each other Loan Party to keep,
all properties useful or necessary to keep its business in good repair and
condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
Section 5.7 TAXES AND OTHER LIABILITIES. Pay and discharge when due,
and cause each other Loan Party to pay and discharge when due, any and all
indebtedness, obligations, assessments and taxes, both real or personal,
including Federal and state income taxes and state and local property taxes and
assessments, except such (a) as Borrower or any other Loan Party may in good
faith contest or as to which a bona fide dispute may arise, and (b) for which
Borrower or any other Loan Party has made provision, to Bank's satisfaction, for
eventual payment thereof in the event Borrower or any other Loan Party is
obligated to make such payment.
Section 5.8 LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower or any other Loan Party with a
claim in excess of $150,000.00.
Section 5.9 FINANCIAL CONDITION. Maintain the consolidated financial
condition of Borrower and its Subsidiaries as follows using generally accepted
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accounting principles consistently applied and used consistently with prior
practices (except to the extent modified by the definitions herein):
(a) Current Ratio not at any time less than 2.00 to 1.00, for
the period commencing on the Effective Date and ending December 31, 1997 and not
at any time less than 2:25 to 1.00 at any time thereafter, with "Current Ratio"
defined as total current assets divided by total current liabilities. In
calculating the foregoing, outstanding Advances on the Line of Credit and the
undrawn amount of all Letters of Credit shall be deemed current liabilities.
(b) Leverage Ratio not greater than 1.00 to 1.00, at any time
during the period commencing on the Effective Date and ending December 31, 1997
and not greater than 0.75 to 1.00 at any time thereafter, with "Leverage Ratio"
defined as Total Liabilities divided by Tangible Net Worth. For purposes of the
foregoing, "Total Liabilities" shall mean the aggregate of current liabilities
and non-current liabilities less subordinated debt (including Junior Note
Obligations) and "Tangible Net Worth" shall mean the aggregate of consolidated
stockholders' equity of Borrower and its Subsidiaries plus subordinated debt
(including Junior Note Obligations) less any intangible assets.
(c) EBDITA Coverage Ratio not less than 2.50 to 1.00 as of
each fiscal year end, with "EBDITA" defined as net profit before tax plus
interest expense (net of capitalized interest expense), depreciation expense and
amortization expense, and with "EBDITA Coverage Ratio", defined as EBDITA
divided by the aggregate of total interest expense plus the prior period current
maturity of long-term debt and the prior period current maturity of subordinated
debt (including Junior Note Obligations). For purposes of the foregoing,
outstanding Advances on the Line of Credit and the undrawn amount of Letters of
Credit shall be excluded from the computation of current maturity of long-term
debt.
Section 5.10 NOTICE TO BANK. Promptly (but in no event more than five
(5) days after the occurrence of each such event or matter) give written notice
to Bank in reasonable detail of: (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default; (b) any change in the name or
the organizational structure of Borrower or any other Loan Party; (c) the
occurrence and nature of any Reportable Event or Prohibited Transaction, each as
defined in ERISA, or any funding deficiency with respect to any Plan; (d) any
termination or cancellation of any insurance policy which Borrower or any other
Loan Party is required to maintain, or any uninsured or partially uninsured loss
through liability or property damage, or through fire, theft or any other cause
affecting Borrower's or any other Loan Party's property in excess of an
aggregate of $100,000.00; or (e) the acquisition by Borrower or any other Loan
Party or any other Loan Party or Subsidiary or other affiliate.
Section 5.11 FURTHER ASSURANCES. Promptly execute and deliver, or cause
to be executed and delivered, the documents described in Schedule 5.11 to this
Agreement, and take or cause to be taken such action, and otherwise comply with
such obligations, as are specified in Schedule 5.11.
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ARTICLE 6
NEGATIVE COVENANTS
Borrower further covenants that so long as Bank remains
committed to extend credit to Borrower pursuant hereto, or any liabilities
(whether direct or contingent, liquidated or unliquidated) of Borrower to Bank
under any of the Loan Documents remain outstanding, and until payment in full of
all obligations of Borrower subject hereto, Borrower will not without Bank's
prior written consent:
Section 6.1 USE OF FUNDS. Use any of the proceeds of any of the Line of
Credit except for the purposes stated in Article 1 hereof.
Section 6.2 CAPITAL EXPENDITURES. Make, or permit any Guarantor to
make, any additional investment in fixed assets in any fiscal year in excess of
an aggregate of $4,000,000.00 for Borrowers and all Guarantors combined.
Section 6.3 LEASE EXPENDITURES. Incur, or permit any Guarantor to
incur, operating lease expense in any fiscal year which, in the aggregate,
exceeds the consolidated operating lease expense of Borrower and all Guarantors
for the previous fiscal year by more than $500,000.00.
Section 6.4 OTHER INDEBTEDNESS. Create, incur, assume or permit to
exist, or permit any other Loan Party to create, incur, assume or permit to
exist, any indebtedness or liabilities resulting from borrowings, loans or
advances, whether secured or unsecured, matured or unmatured, liquidated or
unliquidated, joint or several, except (a) the liabilities of Borrower to Bank,
(b) the indebtedness of Borrower to the Noteholders provided such indebtedness
shall not exceed the aggregate principal amount of $18,000,000 at any time
outstanding, and (c) any other liabilities of Borrower or any other Loan Party
existing as of, and disclosed to Bank prior to, the date hereof.
Section 6.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with, or permit any other Loan Party to merge into or consolidate
with, any other entity; make, or permit any other Loan Party to make, any
substantial change in the nature of its business as conducted as of the date
hereof; acquire all or substantially all of the assets of any other entity; nor
sell, lease, transfer or otherwise dispose of all or a substantial or material
portion of its assets except (a) in the ordinary course of its business and (b)
any of the foregoing by and among the Loan Parties with one another so long as
after giving effect thereto the Liens of the Collateral Agent on any assets
affected thereby shall remain in full force and effect and with the same
priority as immediately before such action.
Section 6.6 GUARANTIES. Guarantee or become liable, or permit any other
Loan Party to guarantee or become liable, in any way as surety, endorser (other
than as endorser of negotiable instruments for deposit or collection in the
ordinary course of business), accommodation endorser or otherwise for, nor
pledge or hypothecate any assets of Borrower as security for, any liabilities or
obligations of any other person or entity, except any of the foregoing in favor
of Bank or the Collateral Agent on behalf of Bank and the Noteholders.
Section 6.7 LOANS, ADVANCES, INVESTMENTS. Make, or permit any other
Loan Party to make, any loans or advances to or investments in any person
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or entity, except any of the foregoing existing as of, and disclosed to Bank
prior to, the date hereof.
Section 6.8 PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to
exist, or permit any other Loan Party to mortgage, pledge, grant or permit to
exist, a security interest in, or Lien upon, all or any portion of its assets
now owned or hereafter acquired, except any of the foregoing (a) in favor of
Bank or Collateral Agent on behalf of Bank and the Noteholders or (b) which is
existing as of, and disclosed to Bank in writing prior to, the date hereof.
Section 6.9 DIVIDENDS: DISTRIBUTIONS. Declare or pay, or permit any
other Loan Party to declare or pay, any dividend or distribution either in cash,
stock or any other property, on Borrower's or such Loan Party's stock now or
hereafter outstanding; except for dividends, distributions and redemptions which
(a) are made in compliance with applicable law, (b) are made when no Event of
Default exists hereunder, and when no condition, event or act exists which, with
the giving of notice or the passage of time, or both, would constitute such an
Event of Default, and (c) would not result in an Event of Default hereunder.
ARTICLE 7
EVENTS OF DEFAULT
Section 7.1 The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay within five (5) days of when
due any principal, interest, fees or other amounts payable under any of the Loan
Documents.
(b) Any financial statement or certificate furnished to Bank
in connection with, or any representation or warranty made by Borrower or any
other Loan Party under this Agreement or any other Loan Document shall prove to
be incorrect, false or misleading in any material respect when furnished or
made.
(c) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above), and
with respect to any such default which by its nature can be cured, such default
shall continue for a period of twenty (20) days from its occurrence.
(d) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of any contract or
instrument (other than any of the Loan Documents) pursuant to which Borrower or
any other Loan Party has incurred any debt or other liability to Bank.
(e) Any default in the payment or performance of any
obligation, or any defined event of default, under the terms of any contract or
instrument pursuant to which Borrower or any other Loan Party has incurred any
debt or other liability to any person or entity, whether such debt or other
liability shall be for borrowed money, the purchase or lease of property or the
guaranty of any present or future indebtedness for borrowed money or the
purchase or lease of property, on its part to be paid and the effect of such
default is to cause, or to
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permit such person or entity to cause, such debt or other liability to become
due prior to any stated maturity, provided that the aggregate amount of all such
debt and other liabilities as to which such a default shall occur and be
continuing exceeds $100,000.00.
(f) The filing of a notice of judgment Lien against Borrower
or any other Loan Party; or the recording of any abstract of judgment against
Borrower or any other Loan Party in any county in which Borrower or such Loan
Party has an interest in real property; or the service of a notice of levy
and/or of a writ of attachment or execution, or other like process, against the
assets of Borrower or any other Loan Party; or the entry of a judgment against
Borrower or any other Loan Party; provided, however, that such judgments, Liens,
levies, writs, executions and other process involve debts of or claims against
Borrower or such Loan Party in excess of $100,000.00, individually or in the
aggregate, for all such judgments, Liens, levies, writs, executions and other
process against Borrower and other Loan Parties combined, and within twenty (20)
days after the creation thereof, or at least ten (10) days prior to the date on
which any assets could be lawfully sold in satisfaction thereof, such debt or
claim is not satisfied but stayed pending appeal and insured against in a manner
satisfactory to Bank.
(g) Borrower or any other Loan Party shall become insolvent,
or shall suffer or consent to or apply for the appointment of a receiver,
trustee, custodian or liquidator of itself or any of its property, or shall
generally fail to pay its debts as they become due, or shall make a general
assignment for the benefit of creditors; Borrower or any other Loan Party shall
file a voluntary petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or Federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or Federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any other Loan
Party, or Borrower or any such Loan Party shall file an answer admitting the
jurisdiction of the court and the material allegations of any involuntary
petition; or Borrower or any other Loan Party shall be adjudicated a bankrupt,
or an order for relief shall be entered against Borrower or any other Loan Party
by any court of competent jurisdiction under the Bankruptcy Code or any other
applicable state or Federal law relating to bankruptcy, reorganization or other
relief for debtors.
(h) There shall exist or occur any event or condition which
Bank in good faith believes impairs, or is substantially likely to impair, the
prospect of payment or performance by Borrower or any other Loan Party of its
respective obligations under any of the Loan Documents.
(i) The dissolution or liquidation of Borrower or any other
Loan Party or any of their directors, stockholders or members shall take action
seeking to effect the dissolution or liquidation of Borrower or such Loan Party.
(j) The sale, transfer, hypothecation, assignment or
encumbrance, whether voluntary, involuntary or by operation of law, without
Bank's prior written consent, of all or any part of or interest in any Real
Property Collateral required hereby.
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(k) Any default under the Prudential Agreement or under any
other document, instrument or agreement executed in connection therewith, which
default is not cured within any applicable grace and/or notice period, or which
is not waived in writing by the applicable Noteholders.
Section 7.2 REMEDIES. Upon the occurrence of any Event of Default: (a)
all indebtedness of Borrower under each of the Loan Documents, any term thereof
to the contrary notwithstanding, shall at Bank's option and without notice
become immediately due and payable without presentment, demand, protest or
notice of dishonor, all of which are hereby expressly waived by Borrower; (b)
the obligation, if any, of Bank to extend any further credit under any of the
Loan Documents shall immediately cease and terminate; and (c) Bank shall have
all rights, powers and remedies available under each of the Loan Documents, or
accorded by law, including the right to resort to any or all security for the
Line of Credit and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law. In addition, Bank shall have no
obligation to permit further borrowings hereunder if Borrower fails to pay when
due any principal, interest, fees or other amounts payable under any of the Loan
Documents, notwithstanding that an Event of Default has not yet occurred under
Section 6.1(a) above. All rights, powers and remedies of Bank may be exercised
at any time by Bank and from time to time after the occurrence of an Event of
Default, are cumulative and not exclusive, and shall be in addition to any other
rights, powers or remedies provided by law or equity.
ARTICLE 8
MISCELLANEOUS
Section 8.1 NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.
Section 8.2 NOTICES. All notices, requests and demands which any party
is required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
BORROWER:
DATUM INC.
0000 Xxxxxx Xxx
Xxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Vice President/Chief Financial Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
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BANK:
XXXXX FARGO BANK, NATIONAL ASSOCIATION
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Datum Account Officer
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
Section 8.3 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), incurred by
Bank in connection with (a) the negotiation and preparation of this Agreement
and the other Loan Documents, Bank's continued administration hereof and
thereof, and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents and/or the Prior Loan
Documents, and (c) the prosecution or defense of any action in any way related
to any of the Loan Documents and/or the Prior Loan Documents, including any
action for declaratory relief, and including any of the foregoing incurred in
connection with any bankruptcy proceeding relating to Borrower or any other Loan
Party.
Section 8.4 SUCCESSORS, ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to the Line of Credit, Borrower or its business, any other Loan
Party or the business of such Loan Party, or any Collateral required hereunder.
Section 8.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
Loan Documents constitute the entire agreement between Borrower and Bank with
respect to the Line of Credit and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only by a written instrument
executed by each party hereto.
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Section 8.6 NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.
Section 8.7 TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
Section 8.8 SEVERABILITY OF PROVISIONS. If any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective only to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or any remaining provisions
of this Agreement.
Section 8.9 COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which when executed and delivered shall be deemed to be
an original, and all of which when taken together shall constitute one and the
same Agreement.
Section 8.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Section 8.11 INDEMNITY BY BORROWER. Borrower agrees to indemnify, save
and hold harmless Bank and its directors, officers, agents, attorneys and
employees (collectively, the "Indemnitees") from and against: (a) Any and all
claims, demands, actions or causes of action that are asserted against any
Indemnitee if the claim, demand, action or cause of action arises out of or
relates to the relationship between Borrower and Bank under any of the Loan
Documents or the transactions contemplated thereby; (b) Any and all
administrative or investigative proceedings by any governmental agency or
authority arising out of or related to any claim, demand, action or cause of
action described in clause (a) above; and (c) Any and all liabilities, losses,
costs or expenses (including reasonable attorneys' fees and disbursements and
other professional services) that any Indemnitee suffers or incurs as a result
of the assertion of any of the foregoing; provided that no Indemnitee shall be
entitled to indemnification for any loss caused by its own or its employees' or
agents' gross negligence or willful misconduct. Each Indemnitee is authorized to
employ counsel in enforcing its rights hereunder and in defending against any
claim, demand, action, cause of action or administrative or investigative
proceeding covered by this Section 8.11; provided that the Indemnitees as a
group may retain only one law firm to represent them with respect to any such
matter unless there is, under applicable standards of professional conduct,
conflict on any significant issue between the positions of any two or more
Indemnitee. Any obligation or liability of Borrower to any Indemnitee under this
Section 8.11 shall be and hereby is covered and secured by the Loan Documents
and the Collateral referred to in Section 2.5 and shall survive the expiration
or termination of this Agreement and the repayment of the Line of Credit and the
payment and performance of all other obligations owed to Bank.
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Section 8.12 NONLIABILITY OF BANK. Borrower acknowledges and agrees
that:
(a) Any inspections of Collateral made by Bank are for
purposes of administration of the Line of Credit only and Borrower is not
entitled to rely upon the same;
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to Bank pursuant to the Loan Documents,
including any certificate, financial statement, insurance policy or other
document, Bank shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not constitute a warranty or representation to anyone with respect thereto
by Bank;
(c) The relationship between Borrower and Bank in connection
with this Agreement and the other Loan Documents is, and shall at all times
remain, solely that of a borrower and lender; Bank shall not under any
circumstance be construed to be a partner or joint venturer of Borrower; Bank
shall not under any circumstances be deemed to be in a relationship of
confidence or trust or a fiduciary relationship with Borrower, or to owe any
fiduciary duty to Borrower as a result of the transactions arising under this
Agreement and the other Loan Documents; Bank does not undertake or assume any
responsibility or duty to Borrower to select, review, inspect, supervise, pass
judgment upon or inform Borrower of any matter in connection with its property,
any Collateral held by Bank or the operations of Borrower; Borrower shall rely
entirely upon its own judgment with respect to such matters; and any review,
inspection, supervision, exercise of judgment or supply of information
undertaken or assumed by Bank in connection with such matters is solely for the
protection of Bank and neither Borrower nor any other person or entity is
entitled to rely thereon; and
(d) Bank shall not be responsible or liable to any person or
entity for any loss, damage, liability or claim of any kind relating to injury
or death to persons or damage to property caused by the actions, inaction or
negligence of Borrower and Borrower hereby indemnifies and holds Bank harmless
from any such loss, damage, liability or claim.
Section 8.13 FURTHER ASSURANCES. Borrower shall, at its expense and
without expense to Bank, do, execute and deliver such further acts and documents
as Bank from time to time reasonably requires for the assuring and confirming
unto Bank of the rights hereby created or intended now or hereafter so to be, or
for carrying out the intention or facilitating the performance of the terms of
any Loan Document, or for assuring the validity, perfection, priority or
enforceability of any Lien under any Loan Document.
Section 8.14 CONFLICTING PROVISIONS. The provisions of this Agreement
are not intended to supersede the provisions of the other Loan Documents but
shall be construed as supplemental thereto. However, in the event of any actual
irreconcilable conflict between the provisions hereof and any provisions of the
other Loan Documents, it is intended that the provisions of this Agreement shall
control; provided that the inclusion of provisions in such other Loan Documents
which are not addressed in this Agreement shall not be deemed
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a conflict with this Agreement. The foregoing shall apply with respect to all
Loan Documents, whether executed and delivered by Borrower or by any
third-party.
Section 8.15. CONTINUED EXISTING EFFECTIVENESS OF CERTAIN EXISTING LOAN
DOCUMENTS. Each of the Existing Loan Documents (other than the Existing Credit
Agreement, Existing Notes and any other Existing Loan Document that has been (or
will be) expressly superseded, replaced or otherwise restated by a "Loan
Document", either as previously executed in connection with a prior amendment or
as executed in connection herewith) shall continue in full force and effect and
shall, as of the effective date hereof, be deemed to be a "Loan Document" as
such term is used and defined in this Agreement.
Section 8.15 ARBITRATION.
(a) Arbitration. Upon the demand of any party, any Dispute
shall be resolved by binding arbitration (except as set forth in (e) below) in
accordance with the terms of this Agreement. A "Dispute" shall mean any action,
dispute, claim or controversy of any kind, whether in contract or tort,
statutory or common law, legal or equitable, now existing or hereafter arising
under or in connection with, or in any way pertaining to, any of the Loan
Documents, or any past, present or future extensions of credit and other
activities, transactions or obligations of any kind related directly or
indirectly to any of the Loan Documents, including any of the foregoing arising
in connection with the exercise of any self-help, ancillary or other remedies
pursuant to any of the Loan Documents. Any party may by summary proceedings
bring an action in court to compel arbitration of a Dispute. Any party who fails
or refuses to submit to arbitration following a lawful demand by any other party
shall bear all costs and expenses incurred by such other party in compelling
arbitration of any Dispute.
(b) Governing Rules. Arbitration proceedings shall be
administered by the American Arbitration Association ("AAA") or such other
administrator as the parties shall mutually agree upon in accordance with the
AAA Commercial Arbitration Rules. All Disputes submitted to arbitration shall be
resolved in accordance with the Federal Arbitration Act (Title 9 of the United
States Code), notwithstanding any conflicting choice of law provision in any of
the Loan Documents. The arbitration shall be conducted at a location in
California selected by the AAA or other administrator. If there is any
inconsistency between the terms hereof and any such rules, the terms and
procedures set forth herein shall control. All statutes of limitation applicable
to any Dispute shall apply to any arbitration proceeding. All discovery
activities shall be expressly limited to matters directly relevant to the
Dispute being arbitrated. Judgment upon any award rendered in an arbitration may
be entered in any court having jurisdiction; provided however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under 12 U.S.C. Section 91 or any similar
applicable state law.
(c) No Waiver; Provisional Remedies, Self-Help and
Foreclosure. No provision hereof shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property Collateral or security, or to obtain provisional or ancillary
remedies, including injunctive relief, sequestration, attachment, garnishment or
the appointment of a receiver, from a court of competent jurisdiction before,
after or during the
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pendency of any arbitration or other proceeding. The exercise of any such remedy
shall not waive the right of any party to compel arbitration or reference
hereunder.
(d) Arbitrator Qualifications and Powers; Awards. Arbitrators
must be active members of the California State Bar or retired judges of the
state or federal judiciary of California, with expertise in the substantive laws
applicable to the subject matter of the Dispute. Arbitrators are empowered to
resolve Disputes by summary rulings in response to motions filed prior to the
final arbitration hearing. Arbitrators (i) shall resolve all Disputes in
accordance with the substantive law of the state of California, (ii) may grant
any remedy or relief that a court of the state of California could order or
grant within the scope hereof and such ancillary relief as is necessary to make
effective any award, and (iii) shall have the power to award recovery of all
costs and fees, to impose sanctions and to take such other actions as they deem
necessary to the same extent a judge could pursuant to the Federal Rules of
Civil Procedure, the California Rules of Civil Procedure or other applicable
law. Any Dispute in which the amount in controversy is $5,000,000 or less shall
be decided by a single arbitrator who shall not render an award of greater than
$5,000,000 (including damages, costs, fees and expenses). By submission to a
single arbitrator, each party expressly waives any right or claim to recover
more than $5,000,000. Any Dispute in which the amount in controversy exceeds
$5,000,000 shall be decided by majority vote of a panel of three arbitrators;
provided however, that all three arbitrators must actively participate in all
hearings and deliberations.
(e) Judicial Review. Notwithstanding anything herein to the
contrary, in any arbitration in which the amount in controversy exceeds
$25,000,000, the arbitrators shall be required to make specific, written
findings of fact and conclusions of law. In such arbitrations (A) the
arbitrators shall not have the power to make any award which is not supported by
substantial evidence or which is based on legal error, (B) an award shall not be
binding upon the parties unless the findings of fact are supported by
substantial evidence and the conclusions of law are not erroneous under the
substantive law of the state of California, and (C) the parties shall have in
addition to the grounds referred to in the Federal Arbitration Act for vacating,
modifying or correcting an award the right to judicial review of (1) whether the
findings of fact rendered by the arbitrators are supported by substantial
evidence, and (2) whether the conclusions of law are erroneous under the
substantive law of the state of California. Judgment confirming an award in such
a proceeding may be entered only if a court determines the award is supported by
substantial evidence and not based on legal error under the substantive law of
the state of California.
(f) Real Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no Dispute shall be submitted
to arbitration if the Dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the holder of
the mortgage, Lien or security interest specifically elects in writing to
proceed with the arbitration, or (ii) all parties to the arbitration waive any
rights or benefits that might accrue to them by virtue of the single action rule
statute of California, thereby agreeing that all indebtedness and obligations of
the parties, and all mortgages, Liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If any
such Dispute is not submitted to arbitration, the Dispute shall be referred to a
referee in accordance with California Code of Civil Procedure Section 638 et
seq., and this general reference agreement is intended to be specifically
enforceable in
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accordance with said Section 638. A referee with the qualifications required
herein for arbitrators shall be selected pursuant to the AAA's selection
procedures. Judgment upon the decision rendered by a referee shall be entered in
the court in which such proceeding was commenced in accordance with California
Code of Civil Procedure Sections 644 and 645.
(g) Miscellaneous. To the maximum extent practicable, the AAA,
the arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the Dispute with the
AAA. No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business, by applicable law or
regulation, or to the extent necessary to exercise any judicial review rights
set forth herein. If more than one agreement for arbitration by or between the
parties potentially applies to a Dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the Dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first written above.
DATUM INC., a Delaware corporation
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx, President/Chief
Executive Officer/Chairman of the Board
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Xxxxx X. Xxxxx, Vice President/Chief
Financial Officer
XXXXX FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx, Vice President
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SCHEDULE 3.11
DIVISIONS, TRADE NAMES, ETC.
A. TRADE NAMES AND TRADE STYLES
Datum Timing
Bancomm
Efratom
B. DIVISIONS
Bancomm - Timing Division
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SCHEDULE 5.11
FURTHER ASSURANCES
1. Borrower and Bank acknowledge that the deposit account
agreements required pursuant to Section 4.1(b)(vi) of this Agreement, although
executed by the applicable Loan Parties and the Collateral Agent, have not been
executed and delivered by the applicable financial institutions referenced
therein. Bank agrees that Borrower may satisfy the condition precedent set forth
in Section 4.1(b)(vi) after the Effective Date and Borrower shall be deemed to
have satisfied such condition by delivering such deposit account agreements
(executed by the applicable depository financial institutions) to the Collateral
Agent within fifteen (15) days of the Effective Date.
2. Bank agrees that, notwithstanding the condition precedent
set forth in Section 4.1(b)(viii) of this Agreement, Borrower may satisfy such
condition after the Effective Date and Borrower shall be deemed to have
satisfied such condition by causing such policies of title insurance (or
endorsements to existing title insurance policies) to be delivered to the
Collateral Agent within fifteen (15) days of the Effective Date.
3. In addition to the foregoing, Bank agrees that,
notwithstanding the condition precedent set forth in Section 4.1(d) of this
Agreement, Borrower may satisfy such condition after the Effective Date and
Borrower shall be deemed to have satisfied such condition by causing (a) the
recordation of the referenced assignments and amendments in the applicable real
estate records within fifteen (15) days of the Effective Date and (b) the
recordation or filing, as appropriate, of the referenced financing statements
and amendments to financing statements within five (5) days of the Effective
Date.
4. Borrower shall execute and deliver, or obtain and deliver,
to the Collateral Agent, within thirty (30) days of the Effective Date, such
trademark collateral assignment agreements and related documents as the
Collateral Agent may require, in form and substance satisfactory to the
Collateral Agent, pursuant to which the Collateral Agent shall be granted a
first priority perfected Lien on the registered trademarks and service marks
referenced in Schedule 8R to the Prudential Agreement.
5. Bank agrees that, notwithstanding the condition precedent
set forth in Section 4.1(j) of this Agreement, Borrower may satisfy such
condition after the Effective Date and Borrower shall be deemed to have
satisfied such condition by paying the referenced costs and expenses of the
Collateral Agent and Bank within three (3) days of the Collateral Agent's and/or
Bank's demand therefor.
6. Borrower and Bank acknowledge and agree that the form of
Borrowing Base Certificate to be attached to this Agreement as Exhibit A has not
been finalized as of the Effective Date. Borrower and Bank agree to finalize the
form of such Borrowing Base Certificate within fifteen (15) days of the
Effective Date and, in that regard, Bank agrees to provide Borrower a proposed
form of Borrowing Base Certificate within seven (7) days of the Effective Date.
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