EXHIBIT 10.69
GUARANTY OF DATRON SYSTEMS INCORPORATED OF THE
INDEBTEDNESS OF DATRON WORLD COMMUNICATIONS INC. AND
DATRON/TRANSCO INC. TO COMERICA BANK-CALIFORNIA DATED
MARCH 24, 1999
Guaranty
As of March 24, 1999, the undersigned, for value
received, unconditionally and absolutely guarantees to
Comerica Bank - California ("Bank"), a California
banking corporation, payment when due, whether by stated
maturity, demand, acceleration or otherwise, of all
existing and future indebtedness ("Indebtedness") to the
Bank of Datron World Communications Inc., a California
corporation ("DWC"), and Datron/Transco Inc., a
California corporation ("DT", and together with DWC,
"Borrower"). Indebtedness includes without limit any
and all obligations or liabilities of the Borrower to
the Bank, whether absolute or contingent, direct or
indirect, voluntary or involuntary, liquidated or
unliquidated, joint or several, known or unknown; any
and all indebtedness, obligations or liabilities for
which Borrower would otherwise be liable to the Bank
were it not for the invalidity, irregularity or
unenforceability of them by reason of any bankruptcy,
insolvency or other law or order of any kind, or for any
other reason; all amendments, modifications, renewals
and/or extensions of the above; and all costs of
collecting Indebtedness, including, without limit,
attorney fees. Any reference in this Guaranty to
attorney fees shall be deemed a reference to reasonable
fees, charges, costs and expenses of both in-house and
outside counsel and paralegals, whether or not a suit or
action is instituted, and to court costs if a suit or
action is instituted, and whether attorney fees or court
costs are incurred at the trial court level, on appeal,
in a bankruptcy, administrative or probate proceeding or
otherwise. All costs shall be payable by the
undersigned when incurred by the Bank, without demand,
and if not paid within ten (10) business days of when
first due, shall bear interest at the default rate of
interest applicable to the Indebtedness under Borrower's
agreements with Bank until paid in full, but not in
excess of the maximum rate permitted by law.
1. LIMITATION: The total obligation of the undersigned
under this Guaranty shall include, IN ADDITION TO the
principal guaranteed, all interest on the principal
amount, and all costs incurred by the Bank in collection
efforts against the Borrower and/or the undersigned or
otherwise incurred by the Bank in any way relating to
the Indebtedness, or this Guaranty, including without
limit attorney fees. The undersigned agrees that (a)
this limitation shall not be a limitation on the amount
of Borrower's Indebtedness to the Bank; (b) any payments
by the undersigned shall not reduce the maximum
liability of the undersigned under this Guaranty unless
written notice to that effect is actually received by
the Bank at, or prior to, the time of the payment; and
(c) the liability of the undersigned to the Bank shall
at all times be deemed to be the aggregate liability of
the undersigned under this Guaranty and any other
guaranties previously or subsequently given to the Bank
by the undersigned and not expressly revoked, modified
or invalidated in writing.
2. NATURE OF GUARANTY: This is a continuing Guaranty
of payment and not of collection, and remains effective
whether the Indebtedness is from time to time reduced
and later increased or entirely extinguished and later
reincurred. The undersigned delivers this Guaranty
based solely on the undersigned's independent
investigation of (or decision not to investigate) the
financial condition of Borrower and is not relying on
any information furnished by the Bank. The undersigned
assumes full responsibility for obtaining any further
information concerning the Borrower's financial
condition, the status of the Indebtedness or any other
matter which the undersigned may deem necessary or
appropriate now or later. The undersigned knowingly
accepts the full range of risk encompassed in this
Guaranty, which risk includes, without limit, the
possibility that Borrower may incur Indebtedness to the
Bank after the financial condition of the Borrower, or
the Borrower's ability to pay debts as they mature, has
deteriorated.
3. APPLICATION OF PAYMENTS: The undersigned
authorizes the Bank, either before or after termination
of this Guaranty, without notice to or demand on the
undersigned and without affecting the undersigned's
liability under this Guaranty, from time to time to: (a
apply any security and direct the order or manner of
sale; and (b) apply payments received by the Bank from
the Borrower to any indebtedness of the Borrower to the
Bank, in such order as the Bank shall determine in its
sole discretion, whether or not this indebtedness is
covered by this Guaranty, and the undersigned waives any
provision of law regarding application of payments which
specifies otherwise. The undersigned agrees to provide
to the Bank copies of the undersigned's financial
statements upon request.
4. SETOFF: The undersigned acknowledges the Bank's
right of setoff as to any and all deposits and other
amounts from time to time in the possession of, or owing
to the undersigned by, the Bank. The undersigned
further assigns to the Bank as collateral for the
obligations of the undersigned under this Guaranty all
claims of any nature that the undersigned now or later
has (have) against the Borrower (other than any claim
under a deed of trust or mortgage covering California
real property) with full right on the part of the Bank,
in its own name or in the name of the undersigned, to
collect and enforce these claims. The undersigned
agrees that no security now or later held by the Bank
for the payment of any Indebtedness, whether from the
Borrower, any guarantor, or otherwise, and whether in
the nature of a security interest, pledge, lien,
assignment, setoff, suretyship, guaranty, indemnity,
insurance or otherwise, shall affect in any manner the
unconditional obligation of the undersigned under this
Guaranty, and the Bank, in its sole discretion, without
notice to the undersigned, may release, exchange,
enforce and otherwise deal with any security without
affecting in any manner the unconditional obligation of
the undersigned under this Guaranty. The undersigned
acknowledges and agrees that the Bank has no obligation
to acquire or perfect any lien on or security interest
in any asset(s), whether realty or personalty, to secure
payment of the Indebtedness, and the undersigned is not
relying upon any asset(s) in which the Bank has or may
have a lien or security interest for payment of the
Indebtedness.
5. OTHER GUARANTORS: If any Indebtedness is
guaranteed by two or more guarantors, the obligation of
the undersigned shall be several and also joint, each
with all and also each with any one or more of the
others, and may be enforced at the option of the Bank
against each severally, any two or more jointly, or some
severally and some jointly. The Bank, in its sole
discretion, may release any one or more of the
guarantors for any consideration which it deems
adequate, and may fail or elect not to prove a claim
against the estate of any bankrupt, insolvent,
incompetent or deceased guarantor; and after that,
without notice to any guarantor, the Bank may extend or
renew any or all Indebtedness and may permit the
Borrower to incur additional Indebtedness, without
affecting in any manner the unconditional obligation of
the remaining guarantor(s). The undersigned
acknowledges that the effectiveness of this Guaranty is
not conditioned on any or all of the indebtedness being
guaranteed by anyone else.
6. TERMINATION: The undersigned may not terminate its
obligation under this Guaranty as to future Indebtedness
(except as provided below) by (and only by) delivering
written notice of termination to an officer of the Bank
and receiving from an officer of the Bank written
acknowledgment of delivery; provided, however, the
termination shall not be effective until the opening of
business on the fifth (5th) day ("effective date")
following written acknowledgment of delivery. Any
termination shall not affect in any way the
unconditional obligations of the remaining guarantor(s),
if any, whether or not the termination is known to the
remaining guarantor(s). Any termination shall not
affect in any way the unconditional obligations of the
terminating guarantor(s) as to any Indebtedness existing
at the effective date of termination or any Indebtedness
created after that pursuant to any commitment or
agreement of the Bank or pursuant to any Borrower loan
with the Bank existing at the effective date of
termination (whether advances or readvances by the Bank
after the effective date of termination are optional or
obligatory), or any modifications, extensions or
renewals of any of this Indebtedness, whether in whole
or in part, and as to all of this Indebtedness and
modifications, extensions or renewals of it, this
Guaranty shall continue effective until the same shall
have been fully paid. The Bank has no duty to give
notice of termination by any guarantor(s) to any
remaining guarantor(s). The undersigned shall indemnify
the Bank against all claims, damages, costs and
expenses, including, without limit, attorney fees,
incurred by the Bank in connection with any suit, claim
or action against the Bank arising out of any
modification or termination of a Borrower loan or any
refusal by the Bank to extend additional credit in
connection with the termination of this Guaranty.
7. REINSTATEMENT: Notwithstanding any prior
revocation, termination, surrender or discharge of this
Guaranty (or of any lien, pledge or security interest
securing this Guaranty) in whole or in part, the
effectiveness of this Guaranty, and of all liens,
pledges and security interests securing this Guaranty,
shall automatically continue or be reinstated in the
event that any payment received or credit given by the
Bank in respect of the Indebtedness is returned,
disgorged or rescinded under any applicable state or
federal law, including, without limitation, laws
pertaining to bankruptcy or insolvency, in which case
this Guaranty, and all liens, pledges and security
interests securing this Guaranty, shall be enforceable
against the undersigned as if the returned, disgorged or
rescinded payment or credit had not been received or
given by the Bank, and whether or not the Bank relied
upon this payment or credit or changed its position as a
consequence of it. In the event of continuation or
reinstatement of this Guaranty and the liens, pledges
and security interests securing it, the undersigned
agrees upon demand by the Bank, to execute and deliver
to the Bank those documents which the Bank determines
are appropriate to further evidence (in the public
records or otherwise) this continuation or
reinstatement, although the failure of the undersigned
to do so shall not affect in any way the reinstatement
or continuation. If the undersigned does not execute
and deliver to the Bank upon demand such documents, the
Bank and each Bank officer is irrevocably appointed
(which appointment is coupled with an interest) the true
and lawful attorney of the undersigned (with full power
of substitution) to execute and deliver such documents
in the name and on behalf of the undersigned.
8. WAIVERS: The undersigned waives any right to
require the Bank to: (a) proceed against any person or
property; (b) give notice of the terms, time and place
of any public or private sale of personal property
security held from the Borrower or any other person, or
otherwise comply with the provisions of Section 9-504
of the California Uniform Commercial Code or other
applicable Uniform Commercial Code; or (c) pursue any
other remedy in the Bank's power. The undersigned
waives notice of acceptance of this Guaranty and
presentment, demand, protest, notice of protest,
dishonor, notice of dishonor, notice of default, notice
of intent to accelerate or demand payment of any
Indebtedness, any and all other notices to which the
undersigned might otherwise be entitled, and diligence
in collecting any Indebtedness, and agrees that the Bank
may, once or any number of times, modify the terms of
any Indebtedness, compromise, extend, increase,
accelerate, renew or forbear to enforce payment of any
or all Indebtedness, or permit the Borrower to incur
additional Indebtedness, all without notice to the
undersigned and without affecting in any manner the
unconditional obligation of the undersigned under this
Guaranty.
The undersigned unconditionally and irrevocably
waives each and every defense and setoff of any
nature which, under principles of guaranty or
otherwise, would operate to impair or diminish in
any way the obligation of the undersigned under this
Guaranty, and acknowledges that each such waiver is
by this reference incorporated into each security
agreement, collateral assignment, pledge and/or
other document from the undersigned now or later
securing this Guaranty and/or the Indebtedness, and
acknowledges that as of the date of this Guaranty no
such defense or setoff exists.
The undersigned understands that, absent this
waiver, Bank's election of remedies, including but
not limited to its decision to proceed to
nonjudicial foreclosure on any real property
securing the Indebtedness, could preclude Bank from
obtaining a deficiency judgment against Borrower and
the undersigned pursuant to California Code of Civil
Procedures Sections 580a, 580b, 580d or 726 and
could also destroy any subrogation rights which the
undersigned has against Borrower. The undersigned
further understands that, absent this waiver,
California law, including without limitation,
California Code of Civil Procedure Sections 580a,
580b, 580d or 726, could afford the undersigned one
or more affirmative defenses to any action
maintained by Bank against the undersigned on this
Guaranty.
Although, the intent of the undersigned and the Bank
is that California law shall apply, the undersigned
waives any and all rights and provisions of
California Code of Civil Procedure Sections 580a,
580b, 580d and 726, including, but not limited to
any provision thereof that: (i) may limit the time
period for Bank to commence a lawsuit against
Borrower or the undersigned to collection any
Indebtedness owing by Borrower or the undersigned to
Bank; (ii) may entitle Borrower or the undersigned
to a judicial or nonjudicial determination of any
deficiency owed by Borrower or the undersigned to
Bank, or to otherwise limit Bank's right to collect
a deficiency based on the fair market value of such
real property security; (iii) may limit Bank's right
to collect a deficiency judgment after a sale of any
real property securing the indebtedness; (iv) may
require Bank to take only one action to collect the
indebtedness or that may otherwise limit the
remedies available to Bank to collect the
Indebtedness.
Although, the intent of the undersigned and the Bank
is that California law shall apply, the undersigned
waives all rights and defenses arising out of an
election of remedies by Bank even though that
election of remedies, such as a nonjudicial
foreclosure with respect to security for a guarantee
obligation, has destroyed the undersigned's rights
of subrogation and reimbursement against Borrower by
the operation of Section 580d of the Code of Civil
Procedure or otherwise.
9. WAIVER OF SUBROGATION: The undersigned postpones
any and all rights (whether by subrogation, indemnity,
reimbursement, or otherwise) to recover from the
Borrower any amounts paid by the undersigned pursuant to
this Guaranty until such time that all Indebtedness has
been finally and irrevocably paid to Bank.
10. SALE/ASSIGNMENT: The undersigned acknowledges that
the Bank has the right to sell, assign, transfer,
negotiate, or grant participations in all or any part of
the Indebtedness and any related obligations, including,
without limit, this Guaranty, without notice to the
undersigned and that the Bank may disclose any documents
and information which the Bank now has or later acquires
relating to the undersigned or to the Borrower in
connection with such sale, assignment, transfer,
negotiation, or grant. The undersigned agrees that the
Bank may provide information relating to this Guaranty
or relating to the undersigned to the Bank's parent,
affiliates, subsidiaries and service providers.
11. WITHHOLDING TAXES: All payments to be made by the
undersigned under this Guaranty shall be made without
setoff or counterclaim and without deduction for or on
account of any present or future withholding or other
taxes of any nature imposed by any governmental
authority or of any political subdivision thereof or any
federation or organization of which such governmental
authority may at the time of payment be a member, unless
the undersigned is compelled by law to make payment
subject to such tax. In such event, the undersigned
shall: (a) pay to the Bank for the account of the Bank
such additional amounts as may be necessary to ensure
that the Bank receives a net amount equal to the full
amount which would have been receivable under this
Guaranty had payment not been made subject to such tax;
and (b) send to the Bank such certificates or certified
copies of receipts as the Bank shall reasonably require
as proof of the payment by the undersigned of any such
taxes payable by the undersigned. As used herein, the
terms "tax", "taxes" and "taxation" include all existing
taxes, levies, imposts, duties, charges, fees,
deductions and withholdings and any restrictions or
conditions resulting in a charge, together with interest
thereon and fines and penalties with respect thereto,
which may be imposed by reason of any violation or
default with respect to the law regarding such tax,
assessed as a result of or in connection with the
Indebtedness or the obligation of the undersigned
hereunder, or the payment or delivery of funds into or
out of any jurisdiction other than the United States
(whether assessed against Borrower, the undersigned or
the Bank).
12. GENERAL: This Guaranty constitutes the entire
agreement of the undersigned and the Bank with respect
to the subject matter of this Guaranty. No waiver,
consent, modification or change of the terms of the
Guaranty shall bind any of the undersigned or the Bank
unless in writing and signed by the waiving party or an
authorized officer of the waiving party, and then this
waiver, consent, modification or change shall be
effective only in the specific instance and for the
specific purpose given. This Guaranty shall inure to
the benefit of the Bank and its successors and assigns
and shall be binding on the undersigned and the
undersigned's heirs, legal representatives, successors
and assigns including, without limit, any debtor in
possession or trustee in bankruptcy for any of the
undersigned. The undersigned has knowingly and
voluntarily entered into this Guaranty in good faith for
the purpose of inducing the Bank to extend credit or
make other financial accommodations to the Borrower. If
any provision of this Guaranty is unenforceable in whole
or in part for any reason, the remaining provisions
shall continue to be effective.
13. GOVERNING LAW AND JURISDICTION: THIS GUARANTY
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, UNITED
STATES OF AMERICA, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES; The undersigned hereby irrevocably agrees
that any legal action, suit, or proceeding against it
with respect to its obligations, liabilities or any
other matter under or arising out of or in connection
with this Guaranty, the Indebtedness or the transactions
or documents contemplated hereby or for recognition or
enforcement of any judgment rendered in any such action,
suit or proceeding may be brought in the United States
Courts or in the courts of the State of California, or
in any other court having jurisdiction over the subject
matter, as the Bank in its sole discretion may elect,
and, by its execution and delivery of this Guaranty, the
undersigned hereby irrevocably accepts and submits to
the non-exclusive jurisdiction of each of the aforesaid
courts generally and unconditionally with respect to any
such action, suit or proceeding for itself and in
respect of its property. The undersigned further agrees
that final judgment against it in any action, suit, or
proceeding referred to herein shall be conclusive and
may be enforced in any other jurisdiction, within or
outside the United States of America, by suit on the
judgment, a certified or exemplified copy of which shall
be conclusive evidence of the fact and of the amount of
its indebtedness. The undersigned further irrevocably
consents and agrees to the service of any and all legal
process, summons, notices, and documents out of any of
the aforesaid courts in any action, suit or proceeding
by mailing copies thereof by registered or certified
mail, postage prepaid, to the undersigned at its address
set forth in this Guaranty or to any other address of
which the undersigned shall have given prior written
notice to Bank. The undersigned agrees that service
upon the undersigned as provided for herein shall
constitute valid and effective personal service upon the
undersigned. Nothing herein shall, or shall be
construed so as to, limit the right of the Bank, or any
of its successors or assigns, to bring actions, suits or
proceedings with respect to the obligations and
liabilities of the undersigned under, or any other
matter arising out of or in connection with, this
Guaranty, the Indebtedness or the transactions or
documents contemplated hereby, or for recognition or
enforcement of any judgment rendered in any proceeding,
in the courts of whatever jurisdiction in which the
Indebtedness or the obligations or liabilities of the
undersigned hereunder may arise or are created or in
which the assets of the undersigned may be found or as
otherwise shall seem appropriate to the Bank, or any of
its successors or assigns, or to affect the right to
service of process in any jurisdiction in any other
manner permitted by law; (c) In addition, the
undersigned hereby irrevocably and unconditionally
waives any objection which it may now or hereafter have
to the laying of venue of any of the aforesaid actions,
suits or proceedings arising out of or in connection
with this Guaranty, the Indebtedness or the transactions
contemplated hereby brought in any federal or state
court situate in the State of California, and hereby
further irrevocably and unconditionally waives and
agrees not to plead any claim that any such action, suit
or proceeding brought in any such court has been brought
in an inconvenient forum.
14. REPRESENTATIONS AND WARRANTIES:
The undersigned hereby represents and warrants to
Bank:
a. Undersigned is a corporation duly organized and
existing in good standing under the laws of Delaware,
is duly qualified and authorized to do business in each
jurisdiction where the character of its assets or the
nature of its activities makes such qualification
necessary and failure to so qualify could have a
Material Adverse Effect; execution, delivery and
performance of this Guaranty, and any other documents
and instruments required under this Guaranty, are within
its corporate powers, have been duly authorized, are not
in contravention of law or the terms of its
organizational documents, and do not require the consent
or approval of any governmental body, agency or
authority that has not been obtained; and this Guaranty,
and any other documents and instruments required under
this Guaranty, when issued and delivered under this
Guaranty, will be valid and binding upon the undersigned
in accordance with their terms.
b. The execution, delivery and performance of this
Guaranty, and any other documents and instruments
required under this Guaranty, are not in contravention
of the unwaived terms of any indenture, agreement or
undertaking to which the undersigned is party or by
which it is bound.
c. No litigation or other proceeding before any court
or administrative agency is pending, or to the knowledge
of the officers of the undersigned is threatened against
it, the outcome of which if determined adversely would
have a material adverse effect on the properties, assets
or financial condition of the undersigned ("Material
Adverse Effect").
d. The audited balance sheet and operating statement
of the undersigned dated March 31, 1998 and the
unaudited balance sheet and operating statement of the
undersigned dated December 31, 1998, previously
furnished Bank, are complete and correct and fairly
present the financial condition of the undersigned and
the results of its operations; since said dates there
has been no change in the financial condition of the
undersigned that has resulted, or could result, in a
Material Adverse Effect; to the knowledge of the
undersigned's officers, the undersigned has no
contingent obligations (including any liability for
taxes) not disclosed by or reserved against in said
balance sheets, and at the present time there are no
material unrealized or anticipated losses from any
present commitment.
e. The undersigned has reviewed its operations and
those of its subsidiaries and major commercial
counterparts with a view to assessing whether it or its
subsidiaries' respective businesses will, in the
receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization
of data, be vulnerable to a year 2000 issue. Based on
such review, the undersigned has no reason to believe
that any Material Adverse Effect will occur with respect
to its or its subsidiaries businesses or operations
resulting from a year 2000 issue.
15. COVENANTS:
The undersigned covenants and agrees that it will,
and cause its subsidiaries to, so long as Bank is
committed to make any advances to either Borrower
and thereafter so long as any Indebtedness remains
outstanding:
a. Furnish Bank:
(i) within ninety (90) days after and as of the end of
the undersigned's fiscal years, financial statements of
the undersigned on a consolidated and consolidating
basis containing the balance sheet of the undersigned as
of the close of each such fiscal year, statements of
income and retained earnings and a statement of cash
flows for each such fiscal year, and such other comments
and financial details as are usually included in similar
reports. Such reports shall be prepared in accordance
with GAAP by independent certified public accountants of
recognized standing selected by the undersigned and
acceptable to Bank and shall contain unqualified
opinions as to the fairness of the statements therein
contained;
(ii) within thirty (30) days after the end of each
month, financial statements on a consolidated and
consolidating basis containing the balance sheet of the
undersigned as of the end of each such period and
statements of income of the undersigned for the portion
of the fiscal year up to the end of such period. These
statements shall be prepared on the same accounting
basis as the statements required in paragraph (i) above
and shall be in such detail as the Bank may reasonably
require, and the accuracy of the statements shall be
certified by the chief executive or financial officer of
the undersigned;
(iii) promptly, upon becoming available, a copy of
all financial statements, reports, notices, proxy
statements and other communications sent by the
undersigned or any of its subsidiaries to their
stockholders, and all regular and periodic reports filed
by the undersigned or any of its subsidiaries with any
securities exchange, the Securities and Exchange
Commission, and any state securities bureau or
commission;
(iv) as soon as available and in any event within thirty
(30) days after the end of each fiscal quarter of the
undersigned, and ninety (90) days after the fiscal year
end, a report in such detail as Bank may specify
demonstrating the undersigned's compliance with Sections
15 (g), (h), (i) and (j) hereof, certified by an
authorized officer of the undersigned,; and
(v) promptly, and in form to be satisfactory to Bank,
such other information as Bank may reasonably request
from time to time.
b. Pay and discharge, all taxes and other governmental
charges, and all contractual obligations calling for the
payment of money, before the same shall become overdue,
unless and to the extent only that such payment is being
contested in good faith.
c. Maintain insurance coverage on its physical assets
and against other business risks in such amounts and of
such types as-are customarily carried by companies
similar in size and nature, and in the event of
acquisition of additional property, real or personal, or
of incurrence of additional risks of any nature,
increase such insurance coverage in such manner and to
such extent as prudent business judgment and present
practice would dictate.
d. Permit Bank, through its authorized attorneys,
accountants, and representatives, to examine the books,
accounts, records, ledgers and assets of every kind and
description of the undersigned at all reasonable times
upon oral or written request of Bank and, in connection
therewith, reimburse Bank for all costs and expenses
incurred by Bank in connection with audits of the assets
and records of the undersigned.
e. Promptly, not later than three (3) business days
after becoming aware thereof, notify Bank of any
condition or event which constitutes or with the running
of time and/or the giving of notice would constitute a
default in the undersigned's performance of any
obligation hereunder.
f. Maintain in good standing all licenses required by
the jurisdiction of the incorporation, or any agency
thereof, or any other governmental authority that may be
necessary or required for the undersigned to carry on
its general business objects and purposes.
g. Maintain a Current Ratio, on an consolidated basis,
not less than 1.0 to 1.0, tested quarterly.
"Current Assets" shall mean, for any Person, such
Person's current assets determined in accordance with
GAAP.
"Current Liabilities" shall mean, as of
any applicable date of determination, all
liabilities of a person that would be classified as
current in accordance with GAAP, and shall also
include, notwithstanding any provisions of GAAP to
the contrary, the face amount of any letters of
credit outstanding and any funded advances under
the Co-Borrower Facility (as defined in the Credit
Agreement) and the DT Facility (as defined in the
Credit Agreement).
"Current Ratio" shall mean, as of any
applicable date of determination, the ratio of
Current Assets to Current Liabilities.
"Credit Agreement" shall mean that Credit
Agreement of even date herewith among DT, DWC and
Bank.
h. Maintain, on a consolidated basis, a Debt Ratio
less than 1.5 to 1.0, tested quarterly.
"Debt Ratio" shall mean, as of any applicable date
of determination, the ratio of Debt to Tangible
Net Worth.
"Debt" shall mean, as of any applicable date
of determination, all items of indebtedness,
obligation or liability of a person, whether
matured or unmatured, liquidated or unliquidated,
direct or indirect, absolute or contingent, joint
or several, that should be classified as
liabilities in accordance with GAAP, and shall also
include, notwithstanding any provisions of GAAP to
the contrary, the face amount of any letters of
credit outstanding.
"Tangible Net Worth" shall mean, as of the
date of any determination, the excess of (i) the
shareholders equity of the undersigned (minus
amounts included therein in accordance with GAAP as
intangible assets, including patents, patent
rights, trademarks, trade names, franchises,
copyrights, licenses, goodwill, investment in any
individual corporation, partnership, joint
ventures, advances to officers or employees in
excess of Two Hundred Thousand Dollars ($200,000))
after all appropriate deductions in accordance with
GAAP, consistently applied (including, without
limitation, reserves for doubtful receivables,
obsolescence, depreciation and amortization) over
(ii) all liabilities of the undersigned.
"GAAP" shall mean generally accepted
accounting principles, applied in a manner
consistent with those used in connection with the
preparation of the financial reports mentioned in
Section 15(a) above.
i. Maintain, on a consolidated basis, Tangible Net
Worth of not less than $24,750,000 plus fifty percent
(50%) of positive Net Income, accrued on a quarterly
basis.
"Net Income" shall mean, as of any applicable date
of determination, net income (or loss) of a person
for any period determined in accordance with GAAP
but excluding in any event:
(i) any gains or losses on the sale or other
disposition, not in the ordinary course of business, of
investments or fixed or capital assets, and any taxes on
the excluded gains and any tax deductions or credits on
account on any excluded losses; and
(ii) net earnings of any person in which the undersigned
has an ownership interest except for wholly owned
subsidiaries for which earnings have been consolidated
per GAAP unless such net earnings shall have actually
been received by the undersigned in the form of cash
distributions.
j. Not have a negative Net Income for any two
consecutive fiscal quarters.
k. Not purchase, acquire or redeem any of its capital
stock or make any material change in its capital
structure or general business objects or purpose, or pay
cash dividends on any class of its capital stock without
the prior written consent of the Bank.
l. Not enter into any merger or consolidation or sell,
lease, transfer, or dispose of all, substantially all,
or any material part of its assets without the prior
written consent of the Bank.
m. Not guarantee, endorse, otherwise become or remain
secondarily liable for or upon the obligations of
others, except:
(a) by endorsement for deposit in the ordinary course
of business;
(b) its Guaranty of indebtedness of Borrower; and
(c) its unsecured guaranty of Three Million Three
Hundred Thousand Dollar ($3,300,000) loan from Jackson
National Life Insurance Co to Datron Resources Inc.
n. Not purchase, lease or become obligated for the
purchase or lease of any fixed assets, except for
purchases, capital leases and obligations to purchase or
lease fixed assets which, in aggregate, do not exceed
$1,700,000 in any fiscal year.
o. Not become or remain obligated for any indebtedness
for borrowed money, or for any indebtedness incurred in
connection with the acquisition of any property, real or
personal, tangible or intangible, except:
(a) indebtedness to Bank;
(b) current unsecured trade, utility or
non-extraordinary accounts payable arising in the
ordinary course of undersigned's business;
(c) purchase money indebtedness and capital lease
obligations for fixed assets incurred in connection with
purchases of fixed assets (or any refinancings thereof)
to the extent consistent with the limitations of
paragraph 15(n) above; and
(d) indebtedness relating to the unsecured guaranty of
a Three Million Three Hundred Thousand Dollar
($3,300,000) loan from Jackson National Life Insurance
Co to Datron Resources Inc.
p. Not make payments or distributions to undersigned's
shareholders and/or controlling persons or entities.
q. Not purchase or otherwise acquire or become
obligated for the purchase of all or substantially all
of the assets of business interests of any person, firm
or corporation or any shares of stock of any
corporation, trusteeship or association or in any other
manner effectuate or attempt to effectuate an expansion
of present business by acquisition without the written
consent of Bank, except for purchases and acquisitions
permitted under paragraph 15 (n) above.
r. Not make or allow to remain outstanding any
investment (whether such investment shall be of the
character of investment in shares of stock, evidences of
indebtedness or other securities or otherwise) in, or
any loans or advances to, any person, firm, corporation
or other entity or association except:
(a) Loans and advances to employees, officers and
directors not to exceed $400,000 in aggregate amount at
any time outstanding, including a Two Hundred Forty Four
Thousand Dollars($244,000) Note from David A. Derby
recorded as a contra equity account; and
(b) Loans and investments in customers of undersigned
and Borrower arising in the ordinary course of business
as the result of the compromise or settlement of
accounts payable owing by such customers.
s. Not affirmatively pledge or mortgage any of its
assets, whether now owned or hereafter acquired, or
create, suffer or permit to exist any lien, security
interest in, or creditor encumbrance thereon, without
the written consent of Bank, except:
(a) liens and encumbrances in favor of Bank;
(b) liens for taxes, assessments or other governmental
charges incurred in the ordinary course of business and
not yet past due or being contested in good faith by
appropriate proceedings and with proper reserves
therefor maintained in accordance with GAAP;
(c) liens not delinquent created by statute in
connection with worker's compensation, unemployment
insurance, social security and similar statutory
obligations;
(d) liens of mechanics, materialmen, carriers,
warehousemen or other like statutory or common law liens
securing obligations incurred in good faith in the
ordinary course of business that are not yet due and
payable or that are being contested in good faith by
appropriate proceedings and with proper reserves
therefor maintained in accordance with GAAP;
(e) encumbrances consisting of easements, rights of
way, zoning restrictions or other similar restrictions
on the use of real property, none of which materially
impairs the use of such property by Borrower in the
operation of the business for which it is used and none
of which is violated in any material respect by any
existing or proposed structure or land use;
(f) liens on real estate, furniture, fixtures and
equipment (other than the Machinery and Equipment) for
purchase money financing (including loans and leases)
used to acquire fixed assets to the extent consistent
with the limitations of paragraph 15(n) above;
(g) liens arising by operation of law in connection
with judgments being appealed; and
(h) liens on property acquired by a Borrower or any
subsidiary to the extent such Liens are in existence
when such property or subsidiary was acquired and were
not made in anticipation of such acquisition.
t. Not sell, assign, transfer or confer a security
interest in any account, contract, note, trade
acceptance or other receivable, except to Bank.
16. JURY TRIAL WAIVER: THE UNDERSIGNED AND BANK
ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A
CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH
PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY
TO CONSULT) WITH COUNSEL OF THEIR CHOICE, KNOWINGLY AND
VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION
REGARDING THE PERFORMANCE OR ENFORCEMENT OF, OR IN ANY
WAY RELATED TO, THIS GUARANTY OR THE INDEBTEDNESS.
17. HEADINGS: Headings in this Agreement are included
for the convenience of reference only and shall not
constitute a part of this Agreement for any purpose.
IN WITNESS WHEREOF, Guarantor has signed and delivered
this Guaranty the day and year first written above.
WITNESSES: Datron Systems Incorporated
Signature of: By: /s/DAVID A. DERBY
Its: Chairman, President and CEO
Signature of: GUARANTOR'S ADDRESS:
304 Enterprise Street
Escondido, California 92029