-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BtTbJh980ltWVZXMCij6fzTEtIom0IAd3VOrh4pEf64yMLNDo22tlMCB1AlLbISh xX/yuFNZp1TjwtQ8t8HcUA== 0000730255-97-000003.txt : 19971014 0000730255-97-000003.hdr.sgml : 19971014 ACCESSION NUMBER: 0000730255-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970830 FILED AS OF DATE: 19971010 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA AMPLIFIER INC CENTRAL INDEX KEY: 0000730255 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 953647070 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-12182 FILM NUMBER: 97693935 BUSINESS ADDRESS: STREET 1: 460 CALLE SAN PABLO CITY: CAMARILLO STATE: CA ZIP: 93012 BUSINESS PHONE: 8059879000 MAIL ADDRESS: STREET 1: 460 CALLE SAN PABLO CITY: CAMARILLO STATE: CA ZIP: 93012 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: August 30, 1997 OR __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission File Number: 012182 CALIFORNIA AMPLIFIER, INC. (Exact name of registrant's specified in its charter) Delaware 95-3647070 (State or Other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 460 Calle San Pablo Camarillo, California 93012 (Address of principal executive offices) (Zip Code) (805) 987-9000 (Registrant's telephone number including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common Stock Outstanding as of August 30, 1997: 11,722,222 Number of pages in this Form 10-Q: 14 PART I - FINANCIAL INFORMATION ITEM 1: Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except par value) Aug. 30, Mar. 1, 1997 1997 -------- ------ (Unaudited) (Audited) ASSETS Current assets: Cash and cash equivalents $ 2,477 $ 3,165 Accounts receivable 9,458 7,316 Inventories 10,824 8,200 Prepaid expenses and other current assets 1,123 1,183 - ------------------------------------------------------------------------------ Total current assets 23,882 19,864 Property and equipment -- at cost, net of accumulated depreciation and amortization 7,811 7,407 Other assets 1,092 2,265 - ------------------------------------------------------------------------------ $32,785 $ 29,536 - ------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,091 $ 2,136 Accrued liabilities 2,295 1,928 Current portion of long-term debt 841 799 - ------------------------------------------------------------------------------ Total current liabilities 7,227 4,863 Long-term debt 898 525 Minority interest share in net assets of Micro Pulse 217 --- Stockholders' equity: Preferred stock, 3,000 shares authorized; no shares outstanding --- Common stock, $.01 par value; 30,000 shares authorized; 11,722 shares outstanding in August 1997 and 11,713 in March 1997 117 117 Additional paid-in capital 14,007 13,990 Foreign currency translation adjustment (183) (127) Retained earnings 10,502 10,168 - ------------------------------------------------------------------------------ Total stockholders' equity 24,443 24,148 - ------------------------------------------------------------------------------ $32,785 $ 29,536 - ------------------------------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited; in thousands, except per share data)
Three Months Ended Six Months Ended Aug. 30, Aug. 31, Aug. 30, Aug. 31, 1997 1996 1997 1996 Sales $13,091 $11,463 $25,104 $28,738 Cost of sales 9,135 8,033 17,477 19,265 - ------------------------------------------------------------------------------ Gross profit 3,956 3,430 7,627 9,473 Research and development 1,051 1,819 2,137 3,292 Selling 1,405 1,219 2,712 2,552 General and administrative 1,105 807 2,083 1,691 - ------------------------------------------------------------------------------ Income (loss) from operations 395 (415) 695 1,938 Interest and other income (expense), net (8) 127 (13) 266 Minority interest share in income of Micro Pulse (65) --- (148) --- - ------------------------------------------------------------------------------ Income (loss) before taxes 322 (288) 534 2,204 (Provision) benefit for income taxes (118) 79 (200) (790) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Net income (loss) $ 204 $ (209) $ 334 $1,414 Net income (loss) per share $ .02 $(.02) $ .03 $ .11 - -------------------------------------------------------------------------------- Weighted average number of shares outstanding 12,034 11,607 12,009 12,665 - --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in thousands) Six Months Ended Aug. 30, Aug. 31, 1997 1996 Cash flows from operating activities: Net income $ 334 $1,414 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,562 1,385 (Increase) decrease in: Accounts receivable (1,370) (2,765) Inventories (1,990) (924) Prepaid expenses and other assets 380 (226) Increase (decrease) in: Accounts payable 1,465 (967) Accrued liabilities (232) (1,815) - ------------------------------------------------------------------------------- Cash provided (used) by operating activities: 149 (3,898) - ------------------------------------------------------------------------------- Cash flows provided by (used in) investing activities: Purchases of property and equipment (1,784) (3,371) Purchase of controlling interest in Micro Pulse 327 --- Minority interest share in net assets of Micro Pulse 217 --- Advance to Micro Pulse --- (148) - ------------------------------------------------------------------------------- Cash used in investing activities: (1,240) (3,519) - ------------------------------------------------------------------------------- Cash flows from financing activities: Addition (repayment) of term debt 384 (519) Issuances of common stock 19 200 - ------------------------------------------------------------------------------ Cash provided by (used in) financing activities: 403 (319) - ------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (688) (7,736) Cash and cash equivalents at the beginning of period 3,165 11,637 - ------------------------------------------------------------------------------ Cash and cash equivalents at end of period $2,477 $3,901 - ------------------------------------------------------------------------------ CALIFORNIA AMPLIFIER, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION - The accompanying unaudited consolidated financial statements have been prepared in accordance with the requirements of Form 10-Q and, therefore, do not include all information and footnotes which would be presented were such financial statements prepared in accordance with generally accepted accounting principles. These statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended March 1, 1997. In the opinion of management, these interim financial statements reflect all adjustments necessary for a fair presentation of the financial position and results of operations for each of the periods presented. The results of operations and cash flows for such periods are not necessarily indicative of results to be expected for the full fiscal year. 2. INVENTORIES- Inventories include the cost of material, labor and manufacturing overhead and are stated at the lower of cost (first-in, first-out) or market and consist of the following (in 000's): Aug. 30, 1997 March 1,1997 Raw material $3,154 $2,510 Work in process 958 1,568 Finished goods 6,712 4,122 ------ ----- $10,824 $8,200 ------- ------ 3. NET INCOME PER SHARE - Net income per share is based upon the weighted average number of shares outstanding during each of the respective years, including the dilutive effects of stock options and warrants using the treasury stock method. The weighted average number of shares used in the computation of net income per share for the three and six months ended August 30, 1997, and the six months ended August 31, 1996, were increased by 271,000, 321,000, and 1,058,000, respectively, for the dilutive effects of stock options and warrants. There was no share adjustment for stock options and warrants outstanding for the three months ended August 31, 1996 since the Company incurred a net loss, and the effect of including such stock options and warrants would be anti-dilutive. 4. CONSOLIDATION OF INVESTMENT IN MICRO PULSE, INC.. - In March 1997, the Company acquired additional shares in Micro Pulse, Inc. ("Micro Pulse"), which resulted in California Amplifier holding a 50.5% controlling interest in Micro Pulse. Accordingly, as of August 30, 1997, and for the three and six month periods ended August 30, 1997, the balance sheet, statements of income, and cash flows of Micro Pulse are consolidated with those of the Company, reduced by the minority interests' share in the net assets and income of Micro Pulse. Prior to March 2, 1997 and as of March 1, 1997, the 50% investment in Micro Pulse was accounted for using the equity method of accounting. 5. CONTINGENCIES - In June 1997, the Company and certain of its Directors and Officers had three legal actions filed against them, one in United States District Court, Central District of California, Western Division and two in Superior Court for the State of California, County of Ventura. See Part II, Item I- Legal Proceedings included elsewhere herein. Based upon the analysis performed to date, the Company and its Directors and Officers plan to vigorously defend themselves against these claims. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION RESULTS OF OPERATIONS THREE MONTHS ENDED AUGUST 30, 1997 AND AUGUST 31, 1996 SALES Sales increased by $1.6, or 12% from $11.5 million for the three months ended August 31, 1996 to $13.1 million for the three months ended August 30, 1997. Sales of Wireless Cable products increased $312,000, or 4%, from $7.5 million, to $7.8 million. Sales of Satellite Television products decreased $148,000, or 4%, from $3.9 million to $3.8 million. Sales of Antenna products (sales by Micro Pusle) for the three months ended were $1.5 million, but were not included in the sales of the Company in the prior year period since Micro Pulse was reflected as an equity investment and not consolidated. The increase in Wireless Cable sales results from increased sales of Wireless reception products, primarily to Latin America, offset by a decrease in sales of MultiCipher products. The decrease in sales of Satellite Television products results from a continued decrease in sales of C-Band products domestically because of the Ku-DBS alternative, and decreases in sales of C-Band products internationally primarily because of pricing competition. The C-Band product sales decline, however, was offset by increases in Ku-DBS products as the Company expands the Ku-DBS product line. The Company's future sales growth is dependent upon maintaining its Wireless Cable market share internationally, the broad introduction of digital Wireless Cable in the United States which the Company must participate, and continued demand for its Ku-DBS products into niche markets. GROSS PROFITS AND GROSS MARGINS Gross profits increased by $526,000, or 13%, from $3.4 million to $4.0 million. Gross margins increased from 29.9% to 30.2%. The increase in gross profits resulted from increased sales and the slight improvement in gross margins. The gross margin increase is primarily a result of increased sales volumes and product sales mix. There will be continued pressures on gross margins primarily because of competitive pricing pressures. As a result, the Company will concentrate on product cost reductions and product differentiation in an attempt to maintain or increase gross margins. OPERATING EXPENSES Research and development expenses decreased by $768,000 from $1.8 million to $1.1 million. The decrease resulted primarily from reduced expenditures in the current fiscal year period as compared to the second quarter of the prior year, relating primarily to the development and introduction of MultiCipher Plus, offset by the research and development expenses incurred by Micro Pulse, which is now consolidated. Selling expenses increased by $186,000 from $1.2 million to $1.4 million. The increase was due primarily to personnel additions, and selling expenses incurred by Micro Pulse, which is now consolidated. General and administrative expenses increased by $298,000 from $807,000 to $1.1 million. The increase was primarily due to increased general administrative expenses and administrative expenses incurred by Micro Pulse, which is now consolidated. INCOME (LOSS) FROM OPERATIONS Income (loss) from operations, for the reasons noted above, increased by $810,000, from an operating loss of ($415,000) to operating income of $395,000. INTEREST AND OTHER INCOME (EXPENSE), NET Interest and other income (expense), net, decreased by $135,000 to $8,000 expense, net, from $127,000 income, net. The primary reason for the decrease is reduced interest income because of lower cash balances during the current year quarter. MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE The minority interest share in income of Micro Pulse represents the 49.5% ownership interest's share of the consolidated income before tax of Micro Pulse. In the prior year, Micro Pulse was not consolidated, however, no income was booked during the second quarter of the prior year for California Amplifier's then 50% ownership interest, which was accounted for using the equity method of accounting. PROVISION FOR TAXES The provision for taxes for the second quarter of fiscal 1998 is based upon an annualized tax rate of 37%. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. NET INCOME (LOSS) Net income (loss), for reasons outlined above, increased by $413,000, from ($209,000) to $204,000. SIX MONTHS ENDED AUGUST 30, 1997 AND AUGUST 31, 1996 SALES Sales decreased by $3.6 million, or 13%, from $28.7 million for the six months ended August 31, 1996 to $24.1 million for the six months ended August 30, 1997. Sales of Wireless Cable products decreased $5.6 million, or 27%, from $20.4 million to $14.9 million. Sales of Satellite Television products decreased $1.1 million, or 14%, from $8.2 million to $7.1 million. Sales of Antenna products (sales by Micro Pulse) for the six months ended August 30, 1997 were $3.2 million, but were not included in the sales of the Company in the prior year period since Micro Pulse was reflected as an equity investment and not consolidated. The decreases in Wireless Cable sales resulted primarily from decreases in the sales of MultiCipher products. Sales of Wireless Cable reception products remained about flat, with increases in Latin America, offset by reductions domestically and in Asia. The decrease in Satellite Television products resulted from continued decreases in sales of C-Band products domestically because of the Ku-DBS alternative, and decreased sales of C-Band product internationally primarily because of pricing competition. The C-Band product sales decline, however, was offset by increases in Ku-DBS products as the Company expands the Ku-DBS product line. The Company's future sales growth is dependent upon maintaining its Wireless Cable market share internationally, the broad introduction of digital Wireless Cable in the United States which the Company must participate, and continued demand for its Ku-DBS products into niche markets. GROSS PROFITS AND GROSS MARGINS Gross profits decreased by $1.8 million, or 19%, from $9.5 million to $7.6 million, and gross margins decreased from 33% to 30.3%. The 19% decrease in gross profits resulted from a 13% decrease in sales, and the 2.7% reduction in gross margins. The gross margin decline is primarily a result of lower sales volumes, and pricing competition in Wireless Cable reception and Ku-DBS products. There will be continued pressure on gross margins primarily because of competitive pricing pressures. As a result, the Company will concentrate on product cost reductions and product differentiation in an attempt to maintain or increase gross margins. OPERATING EXPENSES Research and development expenses decreased $1.2 million from $3.3 million to $2.1 million. The decrease resulted primarily from reduced expenditures during the current fiscal year six month period, as compared to the prior year period, relating to the development, introduction and rollout of MultiCipher Plus. These reduced expenses were offset by research and development costs incurred by Micro Pulse, which is now consolidated. Selling expenses increased $160,000 from $2.55 million to $2.71 million. The increase is primarily a result of personnel additions, and selling expenses incurred by Micro Pulse, which is now consolidated. General and Administrative expense increased $392,000 from $1.7 million to $2.1 million. The increase is due to a higher level of administrative expenses, and the administrative costs of Micro Pulse which is now consolidated. INCOME FROM OPERATIONS Income from operations, for the reasons outlined above, decreased $1.2 million, from $1.9 million to $695,000. INTEREST AND OTHER INCOME (EXPENSE), NET Interest and other income (expense), net, decreased by $279,000 to $13,000 expense, net from $266,000 income, net. The primary reason for the decrease is reduced interest income because of lower cash balances during the current year period. MINORITY INTEREST SHARE IN INCOME OF MICRO PULSE The minority interest share in income of Micro Pulse represents 49.5% ownership interest's share of the consolidated income before tax of Micro Pulse. In the prior year, Micro Pulse was not consolidated, however, no income was booked during the second quarter of the prior year for California Amplifier's then 50% ownership interest which was accounted for using the equity method of accounting. PROVISION FOR TAXES The provision for taxes for the second quarter of fiscal 1998 is based upon an annualized tax rate of 37%, the same tax rate as fiscal year 1997. This tax rate assumes savings from benefits allowed for export sales through a foreign sales corporation and research and development tax credits. NET INCOME Net income, for reasons outlined above, decreased by $1.1 million, or 76% from $1.4 million to $334,000. LIQUIDITY AND CAPITAL RESOURCES The Company has a $6.0 million working capital facility with California United Bank at the bank's prime rate (8.5% at August 30, 1997). In addition, California Amplifier s.a.r.l., its foreign subsidiary, has an informal arrangement with a French bank to borrow up to $600,000. As of August 30, 1997, no amounts were outstanding under any of these arrangements. The $6.0 million credit facility with California United Bank expires in August 1998. The Company believes that cash flow from operations, together with the funds available under its credit facilities, are sufficient to support operations and capital equipment requirements over the next twelve months. The Company believes that inflation has not had a material effect on its operations. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. On June 11, 1997, the Company and certain of its directors and officers had two legal actions filed against them, one in the United States District Court, Central District of California, entitled Yourish v. California Amplifier, Inc., et al., Case No. 97-4293 (BM (Mcx), and the other in the Superior Court for the State of California, County of Ventura, entitled Yourish v. California Amplifier, Inc., et al., Case No. CIV 173569. On June 30, 1997, another legal action was filed against the same defendants in the Superior Court for the State of California, County of Ventura, entitled Burns, et al., v. California Amplifier, Inc., et al., Case No. CIV 173981. All three actions are purported class actions on behalf of purchasers of the common stock of the Company between September 12, 1995 and August 8, 1996. The actions claim that the defendants engaged in a scheme to make false and misleading statements and omit to disclose material adverse facts to the public concerning the Company, allegedly causing the Company's stock price to artificially rise, and thereby allegedly allowing the individual defendants to sell stock at inflated prices. Plaintiffs claim that the purported stockholder class was damaged when the price of the stock declined upon disclosure of the alleged adverse facts. The Company and its legal counsel are currently evaluating the claims. Based upon the analysis performed to date, the Company, its directors and officers, plan to vigorously defend themselves against these claims. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The annual meeting of stockholders of California Amplifier, Inc. was held July 18, 1997. At the annual meeting of stockholders a proposal was considered for the election of Ira Coron, Arthur H. Hausman, William E. McKenna and Thomas L. Ringer as directors to serve until the 1998 annual meeting of stockholders. The director-nominees were elected. The voting results were as follows: Proposal 1) Election of directors: For Withheld Against Ira Coron 10,800,072 131,998 0 Arthur H. Hausman 10,800,321 131,749 0 William E. McKenna 10,799,371 132,699 0 Thomas L. Ringer 10,804,872 127,198 0 ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) See exhibit index attached hereto which is incorporated herein by this reference. (b) No reports on Form 8-K were filed during the quarter ended August 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. California Amplifier, Inc. (Registrant) October 10, 1997 /S/ MICHAEL R. FERRON ----------------------------- Michael R. Ferron Vice President, Finance and Chief Accounting Officer INDEX TO EXHIBITS 3.1 Certificate of Incorporation of the Registrant, as amended, filed as Exhibit 3.1 to the Registrant's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 3.1.1 Amendment to Certificate of Incorporation of the Registrant, as filed with the Delaware Secretary of State on September 19, 1996, filed as Exhibit 3.1.1 to the Registrant's Interim Report on Form 10-Q for the period ended August 31, 1996. 3.2 Bylaws of the Registrant, as amended, filed as Exhibit 3.2 to the Registrant's Form 8-K dated February 27, 1992 and by this reference is incorporated herein and made a part hereof. 10.1 1984 Key Employee Stock Option Plan filed as Exhibit 10.1 to the Registrant's Registration Statement on Form S-1 (2-87042) and by this reference is incorporated herein and made a part hereof. 10.2 Form of Incentive Stock Option Agreement filed as Exhibit 10.2 to the Registrant's Registration Statement on Form S-1 (2-87042) and by this reference is incorporated herein and made a part hereof. 10.3 Form of Nonqualified Stock Option Agreement filed as Exhibit 10.3 to the Registrant's Registration Statement on Form S-1 (2-87042) and by this reference is incorporated herein and made a part hereof. 10.4 1989 Key Employee Stock Option Plan filed as Exhibit 4.4 to the Registrant's Registration Statement on Form S-8 (33-31427) and by this reference is incorporated herein and made a part hereof. 10.4.1 Amendment No. 1 to the 1989 Key Employee Stock Option Plan filed as Exhibit 4.7 to the Registrant's Registration Statement on Form S-8(33-36944) and by this reference is incorporated herein and made a part hereof. 10.4.2 Amendment No. 2 to the 1989 Key Employee Stock Option Plan filed as Exhibit 4.8 to the Registrant's Registration Statement on Form S-8 (33-72704) and by this reference is incorporated herein and made a part hereof. 10.4.3 Amendment No. 3 to the 1989 Key Employee Stock Option Plan filed as Exhibit 4.10 to the Registrant's Registration Statement on Form S-8 (33-60879) and by this reference is incorporated herein and made a part hereof. 10.5 Form of Incentive Stock Option Agreement filed as Exhibit 4.6 to the Registrant's Registration Statement on Form S-8 (33-31427) and by this reference is incorporated herein and made a part hereof. 10.6 Form of Nonqualified Stock Option Agreement filed as Exhibit 4.6 to the Registrant's Registration Statement on Form S-8 (33-31427) and by this reference is incorporated herein and made a part hereof. 10.7 Form of Option Agreement for Non-Employee Directors filed as Exhibit 4.9 to the Registrant's Registration Statement on Form S-8 (33-36944) and by this reference is incorporated herein and made a part hereof. 10.8 Letter Agreements regarding sale of the building dated July 18, 1988, filed as an exhibit to Form 8-K, dated February 27, 1989, filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 28, 1989 and by this reference is incorporated herein and made a part hereof. 10.9 Building Lease and Rider on building between the Registrant and Calle San Pablo Property Co. dated January 31, 1989, filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 28, 1989 and by this reference is incorporated herein and made a part hereof. 10.9.1Amendment of Lease on building between the Registrant and Calle San Pablo Property Co. dated February 9, 1995, filed as an exhibit to this Annual Report on Form 10-K for the fiscal year ended March 4, 1995. 10.10 Form of Indemnity Agreement filed as an exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 29, 1988 and by this reference is incorporated herein and made a part hereof. 10.11 Stockholder Rights Plan filed as an exhibit to the Registrant's Form 8-K dated September 5, 1991 and by this reference is incorporated herein and made a part hereof. 10.12 Distribution Agreement between Registrant and Pan Asian Systems, Ltd., dated July 3, 1992 filed as Exhibit 10.17 to the Company's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.13 Stock Purchase Agreement dated December 31, 1992 by and among Registrant, Peter J. Connolly, Steven G. Ow and Toni Ow, and The Peter J. Connolly Charitable Remainder Unitrust dated June 15, 1992 filed as Exhibit 10.20 to the Company's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.14 8% Convertible Subordinated Note dated January 20, 1993 by Registrant payable to The Peter J. Connolly Charitable Remainder Unitrust dated June 15, 1992 filed as Exhibit 10.21 to the Registrant's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.15 8% Convertible Subordinated Note dated January 20, 1993 by Registrant payable to Steven G. Ow and Toni Ow dated June 15, 1992 filed as Exhibit 10.22 to the Registrant's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.16 Promissory Note dated January 20, 1993 by Micro Pulse Incorporated, payable to Registrant filed as Exhibit 10.23 to the Registrant's Registration statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.17 Option Agreement entered into as of February 4, 1993 by and among CAMP Acquisition Corp., Mr. Charles W. Ergen and the Registrant filed as Exhibit 10.24 to the Registrant's Registration Statement on Form S-1 (33-59702) and by this reference is incorporated herein and made a part hereof. 10.18 Promissory Note Agreement between Registrant and California United Bank dated April 5, 1993, filed as Exhibit 10.18 to the Registrant's Annual Report on Form 10-K for the fiscal year ended February 27, 1993 and by this reference is incorporated herein and made part hereof. 10.19 Change in Terms Agreement between Registrant and California United Bank, dated July 22, 1994, and filed as Exhibit 10.19 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 4, 1995, and by this reference is incorporated herein and made part hereof. 10.20 First Amendment to Business Loan Agreement between Registrant and California United Bank, dated July 22, 1994, filed as Exhibit 10.20 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 4, 1995, and by this reference is incorporated herein and made part hereof. 10.21 Second Amendment to Business Loan Agreement between Registrant and California United Bank, dated September 13, 1994, filed as Exhibit 10.21 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 4, 1995, and by this reference is incorporated herein and made part hereof. 10.22 Business Loan Agreement between Registrant and California United Bank, dated July 26, 1995, filed as Exhibit 10.22 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 2, 1996, and by this reference is incorporated herein and made part hereof. 10.23 Promissory Note between Registrant and California United Bank dated July 26, 1995, filed as Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 2, 1996, and by this reference is incorporated herein and made part hereof. 10.24 Commercial Security Agreement between Registrant and California United Bank dated July 26, 1995, filed as Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 2, 1996, and by this reference is incorporated herein and made part hereof. 10.25 First Amendment to Business Loan Agreement between Registrant and California United Bank, dated July 26, 1995, filed as Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 2, 1996, and by this reference is incorporated herein and made part hereof. 10.26 Promissory Note between Registrant and California United Bank dated August 6, 1996, filed as Exhibit 10.26 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 1, 1997. 10.27 Second Amendment to Business Loan Agreement between Registrant and California United Bank, dated August 6, 1996, filed as Exhibit 10.27 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 1, 1997, and by this reference is incorporated herein and made part hereof. 10.28 Building Lease on building between the Registrant and The Jennings Bypass Trust, dated September 11, 1996, filed as Exhibit 10.28 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 1, 1997, and by this reference is incorporated herein and made part hereof. 10.29 Land Purchase Agreement on land between the Registrant and Rhoda-May A. Dallas Trust, dated February 13, 1996, filed as Exhibit 10.29 to the Registrant's Annual Report on Form 10-K for the fiscal year ended March 1, 1997, and by this reference is incorporated herein and made part hereof. *10.30Loan Agreement between Registrant and California United Bank, dated August 22, 1997, filed as Exhibit 10.30 to the Registrant's Quarterly Report on Form 10-Q for the period ended August 30, 1997. *10.31Change in Terms Agreement between Registrant and California United Bank, dated August 22, 1997, and filed as Exhibit 10.31 to the Registrant's Quarterly Report on Form 10-Q for the period ended August 30, 1997. *27 Financial Data Schedule - ------------------- * Filed herewith EX-10 2 EXHIBIT 10.30 LOAN AGREEMENT EXHIBIT 10.30 Borrower: California Amplifier, Inc. Lender: California United Bank 460 Calle San Pablo Encino Commercial Loan Center Camarillo, CA 93012 16030 Ventura Boulevard Encino, CA 91436 THIS LOAN AGREEMENT between California Amplifier, Inc. ("Borrower") and California United Bank ("Lender") is made and executed on the following terms and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans and other financial accommodations, including those which may be described on any exhibit or schedule attached to this Agreement. All such loans and financial accommodations, together with all future loans and financial accommodations from Lender to Borrower, are referred to in this Agreement individually as the "Loan" and collectively as the "Loans." Borrower understands and agrees that: (a) in granting, renewing, or extending any Loan, Lender is relying upon Borrower's representations, warranties, and agreements, as set forth in this Agreement; (b) the granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender's sole judgment and discretion; and (c) all such Loans shall be and shall remain subject to the following terms and conditions of this Agreement. TERM. This Agreement shall be effective as of August 22, 1997, and shall continue thereafter until all Indebtedness of Borrower to Lender has been performed in full and the parties terminate this Agreement in writing. DEFINITIONS. The following words shall have the following meanings when used in this Agreement. Terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. All references to dollar amounts shall mean amounts in lawful money of the United States of America. Agreement. The word "Agreement" means this Loan Agreement, as this Loan Agreement may be amended or modified from time to time, together with all exhibits and schedules attached to this Loan Agreement from time to time. Advance. The word "Advance" means a disbursement of Loan funds under this Agreement. Borrower. The word "Borrower" means California Amplifier, Inc.. The word "Borrower" also includes, as applicable, all subsidiaries and affiliates of Borrower as provided below in the paragraph titled "Subsidiaries and Affiliates." CERCLA. The word "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended. Collateral. The word "Collateral" means and includes without limitation all property and assets granted as collateral security for a Loan, whether real or personal property, whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security interest, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. The word "Collateral" includes without limitation all collateral described below in the section titled "COLLATERAL." ERISA. The word "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. Event of Default. The words "Event of Default" mean and include without limitation any of the Events of Default set forth below in the section titled "EVENTS OF DEFAULT." Expiration Date. The words "Expiration Date" mean the date of termination of Lender's commitment to lend under this Agreement. Grantor. The word "Grantor" means and includes without limitation each and all of the persons or entities granting a Security Interest in any Collateral for the Indebtedness, including without limitation all Borrowers granting such a Security Interest. Guarantor. The word "Guarantor" means and includes without limitation each and all of the guarantors, sureties, and accommodation parties in connection with any Indebtedness. Indebtedness. The word "Indebtedness" means and includes without limitation all Loans, together with all other obligations, debts and liabilities of Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower, or any one or more of them; whether now or hereafter existing, voluntary or involuntary, due or not due, absolute or contingent, liquidated or unliquidated; whether Borrower may be liable individually or jointly with others; whether Borrower may be obligated as a guarantor, surety, or otherwise; whether recovery upon such Indebtedness may be or hereafter may become barred by any statute of limitations; and whether such Indebtedness may be or hereafter may become otherwise unenforceable. Lender. The word "Lender" means California United Bank, its successors and assigns. Letter of Credit. The words "Letter of Credit" mean a letter of credit issued by Lender on behalf of Borrower as described below in the section titled "Letter of Credit Facility." Line of Credit. The words "Line of Credit" mean the credit facility described in the Section titled "LINE OF CREDIT" below. Loan. The word "Loan" or "Loans" means and includes without limitation any and all commercial loans and financial accommodations from Lender to Borrower, whether now or hereafter existing, and however evidenced, including without limitation those loans and financial accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. Note. The word "Note" means and includes without limitation Borrower's promissory note or notes, if any, evidencing Borrower's Loan obligations in favor of Lender, as well as any substitute, replacement or refinancing note or notes therefor. Related Documents. The words "Related Documents" mean and include without limitation all promissory notes, credit agreements, loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, and all other instruments, agreements and documents, whether now or hereafter existing, executed in connection with the Indebtedness. Security Agreement. The words "Security Agreement" mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing, governing, representing, or creating a Security Interest. Security Interest. The words "Security Interest" mean and include without limitation any type of collateral security, whether in the form of a lien, charge, mortgage, deed of trust, assignment, pledge, chattel mortgage, chattel trust, factor's lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. SARA. The word "SARA" means the Superfund Amendments and Reauthorization Act of 1986 as now or hereafter amended. LINE OF CREDIT. Lender agrees to make Advances to Borrower from time to time from the date of this Agreement to the Expiration Date, provided the aggregate amount of such Advances outstanding at any time does not exceed the Line of Credit. Within the foregoing limits, Borrower may borrow, partially or wholly prepay, and reborrow under this Agreement as follows. Conditions Precedent to Each Advance. Lender's obligation to make any Advance to or for the account of Borrower under this Agreement is subject to the following conditions precedent, with all documents, instruments, opinions, reports, and other items required under this Agreement to be in form and substance satisfactory to Lender: (a) Lender shall have received evidence that this Agreement and all Related Documents have been duly authorized, executed, and delivered by Borrower to Lender. (b) Lender shall have received such opinions of counsel, supplemental opinions, and documents as Lender may request. (c) The security interests in the Collateral shall have been duly authorized, created, and perfected with first lien priority and shall be in full force and effect. (d) All guaranties required by Lender for the Line of Credit shall have been executed by each Guarantor, delivered to Lender, and be in full force and effect. (e) Lender, at its option and for its sole benefit, shall have conducted an audit of Borrower's books, records, and operations, and Lender shall be satisfied as to their condition. (f) Borrower shall have paid to Lender all fees, costs, and expenses specified in this Agreement and the Related Documents as are then due and payable. (g) There shall not exist at the time of any Advance a condition which would constitute an Event of Default under this Agreement. Making Loan Advances. Advances under the Line of Credit may be requested orally subject to the limitations set forth below. Lender may, but need not, require that all oral requests be confirmed in writing. Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of Borrower (a) when credited to any deposit account of Borrower maintained with Lender or (b) when advanced in accordance with the instructions of an authorized person. Lender, at its option, may set a cutoff time, after which all requests for Advances will be treated as having been requested on the next succeeding Business Day. Mandatory Loan Repayments. If at any time the aggregate principal amount of the outstanding Advances shall exceed the applicable Line of Credit, Borrower, immediately upon written or oral notice from Lender, shall pay to Lender an amount equal to the difference between the outstanding principal balance of the Advances and the Line of Credit. On the Expiration Date, Borrower shall pay to Lender in full the aggregate unpaid principal amount of all Advances then outstanding and all accrued unpaid interest, together with all other applicable fees, costs and charges, if any, not yet paid. Loan Account. Lender shall maintain on its books a record of account in which Lender shall make entries for each Advance and such other debits and credits as shall be appropriate in connection with the credit facility. Lender shall provide Borrower with periodic statements of Borrower's account, which statements shall be considered to be correct and conclusively binding on Borrower unless Borrower notifies Lender to the contrary within thirty (30) days after Borrower's receipt of any such statement which Borrower deems to be incorrect. Out of Debt Provision. Borrower shall maintain a zero balance on the Line of Credit for a period of at least thirty (30) consecutive days during the term of this loan. Letter of Credit Sublimit. Subject to the terms of this Agreement, Lender will issue standby letters of credit and commercial letters of credit (each a "Letter of Credit") on behalf of Borrower. At no time, however, shall the total face amount of all Letters of Credit outstanding, less any partial draws paid under the Letters of Credit exceed the sum of $100,000.00. For purposes of calculating the amount of Advances available under the Line of Credit, 100% of the face amount of the outstanding Letters of Credit shall be deemed Advances under the Line of Credit and therefore subtracted from the amount available under the Line of Credit. (a) Upon Lender's request, Borrower promptly shall pay to Lender issuance fees and such other fees, commissions, costs, and any out-of-pocket expenses charged or incurred by Lender with respect to any Letter of Credit. (b) The commitment by Lender to issue Letters of Credit shall, unless earlier terminated in accordance with the terms of this Agreement, automatically terminate on the Expiration Date and no standby Letter of Credit shall expire on a date which is sixty (60) days after the Expiration Date. (c) Each Letter of Credit shall be in form and substance satisfactory to Lender and in favor of beneficiaries satisfactory to Lender, provided that Lender may refuse to issue a Letter of Credit due to the nature of the transaction or its terms or in connection with any transaction where Lender, due to the beneficiary or the nationality or residence of the beneficiary, would be prohibited by any applicable law, regulation, or order from issuing such Letter of Credit. Under no circumstances, however, will a commercial Letter of Credit and standby Letter of Credit exceed one hundred twenty (120) days and three hundred sixty (360) days from the issue date, respectively. (d) Prior to the issuance of each Letter of Credit, and in all events prior to any daily cutoff time Lender may have established for purposes thereof, Borrower shall deliver to Lender a duly executed form of Lender's standard form of application for issuance of letter of credit with proper insertions. Lender's Rights Upon Default. Upon the occurrence of any Event of Default, Lender may, at its sole and absolute discretion and in addition to any other remedies available to it under this Agreement or otherwise, require Borrower to pay immediately to Lender, for application against drawings under any outstanding Letters of Credit, the outstanding principal amount of any such Letters of Credit which have not expired. Any portion of the amount so paid to Lender which is not applied to satisfy draws under any such Letters of Credit or any other obligations of Borrower to the Lender shall be repaid to Borrower without interest. Lender's Costs and Expenses. Borrower shall, upon Lender's request, promptly pay to and reimburse Lender for all costs incurred and payments made by Lender by reason of any future assessment, reserve, deposit, or similar requirement or any surcharge, tax, or fee imposed upon Lender or as a result of Lender's compliance with any directive or requirement of any regulatory authority pertaining or relating to any Letter of Credit. COLLATERAL. To secure payment of the Line of Credit and performance of all other Loans, obligations and duties owed by Borrower to Lender, Borrower (and others, if required) shall grant to Lender Security Interests in such property and assets as Lender may require (the "Collateral"). Lender's Security Interests in the Collateral shall be continuing liens and shall include the proceeds and products of the Collateral, including without limitation the proceeds of any insurance. With respect to the Collateral, Borrower agrees and represents and warrants to Lender: Perfection of Security Interests. Borrower agrees to execute such financing statements and to take whatever other actions are requested by Lender to perfect and continue Lender's Security Interests in the Collateral. Upon request of Lender, Borrower will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Borrower will note Lender's interest upon any and all chattel paper if not delivered to Lender for possession by Lender. Contemporaneous with the execution of this Agreement, Borrower will execute one or more UCC financing statements and any similar statements as may be required by applicable law, and will file such financing statements and all such similar statements in the appropriate location or locations. Borrower hereby appoints Lender as its irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect or to continue any Security Interest. Lender may at any time, and without further authorization from Borrower, file a carbon, photograph, facsimile, or other reproduction of any financing statement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection, termination, and the continuation of the perfection of Lender's security interest in the Collateral. Borrower promptly will notify Lender of any change in Borrower's name including any change to the assumed business names of Borrower. Borrower also promptly will notify Lender of any change in Borrower's Social Security Number or Employer Identification Number. Borrower further agrees to notify Lender in writing prior to any change in address or location of Borrower's principal governance office or should Borrower merge or consolidate with any other entity. Collateral Records. Borrower does now, and at all times hereafter shall, keep correct and accurate records of the Collateral, all of which records shall be available to Lender or Lender's representative upon demand for inspection and copying at any reasonable time. Collateral Schedules. Concurrently with the execution and delivery of this Agreement, Borrower shall execute and deliver to Lender a schedule of Collateral, in form and substance satisfactory to the Lender. Thereafter and at such frequency as Lender shall require. REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of Loan proceeds, as of the date of any renewal, extension or modification of any Loan, and at all times any Indebtedness exists: Organization. Borrower is a corporation which is duly organized, validly existing, and in good standing under the laws of the State of Delaware and is validly existing and in good standing in all states in which Borrower is doing business. Borrower has the full power and authority to own its properties and to transact the businesses in which it is presently engaged or presently proposes to engage. Borrower also is duly qualified as a foreign corporation and is in good standing in all states in which the failure to so qualify would have a material adverse effect on its businesses or financial condition. Authorization. The execution, delivery, and performance of this Agreement and all Related Documents by Borrower, to the extent to be executed, delivered or performed by Borrower, have been duly authorized by all necessary action by Borrower; do not require the consent or approval of any other person, regulatory authority or governmental body; and do not conflict with, result in a violation of, or constitute a default under (a) any provision of its articles of incorporation or organization, or bylaws, or any agreement or other instrument binding upon Borrower or (b) any law, governmental regulation, court decree, or order applicable to Borrower. Financial Information. Each financial statement of Borrower supplied to Lender truly and completely disclosed Borrower's financial condition as of the date of the statement, and there has been no material adverse change in Borrower's financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material contingent obligations except as disclosed in such financial statements. Legal Effect. This Agreement constitutes, and any instrument or agreement required hereunder to be given by Borrower when delivered will constitute, legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms. Properties. Except for Permitted Liens, Borrower owns and has good title to all of Borrower's properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such properties. All of Borrower's properties are titled in Borrower's legal name, and Borrower has not used, or filed a financing statement under, any other name for at least the last five (5) years. Hazardous Substances. The terms "hazardous waste," "hazardous substance," "disposal," "release," and "threatened release," as used in this Agreement, shall have the same meanings as set forth in the "CERCLA," "SARA," the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq., Chapters 6.5 through 7.7 of Division 20 of the California Health and Safety Code, Section 25100, et seq., or other applicable state or Federal laws, rules, or regulations adopted pursuant to any of the foregoing. Except as disclosed to and acknowledged by Lender in writing, Borrower represents and warrants that: (a) During the period of Borrower's ownership of the properties, there has been no use, generation, manufacture, storage, treatment, disposal, release or threatened release of any hazardous waste or substance by any person on, under, about or from any of the properties. (b) Borrower has no knowledge of, or reason to believe that there has been (i) any use, generation, manufacture, storage, treatment, disposal, release, or threatened release of any hazardous waste or substance on, under, about or from the properties by any prior owners or occupants of any of the properties, or (ii) any actual or threatened litigation or claims of any kind by any person relating to such matters. (c) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the properties shall use, generate, manufacture, store, treat, dispose of, or release any hazardous waste or substance on, under, about or from any of the properties; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation those laws, regulations and ordinances described above. Borrower authorizes Lender and its agents to enter upon the properties to make such inspections and tests as Lender may deem appropriate to determine compliance of the properties with this section of the Agreement. Any inspections or tests made by Lender shall be at Borrower's expense and for Lender's purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The representations and warranties contained herein are based on Borrower's due diligence in investigating the properties for hazardous waste and hazardous substances. Borrower hereby (a) releases and waives any future claims against Lender for indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (b) agrees to indemnify and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release occurring prior to Borrower's ownership or interest in the properties, whether or not the same was or should have been known to Borrower. The provisions of this section of the Agreement, including the obligation to indemnify, shall survive the payment of the Indebtedness and the termination or expiration of this Agreement and shall not be affected by Lender's acquisition of any interest in any of the properties, whether by foreclosure or otherwise. Litigation and Claims. No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower's financial condition or properties, other than litigation, claims, or other events, if any, that have been disclosed to and acknowledged by Lender in writing. Taxes. To the best of Borrower's knowledge, all tax returns and reports of Borrower that are or were required to be filed, have been filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. Lien Priority. Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower's Loan and Note, that would be prior or that may in any way be superior to Lender's Security Interests and rights in and to such Collateral. Binding Effect. This Agreement, the Note, all Security Agreements directly or indirectly securing repayment of Borrower's Loan and Note and all of the Related Documents are binding upon Borrower as well as upon Borrower's successors, representatives and assigns, and are legally enforceable in accordance with their respective terms. Commercial Purposes. Borrower intends to use the Loan proceeds solely for business or commercial related purposes. Employee Benefit Plans. Each employee benefit plan as to which Borrower may have any liability complies in all material respects with all applicable requirements of law and regulations, and (i) no Reportable Event nor Prohibited Transaction (as defined in ERISA) has occurred with respect to any such plan, (ii) Borrower has not withdrawn from any such plan or initiated steps to do so, (iii) no steps have been taken to terminate any such plan, and (iv) there are no unfunded liabilities other than those previously disclosed to Lender in writing. Location of Borrower's Offices and Records. Borrower's place of business, or Borrower's Chief executive office, if Borrower has more than one place of business, is located at 460 Calle San Pablo, Camarillo, CA 93012. Unless Borrower has designated otherwise in writing this location is also the office or offices where Borrower keeps its records concerning the Collateral. Information. All information heretofore or contemporaneously herewith furnished by Borrower to Lender for the purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all information hereafter furnished by or on behalf of Borrower to Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified; and none of such information is or will be incomplete by omitting to state any material fact necessary to make such information not misleading. Survival of Representations and Warranties. Borrower understands and agrees that Lender, without independent investigation, is relying upon the above representations and warranties in extending Loan Advances to Borrower. Borrower further agrees that the foregoing representations and warranties shall be continuing in nature and shall remain in full force and effect until such time as Borrower's Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last to occur. AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while this Agreement is in effect, Borrower will: Litigation. Promptly inform Lender in writing of (a) all material adverse changes in Borrower's financial condition, and (b) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the financial condition of any Guarantor. Financial Records. Maintain its books and records in accordance with generally accepted accounting principles, applied on a consistent basis, and permit Lender to examine and audit Borrower's books and records at all reasonable times. Additional Information. Furnish such additional information and statements, lists of assets and liabilities, agings of receivables and payables, inventory schedules, budgets, forecasts, tax returns, and other reports with respect to Borrower's financial condition and business operations as Lender may request from time to time. Insurance. Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with respect to Borrower's properties and operations, in form, amounts, coverages and with insurance companies reasonably acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days' prior written notice to Lender. Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans, Borrower will provide Lender with such loss payable or other endorsements as Lender may require. Insurance Reports. Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as Lender may reasonably request, including without limitation the following: (a) the name of the insurer; (b) the risks insured; (c) the amount of the policy; (d) the properties insured; (e) the then current property values on the basis of which insurance has been obtained, and the manner of determining those values; and (f) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. Other Agreements. Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other such agreements. Loan Proceeds. Use all Loan proceeds solely for Borrower's business operations, unless specifically consented to the contrary by Lender in writing. Taxes, Charges and Liens. Pay and discharge when due all of its indebtedness and obligations, including without limitation all assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become a lien or charge upon any of Borrower's properties, income, or profits. Provided however, Borrower will not be required to pay and discharge any such assessment, tax, charge, levy, lien or claim so long as (a) the legality of the same shall be contested in good faith by appropriate proceedings, and (b) Borrower shall have established on its books adequate reserves with respect to such contested assessment, tax, charge, levy, lien, or claim in accordance with generally accepted accounting practices. Borrower, upon demand of Lender, will furnish to Lender evidence of payment of the assessments, taxes, charges, levies, liens and claims and will authorize the appropriate governmental official to deliver to Lender at any time a written statement of any assessments, taxes, charges, levies, liens and claims against Borrower's properties, income, or profits. Performance. Perform and comply with all terms, conditions, and provisions set forth in this Agreement and in the Related Documents in a timely manner, and promptly notify Lender if Borrower learns of the occurrence of any event which constitutes an Event of Default under this Agreement or under any of the Related Documents. Operations. Maintain executive and management personnel with substantially the same qualifications and experience as the present executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner and in compliance with all applicable federal, state and municipal laws, ordinances, rules and regulations respecting its properties, charters, businesses and operations, including without limitation, compliance with the Americans With Disabilities Act and with all minimum funding standards and other requirements of ERISA and other laws applicable to Borrower's employee benefit plans. Inspection. Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral for the Loan or Loans and Borrower's other properties and to examine or audit Borrower's books, accounts, and records and to make copies and memoranda of Borrower's books, accounts, and records. If Borrower now or at any time hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower's expense. Environmental Compliance and Reports. Borrower shall comply in all respects with all environmental protection federal, state and local laws, statutes, regulations and ordinances; not cause or permit to exist, as a result of an intentional or unintentional action or omission on its part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or omission on Borrower's part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. Additional Assurances. Make, execute and deliver to Lender such promissory notes, mortgages, deeds of trust, security agreements, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security Interests. RECOVERY OF ADDITIONAL COSTS. If the imposition of or any change in any law, rule, regulation or guideline, or the interpretation or application of any thereof by any court or administrative or governmental authority (including any request or policy not having the force of law) shall impose, modify or make applicable any taxes (except U.S. federal, state or local income or franchise taxes imposed on Lender), reserve requirements, capital adequacy requirements or other obligations which would (a) increase the cost to Lender for extending or maintaining the credit facilities to which this Agreement relates, (b) reduce the amounts payable to Lender under this Agreement or the Related Documents, or (c) reduce the rate of return on Lender's capital as a consequence of Lender's obligations with respect to the credit facilities to which this Agreement relates, then Borrower agrees to pay Lender such additional amounts as will compensate Lender therefor, within five (5) days after Lender's written demand for such payment, which demand shall be accompanied by an explanation of such imposition or charge and a calculation in reasonable detail of the additional amounts payable by Borrower, which explanation and calculations shall be conclusive in the absence of manifest error. NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: Indebtedness and Liens. (a) Except for trade debt incurred in the normal course of business and indebtedness to Lender contemplated by this Agreement, create, incur or assume indebtedness for borrowed money, including capital leases, (b) sell, transfer, mortgage, assign, pledge, lease, grant a security interest in, or encumber any of Borrower's assets, or (c) sell with recourse any of Borrower's accounts, except to Lender. Continuity of Operations. (a) Engage in any business activities substantially different than those in which Borrower is presently engaged, (b) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change ownership, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business, (c) pay any dividends on Borrower's stock (other than dividends payable in its stock), provided, however that notwithstanding the foregoing, but only so long as no Event of Default has occurred and is continuing or would result from the payment of dividends, if Borrower is a "Subchapter S Corporation" (as defined in the Internal Revenue Code of 1986, as amended), Borrower may pay cash dividends on its stock to its shareholders from time to time in amounts necessary to enable the shareholders to pay income taxes and make estimated income tax payments to satisfy their liabilities under federal and state law which arise solely from their status as Shareholders of a Subchapter S Corporation because of their ownership of shares of stock of Borrower, or (d) purchase or retire any of Borrower's outstanding shares or alter or amend Borrower's capital structure. Loans, Acquisitions and Guaranties. (a) Loan, invest in or advance money or assets, (b) purchase, create or acquire any interest in any other enterprise or entity, or (c) incur any obligation as surety or guarantor other than in the ordinary course of business. CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan proceeds if: (a) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse change in Borrower's financial condition, in the financial condition of any Guarantor, or in the value of any Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any other loan with Lender; or (e) Lender in good faith deems itself insecure, even though no Event of Default shall have occurred. REPLACEMENT OF PRIOR BUSINESS LOAN AGREEMENT. This Agreement replaces and supersedes that certain Business Loan Agreement, dated as of July 26, 1995, as it may be amended from time to time, between Borrower and Lender. FINANCIAL COVENANTS AND RATIOS. Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall comply at all times with the following financial covenants and ratios: (a) Effective Tangible Net Worth. Borrower shall maintain an Effective Tangible Net Worth (defined as the aggregate net worth plus subordinated debt, less any intangible assets, and less any amount due from shareholders, officers and affiliates of Borrower) of not less than $21,000,000.00. (b) Ratio of Total Debt to Effective Tangible Net Worth. Borrower shall maintain a Ratio of Total Debt to Effective Tangible Net Worth (defined as current liabilities and non-current liabilities less subordinated debt divided by Effective Tangible Net Worth) of not more than 1.00 to 1.00. (c) Current Ratio. Borrower shall maintain a Current Ratio (defined as total current assets divided by total current liabilities) of not less than 3.00 to 1.00. (d) Debt Service Coverage Ratio. Borrower shall maintain a Debt Service Coverage Ratio (defined as the aggregate net income after taxes plus depreciation and other non-cash expenses and interest expense, less gain on sale of assets, dividends, distributions, withdrawals and treasury stock purchases divided by the aggregate current portion of long-term debt plus interest expense) of not less than 1.50 to 1.00. (e) Profitability. Borrower shall generate a net profit at the end of each fiscal year and shall not incur two consecutive quarterly losses. Compliance with the foregoing financial covenants and ratios shall be determined as of the end of each fiscal quarter, except as otherwise specifically provided above. All calculations made to determine compliance with the requirements set forth above shall be made in accordance with generally accepted accounting principles consistently applied and used consistently with prior practices. OTHER COVENANTS. Borrower shall not, without the prior written consent of Lender, utilize the Line of Credit to fund legal expenses or acquisitions. BORROWER'S FINANCIAL REPORTS. Borrower shall maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of the following financial reports in conformity with generally accepted accounting principles. Borrower covenants and agrees with Lender that while this Agreement is in effect, unless Lender shall otherwise give its prior written consent, Borrower shall provide to Lender the following financial reports, certified by Borrower as being true and correct: (a) Annual Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year, Borrower shall deliver to Lender the financial statements of Borrower, audited by certified public accountants acceptable to Lender, including, but not limited to, a balance sheet, an income statement, a statement of cash flows, appropriate footnotes and schedules and Form 10K filed with the Securities and Exchange Commission. Such financial statements shall present fairly the financial condition of Borrower as at the dates indicated as well as the results of its operations and cash flows for the periods indicated in conformity with generally accepted accounting principles applied on a basis consistent with prior years. (b) Quarterly Financial Statements. As soon as available and in any event within forty-five (45) days after the end of each fiscal quarter, Borrower shall deliver to Lender the financial statements of Borrower, prepared by Borrower, including, but not limited to, a balance sheet, an income statement, and appropriate schedules, and Form 10Q filed with the Securities and Exchange Commission. (c) Business Plan/Projections. As soon as available and in any event no later than the end of each first fiscal quarter, Borrower shall deliver to Lender Borrower's business plan and projections for each succeeding fiscal year. OTHER REPORTS. Borrower covenants and agrees with Lender that while this Agreement is in effect, unless Lender shall otherwise give its prior written consent, Borrower shall provide to Lender the following other reports: (a) Accounts Receivable and Accounts Payable Agings. As soon as available and in any event within twenty (20) days after the end of each quarter, Borrower shall deliver to Lender (i) a detailed aging, by total and by customer, of Borrower's Accounts, and (ii) a detailed aging, by total and by vendor, of Borrower's accounts payable, both of which shall be set forth in a form and shall contain such information as is acceptable to Lender. (b) Inventory Report. As soon as available and in any event within twenty (20) days after the end of each quarter, Borrower shall deliver to Lender, an inventory report of Borrower, in such form and detail as Lender may require. RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's accounts with Lender (whether checking, savings, or some other account), including without limitation all accounts held jointly with someone else and all accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law. Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts. EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default under this Agreement: Default on Indebtedness. Failure of Borrower to make any payment when due on the Loans. Other Defaults. Failure of Borrower or any Grantor to comply with or to perform when due any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents, or failure of Borrower to comply with or to perform any other term, obligation, covenant or condition contained in any other agreement between Lender and Borrower. Default in Favor of Third Parties. Should Borrower or any Grantor default under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's or any Grantor's ability to repay the Loans or perform their respective obligations under this Agreement or any of the Related Documents. False Statements. Any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower or any Grantor under this Agreement or the Related Documents is false or misleading in any material respect at the time made or furnished, or becomes false or misleading at any time thereafter. Defective Collateralization. This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any Security Agreement to create a valid and perfected Security Interest) at any time and for any reason. Insolvency. The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower, any creditor of any Grantor against any collateral securing the Indebtedness, or by any governmental agency. This includes a garnishment, attachment, or levy on or of any of Borrower's deposit accounts with Lender. Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Change In Ownership. Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower. Adverse Change. A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired. Insecurity. Lender, in good faith, deems itself insecure. EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where otherwise provided in this Agreement or the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make Loan Advances or disbursements), and, at Lender's option, all Indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the "Insolvency" subsection above, such acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of Lender's rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Borrower or of any Grantor shall not affect Lender's right to declare a default and to exercise its rights and remedies. MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of this Agreement: Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. Applicable Law. This Agreement has been delivered to Lender and accepted by Lender in the State of California. If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of LOS ANGELES County, the State of California. Subject to the provisions on arbitration, this Agreement shall be governed by and construed in accordance with the laws of the State of California. Arbitration. Lender and Borrower agree that all disputes, claims and controversies between them, whether individual, joint, or class in nature, arising from this Agreement or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the Rules of the American Arbitration Association, upon request of either party. No act to take or dispose of any Collateral shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any Collateral, including any claim to rescind, reform, or otherwise modify any agreement relating to the Collateral, shall also be arbitrated, provided however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. Lender and Borrower agree that in the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action will not constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, including counterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court having jurisdiction. Nothing in this Agreement shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision. Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. Multiple Parties; Corporate Authority. All obligations of Borrower under this Agreement shall be joint and several, and all references to Borrower shall mean each and every Borrower. This means that each of the persons signing below is responsible for all obligations in this Agreement. Consent to Loan Participation. Borrower agrees and consents to Lender's sale or transfer, whether now or later, of one or more participation interests in the Loans to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy it may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loans and will have all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower's obligation under the Loans irrespective of the failure or insolvency of any holder of any interest in the Loans. Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. Costs and Expenses. Borrower agrees to pay upon demand all of Lender's expenses, including without limitation attorneys' fees, incurred in connection with the preparation, execution, enforcement, modification and collection of this Agreement or in connection with the Loans made pursuant to this Agreement. Lender may pay someone else to help collect the Loans and to enforce this Agreement, and Borrower will pay that amount. This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also will pay any court costs, in addition to all other sums provided by law. Notices. All notices required to be given under this Agreement shall be given in writing, may be sent by telefacsimile (unless otherwise required by law), and shall be effective when actually delivered or when deposited with a nationally recognized overnight courier or deposited in the United States mail, first class, postage prepaid, addressed to the party to whom the notice is to be given at the address shown above. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party's address. To the extent permitted by applicable law, if there is more than one Borrower, notice to any Borrower will constitute notice to all Borrowers. For notice purposes, Borrower will keep Lender informed at all times of Borrower's current address(es). Severability. If a court of competent jurisdiction finds any provision of this Agreement to be invalid or unenforceable as to any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken and all other provisions of this Agreement in all other respects shall remain valid and enforceable. Subsidiaries and Affiliates of Borrower. To the extent the context of any provisions of this Agreement makes it appropriate, including without limitation any representation, warranty or covenant, the word "Borrower" as used herein shall include all subsidiaries and affiliates of Borrower. Notwithstanding the foregoing however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any subsidiary or affiliate of Borrower. Successors and Assigns. All covenants and agreements contained by or on behalf of Borrower shall bind its successors and assigns and shall inure to the benefit of Lender, its successors and assigns. Borrower shall not, however, have the right to assign its rights under this Agreement or any interest therein, without the prior written consent of Lender. Survival. All warranties, representations, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement shall be considered to have been relied upon by Lender and will survive the making of the Loan and delivery to Lender of the Related Documents, regardless of any investigation made by Lender or on Lender's behalf. Time Is of the Essence. Time is of the essence in the performance of this Agreement. Waiver. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall constitute a waiver of any of Lender's rights or of any obligations of Borrower or of any Grantor as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent in subsequent instances where such consent is required, and in all cases such consent may be granted or withheld in the sole discretion of Lender. BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS LOAN AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF AUGUST 22, 1997. BORROWER: California Amplifier, Inc. By: /s/Michael Ferron, Chief Financial Officer LENDER: California United Bank By: /s/Susan Carter, Assistant Vice President EX-10 3 EXHIBIT 10.31 CHANGE IN TERMS AGREEMENT EXHIBIT 10.31 Borrower: California Amplifier, Inc. Lender: California United Bank 460 Calle San Pablo Encino Commercial Loan Center Camarillo, CA 93012 16030 Ventura Boulevard Encino, CA 91436 Principal Amount: $6,000,000.00 Date of Agreement: August 22, 1997 DESCRIPTION OF EXISTING INDEBTEDNESS. A Promissory Note dated as of August 6, 1996, in the original principal amount of $6,000,000.00, executed by Borrower in favor of Lender. DESCRIPTION OF COLLATERAL. This Note is secured by the Collateral as described in that certain Commercial Security Agreement, dated as of July 26, 1995, as it may amended, modified, supplemented, replaced or restated, from time to time, executed by Grantor in favor of Lender. DESCRIPTION OF CHANGE IN TERMS. The maturity date is amended from August 4, 1997 to August 3, 1998. Regularly scheduled monthly interest payments shall continue to be due and payable as provided in said Note, commencing September 1, 1997. PROMISE TO PAY. California Amplifier, Inc. ("Borrower") promises to pay to California United Bank ("Lender"), or order, in lawful money of the United States of America, the principal amount of Six Million & 00/100 Dollars ($6,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance. Interest shall be calculated from the date of each advance until repayment of each advance. ARBITRATION. Lender and Borrower agree that all disputes, claims and controversies between them, whether individual, joint, or class in nature, arising from this Agreement or otherwise, including without limitation contract and tort disputes, shall be arbitrated pursuant to the Rules of the American Arbitration Association, upon request of either party. No act to take or dispose of any collateral securing this Agreement shall constitute a waiver of this arbitration agreement or be prohibited by this arbitration agreement. This includes, without limitation, obtaining injunctive relief or a temporary restraining order; invoking a power of sale under any deed of trust or mortgage; obtaining a writ of attachment or imposition of a receiver; or exercising any rights relating to personal property, including taking or disposing of such property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code. Any disputes, claims, or controversies concerning the lawfulness or reasonableness of any act, or exercise of any right, concerning any collateral securing this Agreement, including any claim to rescind, reform, or otherwise modify any agreement relating to the collateral securing this Agreement, shall also be arbitrated, provided however that no arbitrator shall have the right or the power to enjoin or restrain any act of any party. Lender and Borrower agree that in the event of an action for judicial foreclosure pursuant to California Code of Civil Procedure Section 726, or any similar provision in any other state, the commencement of such an action will not constitute a waiver of the right to arbitrate and the court shall refer to arbitration as much of such action, including counterclaims, as lawfully may be referred to arbitration. Judgment upon any award rendered by any arbitrator may be entered in any court having jurisdiction. Nothing in this Agreement shall preclude any party from seeking equitable relief from a court of competent jurisdiction. The statute of limitations, estoppel, waiver, laches, and similar doctrines which would otherwise be applicable in an action brought by a party shall be applicable in any arbitration proceeding, and the commencement of an arbitration proceeding shall be deemed the commencement of an action for these purposes. The Federal Arbitration Act shall apply to the construction, interpretation, and enforcement of this arbitration provision. CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender's right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions. PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO THE TERMS OF THE AGREEMENT AND ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THE AGREEMENT. BORROWER: California Amplifier, Inc. By:/s/ Michael Ferron, Chief Financial Officer LENDER: California United Bank By: /s/ Authorized Officer EX-27 4 FDS -- WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEET ON PAGE 2 AND THE CONSOLIDATED STATEMENTS OF INCOME ON PAGE 3 OF THE COMPANY'S FORM 10-q FOR THE SIX MONTHS ENDED AUGUST 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000730255 California Amplifier, Inc. 1,000 6-MOS FEB-28-1998 MAR-02-1997 AUG-30-1997 1.000 2477 0 10131 673 10824 23882 20569 12758 32785 7227 0 0 0 14124 10319 32785 25104 25104 17477 6932 148 0 13 534 200 0 0 0 0 334 .03 0
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