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Exhibit 10.31
WAIVER AND FOURTH AMENDMENT TO LOAN AGREEMENT
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This WAIVER AND FOURTH AMENDMENT TO LOAN AGREEMENT ("Amendment") is
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entered into as of June 30, 2000 (the "Amendment Date"), by and between RF
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MONOLITHICS, INC., a Delaware corporation ("Borrower") and BANK ONE, TEXAS,
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NATIONAL ASSOCIATION ("Bank"), a national banking association, acting in its
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capacity as "Bank" under the Loan Documents and as collateral agent for itself
and Banc One Leasing Corporation ("BOLC").
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RECITALS:
A. Pursuant to that certain Letter Loan Agreement dated as of March
8, 1996, by and between Borrower and Bank (as amended by that certain First
Amendment to Loan Agreement dated as of December 31, 1997 between Borrower and
Bank, that certain Second Amendment to Loan Agreement dated as of July 15, 1999
between Borrower and Bank, and that certain Waiver and Third Amendment to Loan
Agreement dated as of February 29, 2000 among Borrower, BOLC, and Bank, and as
such agreement may be further amended, restated, or otherwise modified from time
to time, the "Loan Agreement"), Bank has agreed to provide to Borrower a secured
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credit facility as set forth therein.
B. Borrower and Bank have agreed to amend certain provisions of the
Loan Agreement.
C. Subject to satisfaction of the conditions set forth herein, Bank
is willing to amend the Loan Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE 1
Definitions
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Section 1.1 Definitions. Unless otherwise defined in this Amendment,
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each capitalized term used in this Amendment has the meaning given to such term
in the Loan Agreement.
ARTICLE 2
Waiver of Event of Default
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Section 2.1 Waiver of Events of Default. Pursuant to paragraph 9(e)
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of the Loan Agreement, Borrower was required to maintain a minimum EBITDA for
the three (3) month period ended May 31, 2000 of not less than $1,007,000 (the
"EBITDA Covenant"). For the three (3) month period ended May 31, 2000, Borrower
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failed to maintain the EBITDA Covenant.
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 1
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Borrower's failure to maintain the EBITDA Covenant as of the three month period
ended May 31, 2000, constitutes an Event of Default under paragraph 11(b) of the
Loan Agreement (the "EBITDA Default"). Additionally, certain events of default
occurred under the Lease Agreements which could result in acceleration of the
payments due thereunder and as more specifically set forth in the waiver letter
agreement between Borrower and BOLC dated concurrently herewith (the "Lease
Defaults"). Each of the Lease Defaults constitutes an Event of Default under
paragraph 11(e) of the Loan Agreement. Effective as of the date of this
Amendment, and subject to the conditions precedent contained herein, Bank hereby
waives the Events of Default resulting from the EBITDA Default and the Lease
Defaults.
ARTICLE 3
Amendment to Loan Agreement and other Loan Documents
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Section 3.1 Amendment to Paragraph 1 of the Loan Agreement. Effective
as of the Amendment Date, paragraph 1 of the Loan Agreement is hereby amended
and restated in its entirety to read as follows:
1. Loan. Subject to the terms and conditions set
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forth in this Loan Agreement and the other agreements,
instruments, and documents at any time evidencing, securing,
governing, guaranteeing, and/or pertaining to the
Indebtedness, as hereinafter defined (collectively, together
with this Loan Agreement, referred to hereinafter as the
"Loan Documents"), Bank and Borrower hereby agree as
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follows:
Subject to the terms and conditions set forth herein, Bank
agrees to lend to Borrower an amount equal to $6,897,878.91;
provided, however, the total principal amount outstanding at
any time shall not exceed the Borrowing Base (as such term
is defined hereinbelow) (the "Loan"). If at any time the
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aggregate principal amount outstanding under the Loan shall
exceed the Borrowing Base, unless Bank otherwise consents,
Borrower agrees to immediately repay to Bank such excess
amount, plus all accrued but unpaid interest thereon. All
sums advanced hereunder, together with all accrued but
unpaid interest thereon, shall be due and payable in full at
11:00 a.m. (Dallas, Texas time) on December 31, 2000 (the
"Termination Date"). The sums advanced under the Loan shall
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be used for working capital purposes. The term
"Indebtedness", as used herein, shall mean the Loan and all
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other indebtedness owing from time to time to Bank by
Borrower.
As used in this Loan Agreement, the term "Borrowing Base"
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shall have the meaning set forth hereinbelow:
An amount equal to eighty percent (80.0%) of
Borrower's Eligible Accounts, plus twenty-five
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percent (25.0%) of Borrower's Eligible Inventory;
provided, however, the outstanding amount advanced
with respect to Eligible Inventory at any time
shall not exceed $1,000,000, plus one hundred
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percent (100%) of the balance of cash and ninety
percent (90.0%) of the value of U.S. Treasury
securities, respectively, held in the securities
account described in paragraph 3(d) hereof.
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As used herein, the term "Eligible Accounts" shall mean at
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any time, an amount equal to the aggregate net invoice or
ledger amount owing on all
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 2
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trade accounts receivable of Borrower for goods sold or
leased or services rendered in the ordinary course of
business, in which Bank has a perfected, first priority
lien, after deducting (without duplication): (i) each such
account that is unpaid ninety (90) days or more after the
original invoice date thereof, (ii) the amount of all
discounts, allowances, rebates, credits, and adjustments to
such accounts, (iii) the amount of all contra accounts, set-
offs, defenses, or counterclaims asserted by or available to
the account debtors, (iv) all accounts with respect to which
goods are placed on consignment or subject to a guaranteed
sale or other terms by reason of which payment by the
account debtor may be conditional, (v) all accounts with
respect to which Borrower has furnished a payment and/or
performance bond and that portion of any accounts for or
representing retainage, if any, until all prerequisites to
the immediate payment of retainage have been satisfied, (vi)
all accounts owing by account debtors for which there has
been instituted a proceeding in bankruptcy or reorganization
under the United States Bankruptcy Code or other law,
whether state or federal, now or hereafter existing for
relief of debtors, (vii) all accounts owing by any Affiliate
(as such term is defined hereinbelow) of Borrower, (viii)
all accounts in which the account debtor is the United
States or any department, agency, or instrumentality of the
United States, except to the extent an acknowledgment of
assignment to Bank of such account in compliance with the
Federal Assignment of Claims Act and other applicable laws
has been received by Bank, (ix) all accounts due Borrower by
any account debtor whose principal place of business is
located outside the United States and its territories;
provided that if any such account is supported by either a
letter of credit or an agreement of indemnity or insurance,
each in form and substance satisfactory to Bank, Bank may,
in its discretion, include such accounts, or any portion
thereof, in "Eligible Accounts", (x) all accounts subject to
any provision prohibiting assignment or requiring notice of
or consent to such assignment, (xi) that portion of all
account balances owing by any single account debtor which
exceeds twenty-five percent (25.0%) of the aggregate of all
accounts which are owing to Borrower by all account debtors,
and (xii) any other accounts deemed unacceptable by Bank in
its discretion exercising its reasonable credit judgment;
provided, however, if more than ten percent (10.0%) of the
then balance owing by any single account debtor does not
qualify as an Eligible Account under the foregoing
provisions, then the aggregate amount of all accounts owing
by such account debtor shall be excluded from Eligible
Accounts.
As used herein, the term "Eligible Inventory" shall mean as
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of any date, the aggregate value of all inventory of raw
materials (excluding specifically work in progress and
packaging materials, supplies, finished goods, and any
advertising costs capitalized into inventory) then owned by
Borrower and held for use in the ordinary course of
Borrower's business, in which Bank has a first priority
lien, excluding (i) inventory which is damaged, defective,
obsolete, or otherwise unusable in the ordinary course of
Borrower's business, (ii) inventory which is not in the
possession of Borrower or which has been rejected by
Borrower for any reason, and (iii) inventory subject to any
consignment arrangement between Borrower and any other
person or entity. For purposes of this definition, Eligible
Inventory shall be valued at the lower of cost (excluding
the cost of labor) or market value.
Section 3.2 Amendment to Paragraph 2 of the Loan Agreement. Effective
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as of the Amendment Date, paragraph 2 of the Loan Agreement is hereby amended
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and restated in its entirety to read as follows:
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 3
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2. Promissory Note. The Loan shall be evidenced by a
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promissory note (together with all renewals, extensions, or
other modifications thereto, the "Note") duly executed by
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Borrower in the stated principal amount of $6,897,878.91 and
otherwise in form and substance acceptable to Bank. Interest
on the Note shall accrue at the rate set forth therein. The
principal of and interest on the Note shall be due and
payable in accordance with the terms and conditions set
forth in the Note and in this Loan Agreement.
Section 3.3 Amendment to Paragraph 9 of the Loan Agreement. Effective
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as of the Amendment Date, paragraph 9 of the Loan Agreement is hereby amended by
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adding thereto, immediately following the last sentence thereof, the following
sentence which shall read in its entirety as follows:
Notwithstanding any other provision of this Loan Agreement
to the contrary, Borrower shall certify its compliance with
each of the covenants set forth in this paragraph 9 for the
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period ending August 31, 2000 by reference to the quarterly
financial statements of Borrower prepared for such period
end as required by paragraph 10(b), such certification to be
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received by Bank not later than October 15, 2000.
Section 3.4 Amendment Loan Documents. Effective as of the Amendment
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Date, each and every reference in the Loan Documents to the "Revolving Line of
Credit", as defined in the Loan Agreement prior to the effectiveness of this
Amendment, is hereby amended to refer to the "Loan", as defined in the Loan
Agreement, as amended by this Amendment.
ARTICLE 4
Conditions
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Section 4.1 Items to be Delivered By Borrower. The effectiveness of
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this Amendment is subject to Borrower's delivery to Bank of each of the
following items prior to or simultaneously with execution and delivery of this
Amendment:
(a) Amendment Documents. Each other agreement, certificate,
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document, or instrument required by Bank to be executed or delivered
by Borrower (including, without limitation, a Pledge Agreement in form
and substance satisfactory to Bank) or any other party in connection
with this Amendment or the transactions contemplated in connection
herewith (the "Amendment Documents"), duly executed or delivered by
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the parties thereto;
(b) Amendment Fee. Payment to Bank of a fee of $7,000 in respect
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of the amendments contained herein; and
(c) Fees and Expenses. Payment or reimbursement to Bank for all
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expenses, costs, and fees (including, without limitation, fees and
costs of Bank's legal counsel) incurred by, or due to, Bank in
connection with negotiating and documenting this Amendment, the other
Amendment Documents, and any other Loan Documents;
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 4
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Section 4.2 Other Conditions. This Amendment shall become effective
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upon the following conditions precedent being performed to Bank's satisfaction.
Borrower's failure to comply with the following conditions shall be an Event of
Default under the Loan Agreement:
(a) Continued Effect of Representations and Warranties. All
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representations and warranties contained in the Loan Documents (as
amended hereby) shall be true, correct, and complete in all material
respects (as determined by Bank in its sole discretion) except as
disclosed otherwise to Bank in writing and as acceptable to Bank or
representations specifically relating to a prior date or no longer
relevant due to the occurrence of an event or circumstances
specifically permitted hereunder or by any other Loan Document;
(b) Absence of Default. No Default or Event of Default shall
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have occurred and be continuing (after giving effect to this
Amendment);
(c) Corporate Proceedings. All corporate proceedings taken in
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connection with the transactions contemplated by this Amendment and
all other agreements, documents, and instruments executed and/or
delivered pursuant hereto, and all legal matters incident thereto,
shall be satisfactory to Bank and its legal counsel;
(d) Additional Information. Bank shall have received such
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additional agreements, certificates, documents, instruments, and
information as Bank or its respective legal counsel may request to
effect the transactions contemplated hereby.
ARTICLE 5
Representations and Warranties
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Section 5.1 Representations and Warranties. Borrower hereby
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represents and warrants to Bank that, as of the date of and after giving effect
to this Amendment:
(a) the execution, delivery, and performance of this Amendment
and any and all other Amendment Documents executed and/or delivered in
connection herewith have been authorized by all requisite action on
the part of Borrower and will not violate Borrower's certificate of
incorporation, bylaws, or other similar charter documents;
(b) except as set forth in Exhibit A hereto, all representations
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and warranties set forth in the Loan Agreement, the other Loan
Documents, and the Lease Agreements are true and correct in all
material respects as if made again on and as of such date (except as
disclosed otherwise to Bank and BOLC in writing and as acceptable to
Bank and BOLC or representations specifically relating to a prior date
or no longer relevant due to the occurrence of an event or
circumstances specifically permitted hereunder, by any other Loan
Document, or the Lease Agreements);
(c) no Default or Event of Default has occurred and is
continuing; and
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 5
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(d) the Loan Agreement and the other Loan Documents (as amended
by this Amendment) are and remain legal, valid, binding, and
enforceable obligations of each of the parties thereto.
ARTICLE 6
Miscellaneous
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Section 6.1 The waiver specifically described in Section 2.1 of this
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Amendment shall not constitute and shall not be deemed a waiver of any other
Default or Event of Default, whether arising as a result of the further
violation of the EBITDA Covenant, additional default under the Lease Agreements,
or otherwise, or a waiver of any rights or remedies arising as a result of such
other Defaults or Events of Default.
Section 6.2 Governing Law. THIS AMENDMENT, AND ALL DOCUMENTS AND
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INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS.
Section 6.3 Agreement Remains in Effect; No Waiver. Except as
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expressly provided herein, all terms and provisions of the Loan Agreement, the
other Loan Documents, and the Lease Agreements shall remain unchanged and in
full force and effect and are hereby ratified and confirmed. No delay or
omission by Bank in exercising any power, right, or remedy shall impair such
power, right, or remedy or be construed as a waiver thereof or an acquiescence
therein, and no single or partial exercise of any such power, right, or remedy
shall preclude other or further exercise thereof or the exercise of any other
power, right, or remedy under the Loan Agreement, the other Loan Documents, the
Lease Agreements, or otherwise.
Section 6.4 Survival of Representations and Warranties. All
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representations and warranties made in this Amendment or any other Loan Document
shall survive the execution and delivery of this Amendment and the other Loan
Documents, and no investigation by Bank or any closing shall affect the
representations and warranties or the right of Bank to rely upon them.
Section 6.5 Reference to Loan Documents. Each of the Loan Documents,
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including, without limitation, the Loan Agreement, the Amendment Documents, and
any and all other agreements, documents, or instruments now or hereafter
executed and/or delivered pursuant to the terms hereof or pursuant to the terms
of the Loan Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Loan Agreement shall mean a reference to
the Loan Agreement as amended hereby, and the term Loan Documents as defined in
the Loan Agreement and as used in any of the "Loan Documents" includes, without
limitation, the Amendment Documents.
Section 6.6 Severability. Any provision of this Amendment held by a
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court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 6
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Section 6.7 Successors and Assigns. This Amendment is binding upon
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and shall inure to the benefit of Borrower and Bank and their respective
successors in interest and assigns. Borrower may not assign any right, power,
duty, or obligation hereunder without the prior written consent of Bank.
Section 6.8 Headings. The headings, captions, and arrangements used
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in this Amendment are for convenience only and shall not affect the
interpretation of this Amendment.
Section 6.9 Expenses of Bank. As provided in the Loan Agreement,
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Borrower agrees to pay on demand all, third party out-of-pocket costs and
expenses incurred by Bank in connection with the preparation, negotiation, and
execution of this Amendment, the Amendment Documents, or any other Loan
Documents executed pursuant hereto and any and all amendments, modifications,
and supplements thereto (including, without limitation, fees and costs of Bank's
legal counsel) and all costs and expenses incurred by Bank in connection with
the enforcement or preservation of any rights under the Loan Agreement, as
amended hereby, or any other Loan Document, including, without limitation, the
costs and fees of Bank's legal counsel.
Section 6.10 Counterparts. This Amendment may be executed
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simultaneously in one or more multiple originals and on telecopy counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same agreement.
Section 6.11 Waiver of Claims and Defenses. To induce Bank to enter
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into this Amendment, Borrower represents and warrants that as of the Amendment
Date there are no claims or offsets against or defenses or counterclaims to
Borrower's obligations under the Loan Documents or the Lease Agreements, and
Borrower waives any and all such claims, offsets, defenses, or counterclaims
whether known or unknown, arising prior to the Amendment Date. Additionally,
Borrower hereby releases Bank and each of its legal representatives, successors,
affiliates, parent, subsidiaries, predecessors, assigns, shareholders, partners,
trustees, beneficiaries, administrators, heirs, former and current officers,
directors, agents, attorneys, and employees, and its respective successors,
assigns, heirs, executors, and administrators (collectively, the "Creditor
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Parties") from any and all claims, actions, suits, causes of action, accounts,
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judgments, agreements, promises, executions, debts, damages, demands, rights,
obligations, liabilities, and controversies now in existence concerning or in
connection with the Loan Agreement, this Amendment, or any other Loan Document
(collectively, the "Claims") of every nature and description, in law or in
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equity, whether known or unknown, foreseen or unforseen, and regardless of
whether Borrower hereafter discovers any facts which may give rise to any Claim.
THIS AMENDMENT, TOGETHER WITH THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS, AS WRITTEN, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 7
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IN WITNESS WHEREOF, Borrower and Bank have caused this Amendment to be
executed and delivered by their duly authorized officers effective as of the
date first written above.
BORROWER:
RF MONOLITHICS, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
BANK:
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BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: _______________________________
Name: _____________________________
Title: ____________________________
CONSENT TO WAIVER AND AMENDMENT:
Each of the undersigned hereby consents and agrees to the foregoing agreement
and agrees that the Security Agreement to which it is a party, shall remain in
full force and effect.
BOLC:
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BANC ONE LEASING CORPORATION
By: ______________________________
Name: ____________________________
Title: ___________________________
SECURED PARTY:
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BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: ______________________________
Name: ____________________________
Title: ___________________________
WAIVER AND FOURTH AMENDMENT TO LETTER LOAN AGREEMENT - Page 8
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EXHIBIT A
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Exceptions to Representations and Warranties
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Section 5(a) of the Loan Agreement - Litigation:
Borrower's lawsuit filed in the US District Court in Connecticut
(Civil action no. 399cv00311) seeking to collect outstanding
receivables from Akom Technologies, Inc. as more particularly
described in note no. 7 of the "Notes to Condensed Financial
Statements" which form a part of the Condensed Financial Information
attached to Borrower's Form 10-Q dated February 29, 2000 filed with
the United States Securities and Exchange Commission
