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EXHIBIT 10.28
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of July 22, 2000,
by and among MTI TECHNOLOGY CORPORATION ("Borrower") and SILICON VALLEY BANK
("SVB") and GENERAL ELECTRIC CAPITAL CORPORATION ("GE Capital") as co-lenders,
and SVB as Servicing Agent for the Lenders. (SVB and GE Capital are sometimes
referred to therein, individually, as "Lender", and collectively as "Lenders").
SVB shall be referred to herein as "Lender".
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which may be
owing by Borrower to Lenders, Borrower is indebted to Lenders pursuant to, among
other documents, a Loan and Security Agreement, dated July 22, 1998, as may be
amended from time to time, (the "Loan Agreement"). The Loan Agreement provided
for, among other things, a Committed Revolving Line in the original principal
amount of Thirty Million Dollars ($30,000,000). Defined terms used but not
otherwise defined herein shall have the same meanings as in the Loan Agreement.
Hereinafter, all indebtedness owing by Borrower to Lenders shall be referred to
as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES. Repayment of the Indebtedness is
secured by the Collateral as described in the Loan Agreement and an Intellectual
Property Security Agreement dated July 22, 1998.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents". Hereinafter, the Security Documents,
together with all other documents evidencing or securing the Indebtedness shall
be referred to as the "Existing Loan Documents".
3. DESCRIPTION OF CHANGE IN TERMS.
A. Modification(s) to Loan Agreement
1. The following term set forth in Section 1.1 entitled
"Definitions" is hereby amended as follows:
"Revolving Maturity Date" means September 22, 2000.
2. Section 6.9 entitled "Current Ratio" is hereby amended to read
as follows:
Borrower shall maintain, as of the last day of each calendar
month, a ratio of Current Assets to Current Liabilities of at
least 1.25 to 1.00.
3. Section 6.10 entitled "Debt-Net Worth Ratio" is hereby amended
to read as follows:
Borrower shall maintain, as of the last day of each calendar
month, a ratio of Total Liabilities to Tangible Net Worth plus
Subordinate Debt of not more than 1.25 to 1.00.
4. Section 6.11 entitled "Tangible Net Worth" is hereby deleted
in its entirety.
5. Section 6.12 entitled "Profitability" is hereby deleted in its
entirety.
6. Section 6.13 entitled "Maximum Net Loss" is hereby
incorporated to read as follows:
Borrower's Maximum Net Loss shall not exceed $9,000,000 for
the quarter ended July 1, 2000.
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7. Bank, in its discretion, may transfer Borrower's Obligations
to its Commercial Finance Division.
B. Waiver of Covenant Default.
Bank hereby waives Borrower's existing default under the Loan
Agreement by virtue of Borrower's failure to comply with the
Profitability covenant as of the quarter ended July 1, 2000. Bank's
waiver of Borrower's compliance of this covenant shall apply only to
the foregoing period.
Bank's agreement to waive the above-described default (1) in no way
shall be deemed an agreement by the Bank to waive Borrower's
compliance with the above-described covenant as of all other dates
and (2) shall not limit or impair the Bank's right to demand strict
performance of this covenant as of all other dates and (3) shall not
limit or impair the Bank's right to demand strict performance of all
other covenants as of any date.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever
necessary to reflect the changes described above.
5. PAYMENT OF FEE. Borrower shall pay to Lenders a fee in the amount of Fifteen
Thousand Dollars ($15,000) (the "Loan Fee") plus all out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor signing
below) agrees that, as of the date hereof, it has no defenses against the
obligations to pay any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor signing below)
understands and agrees that in modifying the existing Indebtedness, Lender is
relying upon Borrower's representations, warranties, and agreements, as set
forth in the Existing Loan Documents. Except as expressly modified pursuant to
this Loan Modification Agreement, the terms of the Existing Loan Documents
remain unchanged and in full force and effect. Lender's agreement to
modifications to the existing Indebtedness pursuant to this Loan Modification
Agreement in no way shall obligate Lender to make any future modifications to
the Indebtedness. Nothing in this Loan Modification Agreement shall constitute a
satisfaction of the Indebtedness. It is the intention of Lender and Borrower to
retain as liable parties all makers and endorsers of Existing Loan Documents,
unless the party is expressly released by Lender in writing. No maker, endorser,
or guarantor will be released by virtue of this Loan Modification Agreement. The
terms of this paragraph apply not only to this Loan Modification Agreement, but
also to all subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee.
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This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: LENDERS:
MTI TECHNOLOGY CORPORATION SILICON VALLEY BANK
By: By:
------------------------------------- ----------------------------------
Name: Name:
----------------------------------- --------------------------------
Title: Title:
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GENERAL ELECTRIC CAPITAL
CORPORATION
By:
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Name:
--------------------------------
Title:
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SERVICING AGENT:
SILICON VALLEY BANK
By:
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Name:
--------------------------------
Title:
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