EXHIBIT 10.67
CREDIT AGREEMENT
BETWEEN
DATRON WORLD COMMUNICATIONS INC.
DATRON/TRANSCO INC.
AND
COMERICA BANK-CALIFORNIA
MARCH 24, 1999
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. INDEBTEDNESS: CO-BORROWER FACILITY 10
3. INDEBTEDNESS: DT FACILITY 11
4. CONDITIONS AND SECURITY 12
5. REPRESENTATIONS AND WARRANTIES OF DWC 14
6. REPRESENTATIONS AND WARRANTIES OF DT 16
7. AFFIRMATIVE COVENANTS OF DWC 18
8. AFFIRMATIVE COVENANTS OF DT 20
9. NEGATIVE COVENANTS OF DWC 23
10. NEGATIVE COVENANTS OF DT 24
11. DEFAULTS 26
12. MISCELLANEOUS 27
CREDIT AGREEMENT
THIS AGREEMENT, made as of the 24th day of March 1999,
by and between DATRON WORLD COMMUNICATIONS INC., a
California corporation ("DWC"), DATRON/TRANSCO INC.,
("DT") a California corporation, (DWC and DT each a
"Borrower", and collectively "Borrowers") and COMERICA
BANK - CALIFORNIA, a California banking corporation, of
San Jose, California ("Bank").
1. DEFINITIONS
For purposes of this Agreement the following terms will
have the following meanings:
1.1 "Accounts," "Chattel Paper," "Documents,"
"Equipment," "Fixtures," "General Intangibles," "Goods,"
"Instruments" and "Inventory" shall have the meanings
assigned to them in the Uniform Commercial Code as in
effect in California on the date of this Agreement.
1.2 "Account Debtor" shall mean the party who is
obligated on or under any Account Receivable.
1.3 "Accounts Receivable" shall mean and include
Accounts, Chattel Paper and General Intangibles
(including, but not limited to tax refunds, trade names,
trade styles and goodwill, trade marks, copyrights and
patents, and applications therefor, trade and
proprietary secrets, formulae, designs, blueprints and
plans, customer lists, literary rights, licenses and
permits, receivables, insurance proceeds, beneficial
interests in trusts and minute books and other books and
records) now owned or hereafter acquired by a Borrower.
1.4 "Advance" shall mean a borrowing requested by
a Borrower and made by Bank under this Agreement.
1.5 "Affiliate" shall mean, when used with
respect to any person, any other person which, directly
or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this
definition, "control" (including the correlative
meanings of the terms "controlled by" and "under common
control with"), with respect to any person, shall mean
possession, directly or indirectly, of the power to
direct or cause the direction of the management and
policies of such person, whether through the ownership
of voting securities or by contract or otherwise,
including any affiliate of DWC and DT.
1.6 "Applicable Interest Rate" shall mean with
respect to any Advance, the Prime-based Rate, subject to
the terms and conditions of this Agreement.
1.7 "Borrower Agreement" shall mean that Export-
Import Bank of the United States Working Capital
Guarantee Program Borrower Agreement entered into
between Bank and DT as of even date herewith.
1.8 "Borrowing Base Report" shall mean a report in
form and content satisfactory to Bank setting forth the
Formula Amount applicable to a Facility.
1.9 "Business Day" shall mean any day, other than
a Saturday, Sunday or holiday, on which Bank is open for
all or substantially all of its business in San Jose,
California.
1.10 "Cash Collateral" shall mean good funds on
deposit with Bank in the name of a Borrower and pledged
to Bank as security for indebtedness of Borrowers to
Bank.
1.11 "Co-Borrower Facility" shall mean the facility
for Advances to Borrowers provided for in Article 2 of
this Agreement.
1.12 "Co-Borrower Facility Maximum" shall mean as
of any date, the lesser of (a) the aggregate of the
Formula Amounts for DWC and DT minus the DT Reserve; or
(b) Eleven Million Dollars ($11,000,000).
1.13 "Co-Borrower Note" shall mean a Note issued by
DWC and DT under this Agreement in the form attached to
this Agreement as Exhibit "A" as evidence of Advances
under the Co-Borrower Facility.
1.14 "Debt" shall mean, as of any applicable date
of determination, all items of indebtedness, obligation
or liability of a person, whether matured or unmatured,
liquidated or unliquidated, direct or indirect, absolute
or contingent, joint or several, that should be
classified as liabilities in accordance with GAAP.
1.15 "Default" shall mean, an event or occurrence
which, with the giving of notice and/or the passage of
time, would constitute an Event of Default hereunder.
1.16 "DT Facility" shall mean the facility for
Advances to DT provided for in Article 3 of this
Agreement.
1.17 "DT Facility Maximum" shall mean as of any
date, the lesser of (a) the Formula Amount; or (b) Five
Million Dollars ($5,000,000).
1.18 "DT Note" shall mean a Note issued by DT in
the form attached as Exhibit "B" hereto as evidence of
Advances under the DT Facility.
1.19 "DT Reserve" shall mean, so long as the DT
Facility exists, Five Hundred Thousand Dollars
($500,000).
1.20 "DSI" shall mean Datron Systems Incorporated,
a Delaware corporation.
1.21 "Eligible Billed Accounts Receivable" shall
mean Accounts Receivable which meet the following
requirements:
(a) it is not owing more than ninety (90)
days from the due date on the invoice evidencing such
Account;
(b) it arises from the sale or lease of goods
and such goods have been shipped or delivered to the
Account Debtor under such Account; or it arises from
services rendered and such services have been performed,
excluding however, Accounts representing customer
deposits due but not yet paid;
(c) it is evidenced by an invoice, dated not
later than the date of shipment or performance, rendered
to such Account Debtor or some other evidence of billing
reasonably acceptable to Bank;
(d) it is not evidenced by any note, trade
acceptance, draft or other negotiable instrument or by
any chattel paper;
(e) it is a valid, legally enforceable
obligation of the Account Debtor thereunder (except to
the extent ultimate collection thereof may be limited by
laws relating to bankruptcy, insolvency or auditor's
rights generally), and is not subject to any defense on
the part of such Account Debtor or to any claim on the
part of such Account Debtor denying liability thereunder
in whole or in part and are not subject to any offset or
counterclaim;
(f) it is not subject to any sale of
accounts, any rights of offset, assignment, lien or
security interest whatsoever;
(g) it is not owing by an Account Debtor
which is a Foreign Person;
(h) it is not a Government Account, unless
the Federal Assignment of Claims Act of 1940 applies
thereto, and all necessary steps are taken to comply
with the Federal Assignment of Claims Act of 1940, as
amended, and with any comparable state law, if
applicable, and all other necessary steps are taken to
perfect Bank's security interest in such account,
provided, however, that the foregoing shall not apply
with respect to those Government Accounts arising under
a contract for the provision of goods and services, each
for less than $500,000, up to an aggregate of
$1,000,000;
(i) it is not owing by an Account Debtor for
which a Borrower has received any notice of (i) the
death of the Account Debtor, (ii) the dissolution,
liquidation, termination of existence, insolvency or
business failure of the Account Debtor, (iii) the
appointment of a receiver for any part of the property
of the Account Debtor, or (iv) an assignment for the
benefit of creditors, the filing of a petition in
bankruptcy, or the commencement of any proceeding under
any bankruptcy or insolvency laws by or against the
Account Debtor (which notice, in the case of a notice of
an event described in clauses (ii) through (iv), has not
been revoked or annulled);
(j) it is not an Account billed in advance,
payable on delivery, for goods which are placed on
consignment, guaranteed sale or other terms by reason of
which the payment by the Account Debtor may be
conditional, for guaranteed sales, for unbilled sales,
for progress xxxxxxxx, payable at a future date in
accordance with its terms, subject to a retainage or
holdback by the Account Debtor or insured by a surety
company;
(k) it is not owing by any Account Debtor
whose obligations Bank, acting in its reasonable
business discretion, shall have notified Borrower are
not deemed to constitute Eligible Accounts;
(l) it is not an Eligible Billed Foreign
Account Receivable or an Eligible Unbilled Foreign
Account Receivable;
(m) it is not an Account with respect to
which the Account Debtor is an officer, employee,
partner, joint venturer or agent of a Borrower;
(n) it is not an Account with respect to
which the Account Debtor is a subsidiary of, related to,
affiliated or has common shareholders, officers or
directors with a Borrower;
(o) it is not an Account with respect to
which a Borrower is or may become liable to the Account
Debtor for goods sold or services rendered by the
Account Debtor to Borrower;
(p) it is not an Account owed by a single
Account Debtor which is in excess of twenty percent
(20%) of all Eligible Accounts, other than Accounts
which are supported by a commercial letter of credit or
credit insurance satisfactory to Bank or Accounts with
an Account Debtor satisfactory to Bank; and
(q) it is not an Account due from a
particular Account Debtor as to which over twenty-five
percent (25%) of the aggregate amount owing from such
Account Debtor is greater than ninety (90) days from the
date of invoice, other than Accounts which are supported
by a commercial letter of credit or credit insurance
satisfactory to Bank or Accounts with an Account Debtor
satisfactory to Bank.
An Account Receivable which is at any time an Eligible
Billed Account Receivable, but which subsequently fails
to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Billed Account
Receivable unless and until it meets all of the
foregoing requirements again.
1.22 "Eligible Billed Foreign Account Receivable"
shall mean an Account Receivable which meets each of the
following requirements:
(a) it arises from an Account Receivable
where the Account Debtor is a Foreign Person;
(b) the payment of such Account Receivable
is, one hundred percent (100%) guaranteed or supported
by a commercial letter of credit or export credit
insurance satisfactory to Bank; and
(c) it meets requirements (a) through (f),
(i) through (k), and (m) through (o) of Eligible Billed
Account Receivable.
An Account Receivable which is at any time an Eligible
Billed Foreign Account Receivable, but which
subsequently fails to meet any of the foregoing
requirements, shall forthwith cease to be an Eligible
Billed Foreign Account Receivable.
1.23 "Eligible Domestic Inventory" shall mean all
Inventory which is in good and merchantable condition,
is not obsolete or discontinued, and which would
properly be classified as "raw materials", or as
"finished goods inventory" under generally accepted
accounting principles, consistently applied, excluding
(a) consigned goods and inventory located outside the
United States of America, (b) inventory covered by or
subject to a seller's right to repurchase, or any
consensual or nonconsensual lien or security interest
(including without limitation purchase money security
interests) other than in favor of Bank, whether senior
or junior to Bank's security interest, (c) inventory
that Bank, acting in its sole discretion, after having
notified Borrower, excludes, and (d) inventory intended
for export included in the Borrowing Base (as defined in
the Borrower Agreement). Inventory which is at any time
Eligible Domestic Inventory, but which subsequently
fails to meet any of the foregoing requirements, shall
forthwith cease to be Eligible Domestic Inventory.
1.24 "Eligible Export Inventory" shall mean
Inventory meeting the requirements of Eligible Domestic
Inventory other than requirement (d) thereof, and which
is intended for sale to a Foreign Person.
1.25 "Eligible Machinery and Equipment" shall mean
machinery and equipment owned by a Borrower subject to a
first perfected security interest granted to Bank and no
other liens or encumbrances whatsoever.
1.26 "Eligible Unbilled Accounts Receivable" shall
mean Accounts Receivable which meet each of the
requirements of (a), (d) through (g), and (i) through
(k), and (m) through (q) of Eligible Billed Accounts,
and the requirement that it is not a Government Account,
unless the Federal Assignment of Claims Act of 1940
applies thereto, and all necessary steps are taken to
comply with the Federal Assignment of Claims Act of
1940, as amended, and with any comparable state law, if
applicable, and all other necessary steps are taken to
perfect Bank's security interest in such account;
provided, however, that the foregoing shall not apply
with respect to any Government Account arising under a
contract for the provision of goods and services for
less than $500,000, up to an aggregate amount of
$1,000,000.
An Account Receivable which is at any time an Eligible
Unbilled Account Receivable, but which subsequently
fails to meet any of the foregoing requirements, shall
forthwith cease to be an Eligible Unbilled Account
Receivable unless and until it meets all of the
foregoing requirements again.
1.27 "Environmental Laws" shall mean all federal,
state and local laws including statutes, regulations,
ordinances, codes, rules, and other governmental
restrictions and requirements, relating to environmental
pollution, contamination or other impairment of any
nature, any hazardous or other toxic substances of any
nature, whether liquid, solid and/or gaseous, including
smoke, vapor, fumes, soot, acids, alkalis, chemicals,
wastes, by-products, and recycled materials.
1.28 "Event of Default" shall mean the occurrence
of any of the events described in Section 11 hereof.
1.29 "Eximbank" shall mean the Export-Import Bank
of the United States.
1.30 "Exim Guaranty" shall mean the guaranty, by
Eximbank, of ninety percent (90%) of the indebtedness of
DT, including unpaid interest, from time to time
outstanding under the DT Facility.
1.31 "Forced Sale Value" shall mean the estimated
probable price which could typically be realized at a
properly advertised and conducted public auction sale,
held under forced sale conditions and under present day
economic trends.
1.32 "Foreign Person" shall mean any person,
entity, firm or corporation (i) whose principal office
is located outside of the United States, (ii) is not
incorporated or organized under the laws of the United
States of America or any state thereof, or (iii) is the
government of any foreign country or sovereign state, or
of any state, province, municipality or other political
subdivision thereof or any department or agency thereof.
1.33 "Formula Amount" shall mean, as of the date of
any determination thereof, the sum of:
(a) in the case of DWC, and with respect to
the Co-Borrower Facility:
(i) the sum (without duplication) of (1)
eighty percent (80%) of its Eligible Billed Accounts
Receivable, (2) eighty percent (80%) of its Eligible
Billed Foreign Accounts Receivable, plus (3) fifty
percent (50%) of its Eligible Domestic Inventory, up to
$3,000,000, plus (4) the M&E Borrowing Base not included
in (b) below.
(b) in the case of DT, and with respect to
the Co-Borrower Facility:
(i) the sum (without duplication) of (1)
eighty percent (80%) of its Eligible Billed Accounts
Receivable, plus (2) sixty percent (60%) of its Eligible
Unbilled Accounts Receivable up to $2,000,000, plus (3)
fifty percent (50%) of its Eligible Domestic Inventory
up to $3,000,000, plus (4) the M&E Borrowing Base not
included in (a) above.
(c) in the case of DT, and with respect to
the DT Facility:
(i) the Borrowing Base (as defined in
the Borrower Agreement).
1.34 "GAAP" shall mean generally accepted
accounting principles in the United States of America,
applied consistently.
1.35 "Government Account" shall mean an Account
owing by the United States of America or any state or
political subdivision thereof, or by any department,
agency, public body corporate or other instrumentality
of any of the foregoing.
1.36 "Guaranties" shall mean guaranty agreements
from the Guarantors in form and content satisfactory to
Bank.
1.37 "Guarantor" shall mean, with respect to
indebtedness of DWC and DT under the Co-Borrower
Facility, DSI, and with respect to indebtedness of DT
under the DT Facility, DSI and DWC, jointly and
severally.
1.38 "Letter(s) of Credit" shall mean any standby
or commercial letters of credit issued by Bank for the
account of a Borrower, which Letters of Credit shall:
(a) in the case of the Co-Borrower Facility,
(x) have a stated expiry no later than six months beyond
the Maturity Date, (y) for commercial Letters of Credit,
at no time exceed an aggregate undrawn face amount of
One Million Dollars ($1,000,000) and have a maximum
tenor of no more than one hundred eighty (180) days, and
(z) for stand-by Letters of Credit, at no time exceed an
aggregate undrawn face amount of Eleven Million Dollars
($11,000,000); and
(b) in the case of the DT Facility, (x) be
stand-by Letters of Credit only, (y) have a stated
expiry no later than twelve months beyond the Maturity
Date, and (z) at no time shall the aggregate undrawn
face amount exceed Five Million Dollars ($5,000,000).
1.39 "Loan Documents" shall mean this Agreement,
the Notes, the Guarantees, the Exim Guaranty, the
Borrower Agreement, the Security Agreements, and all
other documents, instruments or agreements executed
and/or delivered to Bank pursuant hereto or pursuant to
any of the foregoing.
1.40 "M&E Borrowing Base" shall mean the lesser of
(y) seventy percent (70%) of the aggregate of Borrowers'
Forced Sale Value of the Eligible Machinery and
Equipment and (z) $1,330,000.
1.41 "Margin" shall mean, in the case of Advances
under either the Co-Borrower Facility or the DT
Facility, one half percent (0.5%).
1.42 "Material Adverse Effect" shall mean any
material adverse effect, or the occurrence of any event
or the existence of any condition that has or could
reasonably be expected to have a material adverse
effect, on (a) the business or financial condition or
performance of either Borrower or of a Borrower and its
subsidiaries taken as a whole, (b) the ability of a
Borrower to pay the Debt when due, (c) the validity or
enforceability of any of the Loan Documents, and lien
created or purported to be created by any of the Loan
Documents or the required priority of any such lien, or
(d) any material right or remedy of Bank under any of
the Loan Documents.
1.43 "Maturity Date" shall mean:
(a) with respect to the Co-Borrower Facility,
April 1, 2001;
(b) with respect to the DT Facility, April 1,
2000.
1.44 "Note(s)" shall mean the Co-Borrower Note and
the DT Note and any other promissory note heretofore or
hereafter made by Borrower to Bank as evidence of
indebtedness, or any one or more of the foregoing.
1.45 "Permitted Liens" shall mean:
(a) liens and encumbrances in favor of Bank;
(b) liens for taxes, assessments or other
governmental charges incurred in the ordinary course of
business and not yet past due or being contested in good
faith by appropriate proceedings and with proper
reserves therefor maintained in accordance with GAAP;
(c) liens not delinquent created by statute
in connection with worker's compensation, unemployment
insurance, social security and similar statutory
obligations;
(d) liens of mechanics, materialmen,
carriers, warehousemen or other like statutory or common
law liens securing obligations incurred in good faith in
the ordinary course of business that are not yet due and
payable or that are being contested in good faith by
appropriate proceedings and with proper reserves
therefor maintained in accordance with GAAP;
(e) encumbrances consisting of easements,
rights of way, zoning restrictions or other similar
restrictions on the use of real property, none of which
materially impairs the use of such property by Borrower
in the operation of the business for which it is used
and none of which is violated in any material respect by
any existing or proposed structure or land use;
(f) liens on real estate, furniture, fixtures
and equipment for purchase money financing (including
loans and leases) hereafter existing used for capital
expenditures permitted under the Guaranty;
(g) liens arising by operation of law in
connection with judgments being appealed; and
(h) liens on property acquired by a Borrower
or any subsidiary to the extent such Liens are in
existence when such property or subsidiary was acquired
and were not made in anticipation of such acquisition.
1.46 "Prime Rate" shall mean the per annum interest
rate established by Bank as its prime rate for its
borrowers as such rate may vary from time to time, which
rate is not necessarily the lowest rate on loans made by
Bank at any such time.
1.47 "Prime-based Advance" shall mean an Advance
which bears interest at the Prime-based Rate.
1.48 "Prime-based Rate" shall mean a per annum
interest rate which is equal to the Prime Rate plus the
Margin.
1.49 "Security Agreements" shall mean security
agreements in form and content satisfactory to Bank
pursuant to which DWC, DT and DSI grants to Bank a
security interest in all of its tangible and intangible
personal property, whether now owned or hereafter
existing or arising.
1.50 "Year 2000 Issue" shall mean the risk of
computer hardware, software or equipment containing
imbedded micro chips which perform functions relevant to
the business or operation of a Borrower which will not,
in the case of dates occurring after December 31, 1999,
function as effectively and reliably as in the case of
dates occurring prior to such date.
2. INDEBTEDNESS: CO-BORROWER FACILITY
2.1 Bank agrees to make Advances under the Co-
Borrower Note to DWC or DT from time to time from the
effective date hereof until the Maturity Date, in
aggregate principle amount at any time outstanding not
to exceed the Co-Borrower Facility Maximum, with
availability thereunder for stand-by and commercial
Letters of Credit. The obligations of DWC and DT under
the Co-Borrower Note shall be joint and several. All of
the Advances hereunder shall be evidenced by the Co-
Borrower Note under which advances, repayments and re-
advances may be made, subject to the terms and
conditions of this Agreement.
2.2 The Co-Borrower Note shall mature on its
Maturity Date, and each Advance from time to time
outstanding thereunder shall bear interest at the Prime-
based Rate. The amount and date of each Advance, and the
amount and date of any repayment shall be noted on
Bank's records, which records will be conclusive
evidence thereof absent manifest error.
2.3 Interest on the unpaid balance of all
Prime-based Advances from time to time outstanding under
the Co-Borrower Note shall be payable monthly commencing
on the last day of each month. Interest accruing at the
Prime-based Rate shall be computed on the basis of a 360
day year and assessed for the actual number of days
elapsed, and in such computation effect shall be given
to any change in the Prime-based Rate resulting from a
change in the Prime Rate on the date of such change in
the Prime Rate.
2.4 Either Borrower may request an Advance under
the Co-Borrower Note telephonically in compliance with
Bank's telephonic request procedures. Any request made
telephonically shall not be revocable by either
Borrower, and shall be promptly confirmed in writing.
Borrowers shall assume, and shall indemnify Bank from
loss with respect to, the risk of misunderstanding with
respect to any request for Advance. Upon communication
to Bank of any request for Advance, Bank may require
Borrower to deliver as a condition to the Advance, a
Borrowing Base Report.
2.5 Proceeds of the Co-Borrower Note shall be
available to Borrowers for the purpose of financing
their respective working capital needs. In the event
that Bank is not reimbursed on the same day that any
drawing is made under a Letter of Credit issued in
conjunction with the Co-Borrower Facility, such
unreimbursed draw shall be deemed an Advance under the
Co-Borrower Facility, and Borrowers hereby irrevocably
authorize and direct Bank to make such Advances for the
purpose, and in the amounts necessary to pay their
respective obligations related to unreimbursed drawings
on Letters of Credit, and to apply the proceeds of such
Advances toward repayment of such obligations.
2.6 With respect to the stand-by Letters of Credit
issued pursuant to this Section 2, Borrowers shall pay
to Bank Letter of Credit fees at a per annum rate equal
to one and one quarter percent (1.25%) calculated on the
face amount of each Letter of Credit for the period from
the date of issuance thereof until its stated expiry.
Such fees shall be payable quarterly in advance, and
shall not be refundable under any circumstance. With
respect to commercial Letters of Credit issued pursuant
to this Section 2, Borrowers will pay Bank's standard
letter of credit issuance fees. With respect to all
Letters of Credit, Borrowers shall pay standard
administration, payment and cancellation charges
assessed by Bank.
2.7 Borrowers shall pay to Bank an annual facility
fee of $12,500 for the Co-Borrower Facility, which fee
shall be due and payable on the date of this Agreement
and on each anniversary of the date of this Agreement
and shall not be refundable under any circumstance,
together with a documentation preparation fee of $350
which is due and payable on the date of this Agreement.
3. INDEBTEDNESS: DT FACILITY
3.1 Bank agrees to make Advances to DT under the
DT Note from time to time from the effective date hereof
until the Maturity Date, in aggregate principle amount
at any time outstanding not to exceed the DT Facility
Maximum, with availability thereunder for stand-by
Letters of Credit. All of the Advances hereunder shall
be evidenced by the DT Note, under which advances,
repayments and re-advances may be made, subject to the
terms and conditions of this Agreement.
3.2 The DT Facility shall mature on its Maturity
Date, and each Advance from time to time outstanding
thereunder shall bear interest at the Prime-based Rate.
The amount and date of each Advance, and the amount and
date of any repayment shall be noted on Bank's records,
which records will be conclusive evidence thereof absent
manifest error.
3.3 Interest on the unpaid balance of all
Prime-based Advances from time to time outstanding under
the DT Facility shall be payable monthly on the last day
of each month. Interest accruing at the Prime-based
Rate shall be computed on the basis of a 360 day year
and assessed for the actual number of days elapsed, and
in such computation effect shall be given to any change
in the Prime-based Rate resulting from a change in the
Prime Rate on the date of such change in the Prime Rate.
3.4 DT may request an Advance under the DT Note
telephonically in compliance with Bank's telephonic
request procedures. Any request made telephonically
shall not be revocable by DT, and shall be promptly
confirmed in writing. DT shall assume, and shall
indemnify Bank from loss with respect to, the risk of
misunderstanding with respect to any request for
Advance. Upon communication to Bank of any request for
Advance, Bank may require DT to deliver as a condition
to the Advance, a Borrowing Base Report.
3.5 Proceeds of the DT Facility shall be available
to DT solely for the purpose of financing DT's pre-
export working capital needs and in any event shall be
in compliance with the Borrower Agreement. In the event
that Bank is not reimbursed on the same day that any
drawing is made under a Letter of Credit issued in
conjunction with the DT Facility, such unreimbursed draw
shall be deemed an Advance under the DT Facility, and DT
hereby irrevocably authorizes and directs Bank to make
such Advances for the purpose, and in the amounts
necessary to pay its obligations related to unreimbursed
drawings on Letters of Credit, and to apply the proceeds
of such Advances toward repayment of such obligations.
3.6 DT shall pay to Bank Letter of Credit Fees
with respect to the Letters of Credit issued pursuant to
this Section 3 at a per annum rate equal to one and one
eighth percent (1.125%) calculated on the face amount of
each Letter of Credit for the period from the date of
issuance thereof until its stated expiry. Such fees
shall be payable quarterly in advance, and shall not be
refundable under any circumstance. In addition,
Borrowers will pay standard letter of credit issuance
fees and standard administration, payment and
cancellation charges assessed by Bank.
3.7 DT shall pay an Eximbank facility fee of
Thirty Eight Thousand Seven Hundred Fifty Dollars
($38,750) for the DT Facility, and a document
preparation fee of Three Hundred Fifty Dollars ($350),
which fees shall be due and payable on the date of this
Agreement and shall not be refundable under any
circumstance.
4. CONDITIONS AND SECURITY
4.1 Borrowers shall have executed and delivered to
Bank, or caused to have been executed and delivered to
the Bank, this Agreement, the Note, the Guaranties and
all other applicable Loan Documents, and this Agreement
(including all schedules, exhibits, certificates,
opinions, financial statements and other documents to be
delivered pursuant hereto), and the Notes and other
applicable Loan Documents (when executed and delivered
to Bank) shall be in full force and effect and binding
and enforceable obligations of Borrowers and any other
persons who may be parties thereto, except to the extent
limited by applicable bankruptcy, insolvency or other
insolvency laws.
4.2 Bank shall have received: (a) certified copies
of resolutions of the Board of Directors of DWC
evidencing approval of the borrowings hereunder and the
transactions contemplated hereby, (b) certified copies
of DWC's Articles of Incorporation and Bylaws; and (c) a
certificate of good standing from the state or other
jurisdiction of DWC's incorporation, and from each state
or other jurisdiction in which DWC is required, under
applicable law, to be qualified to do business.
4.3 Bank shall have received: (a) certified copies
of resolutions of the Board of Directors of DT
evidencing approval of the borrowings hereunder and the
transactions contemplated hereby, (b) certified copies
of DT's Articles of Incorporation and Bylaws; and (c) a
certificate of good standing from the state or other
jurisdiction of DT's incorporation, and from each state
or other jurisdiction in which DT is required, under
applicable law, to be qualified to do business
4.4 Bank shall have received copies of each
authorization, license, permit, consent, order or
approval of, or registration, declaration or filing
with, any governmental authority or any securities
exchange or other person obtained or made by Borrowers
and/or Guarantors in connection with the transactions
contemplated by this Agreement or the Loan Documents.
4.5 Bank shall have received initial Borrowing
Base Reports for each Facility and evidence of
satisfaction of the Federal Assignment of Claims Act
required for any Government Account included in the
Formula Amounts set forth therein.
4.6 The representations and warranties made by
Borrowers, and any other person who is a party to any of
the Loan Documents, under this Agreement or any of the
Loan Documents, and the representations and warranties
of any of the foregoing made to Bank which are contained
in any certificate, document or financial or other
statement furnished at any time hereunder or thereunder
or in connection herewith or therewith, shall have been
true and correct in all material respects when made.
4.7 Borrowers and any other person who is a party
to any of the Loan Documents shall have each performed
and complied in all material respects with all
agreements and conditions contained in the Loan
Documents applicable to it which are then in effect.
4.8 No Default or Event of Default shall have
occurred and be continuing and there shall have been no
material change in the condition (financial or
otherwise), properties, business, results or operations
of Borrowers since the date of the financial statements
mentioned in Sections 5.8 and 6.8 hereof.
4.9 Bank shall have received payment at closing
from Borrowers of arrangement fees in the aggregate
amount of Fifty One Thousand Nine Hundred Fifty Dollars
($51,950) which fees shall not be refundable under any
circumstances. Bank and DT agree that Thirty Eighty
Thousand Seven Hundred Fifty Dollars ($38,750) of such
amount shall be paid by it to Eximbank in satisfaction
of the fee due Eximbank in connection with its issuance
of the Exim Guaranty.
4.10 Bank shall have received such other
instruments and documents (not inconsistent with the
terms hereof) as Bank may request in connection with the
making of the Advances hereunder, and all such
instruments and documents shall be reasonably
satisfactory in form and substance to the Bank,
including (without limitation) all documents,
instruments, applications and agreements deemed
necessary by Bank as a condition to the effectiveness of
the Exim Guaranty.
4.11 The obligations of Bank to make Advances under
this Agreement shall be subject to the continuing
condition that all documents, instruments and agreements
executed or submitted pursuant hereto shall be
satisfactory in form and substance to Bank; Bank shall
have received all information, and such counterpart
originals or such certified or other copies of such
materials, as Bank and its counsel may reasonably
request; and all other legal matters relating to the
transactions contemplated by this Agreement (including,
without limitation, matters arising from time to time as
a result of changes occurring with respect to any
statutory, regulatory or decisional law applicable
hereto) shall be satisfactory to Bank.
5. REPRESENTATIONS AND WARRANTIES OF DWC
DWC represents and warrants and such representations and
warranties shall be deemed to be continuing
representations and warranties during the entire life of
this Agreement:
5.1 DWC is a corporation duly organized and
existing in good standing under the laws of the State of
California; is duly qualified and authorized to do
business in each jurisdiction where the character of its
assets or the nature of its activities makes such
qualification necessary; execution, delivery and
performance of this Agreement, and any other documents
and instruments required under this Agreement, and the
issuance of the Co-Borrower Note by DWC and the Guaranty
are within DWC's corporate powers, have been duly
authorized, are not in contravention of law or the terms
of the Articles of Incorporation or Bylaws of DWC, and
do not require the consent or approval of any
governmental body, agency or authority that has not been
obtained; and this Agreement, and any other documents
and instruments required under this Agreement, when
issued and delivered under this Agreement, will be valid
and binding upon DWC in accordance with their terms
subject only to applicable bankruptcy and insolvency
laws.
5.2 The execution, delivery and performance of
this Agreement, and any other documents and instruments
required under this Agreement, and the issuance of the
Co-Borrower Note by DWC, are not in contravention of the
unwaived terms of any indenture, agreement or
undertaking to which DWC is a party or by which it is
bound.
5.3 No litigation or other proceeding before any
court or administrative agency is pending, or to the
knowledge of the officers of DWC is threatened against
DWC other than as disclosed in DSI's annual report dated
March 31, 1998 and subsequent filings with the SEC.
5.4 There are no security interests in, liens,
mortgages, or other encumbrances on any of DWC's assets,
except to Bank, or as permitted under Section 9.7 of
this Agreement.
5.5 There are no subsidiaries of DWC.
5.6 There exists no default under the provisions
of any instrument evidencing any debt of DWC or of any
agreement relating thereto.
5.7 The unaudited balance sheet and operating statement
of DWC dated December 31, 1998, previously furnished
Bank, are complete and correct and fairly present the
financial condition of DWC and the results of its
operations; since said dates there has been no change in
the financial condition of DWC that has resulted, or
could result, in a Material Adverse Effect; DWC has no
contingent obligations (including any liability for
taxes) not disclosed by or reserved against in said
balance sheets, and at the present time there are no
material unrealized or anticipated losses from any
present commitment of DWC.
5.8 DWC is not a party to any litigation or
administrative proceeding, nor so far as is known by DWC
is any litigation or administrative proceeding
threatened against DWC the outcome of which if
determined adversely would materially impair the
financial condition of DWC or its ability to carry on
its business, which in either case (A) asserts or
alleges that DWC violated Environmental Laws, (B)
asserts or alleges that DWC is required to clean up,
remove, or take remedial or other response action due to
the disposal, depositing, discharge, leaking or other
release of any hazardous substances of materials, (C)
asserts or alleges that DWC is required to pay all or a
portion of the cost of any past, present, or future
cleanup, removal or remedial or other response action
which arises out of or is related to the disposal,
depositing, discharge, making or other release of any
hazardous substances or materials by DWC.
5.9 There are no conditions existing currently or
likely to exist during the term of this Agreement which
would subject DWC to damages, penalties, injunctive
relief or cleanup costs under any applicable
Environmental Laws or which require or are likely to
require cleanup, removal, remedial action or other
response pursuant to applicable Environmental Laws by
DWC.
5.10 DWC is not subject to any judgment, decree,
order or citation related to or arising out of
applicable Environmental Laws and to the best knowledge
of DWC after due inquiry, DWC has not been named or
listed as a potentially responsible party by any
governmental body or agency in a matter arising under
any applicable Environmental Laws.
5.11 DWC has all permits, licenses and approvals
required under applicable Environmental Laws.
5.12 DWC has reviewed its operations and is in the
process of reviewing its major commercial counterparts
with a view to assessing whether it will, in the
receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization
of data, be vulnerable to a Year 2000 Issue. Based on
such review, DWC has no reason to believe that any
Material Adverse Effect will occur with respect to its
businesses or operations resulting from a Year 2000
Issue.
6. REPRESENTATIONS AND WARRANTIES OF DT
DT represents and warrants and such representations and
warranties shall be deemed to be continuing
representations and warranties during the entire life of
this Agreement:
6.1 DT is a corporation duly organized and
existing in good standing under the laws of California;
is duly qualified and authorized to do business in each
jurisdiction where the character of its assets or the
nature of its activities makes such qualification
necessary; execution, delivery and performance of this
Agreement, and any other documents and instruments
required under this Agreement, and the issuance of the
DT Note to be issued under the DT Facility are within
DT's corporate powers, have been duly authorized, are
not in contravention of law or the terms of the
organizational documents of DT, and do not require the
consent or approval of any governmental body, agency or
authority that has not been obtained; and this
Agreement, and any other documents and instruments
required under this Agreement, when issued and delivered
under this Agreement, will be valid and binding upon DT
in accordance with their terms subject only to
applicable bankruptcy and insolvency laws.
6.2 The execution, delivery and performance of
this Agreement, and any other documents and instruments
required under this Agreement, and the issuance of the
DT Note by DT, are not in contravention of the unwaived
terms of any indenture, agreement or undertaking to
which DT is a party or by which it is bound.
6.3 No litigation or other proceeding before any
court or administrative agency is pending, or to the
knowledge of the officers of DT is threatened against
DT.
6.4 There are no security interests in, liens,
mortgages, or other encumbrances on any of DT's assets,
except to Bank, or as permitted under Section 10.7 of
this Agreement.
6.5 There are no subsidiaries of DT other than
Datron Resources Inc., a California corporation.
6.6 There exists no default under the provisions
of any instrument evidencing any debt of DT or of any
agreement relating thereto.
6.7 The unaudited balance sheet and operating
statement of DT dated December 31, 1998, previously
furnished Bank, are to the best of the knowledge of DT
complete and correct and fairly present the financial
condition of DT and the results of its operations; since
said dates there has been no change in the financial
condition of DT that has resulted or could result, in a
Material Adverse Effect; DT has no contingent
obligations (including any liability for taxes) not
disclosed by or reserved against in said balance sheets,
and at the present time there are no material unrealized
or anticipated losses from any present commitment of DT.
6.8 DT is not a party to any litigation or
administrative proceeding threatened against DT the
outcome of which if determined adversely would
materially impair the financial condition of DT or its
ability to carry on its business, other than as
previously disclosed to Bank in writing, which in either
case (A) asserts or alleges that DT violated
Environmental Laws, (B) asserts or alleges that DT is
required to clean up, remove, or take remedial or other
response action due to the disposal, depositing,
discharge, leaking or other release of any hazardous
substances of materials, (C) asserts or alleges that DT
is required to pay all or a portion of the cost of any
past, present, or future cleanup, removal or remedial or
other response action which arises out of or is related
to the disposal, depositing, discharge, making or other
release of any hazardous substances or materials by DT.
6.9 Other than as previously disclosed to Bank in
writing, there are no conditions existing currently or
likely to exist during the term of this Agreement which
would subject DT to damages, penalties, injunctive
relief or cleanup costs under any applicable
Environmental Laws or which require or are likely to
require cleanup, removal, remedial action or other
response pursuant to applicable Environmental Laws by
DT.
6.10 DT is not subject to any judgment, decree,
order or citation related to or arising out of
applicable Environmental Laws and to the best knowledge
of DT after due inquiry, DT has not been named or listed
as a potentially responsible party by any governmental
body or agency in a matter arising under any applicable
Environmental Laws.
6.11 DT has all permits, licenses and approvals
required under applicable Environmental Laws.
6.12 The representations of DT under the Borrower
Agreement are true and correct on and as of the date
hereof with the same force and effect as though made on
and as of the date hereof, and Borrower is not otherwise
in default under the Borrower Agreement.
6.13 DT has reviewed its operations and is in the
process of reviewing those of its subsidiaries and major
commercial counterparts with a view to assessing whether
it or its subsidiaries' respective businesses will, in
the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization
of data, be vulnerable to a year 2000 issue. Based on
such review, DT has no reason to believe that any
Material Adverse Effect will occur with respect to its
or its subsidiaries businesses or operations resulting
from a year 2000 issue.
7. AFFIRMATIVE COVENANTS OF DWC
DWC covenants and agrees that it will, so long as Bank
is committed to make any Advances under this Agreement
and thereafter so long as any indebtedness remains
outstanding under this Agreement:
7.1 Furnish Bank:
(a) Within thirty days and as of the end of
each month, monthly agings of DWC's accounts receivable
and accounts payable, monthly inventory reports and
accounts receivable reports, each in form acceptable to
Bank, together with a Borrowing Base Report in such
detail as Bank may specify demonstrating that the
Advances under the Co-Borrower Facility do not exceed
the Co-Borrower Facility Maximum; and
(b) promptly, and in form to be satisfactory
to Bank, such other information as Bank may reasonably
request from time to time.
7.2 Pay and discharge, all taxes and other
governmental charges, and all contractual obligations
calling for the payment of money, before the same shall
become overdue, unless and to the extent only that such
payment is being contested in good faith.
7.3 Maintain insurance coverage on its physical
assets and against other business risks in such amounts
and of such types as-are customarily carried by
companies similar in size and nature, and in the event
of acquisition of additional property, real or personal,
or of incurrence of additional risks of any nature,
increase such insurance coverage in such manner and to
such extent as prudent business judgment and present
practice would dictate; and in the case of all policies
insuring property mortgaged or pledged to Bank or
property in which Bank shall have a security interest of
any kind whatsoever, all such insurance policies shall
provide that the loss payable thereunder shall be
payable to Bank.
7.4 Permit Bank, through its authorized attorneys,
accountants, and representatives, to examine the books,
accounts, records, ledgers and assets of every kind and
description of DWC at all reasonable times upon oral or
written request of Bank and, in connection therewith,
reimburse Bank for all costs and expenses incurred by
Bank in connection with audits of the assets and records
of DWC.
7.5 Promptly, not later than three (3) business
days after becoming aware thereof, notify Bank of any
condition or event which constitutes or with the running
of time and/or the giving of notice would constitute a
Default or Event of Default hereunder and promptly
inform Bank of any change in the financial condition of
DWC, that has resulted, or could result, in a Material
Adverse Effect.
7.6 Maintain in good standing all licenses
required by the State of California, or any agency
thereof, or any other governmental authority that may be
necessary or required for DWC to carry on its general
business objects and purposes.
7.7 Pay all of Bank's reasonable legal fees and
disbursements of counsel connected with the preparation
and closing of the transactions contemplated by this
Agreement, subject to a cap of $7,000 and, if there is
any Default or Event of Default, pay all of the expenses
incurred by Bank in connection with such Default or
Event of Default and Bank's exercise of its remedies
hereunder, under any security documents or under
applicable law, including, without limitation, Bank's
reasonable legal fees and disbursements of counsel
connected therewith.
7.8 In the event that, as of any date, the
principal amount of Advances under the Co-Borrower
Facility, together with the aggregate face amount of
Letters of Credit issued pursuant to the Co-Borrower
Facility, exceeds the Co-Borrower Facility Maximum,
promptly, and in any event within three (3 days) of
notice thereof from Bank, pay to Bank an amount not less
than such excess, for applications on the Advances under
the Co-Borrower Note, or deposit with Bank Cash
Collateral in an amount not less than such excess.
7.9 In the event of any condition or circumstance
that makes any environmental warranty, representation or
agreement incomplete or inaccurate as of any date, DWC
shall, at its sole expense, retain a professional
environmental consultant, reasonably acceptable to Bank,
to conduct a thorough and complete environmental audit
regarding the changed condition and/or circumstances and
any environmental concerns arising from that changed
condition and/or circumstance. A copy of the
environmental consultant's report will be promptly
delivered to Bank and DWC upon completion.
7.10 At any time DWC directly or indirectly through
any professional consultant or other representative,
determines to undertake an environmental audit,
assessment or investigation, DWC shall promptly provide
Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and
intended scope of the environmental audit. Upon receipt,
DWC will promptly provide to Bank copies of all final
findings and conclusions of any such environmental
investigation. Preliminary findings and conclusions
shall be provided if final reports have not been
completed and delivered to Bank within sixty (60) days
following completion of the preliminary findings and
conclusions.
8. AFFIRMATIVE COVENANTS OF DT
DT covenants and agrees that it will, so long as Bank is
committed to make any Advances under this Agreement and
thereafter so long as any indebtedness remains
outstanding under this Agreement:
8.1 Furnish Bank:
(a) Within thirty days and as of the end of
each month, monthly agings of DT's accounts receivable
and accounts payable, monthly inventory reports and
accounts receivable reports, each in form acceptable to
Bank, together with Borrowing Base Reports in such
detail as Bank may specify demonstrating that the
Advances under the DT Facility do not exceed the DT
Facility Maximum and Advances under the Co-Borrower
Facility do not exceed the Co-Borrower Facility Maximum;
(b) As soon as available and in any event
within sixty (60) days after the end of each fiscal
quarter of DT "percent completion report" including
backlog by project; and
(c) promptly, and in form to be satisfactory
to Bank, such other information as Bank may reasonably
request from time to time.
8.2 Pay and discharge, all taxes and other
governmental charges, and all contractual obligations
calling for the payment of money, before the same shall
become overdue, unless and to the extent only that such
payment is being contested in good faith.
8.3 Maintain insurance coverage on its physical
assets and against other business risks in such amounts
and of such types as-are customarily carried by
companies similar in size and nature, and in the event
of acquisition of additional property, real or personal,
or of incurrence of additional risks of any nature,
increase such insurance coverage in such manner and to
such extent as prudent business judgment and present
practice would dictate; and in the case of all policies
insuring property mortgaged or pledged to Bank or
property in which Bank shall have a security interest of
any kind whatsoever, all such insurance policies shall
provide that the loss payable thereunder shall be
payable to Bank.
8.4 Permit Bank, through its authorized attorneys,
accountants, and representatives, to examine the books,
accounts, records, ledgers and assets of every kind and
description of DT at all reasonable times upon oral or
written request of Bank and, in connection therewith,
reimburse Bank for all costs and expenses incurred by
Bank in connection with audits of the assets and records
of DT.
8.5 Promptly, not later than three (3) business
days after becoming aware thereof, notify Bank of any
condition or event which constitutes or with the running
of time and/or the giving of notice would constitute a
Default or Event of Default hereunder and promptly
inform Bank of any change in the financial condition of
DT, that has resulted, or could result, in a Material
Adverse Effect.
8.6 Maintain in good standing all licenses
required by the State of California, or any agency
thereof, or any other governmental authority that may be
necessary or required for DT to carry on its general
business objects and purposes.
8.7 Pay all of Bank's reasonable legal fees and
disbursements of counsel connected with the preparation
and closing of the transactions contemplated by this
Agreement, subject to a cap of $7,000 and any costs or
fees incurred by Bank in connection with obtaining or
complying with the Exim Guaranty, and if there is any
Default or Event of Default, pay all of the expenses
incurred by Bank in connection with such Default or
Event of Default and Bank's exercise of its remedies
hereunder, under any security documents or under
applicable law, including, without limitation, Bank's
reasonable legal fees and disbursements of counsel
connected therewith.
8.8 In the event that, as of any date, the
principal amount of Advances under the Co-Borrower
Facility, together with the aggregate face amount of
Letters of Credit issued pursuant to the Co-Borrower
Facility, exceeds the Co-Borrower Facility Maximum,
promptly, and in any event within three (3) days of
notice thereof from Bank, pay to Bank an amount not less
than such excess, for applications on the Advances under
the Co-Borrower Note, or deposit with Bank Cash
Collateral in an amount not less than such excess.
8.9 In the event that, as of any date, the
principal amount of Advances under the DT Facility,
together with the aggregate face amount of Letters of
Credit issued pursuant to the DT Facility, exceeds the
DT Facility Maximum, promptly, and in any event within
three (3) days of notice thereof from Bank, pay to Bank
an amount not less than such excess for application on
the Advances outstanding under the DT Facility.
8.10 In the event of any condition or circumstance
that makes any environmental warranty, representation or
agreement incomplete or inaccurate as of any date, DT
shall, at its sole expense, retain a professional
environmental consultant, reasonably acceptable to Bank,
to conduct a thorough and complete environmental audit
regarding the changed condition and/or circumstances and
any environmental concerns arising from that changed
condition and/or circumstance. A copy of the
environmental consultant's report will be promptly
delivered to Bank and DT upon completion.
8.11 At any time DT directly or indirectly through
any professional consultant or other representative,
determines to undertake an environmental audit,
assessment or investigation, DT shall promptly provide
Bank with written notice of the initiation of the
environmental audit, fully describing the purpose and
intended scope of the environmental audit. Upon receipt,
DT will promptly provide to Bank copies of all final
findings and conclusions of any such environmental
investigation. Preliminary findings and conclusions
shall be provided if final reports have not been
completed and delivered to Bank within sixty (60) days
following completion of the preliminary findings and
conclusions.
8.12 DT acknowledges that, the advances under the
DT Facility, and Bank's ability to amend, waive or
modify provisions thereof, are subject to the Exim
Guaranty, the terms of which are incorporated herein by
this reference. DT agrees to comply with the terms of
applicable provisions of the Exim Guaranty, and hereby
waives and indemnifies Bank from all claims, judgments,
damages and costs which may at any time arise as a
result of, under the provisions of, or as a consequence
of Bank's compliance terms of the Exim Guaranty, and,
without limiting any of the foregoing, DT further
acknowledges that, under the terms of the Exim Guaranty:
(a) Bank's discretion to make certain
advances, waive provisions of this Agreement, Events of
Default hereunder, and/or to delay or forego remedies
available hereunder and under Collateral Documents, is
limited and/or controlled;
(b) information regarding occurrences and
transactions contemplated hereunder, and under the Loan
Documents, is required to be provided from time to time
by DT and/or Eximbank;
(c) upon occurrence of certain Events of
Default, Bank may be required, at the direction of
Eximbank, to accelerate indebtedness hereunder and under
the Note and other indebtedness of DT to Bank; and
(d) upon Eximbank's payment under the Exim
Guarantee, Eximbank shall be entitled to succeed to the
rights of Bank under this Agreement, the DT Note, the
Notes and the collateral granted to Bank securing the DT
Facility.
9. NEGATIVE COVENANTS OF DWC
DWC covenants and agrees that so long as any
indebtedness remains outstanding under this Agreement or
any of the Notes, DWC will not without the prior written
consent of Bank:
9.1 Purchase, acquire or redeem any of its capital
stock or make any material change in its capital
structure or general business objects or purpose, or pay
dividends on any class of its capital stock.
9.2 Enter into any merger or consolidation or
sell, lease, transfer, or dispose of all, substantially
all, or any material part of its assets.
9.3 Guarantee, endorse, otherwise become or remain
secondarily liable for or upon the obligations of
others, except:
(a) by endorsement for deposit in the ordinary course
of business; and
(b) its Guaranty of indebtedness of DT.
9.4 Make payments or distributions to DWC's
shareholders, Affiliates and/or controlling persons or
entities, except for dividends to DSI.
9.5 Purchase or otherwise acquire or become
obligated for the purchase of all or substantially all
of the assets of business interests of any person, firm
or corporation or any shares of stock of any
corporation, trusteeship or association or in any other
manner effectuate or attempt to effectuate an expansion
of present business by acquisition.
9.6 Make or allow to remain outstanding any
investment (whether such investment shall be of the
character of investment in shares of stock, evidences of
indebtedness or other securities or otherwise) in, or
any loans or advances to, any person, firm, corporation
or other entity or association except:
(a) Loans and advances to employees, officers
and directors not to exceed $200,000 in aggregate amount
at any time outstanding;
(b) Loans and investments in customers of DWC
arising in the ordinary course of business as the result
of the compromise or settlement of accounts payable
owing by such customers; and
(c) Loans and advances to DT or DSI.
9.7 Affirmatively pledge or mortgage any of its
assets, whether now owned or hereafter acquired, or
create, suffer or permit to exist any lien, security
interest in, or encumbrance thereon, except Permitted
Liens.
9.8 Sell, assign, transfer or confer a security
interest in any account, contract, note, trade
acceptance or other receivable, except to Bank.
9.9 Become or remain obligated for any
indebtedness for borrowed money, or for any indebtedness
incurred in connection with the acquisition of any
property, real or personal, tangible or intangible,
except for indebtedness to Bank and purchase money
indebtedness and capital lease obligations for fixed
assets incurred in connection with purchases of fixed
assets (or any refinancings thereof) to the extent
permitted in the DSI Guaranty.
10. NEGATIVE COVENANTS OF DT
DT covenants and agrees that so long as any indebtedness
remains outstanding under this Agreement or any of the
Notes, DT will not without the prior written consent of
Bank:
10.1 Purchase, acquire or redeem any of its capital
stock or make any material change in its capital
structure or general business objects or purpose, or pay
dividends on any class of its capital stock.
10.2 Enter into any merger or consolidation or
sell, lease, transfer, or dispose of all, substantially
all, or any material part of its assets.
10.3 Guarantee, endorse, otherwise become or remain
secondarily liable for or upon the obligations of
others, except by endorsement for deposit in the
ordinary course of business.
10.4 Make payments or distributions to DT's
shareholders, Affiliates and/or controlling persons or
entities, except for dividends paid to DSI.
10.5 Purchase or otherwise acquire or become
obligated for the purchase of all or substantially all
of the assets of business interests of any person, firm
or corporation or any shares of stock of any
corporation, trusteeship or association or in any other
manner effectuate or attempt to effectuate an expansion
of present business by acquisition.
10.6 Make or allow to remain outstanding any
investment (whether such investment shall be of the
character of investment in shares of stock, evidences of
indebtedness or other securities or otherwise) in, or
any loans or advances to, any person, firm, corporation
or other entity or association except:
(a) Loans and advances to employees, officers
and directors not to exceed $200,000 in aggregate amount
at any time outstanding;
(b) Loans and investments in customers of DT
arising in the ordinary course of business as the result
of the compromise or settlement of accounts payable
owing by such customers; and
(c) Loans and advances to DSI or DWC.
10.7 Affirmatively pledge or mortgage any of its
assets, whether now owned or hereafter acquired, or
create, suffer or permit to exist any lien, security
interest in, or encumbrance thereon, except Permitted
Liens.
10.8 Sell, assign, transfer or confer a security
interest in any account, contract, note, trade
acceptance or other receivable, except to Bank.
10.9 Become or remain obligated for any
indebtedness for borrowed money, or for any indebtedness
incurred in connection with the acquisition of any
property, real or personal, tangible or intangible,
except for indebtedness to Bank and purchase money
indebtedness and capital lease obligations for fixed
assets incurred in connection with purchases of fixed
assets (or any refinancings thereof) to the extent
permitted in the DSI Guaranty.
11. DEFAULTS
11.1 Upon (i) non-payment of the principal due
under the terms of this Agreement or on any Note, or
(ii) upon non-payment of interest or any other amount
required to be paid by either Borrower hereunder when
due in accordance with the terms hereof or the
performance of any covenant set forth in Section 9.1 or
10.1 hereof and the expiration of three (3) Business
Days after notice to such Borrower by Bank, Bank's
commitment to make further Advances and to issue Letters
of Credit under this Agreement shall automatically
terminate and the Notes shall, at Bank's sole
discretion, become immediately due and payable.
11.2 Upon occurrence of any of the following
defaults:
(a) default in the observance or performance
of any of the conditions, covenants or agreements of
Borrowers set forth in this Agreement and, in the case
only of the covenants set forth in Sections 7.2, 7.6,
7.7., 7.9, 7.10, 8.2, 8.6., 8.7, 8.10, or 8.11 hereof,
continuation thereof for a period in excess of thirty
(30) days from the earlier of a Borrower's actual
knowledge thereof or Bank's written notice to Borrowers
thereof;
(b) failure in the observance or performance
of any other conditions or covenants of either Borrower
set forth herein or any Loan Document and the expiration
of any period for cure thereof (if any) provided
therein;
(c) any representation or warranty made by a
Borrower herein or in any Loan Document or any other
instrument submitted pursuant hereto proves untrue in
any material respect;
(d) default in the payment of any other
obligation of a Borrower or a Guarantor for borrowed
money in principal amount in excess of the sum of Fifty
Thousand Dollars ($50,000), or in the observance or
performance of any conditions, covenants or agreements
related or given with respect thereto and continuation
of such default for ten (10) days after the occurrence
of such default;
(e) judgments for payment of money in excess
of the sum of Fifty Thousand ($50,000) in the aggregate
shall be rendered against a Borrower or a Guarantor, and
any of such judgments shall remain unpaid, unvacated,
unbonded or unstayed by appeal or otherwise for a period
of sixty (60) consecutive days from the date of its
entry;
(f) (i) uninsured or underinsured loss,
theft, substantial damage or destruction to or of any
part of the Collateral (as defined in the Security
Agreement) to the extent that the Formula Amount less
the uninsured or underinsured loss is less than the
aggregate amount of Advances and Letters of Credit
outstanding; provided, however, Borrower has 10 business
days to cure any such deficiency by reducing the amount
of Advances outstanding or by pledging additional
collateral to Bank; or (ii) the issuance or filing of
any attachment, levy, garnishment or the commencement of
any proceeding in connection with any Collateral;
(g) a default by DSI or DWC under their
respective Guaranties;
Bank's commitment to make further Advances and to issue
Letters of Credit under this Agreement shall
automatically terminate and then, or at any time
thereafter, Bank may give notice to Borrowers declaring
all outstanding indebtedness hereunder and under the
Notes to be due and payable, whereupon all indebtedness
then outstanding hereunder and under the Notes shall
immediately become due and payable without further
notice or demand.
11.3 If a creditors' committee shall have been
appointed for the business of Borrower or Guarantor; or
if Borrower or Guarantor shall have made a general
assignment for the benefit of creditors or shall have
been adjudicated bankrupt, or shall have filed a
voluntary petition in bankruptcy or for reorganization
or to effect a plan or arrangement with creditors; or
shall file an answer to a creditor's petition or other
petition filed against it, admitting the material
allegations thereof for an adjudication in bankruptcy or
for reorganization; or shall have applied for or
permitted the appointment of a receiver or trustee or
custodian for any of its property or assets; or such
receiver, trustee or custodian shall have been appointed
for any of its property or assets (otherwise than upon
application or consent of such person) and such
receiver, trustee, or custodian so appointed shall not
have been discharged within forty-five (45) days after
the date of his appointment; or if an order shall be
entered and shall not be dismissed or stayed within
forty-five (45) days from its entry, approving any
petition for reorganization of a Borrower or Guarantor;
then Bank's commitment to make further Advances or issue
Letters of Credit under this Agreement shall
automatically terminate and the Notes and all
indebtedness then outstanding hereunder shall
automatically become immediately due and payable.
11.4 Upon the occurrence of any of the defaults
specified in Sections 11.1, 11.2, or 11.3, Borrowers
shall deposit with Bank Cash Collateral in the
aggregate, undrawn face amount of any Letters of Credit.
11.5 From and after the maturity of any Debt
(whether upon stated maturity or any accelerated date
for payment thereof) Debt outstanding under this
Agreement and the Notes shall bear interest at three
percent (3%) above the Applicable Interest Rate as it
may vary from time to time, which interest shall be
payable daily.
12. MISCELLANEOUS
12.1 This Agreement shall be binding upon and shall
inure to the benefit of Borrowers and Bank and their
respective successors and assigns, except that the
credit provided for under this Agreement and no part
thereof and no obligation of Bank hereunder shall be
assignable or otherwise transferable by Borrowers.
12.2 Where the character or amount of any asset or
liability or item of income or expense is required to be
determined or any other accounting computation is
required to be made for the purposes of this Agreement,
unless the calculation of such item, amount or
computation is specifically defined to the contrary
herein, it shall be done in accordance with GAAP.
12.3 No delay or failure of Bank in exercising any
right, power or privilege hereunder shall affect such
right, power or privilege, nor shall any single or
partial exercise thereof preclude any further exercise
thereof, or the exercise of any other power, right or
privilege. The rights of Bank under this Agreement are
cumulative and not exclusive of any right or remedies
which Bank would otherwise have.
12.4 Until Borrowers or Bank, as the case may be,
shall notify one another in writing that notices shall
be sent to some other address, in which case subsequent
notice shall be completed upon mailing by certified mail
to such subsequent address, all notices with respect to
this Agreement shall be deemed to be completed upon
mailing by certified mail to the following:
To Borrowers:
Datron Systems Incorporated
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
To Bank:
Comerica Bank-California
000 "X" Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxx
All agreements between the Borrowers and the Bank
pertaining to the indebtedness described herein are
expressly limited so that in no event whatsoever shall
the amount of interest paid or agreed to be paid to the
Bank exceed the highest rate of interest permissible
under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this
Agreement, the Loan Documents, the Notes or any other
instrument securing the Notes or all or any part of the
indebtedness secured thereby, at the time performance of
such provision shall be due, shall involve exceeding the
interest limitation validly prescribed by law which a
court of competent jurisdiction may deem applicable
thereto, then, the obligation to be fulfilled shall be
reduced to an amount computed at the highest rate of
interest permissible under such applicable law, and if,
for any reason whatsoever, the Bank shall ever receive
as interest an amount which would be deemed unlawful
under such applicable law, such interest shall be
automatically applied to the payment of the principal
amount described herein or otherwise owed by the
relevant Borrowers to Bank (whether or not then due and
payable) and not to payment of interest.
12.5 This Agreement, the Loan Documents and the
Notes shall be governed by, and construed and enforced
in accordance with, California law.
12.6 Borrowers hereby indemnify, save and hold Bank
and any of its past, present and future officers,
directors, shareholders, employees, representatives and
consultants harmless from any and all loss, damages,
suits, penalties, costs, liabilities and expenses
(including but not limited to reasonable investigation,
environmental audit(s), and legal expenses) arising out
of any claim, loss or damage of any property, injuries
to or death of persons, contamination of or adverse
affects on the environment, or any violation of any
applicable Environmental Laws, caused by or in any way
related to the real property owned by Borrowers, or due
to any acts of Borrowers, its officers, directors,
shareholders, employees, consultants and/or
representatives. In no event shall the Borrowers be
liable hereunder for any loss, damages, suits,
penalties, costs, liabilities or expenses arising from
any act of gross negligence or willful misconduct of
Bank, or its agents or employees.
12.7 It is expressly understood and agreed that the
indemnifications granted herein are intended to protect
Bank, its past, present and future officers, directors,
shareholders, employees, consultants and representatives
from any claims that may arise by reason of the security
interest, liens and/or mortgages granted to Bank, or
under any other document or agreement given to secure
repayment of any indebtedness from Borrowers, whether or
not such claims arise before or after Bank has
foreclosed upon and/or otherwise become the owner of any
such property. All obligations of indemnity as provided
hereunder shall be secured by the Loan Documents.
12.8 It is expressly agreed and understood that the
provisions hereof shall and are intended to be
continuing and shall survive the repayment of any
indebtedness from Borrowers to the Bank.
12.9 Borrowers and the Bank acknowledge that the
right to trial by jury is a constitutional one, but that
it may be waived, and, after consulting with counsel of
their choice, knowingly and voluntarily, and for their
mutual benefit, waive any right to trial by jury in the
event of litigation regarding the performance or
enforcement of, or in any way related hereto.
[signature page follows]
WITNESS the due execution hereof as of the day and year
first above written.
COMERICA BANK DATRON WORLD COMMUNICATIONS INC.
By:/s/ XXXXXXX X. XXXXXXXXX By:/s/ XXXXXXX X. XXXXXXX
Its: Vice President Its: Secretary/Treasurer
DATRON/TRANSCO INC.
By:/s/ XXXXXXX X. XXXXXXX
Its: Secretary/Treasurer
