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[LOGO] Heller Financial
FIRST AMENDMENT
TO
SECURITY AGREEMENT
1. Parties and Date. This First Amendment to Security Agreement (the
"Amendment") is entered into effective as of March 31, 1995, by and between
Digital Microwave Corporation, a Delaware corporation ("Debtor"), and Heller
Financial, Inc., a Delaware corporation ("Secured Party").
2. Facts. Secured Party has made a loan to Debtor (the "Loan") that is
evidenced by a Promissory Note dated October 28, 1994, made by Debtor in favor
of Secured Party in the amount of Ten Million and 00/100 Dollars
($10,000,000.00) (the "Note"). The Note is secured by a Security Agreement
dated October 28, 1994, between Debtor and Secured Party (the "Security
Agreement") covering certain collateral. Debtor's failure to satisfy various
financial conditions set forth in the Security Agreement would constitute a
default thereunder. If the Security Agreement were not amended as set forth
herein effective as of March 31, 1995, Debtor would not be able to satisfy
certain of those financial conditions and therefore would be in default under
the Security Agreement. In order to avoid that result, Debtor has requested
and Secured Party has agreed that the Security Agreement be amended on the
terms and conditions set forth in this Amendment. The parties therefore agree
as follows.
3. Amendment to Security Agreement. Debtor and Secured Party hereby
agree that the Security Agreement shall be and hereby is amended effective as
of March 31, 1995, as follows:
(i) The amount set forth in clause (aa) of Section 4 of the
Security Agreement shall be and hereby is changed from Twenty Million and
00/100 Dollars ($20,000,000) to Thirty Million and 00/100 Dollars
($30,000,000).
(ii) The last paragraph of Section 4 of the Security
Agreement shall be and hereby is deleted in its entirety and shall be of no
further force or effect. Accordingly, clauses (bb) and (cc) of Section 4 of
the Security Agreement shall be in full force and effect for all applicable
periods as long as any indebtedness under the Note, Security Agreement or other
Loan Documents (as defined in the Security Agreement) remains outstanding. The
paragraph hereby deleted and of no further force or effect reads as follows:
Notwithstanding the foregoing, if at any time the Net
Worth of Debtor exceeds Thirty-Five Million and 00/100
Dollars
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($35,000,000.00), the Net Worth requirement under clause
(aa) above, shall thereafter be Thirty-Five Million and
00/100 Dollars ($35,000,000.00), and clauses (bb) and
(cc) above, shall thereafter not be applicable.
(iii) Reserves in the amount of Three Million Two Hundred
Sixty-Five Thousand and 00/100 Dollars ($3,265,000.00) that Debtor has recorded
in its fiscal quarter ending March 31, 1995, for product discounts in
connection with the late delivery of its Spectrum II product to Siemens/E-Plus
shall not be considered for purposes of determinating EBITDA (as defined in the
Security Agreement) for any applicable calculation under clause (dd) of Section
4 of the Security Agreement (i.e., the calculations involving Debtor's EBITDA
on a trailing twelve month basis to be made as of the end of Debtor's fiscal
quarters ending March 31, 1995, June 30, 1995, September 30, 1995, and December
31, 1995).
4. Acknowledgments, Ratifications and Reaffirmations by Debtor. Debtor
hereby acknowledges, ratifies and reaffirms that (i) as of March 31, 1995, the
outstanding principal balance under the Note is Eight Million Eight Hundred
Eighty-Eight Thousand Eight Hundred Eight-Eight and 00/100 Dollars
($8,888,888.00), (ii) no Event of Default (as defined in the Security
Agreement) or other event or circumstance which, with the passage of time or
the giving of notice, or both, would constitute an Event of Default, has
occurred or exists, (iii) Debtor has no defense, offset or counterclaim to any
of Debtor's obligations under the Note, Security Agreement or other Loan
Documents, and (iv) the Note, Security Agreement (as amended by this Amendment)
and other Loan Documents are in full force and effect and are fully enforceable
against Debtor in accordance with their respective terms.
5. Fee. In consideration for Secured Party's agreement to amend the
Security Agreement as set forth herein, Debtor shall promptly pay to Secured
Party the amount of Eight Thousand Eight Hundred Eight-Eight and 88/100 Dollars
($8,888.88).
6. Effectiveness of Loan Documents. Except as expressly amended by
this Amendment, the Security Agreement, as well as the Note and all of the
other Loan Documents shall remain in full force and effect.
7. No Waiver of Remedies. Secured Party expressly reserves any and all
rights and remedies at any time available to it in connection with the Loan,
whether arising under the Note, Security Agreement and/or any of the other Loan
Documents, at law, in equity or otherwise. No failure to exercise, or delay by
secured Party in exercising, any right, remedy, power or privilege under or in
connection with the Note, Security Agreement and/or any of the other Loan
Documents shall preclude any other or further exercise thereof, or the exercise
of any other right, remedy, power or privilege at any time, and all such
rights, remedies, powers and privileges shall be cumulative and not exclusive
of one another.
8. Enforcement. This Amendment shall be governed by and construed in
accordance with the laws and decisions of the State of Illinois. At Secured
Party's election and without limiting Secured Party's right to commence an
action in any other jurisdiction, Debtor
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hereby submits to the exclusive jurisdiction and venue of any court (federal,
state or local) having situs within the State of Illinois, expressly waives
personal service of process and consents to service by certified mail, postage
prepaid, directed to the last known address of Debtor, which service shall be
deemed completed within ten (10) days after the date of mailing thereof.
9. Entire Agreement. The parties acknowledge and agree that there are
no other agreements or representations, either oral or written, express or
implied, in connection with the Loan, that are not embodied in this Amendment,
the Note, the Security Agreement and the other Loan Documents, which, together
represent a complete integration of all prior and contemporaneous agreements
and understandings of Debtor and Secured Party in any way related to the Loan.
The Security Agreement (as amended by this Amendment) may not be altered,
modified or terminated in any manner except by a writing duly executed by
Debtor and Secured Party. If any provision of the Security Agreement (as
amended by this Amendment) is held to be invalid or unenforceable, the
remaining provisions shall remain in effect without impairment.
10. Binding on Successors. Debtor shall not assign any of its rights,
duties or obligations under the Note, the Security Agreement (as amended by
this Amendment) or any of the other Loan Documents and any purported such
assignment shall be void. Secured Party may transfer or assign the Note or the
Indebtedness (as defined in the Security Agreement) and the other Loan
Documents, either together or separately, in accordance with the Security
Agreement. Without in any way limiting the foregoing, the Note, Security
Agreement (as amended by this Amendment) and other Loan Documents shall be
binding upon the successors and legal representatives of Debtor.
11. Construction. The parties acknowledge and agree that each of them
and their respective counsel have reviewed and contributed substantively and
materially to the content of this Amendment and, as a result, this Amendment,
and any ambiguities it might contain, shall not be construed more strictly
against or in favor of either party on the basis that this Amendment, or any
provision herein, was drafted by one or the other party.
IN WITNESS WHEREOF, Debtor and Secured Party have each executed this Agreement
to be effective as of the day and year first above written.
"DEBTOR" "SECURED PARTY"
Digital Microwave Corporation, a Heller Financial, Inc., a
Delaware corporation Delaware corporation
By: CARL A. THOMSEN By: DAVID KETCHUM
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Name: /s/ Carl A. Thomsen Name: /s/ David Ketchum
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Title: UP--CFO Title: Assistant Vice President
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