EXHIBIT 4.5
LOAN AND SECURITY AGREEMENT
by and between
STRATEX NETWORKS, INC., AS BORROWER
and
SILICON VALLEY BANK, AS LENDER
January 21, 2003
1. ACCOUNTING AND OTHER TERMS............................................................................. 1
2. LOAN AND TERMS OF PAYMENT.............................................................................. 1
2.1 Promise to Pay................................................................................ 1
2.2 Overadvances.................................................................................. 2
2.3 General Provisions Relating to the Advances................................................... 2
2.4 Permitted Uses of Advance Proceeds............................................................ 2
2.5 Interest Rate, Payments....................................................................... 3
2.6 Fees.......................................................................................... 4
3. CONDITIONS OF ADVANCES................................................................................. 4
3.1 Conditions Precedent to Initial Credit Extension.............................................. 4
3.2 Conditions Precedent to all Credit Extensions................................................. 5
3.3 Procedure for the Borrowing of Advances....................................................... 5
3.4 Conversion and Continuation Elections......................................................... 6
3.5 Special Provisions Governing LIBOR Advances................................................... 7
3.6 Additional Requirements/Provisions Regarding LIBOR Advances................................... 8
3.7 Calculation of Interest and Fees.............................................................. 10
4. CREATION OF SECURITY INTEREST.......................................................................... 11
4.1 Grant of Security Interest.................................................................... 11
4.2 Authorization to File Financing Statements.................................................... 11
5. REPRESENTATIONS AND WARRANTIES......................................................................... 11
5.1 Due Organization and Authorization............................................................ 11
5.2 Collateral.................................................................................... 11
5.3 Litigation.................................................................................... 11
5.4 No Material Adverse Change in Financial Statements............................................ 12
5.5 Solvency...................................................................................... 12
5.6 Regulatory Compliance......................................................................... 12
5.7 Subsidiaries; Investments..................................................................... 12
5.8 Full Disclosure............................................................................... 12
6. AFFIRMATIVE COVENANTS.................................................................................. 13
6.1 Government Compliance......................................................................... 13
6.2 Financial Statements, Reports, Certificates................................................... 13
6.3 Inventory..................................................................................... 13
6.4 Taxes......................................................................................... 13
6.5 Insurance..................................................................................... 14
6.6 Depository Accounts........................................................................... 14
6.7 Financial Covenants........................................................................... 14
6.8 Further Assurances............................................................................ 14
7. NEGATIVE COVENANTS..................................................................................... 15
7.1 Dispositions.................................................................................. 15
7.2 Changes in Control, Business.................................................................. 15
7.3 Mergers or Acquisitions....................................................................... 15
7.4 Indebtedness.................................................................................. 15
7.5 Encumbrance................................................................................... 15
7.6 Subordinated Debt............................................................................. 15
7.7 Compliance.................................................................................... 16
8. EVENTS OF DEFAULT...................................................................................... 16
8.1 Payment Default............................................................................... 16
8.2 Covenant Default.............................................................................. 16
8.3 Material Adverse Change....................................................................... 16
8.4 Attachment.................................................................................... 16
8.5 Insolvency.................................................................................... 17
8.6 Other Agreements.............................................................................. 17
8.7 Judgments..................................................................................... 17
8.8 Misrepresentations............................................................................ 17
9. BANK'S RIGHTS AND REMEDIES............................................................................. 17
9.1 Rights and Remedies........................................................................... 17
9.2 Power of Attorney............................................................................. 18
9.3 Bank Expenses................................................................................. 18
9.4 Bank's Liability for Collateral............................................................... 19
9.5 Remedies Cumulative........................................................................... 19
9.6 Demand Waiver................................................................................. 19
10. NOTICES................................................................................................ 19
11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER............................................................. 19
12. GENERAL PROVISIONS..................................................................................... 20
12.1 Successors and Assigns........................................................................ 20
12.2 Indemnification............................................................................... 20
12.3 Time of Essence............................................................................... 20
12.4 Severability of Provision..................................................................... 20
12.5 Amendments in Writing, Integration............................................................ 20
12.6 Counterparts.................................................................................. 20
12.7 Survival...................................................................................... 20
12.8 Confidentiality............................................................................... 21
12.9 Attorneys' Fees, Costs and Expenses........................................................... 21
13. DEFINITIONS............................................................................................ 21
13.1 Definitions................................................................................... 21
THIS LOAN AND SECURITY AGREEMENT dated January 21, 2003, between
SILICON VALLEY BANK ("BANK"), whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and Stratex Networks, Inc., a Delaware corporation
("BORROWER"), whose address is ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. The parties agree as follows:
1. ACCOUNTING AND OTHER TERMS
Accounting terms not defined in this Agreement will be construed
following GAAP. Calculations and determinations must be made following GAAP. The
term "financial statements" includes the notes and schedules. The terms
"including" and "includes" always mean "including (or includes) without
limitation," in this or any Loan Document.
2. LOAN AND TERMS OF PAYMENT
2.1 PROMISE TO PAY.
Borrower promises to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.
2.1.1 REVOLVING ADVANCES.
(a) Bank will make Advances not exceeding the
Committed Revolving Line minus the sum of (i) all amounts for services utilized
under the Cash Management Services Sublimit (as defined in SECTION 2.1.4), and
(ii) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit).
(b) To obtain an Advance, Borrower must follow
the procedures set forth in SECTION 3.3(a).
(c) The Bank's obligation to make Credit
Extensions terminates on the Revolving Maturity Date, when all Advances are
immediately payable.
(d) Bank's obligation to make Credit Extensions
will terminate if an Event of Default (as herein defined) has occurred or there
exists any event, condition, or act which with notice or lapse of time, or both,
would constitute an Event of Default.
2.1.2 LETTERS OF CREDIT SUBLIMIT.
Bank will issue or have issued Letters of Credit for
Borrower's account not exceeding the Committed Revolving Line minus the sum of
(a) the outstanding principal balance of the Advances, and (b) the Cash
Management Services Sublimit. Each Letter of Credit will have an expiry date of
no later than eighteen (18) months after the Revolving Maturity Date, and
Borrower's reimbursement obligation will be fully secured by cash on terms
acceptable to Bank at any time after the Revolving Maturity Date if the term of
this Agreement is not extended by Bank. Borrower agrees to execute any further
documentation in connection with the Letters of Credit as Bank may reasonably
request.
1.
2.1.3 FX FORWARD CONTRACTS.
Borrower may enter into foreign exchange contracts with the
Bank under which Borrower commits to purchase from or sell to Bank a set amount
of foreign currency on a specified date (the "SETTLEMENT DATE"). Foreign
exchange contracts with a Settlement Date of two (2) or more business days (as
applicable in the country of the contract foreign currency) after the contract
date (each, a "FX Forward Contract") are subject to a reserve of ten percent
(10%) of each outstanding FX Forward Contract in a maximum aggregate amount
equal to $2,000,000 (the "FX Reserve"). The aggregate amount of FX Forward
Contracts at any one time may not exceed ten (10) times the amount of the FX
Reserve.
2.1.4 CASH MANAGEMENT SERVICES SUBLIMIT.
Borrower may use amounts not to exceed the Committed Revolving
Line minus the sum of (a) the face amount of all outstanding Letters of Credit
(including drawn but unreimbursed Letters of Credit), and (b) the outstanding
principal balance of the Advances (without duplication for any drawn but
unreimbursed Letters of Credit) for Bank's cash management services, which may
include merchant services, direct deposit of payroll, business credit card, and
check cashing services identified in various cash management services agreements
related to such services (collectively, the "CASH MANAGEMENT SERVICES"). The
aggregate amount utilized for Cash Management Services (the "CASH MANAGEMENT
SERVICES SUBLIMIT") will at all times reduce the amounts available to be
borrowed under the Committed Revolving Line or otherwise available for Letters
of Credit under the Committed Revolving Line. Any amounts Bank pays on behalf of
Borrower or any amounts that are not paid by Borrower for any Cash Management
Services will be treated as Advances under the Committed Revolving Line and will
accrue interest at the rate for Advances.
2.2 OVERADVANCES.
If Borrower's aggregated Obligations under Sections 2.1.1, 2.1.2, and
2.1.3 exceed the Committed Revolving Line, Borrower must immediately pay Bank
the excess.
2.3 GENERAL PROVISIONS RELATING TO THE ADVANCES.
Each Advance shall, at Borrower's option in accordance with the terms
of this Agreement, be either in the form of a Prime Rate Advance or a LIBOR
Advance; provided that in no event shall Borrower maintain at any time LIBOR
Advances having more than two (2) different Interest Periods. Borrower shall pay
interest accrued on the Advances at the rates and in the manner set forth in
SECTION 2.5(a). Amounts borrowed by Borrower under the Committed Revolving Line
may be repaid and, prior to the Revolving Maturity Date, and subject to the
applicable terms and conditions precedent in Sections 3.1, 3.2, and 3.3,
reborrowed.
2.4 PERMITTED USES OF ADVANCE PROCEEDS.
The Advances shall be used solely for working capital and other general
business requirements of Borrower.
2.
2.5 INTEREST RATE, PAYMENTS.
(a) INTEREST RATE. Each Advance shall bear
interest on the outstanding principal amount thereof from the date when made,
continued or converted until paid in full at a rate per annum equal to the Prime
Rate or Adjusted LIBOR, as the case may be. After an Event of Default occurs and
so long as such Event of Default continues, including after an acceleration of
the Obligations pursuant to SECTION 9.1(a) (whether before or after entry of
judgment to the extent permitted by law), Obligations shall accrue interest at
five (5) percent above the rate effective immediately before the Event of
Default; provided, however, that on and after the expiration of any Interest
Period applicable to any LIBOR Advance outstanding on the date of occurrence of
such Event of Default or acceleration, the Effective Amount of such LIBOR
Advance shall, during the continuance of such Event of Default or after
acceleration, bear interest at a rate per annum equal to the Prime Rate plus
five (5) percent. Payment or acceptance of the increased interest provided in
this SECTION 2.5(a) is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of Bank.
(b) PAYMENTS. Pursuant to the terms of SECTION
3.7, interest on each Advance shall be paid in arrears on each Interest Payment
Date. Interest shall also be paid on the date of any prepayment of any Advance
pursuant to this Agreement for the portion of any Advance so prepaid and upon
payment (including prepayment) in full thereof. All accrued but unpaid interest
on the Advances shall be due and payable on the Revolving Maturity Date.
(c) LIMITATIONS ON INTEREST RATES.
Notwithstanding any provision in this Agreement or any of the other Loan
Documents, the total liability for payments in the nature of interest shall not
exceed the applicable limits imposed by any applicable federal or state interest
rate laws. If any payments in the nature of interest, additional interest and
other charges made hereunder or under any of the Loan Documents are held to be
in excess of the applicable limits imposed by any applicable federal or state
law, the amount held to be in excess shall be considered payment of principal
under the Advances and the indebtedness evidenced thereby shall be reduced by
such amount in the inverse order of maturity so that the total liability for
payments in the nature of interest, additional interest and other charges shall
not exceed the applicable limits imposed by any applicable federal or state
interest rate laws.
(d) GENERAL PROVISIONS. Bank may debit any of
Borrower's deposit accounts including Account Number 3300389009 (the "DESIGNATED
DEPOSIT ACCOUNT") for principal and interest payments owing or any amounts
Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower's
accounts. These debits are not a set-off. Payments received after 12:00 p.m.
(Pacific time) are considered received at the opening of business on the next
Business Day. When a payment is due on a day that is not a Business Day, the
payment is due the next Business Day and additional fees or interest accrue.
3.
2.6 FEES.
Borrower will pay:
(a) SET-UP FEE. On the Closing Date, a fully
earned, non-refundable set-up fee equal to .45% of the Committed Revolving Line
(the "SET-UP FEE").
(b) LETTER OF CREDIT FEE. Upon the issuance of a
Letter of Credit, a fully earned, non-refundable Letter of Credit fee equal to
..75% per annum of the face amount of the issued Letter of Credit.
(c) BANK EXPENSES. All Bank Expenses (including
reasonable attorneys' fees and reasonable expenses) incurred through and after
the date of this Agreement when due.
3. CONDITIONS OF ADVANCES
3.1 CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.
Bank's obligation to make the initial Credit Extension is subject to
the condition precedent that the following have been satisfied, all in form and
substance satisfactory to Bank:
(a) Borrower shall have executed and delivered
the Loan Documents;
(b) Borrower shall have delivered an executed
one or more Control Agreements by and among Borrower, Bank, and securities
intermediary(y)(ies) as is necessary for Bank to obtain control (within the
meaning of the applicable provision of the Code) over any Collateral Accounts
(as defined in SECTION 6.8 hereof) that hold, in the aggregate, assets valued in
an amount equal to at least 1.25 times the Committed Revolving Line;
(c) Borrower shall have delivered an executed
Control Agreement by and among Borrower, Bank, and SVB Securities;
(d) Borrower shall have delivered the Operating
Documents and a good standing certificate of Borrower from the State of
Delaware;
(e) Borrower shall have delivered the Corporate
Borrowing Resolutions;
(f) Borrower shall have paid all costs and fees,
including the Set-up Fee and Bank Expenses, then due; and
(g) Borrower shall have delivered to Bank, in
addition to the documents required in SECTION 3.2, all documents, certificates,
and other assurances that Bank or its counsel may reasonably request.
4.
3.2 CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.
Bank's obligation to make each Credit Extension, including the initial
Credit Extension, is subject to the condition precedent that the following shall
have been satisfied, all in form and substance satisfactory to Bank:
(a) timely receipt of a Notice of Borrowing;
(b) unless otherwise waived by Bank, the Control
Agreements shall be in full force and effect; and
(c) the representations and warranties in
SECTION 5 must be true on the date of the Notice of Borrowing and on the Funding
Date or the date any other Credit Extension is made, and no Event of Default may
have occurred and be continuing or result from the Credit Extension. Each Credit
Extension is Borrower's representation and warranty on that date that the
representations and warranties of SECTION 5 remain true.
3.3 PROCEDURE FOR THE BORROWING OF ADVANCES.
(a) Subject to the prior satisfaction of all
other applicable conditions to the making of an Advance set forth in this
Agreement, including SECTION 3.1 and SECTION 3.2 for Advances made on the
Closing Date and SECTION 3.2 for all Advances, each Advance shall be made upon
Borrower's irrevocable written notice delivered to Bank in the form of a Notice
of Borrowing, each executed by a Responsible Officer of Borrower or his or her
designee or without instructions if the Advances are necessary to meet
Obligations which have become due. Bank may rely on any telephone notice given
by a person whom Bank believes is a Responsible Officer or designee. Borrower
will indemnify Bank for any loss Bank suffers due to such reliance. Such Notice
of Borrowing must be received by Bank prior to 11:00 a.m. (Pacific time), (i) at
least three (3) Business Days prior to the requested Funding Date, in the case
of LIBOR Advances, and (ii) at least one (1) Business Day prior to the requested
Funding Date, in the case of Prime Rate Advances, specifying:
(i) the amount of the Advance, which,
if a LIBOR Advance is requested, shall be in an aggregate minimum principal
amount of $1,000,000 or in any integral multiple of $1,000,000 in excess
thereof;
(ii) the requested Funding Date, which
shall be a Business Day;
(iii) whether the Advance is to be
comprised of LIBOR Advances or Prime Rate Advances; and
(iv) the duration of the Interest Period
applicable to any such LIBOR Advances included in such notice; provided that if
the Notice of Borrowing shall fail to specify the duration of the Interest
Period for any Advance comprised of LIBOR Advances, such Interest Period shall
be one (1) month.
(b) The proceeds of all such Advances will then
be made available to Borrower on the Funding Date by Bank by transfer to the
Designated Deposit Account and,
5.
subsequently, by wire transfer to such other account as Borrower may instruct in
the Notice of Borrowing. No Advances shall be deemed made to Borrower, and no
interest shall accrue on any such Advance, until the related funds have been
deposited in the Designated Deposit Account.
3.4 CONVERSION AND CONTINUATION ELECTIONS.
(a) So long as (1) no Event of Default or event
which with notice, passage of time, or both would constitute an Event of Default
exists; (2) no party hereto shall have sent any notice of termination of this
Agreement; and (3) Borrower shall have complied with such customary procedures
as Bank has established from time to time for Borrower's requests for LIBOR
Advances, Borrower may, upon irrevocable written notice to Bank:
(i) elect to convert on any Business
Day, Prime Rate Advances in an amount equal to $1,000,000 or any integral
multiple of $1,000,000 in excess thereof into LIBOR Advances;
(ii) elect to continue on any Interest
Payment Date any LIBOR Advances maturing on such Interest Payment Date (or any
part thereof in an amount equal to $1,000,000 or any integral multiple of
$1,000,000 in excess thereof); provided, that if the aggregate amount of LIBOR
Advances shall have been reduced, by payment, prepayment, or conversion of part
thereof, to be less than $1,000,000, such LIBOR Advances shall automatically
convert into Prime Rate Advances, and on and after such date the right of
Borrower to continue such Advances as, and convert such Advances into, LIBOR
Advances shall terminate; or
(iii) elect to convert on any Interest
Payment Date any LIBOR Advances maturing on such Interest Payment Date (or any
part thereof in an amount equal to $1,000,000 or any integral multiple of
$1,000,000 in excess thereof) into Prime Rate Advances.
(b) Borrower shall deliver a Notice of
Conversion/Continuation in accordance with Section 10 to be received by Bank
prior to 11:00 a.m. (Pacific time) at least (i) three (3) Business Days in
advance of the Conversion Date or Continuation Date, if any Advances are to be
converted into or continued as LIBOR Advances; and (ii) one (1) Business Day in
advance of the Conversion Date, if any Advances are to be converted into Prime
Rate Advances, in each case specifying:
(i) the proposed Conversion Date or
Continuation Date;
(ii) the aggregate amount of the
Advances to be converted or continued which, if any Advances are to be converted
into or continued as LIBOR Advances, shall be in an aggregate minimum principal
amount of $1,000,000 or in any integral multiple of $1,000,000 in excess
thereof;
(iii) the nature of the proposed
conversion or continuation; and
(iv) the duration of the requested
Interest Period.
6.
(c) If upon the expiration of any Interest
Period applicable to any LIBOR Advances, Borrower shall have timely failed to
select a new Interest Period to be applicable to such LIBOR Advances, Borrower
shall be deemed to have elected to convert such LIBOR Advances into Prime Rate
Advances.
(d) Any LIBOR Advances shall, at Bank's option,
convert into Prime Rate Advances in the event that (i) an Event of Default, or
event which with notice, the passage of time, or both would constitute an Event
of Default, shall exist, (ii) the Agreement shall terminate, or (iii) the
aggregate principal amount of the Prime Rate Advances which have been previously
converted to LIBOR Advances, or the aggregate principal amount of existing LIBOR
Advances continued, as the case may be, at the beginning of an Interest Period
shall at any time during such Interest Period exceed the Committed Revolving
Line. Borrower agrees to pay Bank, upon demand by Bank (or Bank may, at its
option, charge the Designated Deposit Account or any other account Borrower
maintains with Bank) any amounts required to compensate Bank for any loss
(including loss of anticipated profits), cost, or expense incurred by Bank, as a
result of the conversion of LIBOR Advances to Prime Rate Advances pursuant to
any of the foregoing.
(e) Notwithstanding anything to the contrary
contained herein, Bank shall not be required to purchase United States Dollar
deposits in the London interbank market or other applicable LIBOR market to fund
any LIBOR Advances, but the provisions hereof shall be deemed to apply as if
Bank had purchased such deposits to fund the LIBOR Advances.
3.5 SPECIAL PROVISIONS GOVERNING LIBOR ADVANCES.
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to LIBOR Advances as to the
matters covered:
(a) DETERMINATION OF APPLICABLE INTEREST RATE.
As soon as practicable on each Interest Rate Determination Date, Bank shall
determine (which determination shall, absent manifest error in calculation, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the LIBOR Advances for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to Borrower.
(b) INABILITY TO DETERMINE APPLICABLE INTEREST
RATE. In the event that Bank shall have determined (which determination shall be
final and conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any LIBOR Advance, that by reason of
circumstances affecting the London interbank market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Advance on the
basis provided for in the definition of LIBOR, Bank shall on such date give
notice (by telefacsimile or by telephone confirmed in writing) to Borrower of
such determination, whereupon (i) no Advances may be made as, or converted to,
LIBOR Advances until such time as Bank notifies Borrower that the circumstances
giving rise to such notice no longer exist, and (ii) any Notice of Borrowing or
Notice of Conversion/Continuation given by Borrower with respect to Advances in
respect of which such determination was made shall be deemed to be rescinded by
Borrower.
7.
(c) COMPENSATION FOR BREAKAGE OR
NON-COMMENCEMENT OF INTEREST PERIODS. Borrower shall compensate Bank, upon
written request by Bank (which request shall set forth the manner and method of
computing such compensation), for all reasonable losses, expenses and
liabilities, if any (including any interest paid by Bank to lenders of funds
borrowed by it to make or carry its LIBOR Advances and any loss, expense or
liability incurred by Bank in connection with the liquidation or re-employment
of such funds) such that Bank may incur: (i) if for any reason (other than a
default by Bank or due to any failure of Bank to fund LIBOR Advances due to
illegality or impracticability under Section 3.6(d)) a borrowing or a conversion
to or continuation of any LIBOR Advance does not occur on a date specified in a
Notice of Borrowing or a Notice of Conversion/Continuation, as the case may be,
or (ii) if any principal payment or any conversion of any of its LIBOR Advances
occurs on a date prior to the last day of an Interest Period applicable to that
Advance.
(d) ASSUMPTIONS CONCERNING FUNDING OF LIBOR
ADVANCES. Calculation of all amounts payable to Bank under this SECTION 3.5 and
under SECTION 3.3 shall be made as though Bank had actually funded each of its
relevant LIBOR Advances through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to the definition of LIBOR Rate in an
amount equal to the amount of such LIBOR Advance and having a maturity
comparable to the relevant Interest Period; provided, however, that Bank may
fund each of its LIBOR Advances in any manner it sees fit and the foregoing
assumptions shall be utilized only for the purposes of calculating amounts
payable under this SECTION 3.5 and under SECTION 3.3.
(e) LIBOR ADVANCES AFTER DEFAULT. After the
occurrence of and during the continuation of an Event of Default, (i) Borrower
may not elect to have an Advance be made or continued as, or converted to, a
LIBOR Advance after the expiration of any Interest Period then in effect for
such Advance and (ii) subject to the provisions of SECTION 3.5(c), any Notice of
Conversion/Continuation given by Borrower with respect to a requested
conversion/continuation that has not yet occurred shall be deemed to be
rescinded by Borrower and be deemed a request to convert or continue Advances
referred to therein as Prime Rate Advances.
3.6 ADDITIONAL REQUIREMENTS/PROVISIONS REGARDING LIBOR ADVANCES.
(a) If for any reason (including voluntary or
mandatory prepayment or acceleration), Bank receives all or part of the
principal amount of a LIBOR Advance prior to the last day of the Interest Period
for such Advance, Borrower shall immediately notify Borrower's account officer
at Bank and, on demand by Bank, pay Bank the amount (if any) by which (i) the
additional interest which would have been payable on the amount so received had
it not been received until the last day of such Interest Period exceeds (ii) the
interest which would have been recoverable by Bank by placing the amount so
received on deposit in the certificate of deposit markets, the offshore currency
markets, or United States Treasury investment products, as the case may be, for
a period starting on the date on which it was so received and ending on the last
day of such Interest Period at the interest rate determined by Bank in its
reasonable discretion. Bank's determination as to such amount shall be
conclusive absent manifest error.
(b) Borrower shall pay Bank, upon demand by
Bank, from time to time such amounts as Bank may determine to be necessary to
compensate it for any costs
8.
incurred by Bank that Bank determines are attributable to its making or
maintaining of any amount receivable by Bank hereunder in respect of any
Advances relating thereto (such increases in costs and reductions in amounts
receivable being herein called "ADDITIONAL COSTS"), in each case resulting from
any Regulatory Change which:
(i) changes the basis of taxation of
any amounts payable to Bank under this Agreement in respect of any Advances
(other than changes which affect taxes measured by or imposed on the overall net
income of Bank by the jurisdiction in which Bank has its principal office);
(ii) imposes or modifies any reserve,
special deposit or similar requirements relating to any extensions of credit or
other assets of, or any deposits with, or other liabilities of Bank (including
any Advances or any deposits referred to in the definition of LIBOR); or
(iii) imposes any other condition
affecting this Agreement (or any of such extensions of credit or liabilities).
Bank will notify Borrower of any event occurring after the Closing Date
which will entitle Bank to compensation pursuant to this SECTION 3.6 as promptly
as practicable after it obtains knowledge thereof and determines to request such
compensation. Bank will furnish Borrower with a statement setting forth the
basis and amount of each request by Bank for compensation under this SECTION
3.6. Determinations and allocations by Bank for purposes of this SECTION 3.6 of
the effect of any Regulatory Change on its costs of maintaining its obligations
to make Advances, of making or maintaining Advances, or on amounts receivable by
it in respect of Advances, and of the additional amounts required to compensate
Bank in respect of any Additional Costs, shall be conclusive absent manifest
error.
(c) If Bank shall determine that the adoption or
implementation of any applicable law, rule, regulation, or treaty regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by Bank (or its applicable lending office) with any respect or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank, or comparable agency, has or would have the
effect of reducing the rate of return on capital of Bank or any person or entity
controlling Bank (a "PARENT") as a consequence of its obligations hereunder to a
level below that which Bank (or its Parent) could have achieved but for such
adoption, change, or compliance (taking into consideration policies with respect
to capital adequacy) by an amount deemed by Bank to be material, then from time
to time, within fifteen (15) days after demand by Bank, Borrower shall pay to
Bank such additional amount or amounts as will compensate Bank for such
reduction. A statement of Bank claiming compensation under this Section 3.6(c)
and setting forth the additional amount or amounts to be paid to it hereunder
shall be conclusive absent manifest error.
(d) If, at any time, Bank, in its sole and
absolute discretion, determines that (i) the amount of LIBOR Advances for
periods equal to the corresponding Interest Periods are not available to Bank in
the offshore currency interbank markets, or (ii) LIBOR does not
9.
accurately reflect the cost to Bank of lending the LIBOR Advances, then Bank
shall promptly give notice thereof to Borrower. Upon the giving of such notice,
Bank's obligation to make the LIBOR Advances shall terminate; provided, however,
Advances shall not terminate if Bank and Borrower agree in writing to a
different interest rate applicable to LIBOR Advances.
(e) If it shall become unlawful for Bank to
continue to fund or maintain any LIBOR Advances, or to perform its obligations
hereunder, upon demand by Bank, Borrower shall prepay the Advances in full with
accrued interest thereon and all other amounts payable by Borrower hereunder
(including, without limitation, any amount payable in connection with such
prepayment pursuant to SECTION 3.6(a)). Notwithstanding the foregoing, to the
extent a determination by Bank as described above relates to a LIBOR Advance
then being requested by Borrower pursuant to a Notice of Borrowing or a Notice
of Conversion/Continuation, Borrower shall have the option, subject to the
provisions of SECTION 3.5(c), to (i) rescind such Notice of Borrowing or Notice
of Conversion/Continuation by giving notice (by telefacsimile or by telephone
confirmed in writing) to Bank of such rescission on the date on which Bank gives
notice of its determination as described above, or (ii) modify such Notice of
Borrowing or Notice of Conversion/Continuation to obtain a Prime Rate Advance or
to have outstanding Advances converted into or continued as Prime Rate Advances
by giving notice (by telefacsimile or by telephone confirmed in writing) to Bank
of such modification on the date on which Bank gives notice of its determination
as described above.
3.7 CALCULATION OF INTEREST AND FEES.
Interest on the Advances and all fees payable hereunder shall be
computed on the basis of a 365-day year and the actual number of days elapsed in
the period during which such interest accrues. In computing interest on any
Advance, the date of the making of such Advance shall be included and the date
of payment shall be excluded; provided, however, that if any Advance is repaid
on the same day on which it is made, such day shall be included in computing
interest on such Advance.
(a) PRIME RATE ADVANCES. Each change in the
interest rate of the Prime Rate Advances based on changes in the Prime Rate
shall be effective on the effective date of such change and to the extent of
such change. Bank shall give Borrower prompt notice of any such change in the
Prime Rate; provided, however, that any failure by Bank to provide Borrower with
notice hereunder shall not affect Bank's right to make changes in the interest
rate of the Prime Rate Advances based on changes in the Prime Rate. Interest on
Prime Rate Advances is payable monthly by debit to the Designated Deposit
Account on each Interest Payment Date. Bank shall provide Borrower a statement
of interest four (4) days prior to each Interest Payment Date applicable to
Prime Rate Advances.
(b) LIBOR ADVANCES. The interest rate applicable
to each LIBOR Advance shall be determined in accordance with SECTION 3.5(a)
hereunder. Subject to SECTIONS 3.5 and 3.6, such rate shall apply during the
entire Interest Period applicable to such LIBOR Advance, and interest calculated
thereon shall be payable on the Interest Payment Date applicable to such LIBOR
Advance.
10.
4. CREATION OF SECURITY INTEREST
4.1 GRANT OF SECURITY INTEREST.
Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. If this Agreement is terminated, Bank's lien and security interest
in the Collateral will continue until Borrower fully satisfies its Obligations.
4.2 AUTHORIZATION TO FILE FINANCING STATEMENTS.
Borrower authorizes Bank to file financing statements, without notice
to Borrower, with all appropriate jurisdictions, as Bank deems necessary, in
order to protect or perfect Bank's security interest in the Collateral.
5. REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants as follows:
5.1 DUE ORGANIZATION AND AUTHORIZATION.
Borrower and each Subsidiary is duly existing and in good standing in
its state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change.
The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.
5.2 COLLATERAL.
Borrower has good title to the Collateral, free of Liens except
Permitted Liens. All Inventory is in all material respects of good and
marketable quality, free from material defects.
5.3 LITIGATION.
Except as shown in the Disclosure Schedule, there are no actions or
proceedings pending or, to the knowledge of Borrower's Responsible Officers,
threatened by or against Borrower or any Subsidiary in which an adverse decision
could reasonably be expected to cause a Material Adverse Change.
11.
5.4 NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.
All consolidated financial statements for Borrower delivered to Bank
fairly present in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations. There has not been
any material deterioration in Borrower's consolidated financial condition since
the date of the most recent financial statements submitted to Bank.
5.5 SOLVENCY.
The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.
5.6 REGULATORY COMPLIANCE.
Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has generally timely filed all
(a) required tax returns and paid, or made adequate provision to pay, all
material taxes, except those being contested in good faith with adequate
reserves under GAAP and where failure to do so could cause an Event of Default,
and (b) filings required by the Securities and Exchange Commission. Borrower and
each Subsidiary has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all government
authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change.
5.7 SUBSIDIARIES; INVESTMENTS.
Borrower does not own any stock, partnership interest or other equity
securities except as disclosed in the Disclosure Schedule.
5.8 FULL DISCLOSURE.
No written representation, warranty or other statement of Borrower in
any certificate or written statement given to Bank (taken together with all such
written certificates and written statements to Bank) contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements contained in the certificates or statements not misleading. Bank
recognizes that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.
12.
6. AFFIRMATIVE COVENANTS
Borrower will do all of the following for so long as Bank has an
obligation to lend or there are outstanding Obligations:
6.1 GOVERNMENT COMPLIANCE.
Borrower will maintain its and all Subsidiaries' legal existence and
good standing in their jurisdictions of formation and maintain qualification in
each jurisdiction in which the failure to so qualify could reasonably be
expected to cause a material adverse effect on Borrower's business or
operations. Borrower will comply, and have each Subsidiary comply, with all
laws, ordinances and regulations to which it is subject, for which noncompliance
could have a material adverse effect on Borrower's business or operations or
would reasonably be expected to cause a Material Adverse Change.
6.2 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.
(a) Borrower will deliver to Bank: (i) within
five (5) Business Days of filing, copies of all reports on Forms 10-K and 10-Q
filed with the Securities and Exchange Commission; (ii) as soon as available,
but no later than thirty (30) days after the end of each month, a cash holding
report in form and substance satisfactory to Bank; (iii) as soon as available,
but no later than forty-five (45) days after the end of each fiscal year, a one
(1) year (prepared on a quarterly basis) financial projections of Borrower on a
Consolidated basis, including a pro forma balance sheet and statements of income
and cash flows and showing projected operating revenues, expenses and debt
service of Borrower on a Consolidated basis; (iv) a prompt report of any
material infringements to its Intellectual Property (collectively, "IP
INFRINGEMENTS"); (v) a prompt report of any legal actions pending or threatened
against Borrower or any Subsidiary that could result in damages or costs to
Borrower or any Subsidiary of $2,000,000 or more, or in which an adverse
decision could reasonably be expected to cause a Material Adverse Change
(collectively, "MATERIAL LITIGATION"); and (vi) other financial information Bank
reasonably requests.
(b) Borrower will deliver to Bank with its Forms
10-K and 10-Q a Compliance Certificate signed by a Responsible Officer in the
form of EXHIBIT D.
6.3 INVENTORY.
Borrower will keep all Inventory in good and marketable condition, and
free from material defects. Returns and allowances between Borrower and its
account debtors will follow Borrower's customary practices as they exist at
execution of this Agreement. Borrower must promptly notify Bank of all returns,
recoveries, disputes and claims, that involve more than $2,000,000.
6.4 TAXES.
Borrower will make, and cause each Subsidiary to make, timely payment
of all material federal, state, and local taxes or assessments (other than taxes
and assessments which Borrower
13.
is contesting in good faith, with adequate reserves maintained in accordance
with GAAP) and will deliver to Bank, on demand, appropriate certificates
attesting to the payment.
6.5 INSURANCE.
Borrower will keep its business and the Collateral insured for risks
and in amounts standard for Borrower's industry, and as Bank may reasonably
request. Insurance policies will be in a form, with companies, and in amounts
that are satisfactory to Bank in Bank's reasonable discretion. At Bank's
request, Borrower will deliver certificates of insurance showing the Bank as an
additional insured, as applicable, and that the Bank will be provided at least
twenty (20) days notice of cancellation of any policy. If an Event of Default
has occurred and is continuing, proceeds payable under any policy will, at
Bank's option, be payable to Bank on account of the Obligations.
6.6 DEPOSITORY ACCOUNTS.
Borrower will maintain a depository account or accounts with Bank, one
of which shall be the Designated Deposit Account for purposes of debiting
amounts owed to Bank hereunder.
6.7 FINANCIAL COVENANTS.
Borrower will maintain:
(a) TANGIBLE NET WORTH. As measured at the last
day of each fiscal quarter of Borrower, Tangible Net Worth of at least
$105,000,000.
(b) LIQUIDITY COVERAGE. As measured at the last
day of each calendar month, a ratio of (1) unrestricted cash and Cash
Equivalents plus (i) short-term, marketable securities of Borrower, minus (ii)
outstanding Cash Management Services, and minus (iii) the FX Reserve divided by
(2) the aggregate amount of the Obligations of not less than 1.50 to 1.00.
6.8 FURTHER ASSURANCES.
Borrower will execute any further instruments and take further action
as Bank reasonably requests to effect the purposes of this Agreement, including
executing and delivering and causing any applicable depositary bank, securities
intermediary or commodity intermediary at or with which any Deposit Account,
Securities Account, or Commodity Account (collectively, the "COLLATERAL
ACCOUNTS") is maintained to execute and deliver a Control Agreement with respect
to such Collateral Accounts as is necessary for Bank to obtain control (within
the meaning of the applicable provision of the Code) over such Collateral
Accounts that hold, in the aggregate, assets valued in an amount equal to at
least 1.25 times the Committed Revolving Line. In addition, Borrower will take
all commercially reasonable actions necessary to ensure that it is certified by
the Secretary of State of the State of California as qualified to transact
business in California under the name "Stratex Networks, Inc." within thirty
(30) days from the date hereof.
14.
7. NEGATIVE COVENANTS
Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld, for so long as Bank has an
obligation to lend or there are any outstanding Obligations:
7.1 DISPOSITIONS.
Convey, sell, lease, transfer or otherwise dispose of (collectively
"TRANSFER"), or permit any of its Subsidiaries to Transfer, all or any material
part of its business or property, except for Transfers of (a) assets in the
ordinary course of business; (b) licenses and similar arrangements for the use
of the property of Borrower or its Subsidiaries in the ordinary course of
business; or (c) worn-out or obsolete assets.
7.2 CHANGES IN CONTROL, BUSINESS.
Permit or suffer any Change in Control or engage in any business other
than the businesses currently engaged in by Borrower or reasonably related
thereto.
7.3 MERGERS OR ACQUISITIONS.
Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person (collectively, "MERGERS OR ACQUISITIONS"), except
that Borrower may enter into Mergers or Acquisitions so long as no Event of
Default has occurred and is continuing or would result from any such Mergers or
Acquisitions. A Subsidiary may merge or consolidate into another Subsidiary or
into Borrower.
7.4 INDEBTEDNESS.
Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.
7.5 ENCUMBRANCE.
Create, incur, or allow any Lien on any of the Collateral, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for (a) Permitted Liens, or (b)
Transfers of Accounts in the ordinary course of Borrower's business in exchange
for cash or other unencumbered Property to an entity or entities regularly
engaged in the purchase of such Accounts, or permit any Collateral not to be
subject to the first priority security interest granted here, subject to
Permitted Liens.
7.6 SUBORDINATED DEBT.
Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.
15.
7.7 COMPLIANCE.
Become an "investment company" or a company controlled by an
"investment company," under the Investment Company Act of 1940 or undertake as
one of its important activities extending credit to purchase or carry margin
stock, or use the proceeds of any Credit Extension for that purpose; fail to
meet the minimum funding requirements of ERISA, permit a Reportable Event or
Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the
Federal Fair Labor Standards Act or violate any other law or regulation, if the
violation could reasonably be expected to have a material adverse effect on
Borrower's business or operations or would reasonably be expected to cause a
Material Adverse Change, or permit any of its Subsidiaries to do so.
8. EVENTS OF DEFAULT
Any one of the following is an Event of Default:
8.1 PAYMENT DEFAULT.
If Borrower fails to pay (a) the principal or interest portion of any
Advance within three (3) Business Days after their due date, or (b) any other
Obligations within three (3) Business Days after being notified by Bank that
such Obligations are due and payable. During any cure period, the failure to
cure the payment default is not an Event of Default (but no Credit Extension
will be made during the cure period);
8.2 COVENANT DEFAULT.
If Borrower does not perform any obligation in SECTION 6 (other than
any obligation under SECTIONS 6.2 or 6.5) or violates any covenant in SECTION 7;
or
If Borrower does not perform or observe any other material term,
condition or covenant in this Agreement, any Loan Documents, or in any agreement
between Borrower and Bank and as to any default under a term, condition or
covenant that can be cured, has not cured the default within ten (10) days after
it occurs, or if the default cannot be cured within ten (10) days or cannot be
cured after Borrower's attempts to cure such default within the ten (10) day
period, and the default may be cured within a reasonable time, then Borrower has
an additional period (of not more than thirty (30) days) to attempt to cure the
default. During the additional cure period, the failure to cure the default is
not an Event of Default (but no Credit Extensions will be made during any cure
period);
8.3 MATERIAL ADVERSE CHANGE.
If a Material Adverse Change occurs;
8.4 ATTACHMENT.
If any material portion of Borrower's assets is attached, seized,
levied on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in ten (10) days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a
16.
material part of its business or if a judgment or other claim becomes a Lien on
a material portion of Borrower's assets, or if a notice of lien, levy, or
assessment is filed against any material portion of Borrower's assets by any
government agency and is not paid within ten (10) days after Borrower receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by Borrower (but no Credit Extensions will be made while (a) the stay is
in effect, or (b) Borrower contests the action, whichever is applicable);
8.5 INSOLVENCY.
If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and is not
dismissed or stayed within thirty (30) days (but no Credit Extensions will be
made before any Insolvency Proceeding is dismissed);
8.6 OTHER AGREEMENTS.
If there is a default in any agreement between Borrower and a third
party that gives the third party the right to accelerate any Indebtedness
exceeding $2,000,000 or that could cause a Material Adverse Change;
8.7 JUDGMENTS.
If a money judgment(s) in the aggregate of at least $2,000,000 is
rendered against Borrower, is not covered by insurance, and is unsatisfied and
unstayed for ten (10) days (but no Credit Extensions will be made before the
judgment is stayed or satisfied); or
8.8 MISREPRESENTATIONS.
If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement at the time made now or later in any
warranty or representation in this Agreement or in any writing delivered to Bank
to induce Bank to enter this Agreement or any Loan Document.
9. BANK'S RIGHTS AND REMEDIES
9.1 RIGHTS AND REMEDIES.
When an Event of Default occurs and continues Bank may, without notice
or demand, do any or all of the following:
(a) Declare all Obligations immediately due and
payable (but if an Event of Default described in SECTION 8.5 occurs, all
Obligations are immediately due and payable without any action by Bank);
(b) Stop advancing money or extending credit for
Borrower's benefit under this Agreement or under any other agreement between
Borrower and Bank;
17.
(c) Make any payments and do any acts it
considers necessary or reasonable to protect its security interest in the
Collateral. Borrower will assemble the Collateral if Bank requires and make it
available as Bank designates. Bank may enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay,
purchase, contest, or compromise any Lien which appears to be prior or superior
to its security interest and pay all expenses incurred. Borrower grants Bank a
license to enter and occupy any of its premises, without charge, to exercise any
of Bank's rights or remedies;
(d) Request that Borrower provide cash in an
amount equal to the amount of the outstanding Letters of Credit to serve as
collateral for such Letters of Credit;
(e) Apply to the Obligations any (i) balances
and deposits of Borrower it holds, or (ii) any amount held by Bank owing to or
for the credit or the account of Borrower;
(f) Terminate any FX Forward Contracts;
(g) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral.
Bank is granted a non-exclusive, royalty-free license or other right to use,
without charge, Borrower's labels, patents, copyrights, mask works, rights of
use of any name, trade secrets, trade names, trademarks, service marks, and
advertising matter, or any similar property as it pertains to the Collateral, in
completing production of, advertising for sale, and selling any Collateral and,
in connection with Bank's exercise of its rights under this Section, Borrower's
rights under all licenses and all franchise agreements inure to Bank's benefit;
and
(h) Dispose of the Collateral according to the
Code.
9.2 POWER OF ATTORNEY.
Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (a) endorse Borrower's name
on any checks or other forms of payment or security; (b) sign Borrower's name on
any invoice or ▇▇▇▇ of lading for any Account or drafts against account debtors,
(c) make, settle, and adjust all claims under Borrower's insurance policies; (d)
settle and adjust disputes and claims about the Accounts directly with account
debtors, for amounts and on terms Bank determines reasonable; and (e) transfer
the Collateral into the name of Bank or a third party as the Code permits. Bank
may exercise the power of attorney to sign Borrower's name on any documents
necessary to perfect or continue the perfection of any security interest in the
Collateral regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.
9.3 BANK EXPENSES.
If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in SECTION 6.5 and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then
18.
applicable Prime Rate. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.
9.4 BANK'S LIABILITY FOR COLLATERAL.
If Bank complies with reasonable banking practices and the Code, it is
not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to
the Collateral; (c) any diminution in the value of the Collateral; or (d) any
act or default of any carrier, warehouseman, bailee, or other person. Borrower
bears all risk of loss, damage or destruction of the Collateral.
9.5 REMEDIES CUMULATIVE.
Bank's rights and remedies under this Agreement, the Loan Documents,
and all other agreements are cumulative. Bank has all rights and remedies
provided under the Code, by law, or in equity. Bank's exercise of one right or
remedy is not an election, and Bank's waiver of any Event of Default is not a
continuing waiver. Bank's delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the
specific instance and purpose for which it was given.
9.6 DEMAND WAIVER.
Borrower waives demand, notice of default or dishonor, notice of
payment and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.
10. NOTICES
All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.
11. CHOICE OF LAW , VENUE AND JURY TRIAL WAIVER
California law governs the Loan Documents without regard to principles
of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction
of the State and Federal courts in Santa ▇▇▇▇▇ County, California.
BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.
19.
12. GENERAL PROVISIONS
12.1 SUCCESSORS AND ASSIGNS.
This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.
12.2 INDEMNIFICATION.
Borrower will indemnify, defend and hold harmless Bank and its
officers, employees, and agents against: (a) all obligations, demands, claims,
and liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys' fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.
12.3 TIME OF ESSENCE.
Time is of the essence for the performance of all obligations in this
Agreement.
12.4 SEVERABILITY OF PROVISION.
Each provision of this Agreement is severable from every other
provision in determining the enforceability of any provision.
12.5 AMENDMENTS IN WRITING, INTEGRATION.
All amendments to this Agreement must be in writing and signed by
Borrower and Bank. This Agreement represents the entire agreement about this
subject matter, and supersedes prior negotiations or agreements. All prior
agreements, understandings, representations, warranties, and negotiations
between the parties about the subject matter of this Agreement merge into this
Agreement and the Loan Documents.
12.6 COUNTERPARTS.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.
12.7 SURVIVAL.
All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in SECTION 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.
20.
12.8 CONFIDENTIALITY.
In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (a) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (b) to prospective transferees
or purchasers of any interest in the loans (provided, however, Bank shall use
commercially reasonable efforts in obtaining such prospective transferee or
purchasers agreement of the terms of this provision), (c) as required by law,
regulation, subpoena, or other order, (d) as required in connection with Bank's
examination or audit, and (e) as Bank considers appropriate exercising remedies
under this Agreement. Confidential information does not include information that
either: (x) is in the public domain or in Bank's possession when disclosed to
Bank, or becomes part of the public domain after disclosure to Bank, or (y) is
disclosed to Bank by a third party, if Bank does not know that the third party
is prohibited from disclosing the information.
12.9 ATTORNEYS' FEES, COSTS AND EXPENSES.
In any action or proceeding between Borrower and Bank arising out of
the Loan Documents, the prevailing party will be entitled to recover its
reasonable attorneys' fees and other reasonable costs and expenses incurred, in
addition to any other relief to which it may be entitled.
13. DEFINITIONS
13.1 DEFINITIONS.
In this Agreement:
"ACCOUNTS" is defined on EXHIBIT A hereto.
"ADJUSTED LIBOR" means, for each Interest Period in respect of LIBOR
Advances comprising part of the same Advances, an interest rate per annum
(rounded upward to the nearest 1/16th of one percent (0.0625%)) equal to the sum
of (a) LIBOR for such Interest Period divided by one (1) minus the Reserve
Requirement for such Interest Period plus (b) two percent (2%).
"ADVANCE" or "ADVANCES" is a loan advance (or advances) under the
Committed Revolving Line.
"AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.
"BANK EXPENSES" are all audit fees and expenses and reasonable costs
and expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).
21.
"BORROWER'S BOOKS" are all Borrower's books and records including
ledgers, records regarding Borrower's assets or liabilities, business operations
or financial condition and all computer programs or discs or any equipment
containing the information.
"BUSINESS DAY" is any day other than a Saturday, Sunday or other day on
which banking institutions in the State of California are authorized or required
by law or other governmental action to close, except that if any determination
of a "Business Day" shall relate to a LIBOR Advance, the term "Business Day"
shall also mean a day on which dealings are carried on in the London interbank
market, and if any determination of a "Business Day" shall relate to an FX
Forward Contract, the term "Business Day" shall mean a day on which dealings are
carried on in the country of settlement of the foreign (i.e., non-Dollar)
currency.
"CASH EQUIVALENTS" means highly liquid marketable securities held by
Borrower with a remaining maturity of three (3) months or less in accordance
with GAAP.
"CASH MANAGEMENT SERVICES" are defined in SECTION 2.1.4.
"CHANGE IN CONTROL" means any change, whether by a single transaction
or a series of transactions, in the Person or Persons who control sufficient
voting rights accorded to the owners of Borrower's stock (directly or
indirectly, whether by stock ownership, contract, or otherwise) to direct the
management of Borrower; provided, however, this provision shall not be violated
by any sale of the stock (and related voting rights) of Borrower by Borrower
through the New York Stock Exchange, the American Stock Exchange, NASDAQ or
other public securities markets in which stocks of companies are regularly
traded in the United States.
"CLOSING DATE" is the date of this Agreement.
"CODE" is the Uniform Commercial Code, as applicable.
"COLLATERAL" is the property described on EXHIBIT A hereto.
"COMMITTED REVOLVING LINE" is $22,500,000.
"COMMODITY ACCOUNT" has the meaning ascribed to it in the Code.
"CONSOLIDATED" refers, with respect to any Person, to the consolidation
of accounts of such Person and its Subsidiaries in accordance with GAAP.
"CONSOLIDATED TOTAL ASSETS" means, at any date of determination, the
total Consolidated assets of Borrower, except goodwill, trade names, copyrights,
trademarks, service marks, and other intangible items such as unamortized debt
discount and expenses and research and development expenses except pre-paid
expenses.
"CONSOLIDATED TOTAL LIABILITIES" is on any date of determination,
obligations that should, under GAAP, be classified as liabilities on Borrower's
Consolidated balance sheet, including all Indebtedness, but excluding all
Subordinated Debt.
22.
"CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (a) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (b) any obligations for undrawn letters of credit for the account of
that Person; and (c) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices, but "CONTINGENT
OBLIGATION" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.
"CONTINUATION DATE" means any date on which Borrower elects to continue
a LIBOR Advance into another Interest Period.
"CONTROL AGREEMENTS" means, collectively, the separate control
agreements entered into among Borrower, Bank and the depositary bank, securities
intermediary, or commodity intermediary at which Borrower maintains a deposit
account, securities account, or a commodity account, pursuant to which Bank
obtains control (within the meaning of the applicable provision of the Code)
over such deposit account, securities account, or commodity account.
"CONVERSION DATE" means any date on which Borrower elects to convert a
Prime Rate Advance to a LIBOR Advance or a LIBOR Advance to a Prime Rate
Advance.
"CREDIT EXTENSION" is each Advance, Letter of Credit, FX Forward
Contract, Cash Management Services, or any other extension of credit by Bank for
Borrower's benefit.
"DEPOSIT ACCOUNTS" is defined on EXHIBIT A hereto.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE A.
"DOLLARS," "DOLLARS" and "$" each mean lawful money of the United
States.
"EFFECTIVE AMOUNT" means with respect to any Advances on any date, the
aggregate outstanding principal amount thereof after giving effect to any
borrowing and prepayments or repayments thereof occurring on such date.
"EQUIPMENT" is defined on EXHIBIT A hereto.
"ERISA" is the Employment Retirement Income Security Act of 1974, and
its regulations.
"FX FORWARD CONTRACT" is defined in SECTION 2.1.3.
"FX RESERVE" is defined in Section 2.1.3.
23.
"FUNDING DATE" means the date funds are advanced to Borrower for any
Advance.
"GAAP" is generally accepted accounting principles.
"GOVERNMENTAL AUTHORITY" means (a) any foreign, federal, state, county,
or municipal government, or political subdivision thereof, (b) any governmental
or quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to whose jurisdiction that Person has consented.
"INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services (such as reimbursement and other obligations for
surety bonds and letters of credit that are carried as liabilities on Borrower's
balance sheet) other than Contingent Obligations, (b) obligations evidenced by
notes, bonds, debentures or similar instruments, and (c) capital lease
obligations.
"INSOLVENCY PROCEEDING" are proceedings by or against any Person under
the United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.
"INTELLECTUAL PROPERTY" is defined on EXHIBIT A hereto.
"INTEREST PAYMENT DATE" means, with respect to any LIBOR Advance, the
last day of each Interest Period applicable to such LIBOR Advance and, with
respect to Prime Rate Advances, the twentieth (20th) day of each month (or, if
the twentieth day of the month does not fall on a Business Day, then on the
first Business Day following such date), and each date a Prime Rate Advance is
converted into a LIBOR Advance to the extent of the amount converted to a LIBOR
Advance.
"INTEREST PERIOD" means, as to any LIBOR Advance, the period commencing
on the date of such LIBOR Advance, or on the conversion/continuation date on
which the LIBOR Advance is converted into or continued as a LIBOR Advance, and
ending on the date that is one (1), two (2), or three (3), months thereafter, in
each case as Borrower may elect in the applicable Notice of Borrowing or Notice
of Conversion/Continuation; provided, however, that (a) no Interest Period with
respect to any LIBOR Advance shall end later than the Revolving Maturity Date,
(b) the last day of an Interest Period shall be determined in accordance with
the practices of the LIBOR interbank market as from time to time in effect, (c)
if any Interest Period would otherwise end on a day that is not a Business Day,
that Interest Period shall be extended to the following Business Day unless, in
the case of a LIBOR Advance, the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest Period
shall end on the preceding Business Day, (d) any Interest Period pertaining to a
LIBOR Advance that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at
the end of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period, and (e) interest shall accrue
from and include the first Business Day of an Interest Period but exclude the
last Business Day of such Interest Period.
24.
"INTEREST RATE DETERMINATION DATE" means each date for calculating the
LIBOR for purposes of determining the interest rate in respect of an Interest
Period. The Interest Rate Determination Date shall be the second Business Day
prior to the first day of the related Interest Period for a LIBOR Advance.
"INVENTORY" is defined on EXHIBIT A hereto.
"INVESTMENT" is any beneficial ownership (including stock, partnership
interest or other securities) of any Person, or any loan, advance or capital
contribution to any Person.
"LETTER OF CREDIT" is defined in SECTION 2.1.2.
"LIBOR" means, for any Interest Rate Determination Date with respect to
an Interest Period for any Advance to be made, continued as or converted into a
LIBOR Advance, the rate of interest per annum determined by Bank to be the per
annum rate of interest at which deposits in United States Dollars are offered to
Bank in the London interbank market in which Bank customarily participates at
11:00 a.m. (local time in such interbank market) two (2) Business Days prior to
the first day of such Interest Period for a period approximately equal to such
Interest Period and in an amount approximately equal to the amount of such
Advance.
"LIBOR ADVANCE" means an Advance that bears interest based on Adjusted
LIBOR.
"LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.
"LOAN DOCUMENTS" are, collectively, this Agreement, the Control
Agreements, any note, or notes or guaranties executed by Borrower, and any other
present or future agreement between Borrower and/or for the benefit of Bank in
connection with this Agreement, all as amended, extended or restated.
"MATERIAL ADVERSE CHANGE" is any of the following: (a) a material
adverse change in the business, operations, or condition (financial or
otherwise) of the Borrower, or (b) a material impairment of the prospect of
repayment of any portion of the Obligations; or (c) a material impairment of the
value or priority of Bank's security interests in the Collateral.
"NOTICE OF BORROWING" means a notice given by Borrower to Bank in
accordance with SECTION 3.2(a), substantially in the form of EXHIBIT B, with
appropriate insertions.
"NOTICE OF CONVERSION/CONTINUATION" means a notice given by Borrower to
Bank in accordance with SECTION 3.4, substantially in the form of EXHIBIT C,
with appropriate insertions.
"OBLIGATIONS" are all debts, principal, interest, Bank Expenses and
other amounts Borrower owes to Bank now or hereafter arising, including Cash
Management Services, Letters of Credit, and the FX Reserve, if any and including
interest accruing after Insolvency Proceedings begin and all debts, liabilities,
or obligations of Borrower assigned to Bank.
25.
"OPERATING DOCUMENTS" shall mean the Borrower's certificate of
incorporation, as currently filed with the State of Delaware, and its bylaws in
current form, each with all current modifications and amendments thereto.
"PERMITTED INDEBTEDNESS" is:
(a) Borrower's indebtedness to Bank under this
Agreement or any other Loan Document;
(b) Indebtedness existing on the Closing Date
and shown on the Disclosure Schedule;
(c) Subordinated Debt;
(d) Indebtedness to trade creditors incurred in
the ordinary course of business;
(e) Indebtedness secured by Permitted Liens; and
(f) Any other Indebtedness not to exceed
$5,000,000 in the aggregate outstanding at any time.
"PERMITTED LIENS" are:
(a) Liens existing on the Closing Date and shown
on the Disclosure Schedule or arising under this Agreement or other Loan
Documents;
(b) Liens for taxes, fees, assessments or other
government charges or levies, either not delinquent or being contested in good
faith and for which Borrower maintains adequate reserves on its Books, if they
have no priority over any of Bank's security interests;
(c) Purchase money Liens (i) on Equipment
acquired or held by Borrower or its Subsidiaries incurred for financing the
acquisition of the Equipment, or (ii) existing on Equipment when acquired, if
the Lien is confined to the property and improvements and the proceeds of the
equipment;
(d) Licenses or sublicenses granted in the
ordinary course of Borrower's business and any interest or title of a licensor
or under any license or sublicense, if the licenses and sublicenses permit
granting Bank a security interest;
(e) Leases or subleases granted in the ordinary
course of Borrower's business, including in connection with Borrower's leased
premises or leased property;
(f) Liens incurred in the extension, renewal or
refinancing of the indebtedness secured by Liens described in (a) through (c),
but any extension, renewal or replacement Lien must be limited to the property
encumbered by the existing Lien and the principal amount of the indebtedness may
not increase;
26.
(g) Liens securing (i) the non-delinquent
performance of bids, trade contracts (other than for borrowed money) or
statutory obligations, (ii) Contingent Obligations in respect of surety and
appeal bonds, and (iii) other non-delinquent obligations of a like nature, in
each case incurred in the ordinary course of business; provided all such Liens
in the aggregate could not (even if enforced), with reasonable likelihood, cause
or result in a Material Adverse Change; and
(h) Liens on cash collateral securing
reimbursement obligations to issuing banks under standby letters of credit,
foreign exchange contracts, or other transactions in the ordinary course of
business.
"PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.
"PRIME RATE" is Bank's most recently announced "prime rate," even if it
is not Bank's lowest rate.
"PRIME RATE ADVANCE" means an Advance that bears interest based on the
Prime Rate.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"REGULATORY CHANGE" means, with respect to Bank, any change on or after
the date of this Agreement in United States federal, state, or foreign laws or
regulations, including Regulation D, or the adoption or making on or after such
date of any interpretations, directives, or requests applying to a class of
lenders including Bank, of or under any United States federal or state, or any
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule, regulation, guideline or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding upon the
Person or any of its Property or to which the Person or any of its Property is
subject.
"RESERVE REQUIREMENT" means, for any Interest Period, the average
maximum rate at which reserves (including any marginal, supplemental, or
emergency reserves) are required to be maintained during such Interest Period
under Regulation D against "Eurocurrency liabilities" (as such term is used in
Regulation D) by member banks of the Federal Reserve System. Without limiting
the effect of the foregoing, the Reserve Requirement shall reflect any other
reserves required to be maintained by Bank by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by reference to
which Adjusted LIBOR is to be determined as provided in the definition of LIBOR
or (b) any category of extensions of credit or other assets which include
Advances.
"RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer, the Controller, and the Treasurer of
Borrower.
27.
"REVOLVING MATURITY DATE" is January 20, 2004.
"SECURITIES ACCOUNT" is an account to which a financial asset is or may
be credited in accordance with an agreement under which the person maintaining
the account undertakes to treat the person for whom the account is maintained as
entitled to exercise the rights that comprise the financial asset.
"SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.
"SUBSIDIARY" is for any Person, or any other business entity of which
more than 50% of the voting stock or other equity interests is owned or
controlled, directly or indirectly, by the Person or one or more Affiliates of
the Person.
"TANGIBLE NET WORTH" is, on any date, the Consolidated Total Assets of
Borrower and its Subsidiaries minus (i) any amounts attributable to reserves not
already deducted from assets; (ii) restricted cash; and (iii) Consolidated Total
Liabilities.
[Signature page follows.]
28.
IN WITNESS WHEREOF, the parties have duly authorized and caused this
Agreement to be executed as of the date first written above.
BORROWER:
STRATEX NETWORKS, INC.
By:________________________________________ By: ______________________
Title: ____________________________________ Title: ___________________
BANK:
SILICON VALLEY BANK
By: _______________________________________
Title _____________________________________
[Signature page to Loan and Security Agreement]
SCHEDULE A
DISCLOSURE SCHEDULE
The exact and correct corporate name of Borrower is: Stratex Networks, Inc.
Borrower's state of formation: California - January 4, 1984
Reincorporated: Delaware - February 13, 1987
Borrower has operated under only the following other names (if none, so state):
Dyna Lynx Corporation, Digital Microwave Corporation, DMC Stratex
Networks, Inc.
All addresses at which the Borrower does business in the United States with
total assets in excess of $100,000 are as follows (attach additional sheets if
necessary and include all warehouse addresses):
1. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Principal Offices)
2. ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
3. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (vacated - to be
subleased)
4. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (stockroom)
5. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (warehouse)
Borrower has deposit accounts and/or investment accounts located only at the
following institutions in the United States (include account numbers):
Union Bank of California:
1. Concentration/SWEEP Account No. 64501-54545
2. LC Collateral Account No. 64501-54529
(Restricted)
3. FX Collateral Account No. 64501-54537
(Restricted)
4. Controlled Disbursement Account No.
90800-08462 (zero balance account "ZBA")
5. Payroll Account No. 64501-54596 (ZBA)
6. Medical Payments Account No. 64501-54553
(ZBA)
7. Disability Payments Account No. 64501-54561
(ZBA)
Bank of America: 1. Concentration/SWEEP Account No. 12334-25035
2. Nations Fund LC Collateral Account No.
020100004205217 (Restricted)
3. Controlled Disbursement Account No.
87650-00780 (ZBA)
4. Payroll Account No. 12332-25036 (ZBA)
5. Medical Claims Account No. 12336-25039 (ZBA)
6. Voluntary Disability Account No. 12330-25037
(ZBA)
Liens existing on the Closing Date:
1. Security interest on restricted cash accounts indicated above
2. Liens on leasehold improvements under facility leases
3. Debenture dated June 15, 1990, as amended, in favor of
National Bank of New Zealand for NZ$15,000,000 covering all of
the assets of Stratex Networks (NZ) Limited, a wholly owned
subsidiary of Stratex Networks, Inc., to support obligations
of the subsidiary to the bank
1
Investments (including Securities Accounts) existing on the Closing Date:
1. ▇▇▇▇▇▇ Brothers, Inc.: Investment Account No. 833-79289-18-265
2. CIBC ▇▇▇▇▇▇▇▇▇▇▇: Investment Account No. 232-29693
3. ▇▇▇▇▇▇▇ Telecom UK Ltd.: 214,950 Ordinary Shares (zero book
value)
4. Interwave Communications International Ltd.: 17,076 Common
Shares (zero book value)
5. fSona Corporation: 227,272 Shares Series C Pref. Stock (zero
book value)
6. Aperto Networks, Inc.: 638,297 Shares Series B Pref. Stock
(zero book value)
7. Ensemble Communications, Inc.: 772,210 Shares Special Common
Series C and 81,833 Shares Special Common Series D (zero
book value)
Indebtedness (including Subordinated Debt): None
Borrower is not currently subject to litigation that would have a material
adverse effect on the Borrower's financial condition, except the following
(attach additional comments, if needed):
None material
Federal Tax ID Number: ▇▇-▇▇▇▇▇▇▇
Organizational Numbers:
1. Delaware ID No. 21177-84
2. California ID No. C-1584093
2
EXHIBIT A
"Collateral" means of all of Borrower's right, title and interest in
and to the following whether owned now or hereafter acquired or arising, and
wherever located: all Accounts; all Inventory; all Equipment; all Deposit
Accounts; all General Intangibles; all Investment Property; all Other Property;
and any and all claims, rights and interests in any of the foregoing, and all
guaranties and security for any of the foregoing, and all substitutions and
replacements for, additions, accessions, attachments, accessories, and
improvements to, and proceeds (including proceeds of any insurance policies,
proceeds of proceeds and claims against third parties) of, all of the foregoing,
and all Borrower's Books relating to any of the foregoing.
Notwithstanding the foregoing, "Collateral" shall not be deemed to include:
A. Borrower's Intellectual Property; provided, however, the
Collateral shall include the proceeds of all the Intellectual
Property that are accounts, (i.e. accounts receivable) of
Borrower, or general intangibles consisting of rights to
payment, if a judicial authority (including a U.S. Bankruptcy
Court) holds that a security interest in the underlying
Intellectual Property is necessary to have a security interest
in such accounts and general intangibles of Borrower that are
proceeds of the Intellectual Property, then the Collateral
shall automatically, and effective as of the Closing Date,
include the Intellectual Property to the extent necessary to
permit perfection of Bank's security interest in such accounts
and general intangibles of Borrower that are proceeds of the
Intellectual Property.
B. The following Deposit Accounts of Borrower:
1. National Fund LC Collateral Account No.
020100004205217 (Restricted cash used to support
standby letters of credit issued by Bank of America)
2. Union Bank of California LC Collateral Account No.
64501-54529 (Restricted cash used to support standby
letters of credit issued by Union Bank of California)
3. Union Bank of California FX Collateral Account No.
64501-54537 (Restricted cash used to support foreign
currency contracts transacted with Union Bank of
California)
C. Other assets of Borrower subject to existing Liens:
1. All tangible and intangible assets of Stratex
Networks (NZ) Limited, a wholly owned subsidiary of
Borrower located in Wellington, New Zealand under a
debenture dated June 15, 1990, as amended, in favor
of National Bank of New Zealand in the amount of
NZ$15,000,000 supporting general obligations of the
subsidiary to the bank.
2. Leasehold improvements under various facility leases.
1
As used in this Agreement and in this Exhibit, the following terms have the
following meanings:
"Accounts" means all present and future "accounts" as defined in the
Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all accounts
receivable and other sums owing to Borrower.
"Deposit Accounts" means all present and future "deposit accounts" as
defined in the Code in effect on the date hereof with such additions to
such term as may hereafter be made, and includes without limitation all
general and special bank accounts, demand accounts, checking accounts,
savings accounts and certificates of deposit, whether maintained with
Bank or other institutions.
"Equipment" means all present and future "equipment" as defined in the
Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all machinery,
fixtures, goods, vehicles (including motor vehicles and trailers), and
any interest in any of the foregoing.
"General Intangibles" means all present and future "general
intangibles" as defined in the Code in effect on the date hereof with
such additions to such term as may hereafter be made, and includes
without limitation all payment intangibles, royalties, contract rights,
goodwill, franchise agreements, purchase orders, customer lists, route
lists, telephone numbers, domain names, claims, income tax refunds,
security and other deposits, options to purchase or sell real or
personal property, rights in all litigation presently or hereafter
pending (whether in contract, tort or otherwise), insurance policies
(including without limitation key man, property damage, and business
interruption insurance), payments of insurance and rights to payment of
any kind.
"Intellectual Property" means all present and future (a) copyrights,
copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work
thereof, whether published or unpublished, (b) trade secret rights,
including all rights to unpatented inventions and know-how, and
confidential information; (c) mask work or similar rights available for
the protection of semiconductor chips; (d) patents, patent applications
and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same; (e) trademarks, servicemarks, trade
styles, and trade names, whether or not any of the foregoing are
registered, and all applications to register and registrations of the
same and like protections, and the entire goodwill of the business of
Borrower connected with and symbolized by any such trademarks; (f)
computer software and computer software products; (g) designs and
design rights; (h) technology; (i) all claims for damages by way of
past, present and future infringement of any of the rights included
above; (j) all licenses or other rights to use any property or rights
of a type described above.
"Inventory" means all present and future "inventory" as defined in the
Code in effect on the date hereof with such additions to such term as
may hereafter be made, and includes without limitation all merchandise,
raw materials, parts, supplies, packing and shipping materials, work in
process and finished products, including without limitation such
inventory as is out of Borrower's custody or possession or in transit
and including any returned goods and any documents of title
representing any of the above.
2
"Investment Property" means all present and future investment property,
securities, stocks, bonds, debentures, debt securities, partnership
interests, limited liability company interests, options, security
entitlements, securities accounts, commodity contracts, commodity
accounts, and all financial assets held in any securities account or
otherwise, wherever located, and all other securities of every kind,
whether certificated or uncertificated,
"Other Property" means (a) the following as defined in the Code in
effect on the date hereof with such additions to such term as may
hereafter be made, and all rights relating thereto: all present and
future "commercial tort claims", "documents", "instruments",
"promissory notes", "chattel paper", "letters of credit",
"letter-of-credit rights", "fixtures", "farm products" and "money"; and
(b) all other goods and personal property of every kind, tangible and
intangible, whether or not governed by the Code.
3
EXHIBIT B
FORM OF NOTICE OF BORROWING
STRATEX NETWORKS, INC.
Date:______________
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Services Department
RE: Loan and Security Agreement dated as of January 21, 2003 (as amended,
modified, supplemented or restated from time to time, the "Loan
Agreement"), by and between STRATEX NETWORKS, INC. as the borrower
thereunder, and SILICON VALLEY BANK, as the lender (the "Bank").
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein
and used herein as so defined, and hereby gives you notice irrevocably, pursuant
to SECTION 3.3(a) of the Loan Agreement, of the borrowing of an Advance.
1. The Funding Date, which shall be a Business Day, of the
requested Borrowing is _______________.
2. The aggregate amount of the requested Borrowing is
$_____________.
3. The requested Advance shall consist of $___________ of Prime
Rate Advances and $______ of LIBOR Advances.
4. The duration of the Interest Period for the LIBOR Advances
included in the requested Advance shall be __________ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Advance before
and after giving effect thereto, and to the application of the proceeds
therefrom, as applicable:
(a) all representations and warranties of Borrower
contained in the Loan Agreement are true, accurate and complete in all
material respects as of the date hereof; provided, however, that those
representations and warranties expressly referring to another date are
true, accurate and complete in all material respects as of such date;
and provided, further, that the representations and warranties set
forth in SECTION 5 of the Loan Agreement shall be deemed to be made
with respect to the financial statements most recently delivered to the
Bank pursuant to SECTION 6.2 of the Loan Agreement;
(b) no Event of Default has occurred and is continuing,
or would result from such proposed Advance; and
(c) the requested Advance will not cause the aggregate
principal amount of the outstanding Advances to exceed, as of the
designated Funding Date, the Committed Revolving Line minus the sum of
(i) all amounts for services utilized under the Cash Management
Services Sublimit, and (ii) the amount of all outstanding Letters of
Credit (including drawn but unreimbursed Letters of Credit).
BORROWER STRATEX NETWORKS, INC.
By: ____________________________
Name: __________________________
Title: _________________________
For internal Bank use only
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LIBOR Pricing Date LIBOR LIBOR Variance Maturity Date
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[See attached for additional wire instructions, if any]
2
LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 3:00PM PST
FAX TO:_________________
CLIENT NAME: __________________________________ DATE: ____________
- LOAN PAYMENT:
From Account # _______________________________ To Account # ________________
(Deposit Account #) (Loan Account #)
Principal $_________________________________ and/or Interest $_________________
All Borrower's representation and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the date
of the telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
AUTHORIZED SIGNATURE:_______________________________ Phone Number:______________
- LOAN ADVANCE:
COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE FUNDS
FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.
From Account # ___________________________ To Account # __________________
(Loan Account #) (Deposit Account #)
Amount of Advance $____________________________
All Borrower's representation and warranties in the Loan and Security
Agreement are true, correct and complete in all material respects to on the date
of the telephone transfer request for and advance, but those representations and
warranties expressly referring to another date shall be true, correct and
complete in all material respects as of the date:
AUTHORIZED SIGNATURE: _________________________ Phone Number: __________________
- OUTGOING WIRE REQUEST
COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE TO BE
WIRED. Deadline for same day processing is 12:00pm, PST
Beneficiary Name: _____________________ Amount of Wire: $________________
Beneficiary Bank: _____________________ Account Number: __________________
City and State: _______________________
Beneficiary Bank Transit (ABA) #: ______________
Beneficiary Bank Code (Swift, Sort, Chip, etc.):________________________________
(FOR INTERNATIONAL WIRE ONLY)
Intermediary Bank:______________________ Transit (ABA) #:________________
For Further Credit to:__________________________________________________________
Special Instruction:____________________________________________________________
3
By signing below, I (we) acknowledge and agree that my (our) funds
transfer request shall be processed in accordance with and subject to the terms
and conditions set forth in the agreements(s) covering funds transfer
service(s), which agreements(s) were previously received and executed by me
(us).
Authorized Signature: _________________ 2nd Signature (If Required): ________
Print Name/Title: _____________________ Print Name/Title: _____________________
Telephone #____________________________ Telephone # ___________________________
4
EXHIBIT C
FORM OF NOTICE OF CONVERSION/CONTINUATION
STRATEX NETWORKS, INC.
Date:__________________
TO: SILICON VALLEY BANK
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
RE: Loan and Security Agreement dated as of January 21, 2003 (as amended,
modified, supplemented or restated from time to time, the "Loan
Agreement"), by and between STRATEX NETWORKS, INC. as the borrower
thereunder, and SILICON VALLEY BANK, as the lender (the "Bank").
Ladies and Gentlemen:
The undersigned refers to the Loan Agreement, the terms defined therein
being used herein as therein defined, and hereby gives you notice irrevocably,
pursuant to SECTION 3.4 of the Loan Agreement, of the [conversion]
[continuation] of the Advances specified herein, that:
1. The date of the [conversion] [continuation] is
________________, 2003.
2. The aggregate amount of the proposed Advances to be
[converted] is $_______________________ or [continued] is $____________________.
3. The Advances are to be [converted into] [continued as] [LIBOR]
[Prime Rate] Advances.
4. The duration of the Interest Period for the LIBOR Advances
included in the [conversion] [continuation] shall be ____________ months.
The undersigned, on behalf of Borrower, hereby certifies that the
following statements are true on the date hereof, and will be true on the date
of the proposed [conversion] [continuation], before and after giving effect
thereto and to the application of the proceeds therefrom:
(a) All representations and warranties of
Borrower stated in the Loan Agreement are true, accurate and complete
in all material respects as of the date hereof; provided, however, that
those representations and warranties expressly referring to another
date are true, accurate and complete in all material respects as of
such date; and provided, further, that the representations and
warranties set forth in SECTION 5 of the Loan Agreement shall be deemed
to be made with respect to the financial statements most recently
delivered to Bank pursuant to SECTION 6.2 of the Loan Agreement.
(b) No Default or Event of Default has occurred
and is continuing, or would result from such proposed [conversion]
[continuation].
BORROWER STRATEX NETWORKS, INC.
By: ____________________________________
Name: __________________________________
Title: _________________________________
For internal Bank use only
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2
EXHIBIT D
COMPLIANCE CERTIFICATE
TO: SILICON VALLEY BANK Date:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FROM: STRATEX NETWORKS, INC.
The undersigned Responsible Officer of Stratex Networks, Inc.
("Borrower") certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is
in complete compliance for the period ending _______________ with all required
covenants except as noted below and (ii) all representations and warranties in
the Agreement are true and correct in all material respects on this date.
Attached are the required financial reports and calculation of financial
covenants supporting the certification. The undersigned acknowledges that no
borrowings may be requested at any time or date of determination that Borrower
is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered.
PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" OR
"OCCURRENCES" COLUMNS.
REPORTING COVENANT REQUIRED COMPLIES
------------------ -------- --------
Form 10-Q + CC Quarterly within 5 days of filing with SEC Yes No
Form 10-K + CC Annually within 5 days of filing with SEC Yes No
OCCURRENCES*
IP Infringements Prompt Yes No
Material Litigation Prompt Yes No
FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES
------------------ -------- ------ --------
Minimum Tangible Net Worth $105,000,000 $________ Yes No
(Quarterly)
Minimum Liquidity Ratio 1.50:1.00 _____:1.00 Yes No
(Monthly)
* If yes, attached is a summary of the Material Litigation or IP Infringements
not previously disclosed by Borrower.
Sincerely, BANK USE ONLY
STRATEX NETWORKS, INC. Received by:____________________________
AUTHORIZED SIGNER
By: _______________________
Name: ____________________ Date:__________________________________
Verified:______________________________
AUTHORIZED SIGNER
Date:__________________________________
Compliance Status: Yes No