SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT ("AMENDMENT"), dated as of
July 22, 1998, effective as of June 30, 1998, is entered into by and between
DIGITAL MICROWAVE CORPORATION (the "COMPANY") and BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION (the "BANK").
RECITALS
A. The Company and the Bank are parties to a Credit Agreement dated as
of June 30, 1997, as amended by a First Amendment to Credit Agreement dated
as of June 1, 1998 (as so amended, the "CREDIT AGREEMENT"), pursuant to which
the Bank has extended certain credit facilities to the Company.
B. The Company has requested that the Bank agree to certain amendments
of the Credit Agreement.
C. The Bank is willing to amend the Credit Agreement, subject to the
terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, capitalized terms
used herein shall have the meanings, if any, assigned to them in the Credit
Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT.
(a) Section 1.01 of the Credit Agreement shall be amended as follows:
(i) The definition of "Availability Period" shall be amended
in its entirety to read as follows:
""AVAILABILITY PERIOD": the period commencing on the
date of this Agreement and ending on the date that is the
earlier to occur of (a) September 30, 1998 and (b) the
date on which the Bank's commitment to extend credit
hereunder terminates."
(ii) The definition of "Final Maturity Date" shall be amended
in its entirety to read as follows:
""FINAL MATURITY DATE": (a) in respect of any Advances,
September 30, 1998; (b) in respect of any commercial
letters of credit, March 31, 1999; (c) in respect of any
standby letters of credit, October 29, 1999; and (d) in
respect of any Bank Guaranties, October 29, 1999."
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(b) Section 7.01(k) of the Credit Agreement shall be amended
in its entirety to read as follows:
"(k) other unsecured indebtedness not to exceed
$7,500,000."
(c) Section 7.16 of the Credit Agreement shall be amended in
its entirety to read as follows:
"7.16 CONSECUTIVE QUARTERLY LOSSES; LOSSES IN ONE
QUARTER. Consecutive Quarterly Losses; Losses in One Quarter.
The Borrower on a consolidated basis shall not incur, (a) any
quarterly net or operating losses in any two consecutive fiscal
quarters or (b) any quarterly net or operating loss in excess of
5% of consolidated Tangible Net Worth computed as of the last day
of the immediately preceding fiscal quarter; PROVIDED, THAT, the
Borrower may incur on a one-time basis (i) a consecutive
quarterly net and operating loss for the two consecutive quarters
ending March 31 and June 30, 1998, and (ii) for the quarter
ending June 30, 1998, a quarterly net or operating loss in excess
of 5% of consolidated Tangible Net Worth computed as of the last
day of the immediately preceding fiscal quarter, PROVIDED,
FURTHER, THAT each of the net and operating loss for the quarter
ending June 30, 1998 may not exceed $15,000,000."
3. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Bank as follows:
(a) As of the Effective Date, no Default or Event of Default has
occurred and is continuing.
(b) The execution, delivery and performance by the Company of this
Amendment have been duly authorized by all necessary corporate and other
action and do not and will not require any registration with, consent or
approval of, notice to or action by, any Person (including any
governmental authority) in order to be effective and enforceable. The
Credit Agreement as amended by this Amendment constitutes the legal,
valid and binding obligations of the Company, enforceable against it in
accordance with its respective terms, without defense, counterclaim or
offset.
(c) As of the Effective Date, all representations and warranties
of the Company contained in the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the basis of
its own investigation and for its own reasons, without reliance upon the
Bank or any other Person.
4. EFFECTIVE DATE. This Amendment will become effective as of June
30, 1998 (the "EFFECTIVE DATE"), PROVIDED THAT the Bank has received from the
Company on or before July 31, 1998 a duly executed original (or, if elected
by the Bank, an executed facsimile copy) of this Amendment.
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5. RESERVATION OF RIGHTS. The Company acknowledges and agrees that
the execution and delivery by the Bank of this Amendment shall not be deemed
to create a course of dealing or otherwise obligate the Bank to forbear or
execute similar amendments under the same or similar circumstances in the
future.
6. MISCELLANEOUS.
(a) Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect and all references therein and in the other Credit Documents to such
Credit Agreement shall henceforth refer to the Credit Agreement as amended
by this Amendment. This Amendment shall be deemed incorporated into, and a
part of, the Credit Agreement.
(b) This Amendment shall be binding upon and inure to the benefit
of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with
this Amendment.
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of counterparts,
each of which shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Each of the
parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either
in the form of an executed original or an executed original sent by
facsimile transmission to be followed promptly by mailing of a hard copy
original, and that receipt by the Bank of a facsimile transmitted
document purportedly bearing the signature of the Company shall bind the
Company, with the same force and effect as the delivery of a hard copy
original. Any failure by the Bank to receive the hard copy executed
original of such document shall not diminish the binding effect of
receipt of the facsimile transmitted executed original of such document
which hard copy page was not received by the Bank.
(e) This Amendment, together with the Credit Agreement, contains
the entire and exclusive agreement of the parties hereto with reference
to the matters discussed herein and therein. This Amendment supersedes
all prior drafts and communications with respect thereto. This
Amendment may not be amended except in accordance with the provisions of
Section 9.05 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be deemed
prohibited by or invalid under any applicable law, such provision shall
be invalidated without affecting the remaining provisions of this
Amendment or the Credit Agreement, respectively.
(g) Company covenants to pay to or reimburse the Bank, upon
demand, for all reasonable costs and expenses (including allocated costs
of in-house counsel)
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incurred in connection with the development, preparation, negotiation,
execution and delivery of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment as of the date first above written.
DIGITAL MICROWAVE CORPORATION
By: /s/ CARL A. THOMSEN
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Name: Carl A. Thomsen
Title: Vice President, Chief Financial
Officer and Secretary
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ DEBRA G. STAIGER
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Name: Debra G. Staiger
Title: Vice President
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