<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended February 29, 2000
Commission File No. 0-24414
RF Monolithics, Inc.
(Exact name of registrant as specified in its charter)
------------------
Delaware 75-1638027
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification)
4441 Sigma Road, Dallas, Texas 75244
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 233-2903
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.
[X] Yes [ ] No
As of March 31, 2000, 6,104,594 shares of the Registrant's Common Stock, $.001
par value, were outstanding.
<PAGE>
RF MONOLITHICS, INC.
FORM 10-Q
QUARTER ENDED FEBRUARY 29, 2000
TABLE OF CONTENTS
Item
Number Page
- ------ ----
Part I. Condensed Financial Information
1. Condensed Financial Statements:
Condensed Balance Sheets
February 29, 2000 (Unaudited), and August 31, 1999 1
Condensed Statements of Operations - Unaudited
Three Months Ended February 29, 2000 and February 28, 1999,
and Six Months Ended February 29, 2000 and February 28, 1999 2
Condensed Statements of Cash Flows - Unaudited
Six Months Ended February 29, 2000 and February 28, 1999 3
Notes to Condensed Financial Statements 4
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II. OTHER INFORMATION
1. Legal Proceedings 13
2. Changes in Securities 13
3. Defaults Upon Senior Securities 13
4. Submission of Matters to a Vote of Security Holders 13
5. Other Information 14
6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
<PAGE>
PART I. CONDENSED FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
RF MONOLITHICS, INC.
CONDENSED BALANCE SHEETS
(In Thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
February August
ASSETS 29, 2000 31, 1999
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,550 $ 672
Short-term investments 3,505 4,516
Trade receivables - net 8,719 10,840
Inventories 10,731 11,593
Prepaid expenses and other 1,000 1,208
Income taxes receivable 1,100 851
Deferred income tax benefits -- 647
--------- ---------
Total current assets 26,605 30,327
PROPERTY AND EQUIPMENT - Net 15,805 17,645
OTHER ASSETS AND DEFERRED TAX BENEFITS - Net 2,760 536
--------- ---------
TOTAL $ 45,170 $ 48,508
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and line of credit $ 6,986 $ 5,452
Accounts payable - trade 4,486 4,305
Accounts payable - construction and equipment 208 844
Accrued expenses and other liabilities 2,293 2,340
--------- ---------
Total current liabilities 13,973 12,941
LONG-TERM DEBT 41 68
STOCKHOLDERS' EQUITY:
Common stock $.001 par value: 6,036 and 5,875 shares issued 6 6
Additional paid-in capital 28,859 28,043
Treasury stock, 36 common shares (227) (227)
Retained earnings 2,824 8,082
Unearned compensation (306) (405)
--------- ---------
Total stockholders' equity 31,156 35,499
--------- ---------
TOTAL $ 45,170 $ 48,508
========= =========
</TABLE>
See notes to condensed financial statements.
- 1 -
<PAGE>
RF MONOLITHICS, INC.
CONDENSED STATEMENTS OF OPERATIONS - UNAUDITED
(In Thousands, Except Per-Share Amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
February February
----------------------------- -------------------------------
<S> <C> <C> <C> <C>
29, 2000 28, 1999 29, 2000 28, 1999
SALES $ 12,186 $ 13,102 $ 21,515 $ 25,982
COST OF SALES 10,817 8,516 21,583 16,854
--------- --------- --------- ---------
GROSS PROFIT 1,369 4,586 (68) 9,128
OPERATING EXPENSES:
Research and development 1,026 1,509 2,257 2,653
Sales and marketing 1,501 1,322 2,997 2,618
General and administrative 705 735 1,970 1,390
--------- --------- --------- ---------
Total operating expenses 3,232 3,566 7,224 6,661
--------- --------- --------- ---------
INCOME (LOSS) FROM OPERATIONS (1,863) 1,020 (7,292) 2,467
OTHER INCOME (EXPENSE):
Interest income 53 55 108 121
Interest expense (198) (75) (373) (168)
Other expense (5) - (9) 10
--------- --------- --------- ---------
Total (150) (20) (274) (37)
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (2,013) 1,000 (7,566) 2,430
INCOME TAX (BENEFIT) EXPENSE (614) 355 (2,308) 862
--------- --------- --------- ---------
NET INCOME (LOSS) $ (1,399) $ 645 $ (5,258) $ 1,568
========= ========= ========= =========
EARNINGS (LOSS) PER SHARE:
Basic $ (0.23) $ 0.11 $ (0.89) $ 0.27
========= ========= ========= =========
Diluted $ (0.23) $ 0.11 $ (0.89) $ 0.27
========= ========= ========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING:
Basic 5,983 5,744 5,939 5,726
========= ========= ========= =========
Diluted 5,983 5,927 5,939 5,907
========= ========= ========= =========
</TABLE>
See notes to condensed financial statements.
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<PAGE>
RF MONOLITHICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS - UNAUDITED
(In Thousands)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Six Months Ended
February
-----------------------
<S> <C> <C>
29, 2000 28, 1999
OPERATING ACTIVITIES:
Net income (loss) $ (5,258) $ 1,568
Noncash items included in net income (loss):
Deferred taxes (1,508) 282
Depreciation and amortization 2,393 2,032
Provision for doubtful accounts 46 68
Other 64 27
Cash from (used in) operating working capital:
Trade receivables 2,075 (109)
Inventories 862 (2,429)
Prepaid expenses and other 208 (88)
Accounts payable - trade 182 1,518
Accrued expenses and other liabilities (48) (595)
Income taxes receivable (249) (430)
--------- ---------
Net cash (used in) from operations (1,233) 1,844
INVESTING ACTIVITIES:
Increase in short-term investments (3,046) (2,722)
Decrease in short-term investments 4,057 3,033
Acquisition of property and equipment (513) (3,854)
Decrease (increase) in other assets (109) 8
--------- ---------
Net cash from (used in) investing activities 389 (3,535)
FINANCING ACTIVITIES:
Borrowings on notes payable and line of credit 2,298 1,500
Repayments of notes payable and line of credit (505) (250)
Repayments of capital leases (286) (312)
Borrowings (repayments) of accounts payable - construction and equipment (636) 753
Common stock issued for options exercised 691 190
Common stock issued under the Purchase Plan 160 273
--------- ---------
Net cash from financing activities 1,722 2,154
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 878 463
CASH AND CASH EQUIVALENTS:
Beginning of period 672 199
--------- ---------
End of period $ 1,550 $ 662
========= =========
SUPPLEMENTAL INFORMATION:
Interest paid $ 373 $ 175
========= =========
Income taxes paid (received) - net $ (771) $ 996
========= =========
</TABLE>
See notes to condensed financial statements.
- 3 -
<PAGE>
RF MONOLITHICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. INTERIM FINANCIAL STATEMENTS
The accompanying condensed financial statements include all adjustments,
consisting only of normal recurring adjustments and accruals, that in the
opinion of the management of RF Monolithics, Inc. (the "Company" or "RFM") are
necessary for a fair presentation of the Company's financial position as of
February 29, 2000, the results of operations for the three and six months ended
February 29, 2000 and February 28, 1999, and cash flows for the six months ended
February 29, 2000 and February 28, 1999. These unaudited interim condensed
financial statements should be read in conjunction with the audited financial
statements of the Company and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended August 31, 1999, filed with the
Securities and Exchange Commission.
Operating results for the six months ended February 29, 2000, are not
necessarily indicative of the results to be achieved for the full fiscal year
ending August 31, 2000.
2. INVENTORIES
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
February August
29, 2000 31, 1999
<S> <C> <C>
Raw materials and supplies $ 5,586 $ 5,713
Work in process 2,679 3,099
Finished goods 2,466 2,781
--------- ---------
Total $ 10,731 $ 11,593
========= =========
</TABLE>
3. PROPERTY AND EQUIPMENT
Property and equipment includes construction in progress of $2,822,000 at
February 29, 2000, and $2,679,000 at August 31, 1999, which is composed of
equipment and other assets not yet placed in service primarily related to
increasing the capacity of the Company's manufacturing facilities.
4. CREDIT FACILITIES
As of November 30, 1999, the Company was in violation of certain covenants in
regards to a $7.5 million line of credit with a commercial bank. The Company has
negotiated a revised agreement under which the bank waived the covenant
violation for the period ended November 30, 1999, and modified the terms and
conditions of the agreement resulting in covenants that the Company does not
expect will result in a covenant violation during the balance of the fiscal
year. The Company was in compliance with its covenants as of February 29, 2000.
The structure of the loan has been modified to tie amounts borrowed under the
agreement to a borrowing base consisting of certain receivables, inventory, cash
and marketable securities, all of which are pledged as collateral. Additionally,
the expiration date of the line of credit was changed to December 31, 2000, and
the debt has been classified as current. The Company plans to negotiate an
extension of the credit facility beyond that date.
- 4 -
<PAGE>
In December 1999, the Company utilized approximately $2.1 million available
under an equipment-collateralized lease facility. This utilization will be
recorded as an operating lease. As of February 29, 2000, there is no additional
availability remaining under this lease facility.
5. EARNINGS PER SHARE
Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE,
requires a reconciliation of both the numerator and denominator of the earnings
per share calculations. There are no adjustments to net earnings to arrive at
income for either per share calculation.
Reconciliation of share amounts is as follows (in thousands):
<TABLE>
<CAPTION>
Three months ended Six months ended
February February
---------------------------- -------------------------
<S> <C> <C> <C> <C>
29, 2000 28, 1999 29, 2000 28, 1999
Shares outstanding for basic
earnings per share 5,983 5,744 5,939 5,726
Effect of dilutive stock options -- 183 -- 181
-------- -------- -------- --------
Shares outstanding for dilutive
earnings per share 5,983 5,927 5,939 5,907
======== ======== ======== ========
</TABLE>
6. CAPITAL STOCK
On December 9, 1999, the Company granted to employees Non-Qualified Stock
Options to purchase 51,000 shares of the Company's Common Stock and Incentive
Stock Options to purchase 12,000 shares of the Company's Common Stock, both at
an exercise price of $6.00, the approximate market value on the date of grant.
The options were granted in accordance with the Company's 1999 Equity Incentive
Plan and the 1997 Equity Incentive Plan, respectively.
On January 26, 2000, shareholders of the Company approved increases in shares
available for grant under the Company's 1997 Equity Incentive Plan and the 1994
Non-Employee Directors Stock Option Plan by 200,000 and 100,000 shares
respectively. Additionally, the Board of Directors approved an increase in
shares available for grant under the Company's 1999 Equity Incentive Plan by
201,200 shares and an increase in the shares available for purchase under the
Company's Employee Stock Purchase Plan by 175,000 shares.
On January 26, 2000, the Company granted to employees Non-Qualified Stock
Options to purchase 201,200 shares of the Company's Common Stock and Incentive
Stock Options to purchase 36,000 shares of the Company's Common Stock, at an
exercise price that approximates fair market value on the date of grant. The
options were granted in accordance with the Company's 1999 Equity Incentive Plan
and the 1997 Equity Incentive Plan, respectively, resulting in approximately
6,000 and 257,000 shares of common stock remaining available for grant under the
plans, respectively, at February 29, 2000.
7. LITIGATION AND CONTINGENCIES
Included in the accounts receivable balance is a past-due receivable totaling
$889,000 from a customer. The Company is seeking to recover the entire $889,000
of this past due account plus an additional $819,000 for custom finished goods
manufactured and raw material purchased for this customer. The Company believes
that reserves are not necessary with regard to this mater. As a result, no
additional allowance for uncollectible amounts has been established.
In April 1999, the Company became involved in a lawsuit filed in the US
District Court in Connecticut (Civil action no. 399cv00311) seeking to collect
outstanding receivables that were incurred by Akom
- 5 -
<PAGE>
Technologies, Inc. (Akom) in connection with Raytheon Company's (Raytheon)
Goldmine Project. Also named in the action were Raytheon, Raycom, Inc. (Raycom),
and sixteen other companies who supplied materials and services for the Goldmine
Project. No party is seeking to collect monetary amounts from the Company,
rather the parties are seeking declaration from the courts that they do not owe
monetary amounts to the Company. The Company has filed a counter claim against
Akom and cross claims against Raytheon and Raycom and asserts damages to the
extent of unpaid invoices and custom inventory parts and materials approximating
$1.7 million. Akom, Raytheon and Raycom have denied liability. In an opinion
issued on March 31, 2000, the court denied Raytheon's and Raycom's motion to
dismiss the Company's breach of contract claims, but dismissed the Company's
claims for misrepresentation, fraud, and unfair trade practices. When the case
began there were 17 suppliers seeking recovery for products provided to Akom for
and at the request of Raytheon and Raycom. Raytheon has now settled with all but
5 of the suppliers. The Company believes it has meritorious claims and continues
to prepare for trial.
8. SALES REVENUE
The following table sets forth the components of the Company's sales by
product area for the periods ended as indicated (in thousands):
<TABLE>
<CAPTION>
Amounts
---------------------------------------------------------------
Three Months Six Months
Ended February Ended February
---------------------------------------------------------------
29, 2000 28, 1999 29, 2000 28, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Low-power components $ 7,832 $ 9,143 $ 14,256 $ 18,354
Low-power Virtual Wire(R) radio systems 2,194 1,510 3,719 2,559
--------- --------- --------- ---------
Low-Power Products Group 10,026 10,653 17,975 20,913
--------- --------- --------- ---------
Frequency control modules 540 1,090 1,028 2,172
Filters 1,522 1,341 2,301 2,833
--------- --------- --------- ---------
Communications Products Group 2,062 2,431 3,329 5,005
--------- --------- --------- ---------
Technology development sales 98 18 211 64
--------- --------- --------- ---------
Total Sales $ 12,186 $ 13,102 $ 21,515 $ 25,982
========= ========= ========= =========
</TABLE>
- 6 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion may be understood more fully by reference to the
financial statements, notes to the financial statements, and management's
discussion and analysis contained in the Company's Annual Report on Form 10-K
for the year ended August 31, 1999, filed with the Securities and Exchange
Commission.
General
RFM offers products in four product areas: low-power components, Virtual
Wirea short-range radio device systems, frequency control modules and filters.
In the Second Quarter of fiscal year 2000, marketing and product development
efforts for these four product areas were realigned into two product groups.
The Low-Power Product Group consists of the low power component products and the
Virtual Wirea short range radio products. The Communications Product Group
includes the filter and frequency control product areas. The Company sells to
original equipment manufacturers in automotive, computer, consumer, industrial
and telecommunications market segments worldwide.
This report and other presentations made by us contain "forward-looking
statements" within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended. Such statements involve known and unknown risks, uncertainties
and other factors that could cause our actual results to differ materially from
the results expressed or implied by such statements, including general economic
and business conditions, conditions affecting the industries served by us,
conditions affecting our customers and suppliers, competition, the overall
market acceptance of the Company's services, and other factors disclosed in this
report and our Form 10-K for the year ended August 31, 1999. Accordingly
although we believe that the expectations reflected in such forward-looking
statements are reasonable, there can be no assurance that such expectations will
prove to be correct.
Any forward-looking statement speaks only as of the date on which such
statement was made, and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement was made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for us to
predict all of such factors, nor can it assess the impact of each such factor or
the extent to which my factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking statement.
The Company incurred significant losses in the first and second quarter of
its fiscal year 2000. As a result, it does not expect to overcome these losses
this year and anticipates reporting a loss for fiscal year 2000.
Results of Operations
The following discussion relates to the financial statements of the Company
for the three months ended February 29, 2000 (current quarter), of the fiscal
year ending August 31, 2000, in comparison to the three months ended February
28, 1999 (comparable quarter of the prior year). In addition, certain
comparisons with the three months ended November 30, 1999 (previous quarter),
are provided where management believes it is useful to the understanding of
trends.
The selected financial data for the periods presented may not be indicative
of the Company's future financial condition or results of operations.
- 7 -
<PAGE>
The following table sets forth, for the three months and six months ended
February 29, 2000, and February 28, 1999, (i) the percentage relationship of
certain items from the Company's statements of income to sales and (ii) the
percentage change in these items between the current period and the comparable
period of the prior year:
<TABLE>
<CAPTION>
Percentage of Total Sales Percentage Change From
--------------------------------------------------------- --------------------------------------
Three Months Six Months Three Months Six Months
Ended February Ended February Ended February Ended February
---------------------------------------------------------
29, 2000 28, 1999 29, 2000 28, 1999 1999 to 2000 1999 to 2000
------------ ------------ ------------ ------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Sales 100 % 100 % 100 % 100 % (7)% (17)%
Cost of sales 89 65 100 65 27 28
-------- -------- -------- -------- --------- ---------
Gross profit 11 35 0 35 (70) (101)
-------- -------- -------- -------- --------- ---------
Research and development 8 11 11 10 (32) (15)
Sales and marketing 12 10 14 10 14 14
General and administrative 6 6 9 5 (4) 42
-------- -------- -------- -------- --------- ---------
Total operating expenses 26 27 34 25 (9) 8
-------- -------- -------- -------- --------- ---------
Income from operations (15) 8 (34) 10 (283) (396)
Other income (expense), net (1) - (1) (1) 650 641
-------- -------- -------- -------- --------- ---------
Income before income taxes (16) 8 (35) 9 (301) (411)
Income tax expense (5) 3 (11) 3 (273) (368)
-------- -------- -------- -------- --------- ---------
Net income (11)% 5 % (24)% 6 % (317)% (435)%
======== ======== ======== ======== ========= =========
</TABLE>
Sales
The following table sets forth the components of the Company's sales and the
percentage relationship of the components to sales by product area for the
periods ended as indicated (in thousands, except percentage data):
<TABLE>
<CAPTION>
Percentage of Total Sales % of Total
----------------------------------------------- ------------------------------------------
Three Months Six Months Three Months Six Months
Ended February Ended February Ended February Ended February
----------------------------------------------- ------------------------------------------
29, 2000 28, 1999 29, 2000 28, 1999 29, 2000 28, 1999 29, 2000 28, 1999
---------- ----------- ---------- ----------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Low-power components $ 7,832 $ 9,143 $ 14,256 $ 18,354 64 % 70 % 66 % 71 %
Low-power Virtual Wire(R)
radio systems 2,194 1,510 3,719 2,559 18 12 17 10
-------- --------- --------- --------- ------- --------- -------- ---------
Low-Power Products Group 10,026 10,653 17,975 20,913 82 82 83 81
-------- --------- --------- --------- ------- --------- -------- ---------
Frequency control modules 540 1,090 1,028 2,172 4 8 5 8
Filters 1,522 1,341 2,301 2,833 13 10 11 11
-------- --------- --------- --------- ------- --------- -------- ---------
Communications Products Group 2,062 2,431 3,329 5,005 17 18 16 19
-------- --------- --------- --------- ------- --------- -------- ---------
Technology development sales 98 18 211 64 1 0 1 0
-------- --------- --------- --------- ------- --------- -------- ---------
Total Sales $ 12,186 $ 13,102 $ 21,515 $ 25,982 100 % 100 % 100 % 100 %
======== ========= ========= ========= ======= ========= ======== =========
</TABLE>
Total sales decreased 7% in the current quarter compared to the comparable
quarter of the prior year but increased 31% compared to the previous quarter.
The decrease in sales from the comparable quarter of the prior year was
primarily due to a 14% decrease in sales for the low-power component line, which
was
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<PAGE>
caused by a 12% reduction in the average per unit selling price for these very
competitive products. Although the reduction in average selling prices slowed
somewhat in the second quarter, the Company expects the trend towards lower
prices to continue into future periods. As a result, sales for low-power
components may not increase or return to the levels they had been in previous
periods.
The increase in sales from the previous quarter was primarily due to a
decline in quarterly turns business in the first quarter for all product lines
and the Company's decision not to offer special sales promotions programs to
make up the revenue shortfall because of the potential impact such promotions
have on long-term gross margins. Current year-to-date sales decreased 17% from
the comparable year-to-date period due to very low sales in the first quarter of
fiscal year 2000, as well as the reduced sales for low-power components sales
mentioned above.
Virtual Wirea short-range radio device systems sales in the current quarter
increased 45% in comparison to the comparable quarter of the prior year. This
was primarily attributable to a better than twofold increase in the number of
units sold for those products partially offset by a decrease in the average
selling price. The Company has devoted significant capital and technical, sales
and marketing resources to the Virtual Wirea short-range radio device systems
products, including the recent introduction of a second generation of
transmitter and receiver products, as well as the transceiver (two way
communication) product. The Company believes these products offer robust
operation, small size, low-power consumption and low costs for short-range
wireless data applications. The Company is helping a number of customers
incorporate these products into a wide variety of new applications. The timing
of when any sales resulting from such new applications reach the production
phase is dependent upon the timing of both the customers' product development
cycles and their product introduction cycles. As a result, it is difficult to
predict when, or if, these new products will have a significant impact on the
Company's sales.
Sales of filter products increased 14% from the comparable quarter of the
prior year. The increases were mainly due to increases in units delivered
partially offset by reduced selling prices. The Company continues to devote
significant resources to developing and supporting the growth of its filter
products. The product development and introduction cycle for filter products
takes between six to eighteen months to complete. As a result, it is difficult
to predict when, or if, this strategy to focus on filter products will have a
significant impact on the Company's sales.
The Company's top five customers accounted for approximately 36%, 29% and
34% of the Company's sales in the current quarter, the comparable quarter of the
prior year and the previous quarter, respectively. One customer accounted for
approximately 11% of sales in the current quarter, while no customer accounted
for more than 10% of sales in the comparable quarter of the prior year or the
previous quarter.
International sales were approximately 67%, 55% and 57% of the Company's
sales during the current quarter, the comparable quarter of the prior year and
the previous quarter, respectively. The Company considers all product sales
with a delivery destination outside of North America to be international sales.
These sales are denominated primarily in U.S. currency. The Company intends to
continue its focus on international sales in the future and expects that
international sales will continue to represent a significant portion of its
business. However, international sales are subject to fluctuations as a result
of local economic conditions and competition. Therefore, the Company cannot
predict whether it will continue to derive a significant portion of its business
from international sales.
While the Company has achieved sales increases in prior periods, there can
be no assurance that this can be achieved in future periods. The Company's
success is highly dependent on achieving technological advances in its product
design and manufacturing capabilities, as well as its ability to sell its
products in a competitive marketplace that can be influenced by outside factors
such as economic and regulatory
- 9 -
<PAGE>
conditions. Competition, including alternative technologies or competitors
duplicating the Company's technologies, may adversely affect the selling prices
and market share.
Gross Profit
The current quarter gross margin of 11% decreased from 35% in the
comparable quarter of the prior year but increased from a negative 15% gross
margin in the previous quarter. Year-to-date gross margins were 0%, compared to
35% for the comparable year-to-date period. The decrease from the prior year
was due to several factors and occurred in most of the product lines.
The first factor decreasing gross margins was the continuing decline in
per-unit selling prices, for the Company's Low Power Component and Virtual Wirea
short-range radio device systems due to competitive pressures. There was not a
corresponding decrease in manufacturing costs per unit, and in fact
manufacturing costs increased, as explained below. Therefore gross margins for
those product lines decreased in the current quarter, as well as the current
year-to-date period. The Company expects this trend in reduced sales prices to
continue in both of these product lines. It is not certain if the Company can
reduce per unit manufacturing costs in future periods to the same extent as the
decrease in selling prices. If sufficient cost reductions are not made, gross
margins would be adversely impacted in a material way.
The second factor was the decline in sales that resulted in the large fixed
cost portion of overhead costs to be a higher percentage of total sales. The
decrease in selling prices caused the need to produce more units to reach the
same sales dollars. The Company has added equipment and other manufacturing
overhead costs to increase the capacity in each of its facilities. This has
increased fixed manufacturing costs by approximately $300,000 per quarter. If
additional sales dollars are not obtained in future periods, manufacturing
overhead costs may not decline as a percentage of total sales.
A third factor was the fact that the Company has experienced a significant
change in the mix of its product sales. In the current quarter, low-power
Virtual Wirea short-range radio module product sales increased to 18% of total
sales, compared to only 12% in the comparable quarter of the prior year, while
all of the other product lines declined as a percentage of total sales. This
shift in product sales mix from a historically higher margin product to a
currently lower margin product has produced an overall reduction in gross
profit. The Company expects the change in mix to continue but also believes
that the negative impact on gross margins will be reduced significantly as the
second generation of the transceiver and related low-power Virtual Wirea short-
range radio products represent the majority of total production later in
calendar year 2000. There may be an increase in sales of first generation
products until then as the Company is offering customers the opportunity to buy
more of these products before they are discontinued. The second-generation
products are designed to be more cost-effective than first generation products.
Because of the uncertainty of volume and the new product introduction process,
the Company may not be able to manufacture these future generation products at a
cost low enough to produce an improved gross profit margin result.
Gross margins in the current quarter did increase 26 margin points from the
previous quarter. Part of this was due to the absence of $1.2 million in
special charges that occurred in the first quarter, related to ramp up of new
products and the transition from first generation to second generation Virtual
Wire short range radio products. More significantly, management efforts to
return manufacturing productivity yield and production rates closer to historic
levels resulted in lower per unit material and labor costs. Manufacturing
operations were more level loaded through the quarter, resulting in lower
overtime and expediting costs. Management intends to continue this focus on
improved operations, although there can be no assurance these efforts will
result in lower per unit costs.
The Company has started a program to outsource some of its assembly
operations offshore. The initial focus is to enhance the Company's capability
to produce filter products. A successful offshore
- 10 -
<PAGE>
manufacturing program could result in a material reduction in manufacturing
costs. The Company plans to have some production offshore by the end of the
calendar year: however, there can be no assurance if this program will be
successful.
The Company has experienced sudden increases in demand in the past which
pressured the manufacturing facilities to increase capacity in order to meet
this demand. In addition, new products sometimes require different manufacturing
processes than the Company currently possesses. The Company has devoted the bulk
of its capital expenditures over the past few years to increase capacity and
improve its manufacturing processes. The Company may not be able to continue to
increase its manufacturing capacity and improve its manufacturing processes in a
timely manner so as to take advantage of any increased market demand. Failure to
do this would result in a loss of potential sales in the periods impacted.
Research and Development
Research and development expenses in the current quarter decreased
approximately $483,000 from the comparable quarter of the prior year. The prior
year included approximately $300,000 in unusual process development costs
related to a new packaging process. In addition, the current quarter includes
$80,000 more engineering costs in cost of sales as a result of an increase in
technology development sales. The Company believes that the continued
development of its technology and new products is essential to its success and
is committed to continue to devote significant resources to research and
development. The Company expects that research and development expenses may
increase, or stay approximately the same in future periods.
Sales and Marketing
Current quarter sales and marketing expenses increased approximately
$179,000, or 14% from the prior comparable quarter. This increase was due
primarily to increased sales commission expenses related to the completion of
the Company's sales program to increase coverage around the world. The Company
expects to incur higher sales and marketing expenses in absolute dollars in
future periods as it continues to expand its sales and marketing efforts.
General and Administrative
General and administrative expenses for the current quarter decreased
approximately $30,000, or 4%, from the prior comparable quarter. This decrease
mainly related to cost reductions instituted in response to lower sales levels.
The Company expects general and administrative expenses may increase, or stay
approximately the same in absolute dollars in future periods.
Income Tax (Benefit) Expense
The Company's income tax benefit was $614,000 in the current quarter,
compared to income tax expense of $355,000 in the comparable quarter of the
prior year, reflecting the comparable income before income taxes for the
respective periods. The Company's effective tax benefit rate was approximately
31% in the current quarter, compared to approximately 36% in the prior year
reflecting increased benefit from a Foreign Sales Corporation.
Net (Loss) Income
Net income/(loss) was ($1,399,000), or ($.23) per diluted share, in the
current quarter, compared to net income of $645,000, or $.11 per diluted share,
for the comparable quarter of the prior year. The current year-to-date loss is
$5.3 million, compared to a $1.6 million net income in the prior year-to-date
period. As a result, the Company does not expect to overcome this loss this
year and anticipates reporting a loss for fiscal year 2000.
- 11 -
<PAGE>
Liquidity and Capital Resources
The principal sources of liquidity at February 29, 2000, consisted of $5.1
million of cash and short-term investments and $600,000 of unused credit
facilities. These credit facilities include $600,000 unused under a line of
credit agreement with a commercial bank, available until December 31, 2000. The
credit facilities contain restrictions and financial covenants relating to
various matters, including net worth, interest coverage and levels of debt. The
Company has negotiated a revised bank loan agreement, in which the bank has
waived covenant violations for the period ended November 30, 1999, and modified
the terms and conditions of the agreement, resulting in covenants that the
Company does not expect will result in a covenants violation during the balance
of the fiscal year. The Company was in compliance with its financial covenants
as of February 29, 2000. In addition, the structure of the loan has been
modified to tie amounts borrowed under the agreement to a borrowing base
consisting of certain receivables, inventory, cash and marketable securities,
which are pledged as collateral. Additionally, the expiration date of the line
of credit was changed to December 31, 2000. The Company plans to negotiate an
extension of the credit facility beyond that date.
Net cash used in operating activities was $1.2 million in the year-to-date
period of fiscal 2000 as compared to net cash provided from operating activities
of $1.8 million for the year-to-date period of fiscal 1999. The decrease in cash
available from operations was due to the $5.3 million net loss in the current
year-to-date period that was partially offset by a $2.9 million reduction in
accounts receivable and inventories. The Company's internal plan is to achieve
nearly a breakeven cash flow from operations during its second half. There can
be no assurance that this will be achieved.
Cash from investing activities was $400,000 for the current year-to-date
period, as compared to, $3.5 million of cash used in investing activities for
the comparable year-to-date period of the prior year, primarily as a result of
approximately $500,000 in capital expenditures offset by reduction of $1 million
in short-term investments. Cash used in investing activities was $3.5 million
in the prior year, due to $3.8 million in capital expenditures. The Company
expects to acquire a total of approximately $1 million to $3 million of capital
equipment by the end of fiscal 2000, consisting primarily of equipment needed
for its manufacturing facilities. Some of this equipment may be acquired under
equipment-collateralized operating lease facilities that may be negotiated.
Net cash generated from financing activities was $1.7 million and $2.2
million for the year-to-date period of fiscal 2000 and 1999, respectively. In
the current year, approximately $900,000 was raised from a net increase in
borrowings and $800,000 in sales of stock from stock options and the employee
stock purchase plan. In the prior year, $1.7 million was raised in a net
increase in borrowings and $500,000 in sales of stock.
The Company believes that cash generated from operations, if any, banking
facilities and the $5.1 million balance in cash and short-term investments will
be sufficient to meet the Company's operating cash requirements through the rest
of the fiscal year. To the extent that these sources of funds are insufficient
to meet the Company's capital or operating requirements, the Company may be
required to raise additional funds. No assurance can be given that additional
financing will be available or, if available, that it will be available on
acceptable terms. Should that occur, there could be significant adverse impact
on the Company's operations.
Year 2000 Readiness Disclosure
The Company completed its plan to prepare for the Year 2000 computer issue.
The Company did not experience any significant problems related to the Year 2000
issue in the current quarter and does not expect to experience any in future
periods.
- 12 -
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In April 1999, the Company became involved in a lawsuit filed in the US
District Court in Connecticut (Civil action no. 399cv00311) seeking to collect
outstanding receivables that were incurred by Akom Technologies, Inc. (Akom) in
connection with Raytheon Company's (Raytheon) Goldmine Project. Also named in
the action were Raytheon, Raycom, Inc. (Raycom), and sixteen other companies who
supplied materials and services for the Goldmine Project. No party is seeking
to collect monetary amounts from the Company, rather the parties are seeking
declaration from the courts that they do not owe monetary amounts to the
Company. The Company has filed a counter claim against Akom and cross claims
against Raytheon and Raycom and asserts damages to the extent of unpaid invoices
and custom inventory parts and materials approximating $1.7 million. This amount
is reflected in the Company's trade accounts receivable and inventories at
February 29, 2000. Akom, Raytheon and Raycom have denied liability. In an
opinion issued on March 31, 2000, the court denied Raytheon's and Raycom's
motion to dismiss the Company's breach of contract claims, but dismissed the
Company's claims for misrepresentation, fraud, and unfair trade practices. When
the case began there were 17 suppliers seeking recovery for products provided to
Akom for and at the request of Raytheon and Raycom. Raytheon has now settled
with all but 5 of the suppliers. The Company believes it has meritorious claims
and continues to prepare for trial.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
Pursuant to the Annual Meeting of Stockholders of RF Monolithics held on January
26, 2000, the following actions were taken:
1. The stockholders elected the following individuals as directors until the
next annual meeting of stockholders or until their successors are duly
elected and have qualified. The action was taken as evidenced by the
following vote totals and percentages for each nominee of the Company's then
outstanding stock:
David M. Kirk:
For 4,828,447 82%
Against 243,561 4%
Michael R. Bernique
For 4,829,911 82%
Against 242,097 4%
Cornelius C. Bond, Jr.
For 4,827,417 82%
Against 244,591 4%
Dean C. Campbell
For 4,828,017 82%
Against 243,991 4%
Francis J. Hughes, Jr.
For 4,829,094 82%
Against 242,914 4%
These five individuals constitute the entire board of directors serving at
this time.
- 13 -
<PAGE>
2. The stockholders approved an amendment to the Company's 1997 Equity
Incentive Plan, to increase the aggregate number of shares of Common Stock
authorized for issuance under the plan by 200,000 (from 1,175,000 shares to
1,375,000 shares) and to eliminate the Board's authority and discretion to
reprice options. The action was approved by the following vote totals and
percentages of the Company's then outstanding stock:
For 2,593,239 44%
Against 632,013 11%
Abstain 15,744 0%
Broker Non-Votes 1,831,012 31%
3. The stockholders approved an amendment to the Company's 1994 Non-Employee
Directors' Stock Option Plan to increase the aggregate number of shares of
Common Stock authorized for issuance under the plan by 100,000 (from
175,000 shares to 275,000 shares). The action was approved by the following
vote totals and percentages of the Company's then outstanding stock:
For 2,246,236 38%
Against 930,009 16%
Abstain 64,751 1%
Broker Non-Votes 1,831,012 31%
4. The stockholders approved an amendment to the Company's 1994 Employee Stock
Purchase Plan to increase the aggregate number of shares of Common Stock
authorized for issuance under the plan by 175,000 (from 350,000 shares to
525,000 shares). The action was approved by the following vote totals and
percentages of the Company's then outstanding stock:
For 3,091,962 52%
Against 131,784 2%
Abstain 17,250 0%
Broker Non-Votes 1,831,012 31%
5. The stockholders ratified the selection of Deloitte & Touche LLP as the
Company's independent auditors for the fiscal year ending August 31, 2000.
The action was approved by the following vote totals and percentages of the
Company's then outstanding stock:
For 5,014,503 85%
Against 41,015 1%
Abstain 16,490 0%
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The Company hereby incorporates by reference all exhibits filed
in connection with Form 10-K for the year ended August 31, 1999.
(b) The Company did not file any reports on Form 8-K during the quarter ended
February 29, 2000.
- 14 -
<PAGE>
(c) Exhibits Included Description
----------------- -----------
10.31 Waiver and Third Amendment to Loan Agreement,
dated as of February 29, 2000, among RF
Monolithics, Inc., Banc One Leasing Corporation,
and Bank One, Texas, National Association
10.32 Promissory Note, dated February 29, 2000, in the
principal amount of $7,500,000, executed and
delivered by RF Monolithics, Inc. to Bank One,
Texas, National Association
10.33 Waiver and Amendment to Master Lease Agreement
dated as of February 29, 2000, by and between RF
Monolithics, Inc. and Banc One Leasing Corporation
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.
RF MONOLITHICS, INC.
Dated: April 14, 2000 By: /s/ David Kirk
-------------------------------------
David Kirk
CEO, President and Director
By: /s/ James P. Farley
-------------------------------------
James P. Farley
VP Finance, Controller
- 15 -
<PAGE>
EXHIBIT 10.31
WAIVER AND THIRD AMENDMENT TO LOAN AGREEMENT
--------------------------------------------
This WAIVER AND THIRD AMENDMENT TO LOAN AGREEMENT ("Amendment") is entered
---------
into as of February 29, 2000 (the "Amendment Date"), by and among RF
--------------
MONOLITHICS, INC., a Delaware corporation ("Borrower"), BANC ONE LEASING
--------
CORPORATION ("BOLC"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank"), a
---- ----
national banking association, acting in its capacity as "Bank" under the Loan
Documents and as collateral agent for itself and BOLC (in such capacity "Secured
-------
Party").
- -----
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 and that certain Second Amendment to Loan Agreement dated as of July 15,
1999 between Borrower 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 credit facility as set forth
therein.
B. Borrower has requested that Bank 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
-----------
Section 1.1. Definitions. Unless otherwise defined in this Amendment,
-----------
each capitalized term used in this Amendment has the meaning given to such term
in the Loan Agreement (as amended by this Amendment). As used herein, the
following terms shall mean as follows:
"Lease Agreements" means that certain Master Lease Agreement dated as
----------------
of November 3, 1995 between Borrower, as "Lessee," and BOLC, as "Lessor,"
including, without limitation all "Schedules" (as defined therein) and
amendments thereto, as such agreement may be amended, restated, or
otherwise modified from time to time.
"Security Agreement" means that certain Security Agreement dated as of
------------------
March 8, 1996 executed by Borrower in favor of Bank, as such agreement may
be amended, restated, or otherwise modified from time to time.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 1
<PAGE>
ARTICLE 2.
Waiver of Events of Default
---------------------------
Section 2.1. Waiver of Events of Default. Pursuant to paragraph 11(b) of
--------------------------- ---------------
the Loan Agreement, Borrower is required to comply with all covenants,
agreements, and terms of each of the Loan Documents, and pursuant to paragraph
---------
11(e) the occurrence of an event permitting third party creditors to accelerate
- -----
the maturity of indebtedness in excess of $250,000 constitutes an Event of
Default. Pursuant to paragraph 9(a) of the Loan Agreement, Borrower was
--------------
required maintain, as of the last day of each quarter of each fiscal year of
Borrower, a ratio of (a) current assets minus inventory, to (b) current
-----
liabilities plus the unpaid principal balance of the Revolving Line of Credit,
----
of not less than 1.25 to 1.00 (the "Quick Ratio Covenant"). Additionally,
--------------------
pursuant to paragraph 9(d) of the Loan Agreement, Borrower was required to
--------------
maintain, as of the end of each fiscal quarter, a ratio of (a) net income after
taxes, plus depreciation, amortization, interest expense, and lease and rent
----
expense, for the 12 month period ending with such fiscal quarter, to (b) current
maturities of long-term leases, plus interest expense, lease and rent expense,
----
for such 12 month period, of not less than 2.0 to 1.0 (the "Fixed Charge
------------
Coverage Ratio Covenant"). For the fiscal quarter ended November 30, 1999,
- -----------------------
Borrower failed to maintain each of the Quick Ratio Covenant and the Fixed
Charge Coverage Ratio Covenant. Borrower has also notified Bank of certain
defaults under the Lease Agreements which could result in acceleration of the
payments due thereunder. Borrower's failure to maintain the Quick Ratio
Covenant and the Fixed Charge Coverage Ratio Covenant (collectively, the
"Violated Covenants") for the fiscal quarter ended November 30, 1999,
- -------------------
constitutes an Event of Default under Section 11(b) of the Loan Agreement and
-------------
the default under the Lease Agreements (the "Lease Default") constitutes an
-------------
Event of Default under paragraph 11(e) of the Loan Agreement (collectively, the
---------------
"Existing Defaults"). Effective as of February 29, 2000, and subject to the
-----------------
conditions precedent contained herein, Bank hereby waives the Existing Defaults
resulting from Borrower's failure to comply with the Violated Covenants and the
Lease Defaults.
ARTICLE 3.
Amendments to Loan Agreement
----------------------------
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 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 follows:
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 2
<PAGE>
Subject to the terms and conditions set forth herein, Bank agrees to lend
to Borrower, on a revolving basis from time to time during the period
commencing on the date hereof and continuing through and including 11:00
a.m. (Dallas, Texas time) on December 31, 2000 (the "Termination Date"),
----------------
such amounts as Borrower may request hereunder; provided, however, the
total principal amount outstanding at any time shall not exceed the lesser
of (i) an amount equal to the Borrowing Base (as such term is defined
hereinbelow), or (ii) $7,500,000 (the "Revolving Line of Credit"). In its
------------------------
sole discretion, Bank may elect to make loans available to Borrower under
the Revolving Line of Credit in excess of the availability under the
Borrowing Base on one or more occasions, but in the event Bank agrees to do
so, Bank shall not thereby be deemed to have changed the limits of the
Borrowing Base or to be obligated to exceed such limits on any other
occasion. If at any time the aggregate principal amount outstanding under
the Revolving Line of Credit shall exceed an amount equal to the Borrowing
Base, unless Bank otherwise consents, Borrower agrees to immediately repay
to Bank such excess amount, plus all accrued but unpaid interest thereon.
Subject to the terms and conditions hereof, Borrower may borrow, repay, and
reborrow hereunder. All sums advanced hereunder, together with all accrued
but unpaid interest thereon, shall be due and payable in full on the
Termination Date. The sums advanced under the Revolving Line of Credit
shall be used for working capital purposes. In accordance with the terms
of the Note (as such term is defined hereinbelow), Borrower shall give Bank
prior notice of each requested advance hereunder specifying (i) the
aggregate amount of such requested advance, and (ii) the requested date of
such advance, with such advances to be requested in a form satisfactory to
Bank. The advances under the Revolving Line of Credit shall be
collectively called the "Loan". The term "Indebtedness", as used herein,
---- ------------
shall mean the Loan and all other indebtedness owing from time to time to
Bank by Borrower.
As used in this Loan Agreement, the term "Borrowing Base" shall have the
--------------
meaning set forth hereinbelow:
An amount equal to eighty percent (80.0%) of Borrower's Eligible
Accounts, plus twenty-five percent (25.0%) of Borrower's Eligible
----
Inventory; provided, however, the outstanding amount advanced against
Eligible Inventory at any time shall not exceed $1,000,000, plus one
----
hundred 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.
--------------
As used herein, the term "Eligible Accounts" shall mean at any time, an
-----------------
amount equal to the aggregate net invoice or ledger amount owing on all
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
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 3
<PAGE>
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 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
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 4
<PAGE>
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 as
----------------------------------------------
of the Amendment Date, paragraph 2 of the Loan Agreement is hereby amended and
-----------
restated in its entirety to read as follows:
2. Promissory Note. The Loan shall be evidenced by a promissory note
---------------
(herein called, together with any renewals, extensions, and increases
thereof, the "Note"), duly executed by Borrower, in the stated principal
----
amount of $7,500,000 and 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 3 of the Loan Agreement. Effective as
----------------------------------------------
of the Amendment Date, paragraph 3 of the Loan Agreement is hereby amended by
-----------
adding thereto, immediately following clause (c), a new clause (d) which shall
---------- ----------
read in its entirety as follows:
(d) That certain collateral account No. 60Y519683 styled "RF
Monolithics, Inc. Collateral With Bank One" established by Borrower with
Banc One Securities Corporation.
Additionally, the following sentence is added at the end of paragraph 3 and
-----------
shall read in its entirety as follows:
Upon request of Borrower, if no Default or Event of Default exists
under any Loan Document and if the Borrowing Base, calculated only with
respect to Eligible Accounts and Eligible Inventory, exceeds the
outstanding balance of the Loans, Bank shall cause Secured Party to release
to Borrower the securities held in the securities account described in
paragraph 3(d) to the extent requested by Borrower.
--------------
Section 3.4. Amendment to Paragraph 8 of the Loan Agreement. Effective as
----------------------------------------------
of the Amendment Date, clause (d) and clause (e) of paragraph 8 of the Loan
---------- ---------- -----------
Agreement are hereby amended and restated in their entirety to read as follows:
(d) Liens. Except in connection with purchase money indebtedness
-----
permitted in clause (e) of this paragraph 8, incur, create, assume, or
---------- -----------
permit to exist any lien or other encumbrance on any of its assets or
properties, including, without limitation, the Collateral, other than the
liens granted to Bank pursuant to the Loan Documents and the liens set
forth on Schedule 8(d) of this Loan Agreement.
-------------
(e) Indebtedness. Create, incur, permit to exist, or assume any
------------
indebtedness for borrowed money or issue or assume any other note,
debenture, bond, or other evidences of
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 5
<PAGE>
indebtedness of others (all such indebtedness being referred to herein as
"Debt"), other than (i) Debt owing to Bank, (ii) Debt described on Schedule
---- --------
8(e) hereof, and any extensions, renewals, or refinancings of such Debt so
----
long as (A) the principal amount of such Debt after such extension,
renewal, or refinancing shall not exceed the principal amount of such Debt
which was outstanding immediately prior to such extension, renewal, or
refinancing and (B) such Debt shall not be secured by any assets other than
assets securing such Debt, if any, prior to such extension, renewal, or
refinancing, and (iii) purchase money Debt and equipment leases (the amount
of such each lease being the value of the property subject to such lease on
the date of such lease) (A) not in excess of $500,000 in the aggregate
incurred in any fiscal year of Borrower, (B) set forth on Schedule (8)(e),
---------------
and (C) as otherwise approved by Bank.
Section 3.5. Amendment to Paragraph 9 of the Loan Agreement. Effective as
----------------------------------------------
of the Amendment Date, paragraph 9 of the Loan Agreement is hereby amended and
-----------
restated in its entirety to read as follows:
9. Financial Covenants. Until (i) the Note and all other obligations
-------------------
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) Bank has no further
commitment to lend hereunder, Borrower will at all times maintain the
following financial covenants:
(a) Quick Ratio. Borrower will, beginning as of November 30,
-----------
2000 and at all times thereafter, maintain a ratio of (1) current
assets minus inventory, to (2) current liabilities plus the unpaid
----- ----
principal balance of the Revolving Line of Credit, of not less than
1.25 to 1.00.
(b) Tangible Net Worth. Borrower will, at all times, maintain
------------------
its Tangible Net Worth at not less than $29,500,000.
(c) Liabilities/Tangible Net Worth. Borrower will at all times
------------------------------
maintain a ratio of (1) total liabilities, to (2) Tangible Net Worth,
of not greater than 0.50 to 1.00.
(d) Fixed Charge Ratio. Borrower will, beginning as of November
------------------
30, 2000 and at all times thereafter, maintain a ratio of (1) net
income after taxes, plus depreciation, amortization, interest expense,
----
and long-term lease and rent expense, for the twelve (12) months
ending as of any date of determination, to (2) without duplication (A)
current maturities of long-term debt as of the date of determination,
plus (B) current maturities of capitalized leases as of the date of
----
determination, plus (C) interest expense for the preceding twelve (12)
----
months, plus (D) lease and rent expense for the preceding twelve (12)
----
months, of not less than 2.00 to 1.00.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 6
<PAGE>
(e) Minimum EBITDA. Borrower will not, as of the end of each of
--------------
the fiscal quarters of Borrower set forth below, permit the sum of its
net income, plus depreciation, amortization, interest expense, and
----
income taxes for the three (3) month period ending with such fiscal
quarter to be less than the amount set forth opposite the applicable
period in the table below:
-------------------------------------------------------------
Period Minimum EBITDA
-------------------------------------------------------------
Three months ending February 29, 2000 -$666,000
-------------------------------------------------------------
Three months ending May 31, 2000 $1,007,000
-------------------------------------------------------------
Three months ending August 31, 2000 $2,069,000
-------------------------------------------------------------
As used herein, the term "Tangible Net Worth" means, as of any date,
------------------
Borrower's total assets excluding all intangible assets, less total
----
liabilities excluding any indebtedness owing by Borrower which has been
subordinated by written agreement to all indebtedness now or hereafter
owing by Borrower to Lender, such agreement to be in form and substance
acceptable to Lender. Unless otherwise specified, all accounting and
financial terms and covenants set forth above are to be determined
according to generally accepted accounting principles, consistently
applied.
Section 3.6. Amendment to Paragraph 10 of the Loan Agreement. Effective
-----------------------------------------------
as of the Amendment Date, paragraph 10 of the Loan Agreement is hereby amended
------------
by adding thereto, immediately following clause (d), the following new clauses
---------- -------
(e),(f),(g), and(h) which shall read in their entirety as follows:
- --- --- --- ---
(e) Borrowing Base Report. A borrowing base report signed by a
---------------------
responsible officer of Borrower, within fifteen (15) days after the end of
each month, in form and detail satisfactory to Bank.
(f) Accounts Receivable Aging. An accounts receivable aging report
-------------------------
within fifteen (15) days after the end of each month, in form and detail
satisfactory to Bank.
(g) Payables Aging. An accounts payable aging report within fifteen
--------------
(15) days after the end of each month, in form and detail satisfactory to
Bank.
(h) Inventory Listing. A list of Borrower's inventory by location and
-----------------
type (to include the following: raw materials, work in process, and
finished goods) within fifteen (15) days after the end of each month, in
form and detail satisfactory to Bank.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 7
<PAGE>
Section 3.7. Amendment to Paragraph 11(e) of the Loan Agreement.
--------------------------------------------------
Effective as of the Amendment Date, paragraph 11(e) of the Loan Agreement is
---------------
hereby amended and restated in its entirety to read as follows:
(e) The occurrence of any event which permits the acceleration of the
maturity of any indebtedness in excess of $250,000 owing by Borrower to any
third party under any agreement or understanding or the occurrence of any
default in the payment, performance, or observance of any obligation under
any loan, credit agreement, or lease in which Borrower or any subsidiary
(direct or indirect) of Bank One Corporation (which is Bank's ultimate
parent corporation) is the creditor or lessor.
Section 3.8. Addition of Schedule 8(d) to the Loan Agreement. Effective
-----------------------------------------------
as of the Amendment Date, Schedule 8(d) is hereby added to the Loan Agreement in
-------------
its entirety to read as set forth in Exhibit A attached hereto.
---------
Section 3.9. Addition of Schedule 8(e) to the Loan Agreement. Effective
-----------------------------------------------
as of the Amendment Date, Schedule 8(e) is hereby added to the Loan Agreement in
-------------
its entirety to read as set forth in Exhibit B attached hereto.
---------
ARTICLE 4.
Amendments to Security Agreement
--------------------------------
Section 4.1. Amendment to the Introductory Paragraph of the Security
-------------------------------------------------------
Agreement. Effective as of the Amendment Date, the introductory paragraph of
- ---------
the Security Agreement is hereby amended and restated in its entirety to read as
follows:
THIS SECURITY AGREEMENT ("Agreement") is made as of the 8th day of
---------
March, 1996, by RF Monolithics, Inc. (hereinafter called "Debtor"), in
favor of BANK ONE, TEXAS, NATIONAL ASSOCIATION, acting in its capacity as
agent for itself and Banc One Leasing Corporation ("BOLC") (Bank One,
----
Texas, National Association and its successors and assigns being referred
to hereinafter as "Secured Party"). Debtor hereby agrees with Secured
-------------
Party as follows:
Section 4.2. Amendment to Paragraph 1 of the Security Agreement.
--------------------------------------------------
Effective as of the Amendment Date, paragraph 1 of the Security Agreement is
-----------
hereby amended as follows:
(a) clause (iii) of paragraph 1(c) of the Security Agreement is hereby
------------ --------------
amended and restated in its entirety to read as follows:
(iii) All equipment of whatsoever kind and character used or usable
in Borrower's business, together with all replacements, accessories,
additions, substitutions, and accessions to all of the foregoing, all
records relating in any way to all of the foregoing (including, without
limitation, any computer software, whether on tape, disk,
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 8
<PAGE>
card, strip, or cartridge or any other form), and all PROCEEDS thereof,
including insurance payable by reason of loss or damage to such property.
(b) paragraph 1(d) of the Security Agreement is hereby amended and
--------------
restated in its entirety to read as follows:
(d) The term "Indebtedness" shall mean (i) all indebtedness,
------------
obligations, and liabilities of Debtor to the Creditors (as hereinafter
defined) (including, without limitation, all indebtedness, liabilities, and
obligations of Debtor to Bank pursuant to the Loan Documents and of Debtor
to BOLC pursuant to that certain Master Lease Agreement dated as of
November 3, 1995 between Debtor and BOLC) of any kind or character, now
existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several, or
joint and several, and regardless of whether such indebtedness,
liabilities, and obligations may, prior to their acquisition by the
Creditors, be or have been payable to or in favor of a third party and
subsequently acquired by the Creditors (it being contemplated that the
Creditors may make such acquisitions from third parties), including,
without limitation, all indebtedness, liabilities, and obligations of
Borrower to any Creditor now existing or hereafter arising by note, draft,
acceptance, guaranty, endorsement, letter of credit, assignment, purchase,
overdraft, discount, indemnity agreement, lease agreement, or otherwise,
(ii) all accrued but unpaid interest on any of the indebtedness,
liabilities, and obligations described in clause (i) preceding, (iii) all
----------
indebtedness, liabilities, and obligations described in clauses (i) and
-----------
(ii) preceding, (iv) all costs and expenses incurred by Secured Party in
----
connection with the collection and administration of all or any part of the
indebtedness, liabilities, and obligations described in clauses (i), (ii),
----------- ----
and (iii) preceding or the protection or preservation of, or realization
-----
upon, the collateral securing all or any part of such indebtedness,
liabilities, and obligations, including, without limitation, all reasonable
attorneys' fees, and (v) all renewals, extensions, modifications, and
rearrangements of the indebtedness, liabilities, and obligations described
in clauses (i), (ii), (iii), and (iv) preceding.
----------- ---- ----- ----
(c) paragraph 1(e) of the Security Agreement is hereby amended and
--------------
restated in its entirety to read as follows:
(e) The term "Loan Documents" shall mean the certain Letter Loan
Agreement of even date herewith, as such agreement may be amended,
restated, or otherwise modified, between Borrower and Secured Party (the
"Loan Agreement") and all instruments and documents evidencing, securing,
governing, and/or pertaining to the Indebtedness.
(d) paragraph 1(f) of the Security Agreement is hereby amended and
--------------
restated in its entirety to read as follows:
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 9
<PAGE>
(f) The term "Obligated Party" shall mean any party other than Debtor
---------------
who secures, guarantees, and/or is otherwise obligated to pay all or any
portion of the Indebtedness.
(e) paragraph 1(g) of the Security Agreement is hereby amended and
--------------
restated in its entirety to read as follows:
(g) The term "Bank" shall mean Bank One, Texas, National Association,
----
acting in its individual capacity, its successors and assigns, including,
without limitation, any party to whom Bank, or its successors and assigns
may assign its rights and interests under this Agreement.
(f) paragraph 1(h) is hereby added to the Security Agreement and shall
--------------
read in its entirety as follows:
(h) The term "Creditor" shall mean each of Bank One, Texas, National
--------
Association, Banc One Leasing Corporation, and their respective successors
and assigns, and "Creditors" means all of such entities, collectively.
---------
Section 4.3. Amendment to Paragraph 2 of the Security Agreement.
--------------------------------------------------
Effective as of the Amendment Date, paragraph 2 of the Security Agreement is
-----------
hereby amended and restated in its entirety to read as follows:
2. Security Interest. As security for the Indebtedness, Debtor hereby
-----------------
grants to Secured Party, for the benefit of the Creditors, a continuing
security interest in the Collateral.
Section 4.4. Amendment to Paragraph 4(a) of the Security Agreement.
-----------------------------------------------------
Effective as of the Amendment Date, the third sentence of paragraph 4(a) of the
--------------
Security Agreement is hereby amended and restated in its entirety to read as
follows:
Debtor will cause any financing statement or other security instrument
with respect to the Collateral to be terminated, except as may exist or as
may have been filed in favor of Secured Party, Bank, or BOLC.
Section 4.5. Amendment to Paragraph 7(a) of the Security Agreement.
-----------------------------------------------------
Effective as of the Amendment Date, paragraph 7(a) of the Security Agreement is
--------------
hereby amended by amending the term "Borrower" contained therein to read
"Debtor".
Section 4.6. Amendment to Paragraph 7(b) of the Security Agreement.
-----------------------------------------------------
Effective as of the Amendment Date, paragraph 7(b) of the Security Agreement is
--------------
hereby amended and restated in its entirety to read as follows:
(b) Default Under Other Loan Documents and Master Lease. The
---------------------------------------------------
occurrence of an event of default under any of the
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 10
<PAGE>
Loan Documents or under the Master Lease Agreement referred to in
clause (i) of the definition of Indebtedness; or
----------
Section 4.7. Amendment to Paragraph 8(b) of the Security Agreement.
-----------------------------------------------------
Effective as of the Amendment Date, paragraph 8(b) of the Security Agreement is
--------------
hereby amended by adding thereto, the following sentence at the end of such
paragraph.
Notwithstanding any other provision of this Agreement, unless Bank consents
otherwise, in the event the Secured Party applies the proceeds of any
Collateral to payment of the Indebtedness, all of the Indebtedness owing to
Bank shall be paid in full before any of such proceeds may be applied to
any of the Indebtedness owing to BOLC.
Section 4.8. Amendment to Paragraph 8(c) of the Security Agreement.
-----------------------------------------------------
Effective as of the Amendment Date, the phrase "...to pay all amounts to which
Secured Party is...." contained in paragraph 8(c) of the Security Agreement is
--------------
hereby amended and restated to read "...to pay all amounts to which Secured
Party or any Creditor is...."
Section 4.9A. Amendment to Paragraph 9 of the Security Agreement.
--------------------------------------------------
Effective as of the Amendment Date, the phrase "Secured Party, and its officers,
directors, employees, agents and representatives (each an "Indemnified Person")"
------------------
contained in the first sentence of paragraph 9 of the Security Agreement is
-----------
hereby amended and restated to read "Secured Party, each Creditor, and their
respective officers, directors, employees, agents, and representatives (each an
"Indemnified Person")".
------------------
Section 4.10. Addition of Paragraph 11 of the Security Agreement.
--------------------------------------------------
Effective as of the Amendment Date, a new paragraph 11 is hereby added to the
------------
Security Agreement which shall read in its entirety as follows:
10. Appointment and Acceptance of Agency and Duties. The Creditors
-----------------------------------------------
hereby appoint Secured Party to act as their agent to serve as the secured
party on their behalf under this Agreement and any other agreement
providing or pertaining to collateral provided by Debtor or any other
person or entity as security for the Indebtedness. Secured Party accepts
the agency hereby created and agrees to perform the duties herein required
of Secured Party, and to exercise the rights, powers, and privileges herein
conferred upon Secured Party as agent, upon and subject to the terms and
conditions hereof, and agrees to hold its interest in, and to receive and
disburse proceeds of, the Collateral, and any other property held as
collateral security for the Indebtedness, but only upon the terms of this
Agreement. Notwithstanding the foregoing, under no circumstances shall
Secured Party be liable in its individual capacity for any of the
obligations of Debtor evidenced by or arising under any other agreement
between Secured Party and Debtor or any Creditor and Debtor.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 11
<PAGE>
ARTICLE 5.
Conditions
----------
Section 5.1. Items to be Delivered By Borrower. The effectiveness of 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, document,
-------------------
or instrument required by Bank or BOLC (including, without limitation, an
amendment to the Lease Agreements) to be executed or delivered by Borrower
or any other party in connection with this Amendment or the transactions
contemplated in connection herewith (the "Amendment Documents"), duly
-------------------
executed or delivered by the parties thereto; and
(b) Amendment Fee. Payment to Bank of a fee of $2,000 in respect of
-------------
the amendments contained herein.
Section 5.2. Other Conditions. This Amendment shall become effective upon
----------------
the following conditions precedent being performed to Bank's and BOLC'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
--------------------------------------------------
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 have
------------------
occurred and be continuing (after giving effect to this Amendment);
(c) Corporate Proceedings. All corporate proceedings taken in
---------------------
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) Fees and Expenses. Payment or reimbursement to Bank for all
-----------------
expenses, costs, and fees (including, without limitation, fees and costs of
Bank's legal counsel and fees and costs associated with Bank's field
examination of Borrower and appraisals of Borrower's equipment) incurred
by, or due to, Bank in connection with negotiating and documenting this
Amendment and the other Amendment Documents to the extent invoiced or
otherwise billed by Bank to Borrower;
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 12
<PAGE>
(e) Additional Information. Bank and BOLC shall have received such
----------------------
additional agreements, certificates, documents, instruments, and
information as Bank, BOLC, or their respective legal counsel may request to
effect the transactions contemplated hereby.
Section 5.3. Other Agreements. In addition to the conditions set forth in
----------------
Section 5.1 and Section 5.2 of this Amendment, Borrower agrees as follows:
- ----------- -----------
(a) On or before March 31, 2000, at Borrower's cost not in excess of
$19,500, Borrower will provide Bank with an appraisal of all of Borrower's
equipment in form acceptable to Bank and performed by an appraiser
acceptable to Bank.
(b) Within thirty (30) days of the Amendment Date, Borrower will
provide to Secured Party a landlord waiver or subordination agreement, in
form acceptable to Secured Party executed and delivered by each landlord of
any premises where any Collateral is located.
Borrower agrees that failure to comply with the terms of this Section 5.3 shall
-----------
constitute an Event of Default under the Loan Agreement.
ARTICLE 6.
Representations and Warranties
------------------------------
Section 6.1. Representations and Warranties. Borrower hereby represents
------------------------------
and warrants to Bank, BOLC, and Secured Party 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 constituent documents;
(b) except as set forth in Exhibit C hereto, all representations 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
(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.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 13
<PAGE>
ARTICLE 7.
Miscellaneous
-------------
Section 7.1. The waiver specifically described in Section 2.1 of this
-----------
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 Violated Covenants, 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 7.2. Governing Law. THIS AMENDMENT, AND ALL DOCUMENTS AND
-------------
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF TEXAS.
Section 7.3. Agreement Remains in Effect; No Waiver. Except as 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,
BOLC, or Secured Party 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 7.4. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Amendment, any other Loan Document,
or the Lease Agreements shall survive the execution and delivery of this
Amendment and the other Loan Documents, and no investigation by Bank or BOLC or
any closing shall affect the representations and warranties or the right of Bank
or BOLC to rely upon them.
Section 7.5. Reference to Loan Documents. Each of the Loan Documents,
---------------------------
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 7.6. Severability. Any provision of this Amendment held by a
------------
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.
Section 7.7. Successors and Assigns. This Amendment is binding upon and
----------------------
shall inure to the benefit of Borrower, Bank, BOLC, and Secured Party and their
respective successors in
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 14
<PAGE>
interest and assigns. Borrower may not assign any right, power, duty, or
obligation hereunder without the prior written consent of Bank, BOLC, and
Secured Party.
Section 7.8. Headings. The headings, captions, and arrangements used in
--------
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 7.9. Expenses of Bank. As provided in the Loan Agreement,
----------------
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 fees and costs associated with Bank's field examination of
Borrower and appraisals of Borrower's equipment) 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 7.10. Counterparts. This Amendment may be executed 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 7.11. Waiver of Claims and Defenses. To induce Bank, BOLC, and
-----------------------------
Secured Party to enter 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, BOLC, and Secured Party and each of
their respective 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 Parties") from any
----------------
and all claims, actions, suits, causes of action, accounts, 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, any other Loan Document, or the Lease
Agreements (collectively, the "Claims") of every nature and description, in law
------
or in 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 AND THE LEASE AGREEMENTS, 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 AGREEMENTS BETWEEN THE PARTIES.
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 15
<PAGE>
IN WITNESS WHEREOF, Borrower, Bank, BOLC, and Secured Party 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: /s/ David Kirk
--------------------------------
Name: David Kirk
------------------------------
Title: President & CEO
-----------------------------
BANK:
----
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: /s/ Julie A. Smith
--------------------------------
Name: Julie A. Smith
------------------------------
Title: VP
-----------------------------
BOLC:
----
BANC ONE LEASING CORPORATION
By: /s/ Jacqueline L. Kernodle
--------------------------------
Name: Jacqueline L. Kernodle
------------------------------
Title: Assistant Vice President
-----------------------------
SECURED PARTY:
-------------
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: /s/ Julie A. Smith
--------------------------------
Name: Julie A. Smith
------------------------------
Title: VP
-----------------------------
WAIVER AND THIRD AMENDMENT TO LETTER LOAN AGREEMENT - Page 16
<PAGE>
EXHIBIT 10.32
PROMISSORY NOTE
$7,500,000.00 February 29, 2000
FOR VALUE RECEIVED, on or before December 31, 2000 ("Maturity Date") RF
-------------
MONOLITHICS, INC. ("Borrower"), does hereby unconditionally promise to pay to
--------
the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Bank"), at its offices in
----
Dallas County, Texas at 1717 Main Street, Dallas, Texas 75201, the principal
amount of SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($7,500,000.00)
("Total Principal Amount"), or such amount less than the Total Principal Amount
----------------------
which is outstanding from time to time if the total amount outstanding hereunder
is less than the Total Principal Amount, in lawful money of the United States of
America, together with interest on such portion of the Total Principal Amount
which has been drawn until paid at the rates per annum provided below.
1. Definitions. For purposes of this promissory note ("Note"), unless
----------- ----
the context otherwise requires, in addition to the other terms defined herein,
the following terms shall have the definitions assigned to such terms as
follows:
"Adjusted LIBOR Rate" shall mean with respect to each Interest Period, on
-------------------
any day thereof an amount equal to the sum of (i) four percent (4.0%), plus,
----
(ii) the quotient of (a) the LIBOR Rate with respect to such Interest Period,
divided by (b) the remainder of 1.0 less the Reserve Requirement in effect on
- ---------- ----
such day. Each determination by Bank of the Adjusted LIBOR Rate shall, in the
absence of manifest error, be conclusive and binding.
"Business Day" shall mean any day other than a Saturday, Sunday, or any
------------
other day on which national banking associations are authorized to be closed.
"Consequential Loss" shall mean, with respect to Borrower's payment of all
------------------
or any portion of the then-outstanding principal amount of any LIBOR Balance on
a day other than the last day of the Interest Period related thereto, any loss,
cost or expense incurred by Bank in redepositing such principal amount,
including the sum of (i) the interest which, but for such payment, Bank would
have earned in respect of such principal amount so paid, for the remainder of
the Interest Period applicable to such sum, reduced, if Bank is able to
redeposit such principal amount so paid for the balance of such Interest Period,
by the interest earned by Bank as a result of so redepositing such principal
amount plus (ii) any expense or penalty incurred by Bank on redepositing such
----
principal amount.
"Contract Rate" shall mean a rate of interest based upon the Adjusted LIBOR
-------------
Rate or Prime Rate in effect at any time.
"Dollars" shall mean lawful currency of the United States of America.
-------
"Event of Default" shall mean the occurrence of an "Event of Default" as
----------------
defined in the Loan Agreement.
PROMISSORY NOTE - Page 1
<PAGE>
"Excess Interest Amount" shall mean, on any date, the amount by which (i)
----------------------
the amount of all interest which would have accrued prior to such date on the
principal of this Note, had the applicable Contract Rate at all times been in
effect without limitation by the Maximum Rate, exceeds (ii) the aggregate amount
-------
of interest accrued on this Note on or prior to such date.
"Interest Notice" shall mean the notice given by Borrower to Bank of the
---------------
Interest Options selected hereunder. Each Interest Notice shall specify the
Interest Option selected, the amount of the unpaid principal balance of this
Note to bear interest at the rate selected and, if the Adjusted LIBOR Rate is
specified, the length of the applicable Interest Period. An Interest Notice may
be written or oral (if promptly confirmed thereafter in writing) and Bank is
hereby authorized and directed to honor all telephonic Interest Notices from any
person authorized to request advances hereunder.
"Interest Option" shall have the meaning assigned to such term in paragraph
--------------- ---------
6 hereof.
- -
"Interest Payment Date" shall mean (i) in the case of the Prime Rate
---------------------
Balance, on the first day of each month during the term of this Note beginning
on March 1, 2000, and on the Maturity Date, and (ii) in the case of any LIBOR
Balance, the last day of the corresponding Interest Period with respect to such
LIBOR Balance and on the Maturity Date.
"Interest Period" shall mean, with respect to any LIBOR Balance, a period
---------------
commencing: (i) on any date which, pursuant to an Interest Notice, the principal
amount of such LIBOR Balance begins to accrue interest at the Adjusted LIBOR
Rate, or (ii) the Business Day following the last day of the immediately
preceding Interest Period in the case of a rollover to a successive Interest
Period, and ending one (1) month, two (2) months, or three (3) months thereafter
as Borrower shall elect in accordance with the provisions hereof, provided that
(A) any Interest Period which would otherwise end on a day which is not a London
Business Day shall be extended to the next succeeding London Business Day and
(B) any Interest Period which would otherwise end after the Maturity Date shall
end on the Maturity Date.
"LIBOR Balance" shall mean any principal balance of this Note which,
-------------
pursuant to an Interest Notice, bears interest at a rate based upon the Adjusted
LIBOR Rate for the Interest Period specified in such Interest Notice.
"LIBOR Rate" shall mean, with respect to each Interest Period, the offered
----------
rate for U.S. Dollar deposits of not less than $1,000,000.00 for a period of
time equal to the Interest Period as of 11:00 a.m. City of London, England time
two (2) London Business Days prior to the first date of each Interest Period as
shown on the display designated as "British Bankers Association Interest
Settlement Rates" on the Telerate System ("Telerate"), Page 3750 or Page 3740,
or such other page or pages as may replace such pages on Telerate for the
purpose of displaying such rate; provided, however, that if such rate is not
available on the Telerate then such offered rate shall be otherwise
independently determined by Bank from an alternate, substantially similar
independent source available to Lender or shall be calculated by Bank by a
substantially similar methodology as that theretofore used to determine such
offered rate in Telerate. The LIBOR Rate for the Interest Period to which it
relates shall be rounded upward, if necessary, to the nearest one-one hundredth
of one percent.
PROMISSORY NOTE - Page 2
<PAGE>
"Loan Agreement" shall mean that certain Letter Loan Agreement dated March
--------------
8, 1996 by and between Bank and Borrower as amended by that certain First
Amendment to Loan Agreement dated as of December 31, 1997 by and between
Borrower and Bank, by that certain Second Amendment to Loan Agreement dated as
of July 15, 1999 by and between Borrower and Bank, and as such agreement may be
further amended, restated, or otherwise modified from time to time.
"Loan Documents" shall mean this Note, the Loan Agreement, and all other
--------------
documents evidencing, securing, governing, guaranteeing, and/or pertaining to
this Note.
"London Business Day" shall mean any day other than a Saturday, Sunday, or
-------------------
a day on which banking institutions are generally authorized or obligated by law
or executive order to close in the City of London, England.
"Maximum Rate" shall mean, with respect to the holder hereof, the maximum
------------
nonusurious interest rate, if any, that at any time, or from time to time, may
be contracted for, taken, reserved, charged, or received on the indebtedness
evidenced by this Note under the laws which are presently in effect in the
United States and the State of Texas applicable to such holder and such
indebtedness or, to the extent permitted by law, under such applicable laws of
the United States and the State of Texas which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow. To the extent that Chapter 303 of the Texas Credit Code, as supplemented
by the Texas Credit Title, is relevant to any holder of this Note for the
purposes of determining the Maximum Rate, each such holder elects to determine
such applicable legal rate under the Act pursuant to the "weekly rate ceiling,"
from time to time in effect, as referred to in said Chapter 303; subject,
however, to the limitations on such applicable ceiling referred to and defined
in said Chapter 303, and further subject to any right such holder may have
subsequently, under applicable law, to change the method of determining the
Maximum Rate. If no Maximum Rate is established by applicable law, then the
Maximum Rate shall be equal to eighteen percent (18.0%).
"Prime Rate" shall mean the rate established from time to time by Bank as
----------
its Prime Rate of interest (which may not be the lowest, best or most favorable
rate of interest which Bank may charge on loans to its customers).
"Prime Rate Balance" shall mean that portion of the principal balance of
------------------
this Note bearing interest at a rate based upon the Prime Rate.
"Regulation D" shall mean Regulation D of the Board of Governors of the
------------
Federal Reserve System from time to time in effect and shall include any
successor or other regulation relating to reserve requirements applicable to
member banks of the Federal Reserve System.
"Reserve Requirement" shall, on any day, mean that percentage (expressed as
-------------------
a decimal fraction) which is in effect on such day, as provided by the Board of
Governors of the Federal Reserve System (or any successor governmental body) for
determining the reserve requirements (including, without limitation, basic,
supplemental, marginal, and emergency reserves) under Regulation D with respect
to "Eurocurrency liabilities" as currently defined in Regulation D, or under any
similar or successor regulation. For purposes of this definition, any LIBOR
Balances
PROMISSORY NOTE - Page 3
<PAGE>
hereunder shall be deemed "Eurocurrency liabilities" under Regulation D
without benefit of or credit for prorations, exemptions, or offsets under
Regulation D. Bank's determination of the Reserve Requirement shall be
conclusive.
2. Payments of Interest and Principal. Interest on the unpaid principal
----------------------------------
balance of this Note shall be due and payable on each Interest Payment Date as
it accrues and the entire unpaid principal balance of this Note, and all accrued
but unpaid interest thereon, shall be due and payable on the Maturity Date.
3. Rates of Interest. The unpaid principal of the Prime Rate Balance
-----------------
shall bear interest at a rate per annum which shall from day to day be equal to
the lesser of (i) the Prime Rate in effect from day to day, plus one percent
----
(1.0%), or (ii) the Maximum Rate. The unpaid principal of each LIBOR Balance
shall bear interest at a rate per annum which shall from day to day be equal to
the lesser of (i) the Adjusted LIBOR Rate for the Interest Period in effect with
respect to such LIBOR Balance, or (ii) the Maximum Rate. Each change in the
interest rate applicable to a Prime Rate Balance shall become effective without
prior notice to Borrower automatically as of the opening of business on the date
of such change in the Prime Rate. Interest on this Note shall be calculated on
the basis of the actual days elapsed in a year consisting of 360 days.
4. Interest Recapture. On each Interest Payment Date or any other date on
------------------
which interest payments are required hereunder, if Bank does not receive
interest on this Note computed at the Contract Rate because such Contract Rate
exceeds or has exceeded the Maximum Rate, then Borrower shall, upon the written
demand of Bank, pay to Bank in addition to the interest otherwise required to be
paid hereunder, on each Interest Payment Date thereafter, the Excess Interest
Amount (calculated as of such later Interest Payment Date); provided that in no
event shall Borrower be required to pay interest at a rate exceeding the Maximum
Rate.
5. Interest on Past Due Amounts. To the extent any interest is not paid
----------------------------
on or before the fifth day after it becomes due and payable, Bank may, at its
option, add such accrued but unpaid interest to the principal of this Note.
Notwithstanding anything herein to the contrary, upon an Event of Default or at
maturity, whether by acceleration or otherwise, all principal of this Note
shall, at the option of Bank, bear interest at the Maximum Rate until paid.
6. Interest Option. Subject to the provisions hereof, Borrower shall have
---------------
the option (an "Interest Option") of having designated portions of the unpaid
---------------
principal balance of this Note bear interest at a rate based upon the Adjusted
LIBOR Rate or Prime Rate as provided in paragraph 3 hereof; provided, however,
-----------
that the selection of the Adjusted LIBOR Rate for a particular Interest Period
shall not be for less than $1,000,000.00 of unpaid principal or $250,000
increments above such minimum amount. The Interest Option shall be exercised in
the manner provided below:
(i) At Time of Borrowing. Contemporaneously with each request for an
--------------------
advance by Borrower under paragraph 9 herein, Borrower shall give Bank an
-----------
Interest Notice indicating the initial Interest Option selected with
respect to the principal balance of such advance.
PROMISSORY NOTE - Page 4
<PAGE>
(ii) At Expiration of Interest Periods. At least two (2) Business
---------------------------------
Days prior to the termination of any Interest Period, Borrower shall give
Bank an Interest Notice indicating the Interest Option to be applicable to
the corresponding LIBOR Balance upon the expiration of such Interest
Period. If the required Interest Notice shall not have been timely
received by Bank prior to the expiration of the then-relevant Interest
Period, Borrower shall be deemed to have selected a rate based upon the
Prime Rate to be applicable to such LIBOR Balance upon the expiration of
such Interest Period and to have given Bank notice of such selection.
(iii) Conversion From Prime Rate. During any period in which any
--------------------------
portion of the principal hereof bears interest at a rate based upon the
Prime Rate, Borrower shall have the right, on any Business Day (the
"Conversion Date"), to convert all or a portion of such principal amount
----------------
from the Prime Rate Balance to a LIBOR Balance by giving Bank an Interest
Notice of such selection at least two (2) Business Days prior to such
Conversion Date.
An Interest Notice may be written or oral and Bank is hereby authorized and
directed to honor all telephonic Interest Notices hereunder. Borrower agrees to
indemnify and hold Bank harmless from any loss or liability incurred by Bank in
connection with honoring any telephonic or other oral Interest Notices. All
written Interest Notices are effective only upon receipt by Bank. Each Interest
Notice shall be irrevocable and binding upon Borrower.
7. Special Provisions For LIBOR Pricing.
------------------------------------
a. Inadequacy of LIBOR Loan Pricing. If Bank determines that, by
--------------------------------
reason of circumstances affecting the interbank eurodollar market generally,
deposits in Dollars (in the applicable amounts) are not being offered to United
States financial institutions in the interbank eurodollar market for such
Interest Period, or that the rate at which such Dollar deposits are being
offered will not adequately and fairly reflect the cost to Bank of making or
maintaining a LIBOR Balance for the applicable Interest Period, Bank shall
forthwith give notice thereof to Borrower, whereupon until Bank notifies
Borrower that the circumstances giving rise to such suspension no longer exist,
(i) the right of Borrower to select an Interest Option based upon the LIBOR Rate
shall be suspended, and (ii) Borrower shall be deemed to have converted each
LIBOR Balance to the Prime Rate Balance in accordance with the provisions hereof
on the last day of the then-current Interest Period applicable to such LIBOR
Balance.
b. Illegality. If the adoption of any applicable law, rule, or
----------
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank, or
comparable agency charged with the interpretation or administration thereof, or
compliance by Bank with any request or directive (whether or not having the
force of law) of any such authority, central bank, or comparable agency shall
make it unlawful or impossible for Bank to make or maintain a LIBOR Balance,
Bank shall so notify Borrower. Upon receipt of such notice, Borrower shall be
deemed to have converted any LIBOR Balance to the Prime Rate Balance, on either
(i) the last day of the then-current Interest Period applicable to such LIBOR
Balance if Bank may lawfully continue to maintain and fund such LIBOR Balance to
such day, or (ii) immediately, if Bank may not lawfully continue to maintain
such LIBOR Balance to such day.
PROMISSORY NOTE - Page 5
<PAGE>
8. Extension, Place and Application of Payments. Should the principal of,
--------------------------------------------
or any interest on, this Note become due and payable on any day other than a
Business Day, the maturity thereof shall be extended to the next succeeding
Business Day, and interest shall be payable with respect to such extension. All
payments of principal of, and interest on, this Note shall be made in lawful
money of the United States of America in immediately available funds. Payments
made to Bank by Borrower hereunder shall be applied first to accrued but unpaid
interest and then to outstanding principal.
9. Advances. Subject to the terms of this Note and the Loan Agreement,
--------
Borrower may request advances (each an "Advance") hereunder and make payments
-------
from time to time during the term of this Note, provided that it is understood
and agreed that the aggregate principal amount outstanding from time to time
hereunder shall not exceed the sum of the Total Principal Amount. The unpaid
balance of this Note shall increase and decrease with each new Advance or
payment hereunder as the case may be. This Note shall not be deemed terminated
or canceled prior to the Maturity Date, although the entire principal balance
hereof may from time to time be paid in full. Subject to the provisions of this
Note and the Loan Agreement, Borrower may borrow, repay, and reborrow hereunder
from the date hereof until the Maturity Date. Each Advance hereunder shall be
in an amount not less than $10,000.00 or an integral multiple thereof. If any
Advance request is received by Bank on or prior to 12:00 p.m. (Dallas, Texas
time) on funds designated to accrue interest at the Prime Rate, Bank shall make
available at Bank's office in Dallas, Texas not later than 2:00 p.m. (Dallas,
Texas time) on the day of such Advance request (or the date specified in such
request), the amount of such request in immediately available funds. If any
Advance request is received by Bank after 12:00 p.m. (Dallas, Texas time) on
funds designated to accrue interest at the Prime Rate, Bank shall make available
at Bank's office in Dallas, Texas not later than 2:00 p.m. (Dallas, Texas time)
on the Business Day after the day of such request (or a later date if specified
in such request), the amount of such request in immediately available funds.
Each request for an Advance on funds designated to accrue interest at the
Adjusted LIBOR Rate must be received by Bank not less than three (3) Business
Days prior to the date upon which the Advance requested is desired by Borrower.
Each request for an Advance hereunder must be accompanied by an Interest Notice
for the funds to be advanced thereunder; provided, however, if an Interest
Notice does not accompany an Advance request, Borrower shall be deemed to have
designated the Prime Rate. Each request for an Advance by Borrower hereunder
shall be irrevocable and binding on Borrower. An Advance request may be written
or oral and Bank is authorized and directed to honor all telephonic requests for
Advances from any person authorized to request Advances hereunder.
Borrower agrees to indemnify and hold Bank harmless from any loss or
liability incurred by Bank in connection with honoring any such telephonic or
other oral requests for Advances.
All written Advance requests are effective only upon receipt by Bank.
10. Loan Agreement. This Note is subject to the terms and provisions of
--------------
the Loan Agreement, which is incorporated herein by reference for all purposes.
The holder of this Note is entitled to the benefits provided in the Loan
Agreement.
11. Prepayments; Consequential Loss. Any prepayment made hereunder shall
-------------------------------
be made together with all interest accrued but unpaid on this Note through the
date of such prepayment.
PROMISSORY NOTE - Page 6
<PAGE>
Contemporaneously with each prepayment of principal, Borrower shall give Bank
written or oral notice indicating whether such prepayment is to be applied to
the Prime Rate Balance or a particular LIBOR Balance. If such notice is not
timely received by Bank, Borrower shall be deemed to have selected to prepay the
Prime Rate Balance and, if any sums remain after satisfying all of the Prime
Rate Balance, the remaining sums shall be applied to any LIBOR Balance(s) as
Bank determines in its sole discretion. Borrower agrees to indemnify and hold
Bank harmless from any loss or liability incurred by Bank in connection with
honoring telephonic or other oral notices indicating how a prepayment is to be
applied. If Borrower makes any payment of principal with respect to any LIBOR
Balance on any day prior to the last day of the Interest Period applicable to
such LIBOR Balance, Borrower shall reimburse Bank on demand the Consequential
Loss incurred by Bank as a result of the timing of such payment. A certificate
of Bank setting forth the basis for the determination of a Consequential Loss
shall be delivered to Borrower and shall, in the absence of manifest error, be
conclusive and binding as to such determination and amount.
12. Additional Costs. Borrower agrees to pay to Bank all Additional Costs
----------------
within ten (10) days of receipt by Borrower from Bank of a statement setting
forth the amount or amounts due and the basis for the determination from time to
time of such amount or amounts, which statement shall be conclusive and binding
upon Borrower absent manifest error. Failure on the part of Bank to demand
compensation for any Additional Costs in any Interest Period shall not
constitute a waiver of Bank's right to demand compensation for any Additional
Costs incurred during any such Interest Period or in any other subsequent or
prior Interest Period. The term "Additional Costs" shall mean such additional
----------------
amount or amounts as Bank shall reasonably determine will compensate Bank for
actual costs incurred by Bank in maintaining LIBOR Rates on the LIBOR Balances
or any portion thereof as a result of any change, after the date of this Note,
in applicable law, rule or regulation or in the interpretation or administration
thereof by, or the compliance by Bank with any request or directive from, any
domestic or foreign governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) or by any
domestic or foreign court changing the basis of taxation of payments to Bank of
the LIBOR Balances or interest on the LIBOR Balances or any portion thereof at
an Adjusted LIBOR Rate or any other fees or amounts payable under this Note or
the Loan Agreement (other than taxes imposed on all or any portion of the
overall net income of Bank by the State of Texas or the Federal government), or
imposing, modifying or applying any reserve, special deposit or similar
requirement against assets of, deposits with or for the account of, credit
extended by, or any other acquisition of funds for loans by Bank, or imposing on
Bank, as the case may be, or on the London interbank market any other condition
affecting this Note, the Loan Agreement or the LIBOR Balances so as to increase
the cost of Bank making or maintaining Adjustable LIBOR Rates with respect to
the LIBOR Balances or any portion thereof or to reduce the amount of any sum
received or receivable by Bank under this Note or the Loan Agreement (whether of
principal, interest or otherwise), by an amount deemed by Bank in good faith to
be material, but without duplication for any Reserve Requirement.
13. Notices. Except as otherwise specified herein, all notices and
-------
requests required or permitted hereunder shall be given in accordance with
paragraph 16 of the Loan Agreement.
- ------------
14. Legal Fees. If this Note is placed in the hands of any attorney for
----------
collection, or if it is collected through any legal proceeding at law or in
equity or in bankruptcy, receivership, or other
PROMISSORY NOTE - Page 7
<PAGE>
court proceedings, Borrower agrees to pay all costs of collection including, but
not limited to, court costs and reasonable attorneys' fees.
15. Waivers. Borrower and each surety, endorser, guarantor, and any other
-------
party ever liable for payment of any sums of money payable on this Note, jointly
and severally waive presentment and demand for payment, protest, notice of
protest, intention to accelerate, acceleration and non-payment, or other notice
of default, and agree that their liability under this Note shall not be affected
by any renewal or extension in the time of payment hereof, or in any
indulgences, or by any release or change in any security for the payment of this
Note, and hereby consent to any and all renewals, extensions, indulgences,
releases, or changes, regardless of the number of such renewals, extensions,
indulgences, releases, or changes; provided, however, this Note may not be
amended or modified except by a written instrument signed by the Borrower and
the holder hereof. No waiver by Bank of any of its rights or remedies hereunder
or under any other document evidencing or securing this Note or otherwise shall
be considered a waiver of any other subsequent right or remedy of Bank; no delay
or omission in the exercise or enforcement by Bank of any rights or remedies
shall ever be construed as a waiver of any right or remedy of Bank; and no
exercise or enforcement of any such rights or remedies shall ever be held to
exhaust any right or remedy of Bank.
16. Remedies. Upon the occurrence of any Event of Default, the holder
--------
hereof may, at its option, (i) declare the entire unpaid balance of principal
and accrued but unpaid interest on this Note to be immediately due and payable,
(ii) refuse to advance any additional amounts under this Note, (iii) foreclose
all liens securing payment hereof, (iv) pursue any and all other rights,
remedies, and recourses available to the holder hereof, including but not
limited to, any such rights, remedies, or recourses under the Loan Documents, at
law or in equity, or (v) pursue any combination of the foregoing.
17. Spreading. Any provision herein, or in any document securing this
---------
Note, or any other document executed or delivered in connection herewith, or in
any other agreement or commitment, whether written or oral, expressed or
implied, to the contrary notwithstanding, neither Bank nor any holder hereof
shall in any event be entitled to receive or collect, nor shall or may amounts
received hereunder be credited, so that Bank or any holder hereof shall be paid,
as interest, a sum greater than the maximum amount permitted by applicable law
to be charged to the person, partnership, firm or corporation primarily
obligated to pay this Note at the time in question. If any construction of this
Note or any document securing this Note, or any and all other papers, agreements
or commitments, indicate a different right given to Bank or any holder hereof to
ask for, demand or receive any larger sum as interest, such is a mistake in
calculation or wording which this clause shall override and control, it being
the intention of the parties that this Note, and all other instruments securing
the payment of this Note or executed or delivered in connection herewith shall
in all things comply with the applicable law and proper adjustments shall
automatically be made accordingly. In the event that Bank or any holder hereof
ever receives, collects or applies as interest any sum in excess of the Maximum
Rate, if any, such excess amount shall be applied to the reduction of the unpaid
principal balance of this Note, and if this Note is paid in full, any remaining
excess shall be paid to Borrower. In determining whether or not the interest
paid or payable, under any specific contingency, exceeds the Maximum Rate, if
any, Borrower and Bank or any holder hereof shall, to the maximum extent
permitted under applicable law: (a) characterize any nonprincipal payment as an
expense or fee
PROMISSORY NOTE - Page 8
<PAGE>
rather than as interest, (b) exclude voluntary prepayments and the effects
thereof, (c) "spread" the total amount of interest throughout the entire term of
this Note; provided that if this Note is paid and performed in full prior to the
end of the full contemplated term hereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, if any, Bank or any
holder hereof shall refund to Borrower the amount of such excess, or credit the
amount of such excess against the aggregate unpaid principal balance of all
advances made by the Bank or any holder hereof under this Note at the time in
question.
18. Choice of Law. This Note is being executed and delivered, and is
-------------
intended to be performed in the State of Texas. Except to the extent that the
laws of the United States may apply to the terms hereof, the substantive laws of
the State of Texas shall govern the validity, construction, enforcement and
interpretation of this Note. In the event of a dispute involving this Note or
any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Dallas County, Texas.
19. Renewal. This Note renews and extends amounts unpaid this date under
-------
that certain promissory note dated July 15, 1999 in the stated principal amount
of $7,500,000.00 executed by Borrower and payable to the order of Bank.
20. Entire Agreement. THIS NOTE (TOGETHER WITH THE OTHER LOAN DOCUMENTS)
----------------
CONTAINS THE ENTIRE 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.
RF MONOLITHICS, INC.
By: /s/ David Kirk
---------------------------
Name: David Kirk
-------------------------
Title: President & CEO
------------------------
PROMISSORY NOTE - Page 9
<PAGE>
EXHIBIT 10.33
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT
----------------------------------------------
This WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT ("Amendment") is
---------
entered into as of February 29, 2000 (the "Amendment Date"), by and between RF
--------------
MONOLITHICS, INC., a Delaware corporation ("Lessee") and BANC ONE LEASING
------
CORPORATION ("Lessor").
------
RECITALS:
A. Lessor and Lessee are party to that certain Master Lease Agreement
dated as of November 3, 1995 (including the addendum and schedules thereto and
all other amendments, supplements, or modifications thereof, the "Master Lease")
------------
pursuant to which Lessor has leased to Lessee certain equipment on the terms set
forth in the Master Lease.
B. Lessee has requested that Lessor amend certain provisions of the Master
Lease.
C. Subject to satisfaction of the conditions set forth herein, Lessor is
willing to amend the Master Lease.
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
-----------
Section 1.1. Definitions. Unless otherwise defined in this Amendment,
-----------
each capitalized term used in this Amendment has the meaning given to such term
in the Master Lease.
ARTICLE 2.
Waiver of Events of Default
---------------------------
Section 2.1. Waiver of Events of Default. Certain events of default have
---------------------------
occurred under the Master Lease as follows: (a) default under clause (b) of the
----------
first sentence of Section 14 of the Master Lease for failure to maintain the
----------
required financial covenants set forth in Section 18 (including as set forth in
----------
the Covenant Addendum to Master Lease) and (b) default under clause (d) of the
----------
first sentence of Section 14 resulting from the occurrence of certain events of
----------
default under that certain Letter Loan Agreement dated March 8, 1996 by and
between Lessee and Bank One, Texas, National Association. Effective as of the
Amendment Date, and subject to the conditions precedent contained herein, Lessor
hereby waives the events of default existing on the Amendment Date described in
the preceding sentence.
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 1
<PAGE>
ARTICLE 3.
Amendments to Master Lease
--------------------------
Section 3.1. Amendment to Section 18 of the Master Lease. Effective as of
-------------------------------------------
the Amendment Date, the last sentence of Section 18 of the Master Lease is
----------
hereby deleted.
Section 3.2. Amendment to Covenant Addendum to Master Lease Agreement.
--------------------------------------------------------
Effective as of the Amendment Date, paragraph 2 of the Covenant Addendum to
-----------
Master Lease Agreement (such addendum being attached to the Master Lease and
incorporated therein) is hereby amended and restated in its entirety as follows:
2. The following is added to Section 18 of the Master Lease:
During the term of this Lease, Lessee agrees and covenants that it will at
all times maintain the following financial covenants:
(a) Quick Ratio. Lessee will, beginning as of November 30, 2000
-----------
and at all times thereafter, maintain a ratio of (1) current assets
minus inventory, to (2) current liabilities plus the unpaid principal
----- ----
balance of the Revolving Line of Credit of not less than 1.25 to 1.00.
(b) Tangible Net Worth. Lessee will, at all times, maintain its
------------------
Tangible Net Worth at not less than $29,500,000.
(c) Liabilities/Tangible Net Worth. Lessee will at all times
------------------------------
maintain a ratio of (1) total liabilities, to (2) Tangible Net Worth,
of not greater than 0.50 to 1.00.
(d) Fixed Charge Ratio. Lessee will, beginning as of November
------------------
30, 2000 and at all times thereafter, maintain a ratio of (1) net
income after taxes, plus depreciation, amortization, interest expense,
----
and long-term lease and rent expense, for the twelve (12) months
ending as of any date of determination, to (2) without duplication (A)
current maturities of long-term debt as of the date of determination,
plus (B) current maturities of capitalized leases as of the date of
----
determination, plus (C) interest expense for the preceding twelve (12)
----
months, plus (D) lease and rent expense for the preceding twelve (12)
----
months, of not less than 2.00 to 1.00.
(e) Minimum EBITDA. Lessee will not, as of the end of each of
--------------
the fiscal quarters of Lessee set forth below, permit the sum of its
net income, plus depreciation, amortization, interest expense, and
----
income taxes for the three (3) month period ending with such fiscal
quarter to be less than the amount set forth opposite the applicable
period in the table below:
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 2
<PAGE>
<TABLE>
<CAPTION>
Period Minimum EBITDA
--------------------------------------------------------------------
<S> <C>
Three months ending February 29, 2000 -$666,000
--------------------------------------------------------------------
Three months ending May 31, 2000 $1,007,000
--------------------------------------------------------------------
Three months ending August 31, 2000 $2,069,000
--------------------------------------------------------------------
</TABLE>
Unless otherwise specified, all accounting and financial terms and
covenants set forth above are to be determined according to generally
accepted accounting principles, consistently applied. As used herein, the
following terms shall mean as follows:
"Tangible Net Worth" means, as of any date, Lessee's total assets
------------------
excluding all intangible assets, less total liabilities excluding any
----
indebtedness owing by Lessee which has been subordinated by written
agreement to all indebtedness now or hereafter owing by Lessee to the Bank.
"Revolving Line of Credit" shall have the meaning specified in the
------------------------
Loan Agreement.
ARTICLE 4.
Conditions
----------
Section 4.1. Items to be Delivered By Lessee. The effectiveness of this
-------------------------------
Amendment is subject to Lessee's delivery to Lessor of each other agreement,
certificate, document, or instrument required by Lessor to be executed or
delivered by Lessee or any other party in connection with this Amendment or the
transactions contemplated in connection herewith (including, without limitation,
an amendment to the certain Letter Loan Agreement, dated as of March 8, 1996,
between Lessee and Bank One, Texas, National Association; this Amendment and all
such other agreements, certificates, documents, and instruments are referred to
collectively herein as the "Amendment Documents"), duly executed or delivered by
-------------------
the parties thereto.
Section 4.2. Other Conditions. This Amendment shall become effective upon
----------------
the following conditions precedent being performed to Lessor's satisfaction.
Lessee's failure to comply with the following conditions shall be an event of
default under the Master Lease:
(a) Continued Effect of Representations and Warranties. All
--------------------------------------------------
representations and warranties contained in the Master Lease (as amended
hereby) shall be true, correct, and complete in all material respects (as
determined by Lessor in its sole discretion) except as disclosed otherwise
to Lessor in writing and as acceptable to Lessor 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 the Master Lease;
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 3
<PAGE>
(b) Absence of Default. No event of default shall have occurred and
------------------
be continuing (after giving effect to this Amendment);
(c) Corporate Proceedings. All corporate proceedings taken in
---------------------
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 Lessor and its legal counsel;
(d) Fees and Expenses. Payment or reimbursement to Lessor for all
-----------------
expenses, costs, and fees incurred by, or due to, Lessor in connection with
negotiating and documenting this Amendment and the other Amendment
Documents to the extent invoiced or otherwise billed by Lessor to Lessee;
(e) Additional Information. Lessee shall have received such
----------------------
additional agreements, certificates, documents, instruments, and
information as Lessee or its legal counsel may request to effect the
transactions contemplated hereby.
Section 4.3 Other Agreements. In addition to the conditions set forth in
----------------
Section 4.1 and Section 4.2 of this Amendment, Lessee agrees as follows:
- ----------- -----------
(a) On or before March 31, 2000, at Lessee's cost not in excess of
$12,500, Lessee will provide Lessor with an appraisal of all equipment and
other property covered by the Master Lease, such appraisal to be in form
acceptable to Lessor and performed by an appraiser acceptable to Lessor.
(b) On or before March 31, 2000, the existing balance of Lessee's
lease line of credit (currently $313,341.97) together with all accrued and
unpaid interest and other charges (if any) outstanding with Lessor will be
repaid in full, such repayment being accomplished by (A) Lessee selling the
equipment described on Exhibit B hereto (the "New Equipment") to Lessor and
--------- -------------
executing a Schedule (as defined in the Master Lease) or an amendment to an
existing Schedule between Lessee and Lessor whereby the New Equipment, with
a total cost to Lessor of $290,500, is leased to Lessee upon terms
acceptable to Lessor and (B) making payment of all remaining principal,
interest, and other charges in immediately available funds on the date of
executing such Schedule or amendment.
Lessee agrees that failure to comply with the terms of this Section 4.3 shall
-----------
constitute an event of default under the Master Lease.
ARTICLE 5.
Representations and Warranties
------------------------------
Section 5.1. Representations and Warranties. Lessee hereby represents and
------------------------------
warrants to Lessor that, as of the date of and after giving effect to this
Amendment:
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 4
<PAGE>
(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 Lessee
and will not violate Lessee's certificate of incorporation, bylaws, or
other similar constituent documents;
(b) except as set forth in Exhibit A hereto, all representations and
---------
warranties set forth in the Master Lease and the Schedules thereto are true
and correct in all material respects as if made again on and as of such
date (except as disclosed otherwise to Lessor in writing and as acceptable
to Lessor 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 under the Master Lease);
(c) no event of default has occurred and is continuing under the
Master Lease; and
(d) the Master Lease (as amended by this Amendment) is and remains
legal, valid, binding, and enforceable obligations of Lessee.
ARTICLE 6.
Miscellaneous
-------------
Section 6.1. The waiver described in Section 2.1 of this Amendment shall
-----------
not constitute and shall not be deemed a waiver of any other event of default
under the Master Lease, whether arising as a result of the further violation of
the provisions of the Master Lease or otherwise, or a waiver of any rights or
remedies arising as a result of such other events of default.
Section 6.2. Governing Law. THIS AMENDMENT, AND ALL DOCUMENTS AND
-------------
INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE OF OHIO.
Section 6.3. Agreement Remains in Effect; No Waiver. Except as expressly
--------------------------------------
provided herein, all terms and provisions of the Master Lease shall remain
unchanged and in full force and effect and are hereby ratified and confirmed.
No delay or omission by Lessor 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 Master Lease or
otherwise.
Section 6.4. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Amendment or the Master Lease shall
survive the execution and delivery of this Amendment, and no investigation by
Lessor or any closing shall affect the representations and warranties or the
right of Lessor to rely upon them.
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 5
<PAGE>
Section 6.5. Reference to Master Lease. Each of the Schedules to the
-------------------------
Master Lease, and any and all other agreements, documents, or instruments now or
hereafter executed and/or delivered pursuant to the terms of the Master Lease,
are hereby amended so that any reference in such agreements, documents, or
instruments to the Master Lease shall mean a reference to the Master Lease as
amended hereby.
Section 6.6. Severability. Any provision of this Amendment held by a
------------
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.
Section 6.7. Successors and Assigns. This Amendment is binding upon and
----------------------
shall inure to the benefit of Lessor and Lessee and their respective successors
in interest and assigns. Lessee may not assign any right, power, duty, or
obligation hereunder without the prior written consent of Lessor.
Section 6.8. Headings. The headings, captions, and arrangements used in
--------
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 6.9. Expenses of Lessor. Lessee agrees to pay on demand all,
------------------
third party out-of-pocket costs and expenses incurred by Lessor in connection
with the preparation, negotiation, and execution of this Amendment or any other
agreement, document, or instrument executed pursuant hereto (including, without
limitation, fees and costs of Lessor's legal counsel and fees and costs
associated with appraisals of the equipment as referenced in Section 4.3 of this
-----------
Amendment) and all costs and expenses incurred by Lessor in connection with the
enforcement or preservation of any rights under the Master Lease, as amended
hereby, including, without limitation, the costs and fees of Lessor's legal
counsel.
Section 6.10. Counterparts. This Amendment may be executed 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 Lessor to enter
-----------------------------
into this Amendment, Lessee represents and warrants that as of the Amendment
Date there are no claims or offsets against or defenses or counterclaims to
Lessee's obligations under the Master Lease, and Lessee waives any and all such
claims, offsets, defenses, or counterclaims whether known or unknown, arising
prior to the Amendment Date. Additionally, Lessee hereby releases Lessor and
each of its respective 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 from any and all claims, actions, suits, causes of
action, accounts, judgments, agreements, promises, executions, debts, damages,
demands, rights, obligations, liabilities, and controversies now in existence
concerning or in connection with the Master Lease or this Amendment
(collectively, the "Claims") of every nature and description, in law or in
------
equity,
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 6
<PAGE>
whether known or unknown, foreseen or unforseen, and regardless of whether
Lessee hereafter discovers any facts which may give rise to any Claim.
Section 6.12. Lease Characterization. Nothing contained in any Amendment
----------------------
Document shall constitute a change of character of the Master Lease into any
other type of transaction. Lessee hereby waives any right to assert in any
proceeding or litigation that any lease described in the Master Lease is a
conditional or disguised sale, a secured transaction covered under Article or
Section 9 of the Uniform Commercial Code, or any form of transaction other than
a true lease.
Section 6.13. Entire Agreement. This Amendment, together with the Master
----------------
Lease, as written, represents the final agreement between Lessor and Lessee and
may not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements between Lessor and Lessee. There are no unwritten agreements
between Lessor and Lessee.
[Remainder of page intentionally left blank]
WAIVER AND AMENDMENT TO MASTER LEASE AGREEMENT - Page 7
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Amendment to be
executed and delivered by their duly authorized officers effective as of the
date first written above.
LESSEE:
------
RF MONOLITHICS, INC.
By: /s/ David Kirk
-------------------------------------
Name: David Kirk
-----------------------------------
Title: President & CEO
----------------------------------
LESSOR:
------
BANC ONE LEASING CORPORATION
By: /s/ Jacqueline L. Kernodle
-------------------------------------
Name: Jacqueline L. Kernodle
-----------------------------------
Title: Assistant Vice President
----------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> SEP-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 1,550
<SECURITIES> 3,505
<RECEIVABLES> 8,719
<ALLOWANCES> 517
<INVENTORY> 10,731
<CURRENT-ASSETS> 26,605
<PP&E> 37,506
<DEPRECIATION> 21,701
<TOTAL-ASSETS> 45,170
<CURRENT-LIABILITIES> 13,973
<BONDS> 41
0
0
<COMMON> 28,865
<OTHER-SE> 2,518
<TOTAL-LIABILITY-AND-EQUITY> 45,170
<SALES> 21,515
<TOTAL-REVENUES> 21,515
<CGS> 21,583
<TOTAL-COSTS> 21,583
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 46
<INTEREST-EXPENSE> 373
<INCOME-PRETAX> (7,566)
<INCOME-TAX> (2,308)
<INCOME-CONTINUING> (5,258)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,258)
<EPS-BASIC> (.89)
<EPS-DILUTED> (.89)
</TABLE>
