EXHIBIT 99 to Form 8-K dated May 21, 2009.
LIMITED FORBEARANCE AND FOURTH AMENDMENT
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TO AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
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THIS LIMITED FORBEARANCE AND FOURTH AMENDMENT TO AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT (this "Agreement") is made effective as of May 12,
2009, by and among XXXXX FARGO BANK, NATIONAL ASSOCIATION, acting through its
Xxxxx Fargo Business Credit operating division (the "Lender"), ALEIER, INC., a
Texas corporation, ("Aleier"), CIRRONET INC., a Georgia corporation ("Cirronet"
and together with Aleier, sometimes collectively referred to as the "Guarantors"
and each individually, a "Guarantor") and RF MONOLITHICS, INC., a Delaware
corporation (the "Borrower" and together with the Guarantors, sometimes
hereinafter collectively referred to as the "Obligors").
RECITALS:
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A. The Borrower and the Lender have entered into that certain Amended
and Restated Credit and Security Agreement dated as of August 29, 2007 (as the
same has been amended from time to time, the "Credit Agreement"; capitalized
terms used herein and not otherwise defined having the meanings given to such
terms in the Credit Agreement).
B. In connection with the Credit Agreement, Aleier has executed a
Guaranty Agreement, dated as of August 29, 2007 (as the same may be amended,
restated or modified from time to time, the "Aleier Guaranty").
C. In connection with the Credit Agreement, Cirronet has executed a
Guaranty Agreement, dated as of August 29, 2007 (as the same may be amended,
restated or modified from time to time, the "Cirronet Guaranty").
D. On the date hereof, the Borrower is in default of certain obligations
under the Credit Agreement, and, as a result, the Lender is entitled to exercise
its rights and remedies under the Credit Agreement and the other Loan Documents.
E. The Obligors acknowledge existence of the Enumerated Defaults
(defined below) and request that the Lender forbear from exercising all of its
rights and remedies under the Loan Documents.
F. The Lender is willing to forbear from exercising certain of its
rights and remedies resulting from the Enumerated Defaults for a period
beginning as of the date hereof through and including 5:00 p.m. prevailing
Central time on the earlier of (i) a Forbearance Termination Date and (ii) July
31, 2009 (the "Forbearance Period") upon the terms and conditions set forth in
this Agreement.
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NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties, intending to be legally bound, covenant,
agree, acknowledge, represent and warrant as follows:
AGREEMENTS:
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1. Incorporation of Recitals. Each of the above Recitals is expressly
incorporated herein by reference and made a part hereof for all purposes.
2. Reaffirmation of Obligations. Each Obligor hereby acknowledges that
the Loan Documents and the Obligations constitute the valid and binding
obligations of such Obligor enforceable against such Obligor in accordance with
their respective tents, and each Obligor hereby reaffirms its obligations under
the Loan Documents. The Lender's entry into this Agreement or any of the
documents referenced herein, its negotiations with any Person with respect to
any Loan Documents, its conduct of any analysis or investigation of any
Collateral for the Obligations or any Loan Documents, its acceptance of any
payment from any Obligor or any other Person of any payments made prior to the
date hereof, or any other action or failure to act on the part of the Lender
shall not constitute (a) a modification of any Loan Document or (b) a waiver of
any Default or Event of Default under the Credit Agreement, including, without
limitation, the Enumerated Defaults, or any waiver of any term or provision of
any Loan Document.
3. Enumerated Defaults. As of the date hereof; the Borrower hereby
acknowledges, confirms and agrees that (i) since February 28, 2009, a Default
Period exists and (ii) the Borrower has failed to comply with at least the
following covenants (collectively, the "Enumerated Defaults"), each of which
presently constitutes an Event of Default and entitles the Lender to exercise
its rights and remedies under the Credit Agreement and the other Loan Documents
and other rights and remedies available under applicable law:
a. Section 6.2(a) relating to minimum Net Income during the Borrower's
fiscal quarter ending February 28, 2009.
b. Section 6.2(b) relating to maximum loss in a fiscal quarter for the
Borrower's fiscal quarter ending February 28, 2009.
c. Section 6.2(c) relating to minimum Debt Service Coverage Ratio for
the Borrower's fiscal quarter ending February 28, 2009.
4. Forbearance. The Lender hereby agrees to forbear from the exercise of
any of its rights and remedies under Section 7.2 of the Credit Agreement and the
other Loan Documents as a result of the Enumerated Defaults dining the
Forbearance Period; provided, however, that such forbearance shall be subject to
all terms and conditions set forth in this Agreement and nothing contained
herein shall alter, affect or impair in any way the Lender's ability to exercise
discretion as provided in the Credit Agreement or to exercise any other rights
and remedies available to it irrespective of whether a Default or Event of
Default exists.
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5. Forbearance Limited to Enumerated Defaults. The Lender's forbearance
shall be limited solely to the Enumerated Defaults existing on the date hereof
and to the inapplicability of the covenants found in Sections 6.2(a) and 6.2(c)
of the Credit Agreement during the Forbearance Period, and the Lender shall not
be deemed to have waived any rights or remedies it may have with respect to any
other existing or future breach, Default or Event of Default arising or
occurring thereunder during the Forbearance Period or with respect to any breach
of this Agreement.
6. Notice Requirements Satisfied. Each Obligor acknowledges that all
notice requirements embodied in the Loan Documents and imposed upon the Lender
in connection with the Enumerated Defaults, and the exercise of its remedies
therefor (together with all applicable cure and/or grace periods) have been
satisfied (or shall be deemed to have been satisfied by this Agreement) without
exception, and that upon the expiration of the Forbearance Period, the Lender
shall, with respect to the Enumerated Defaults, have the full right and power to
exercise all remedies granted to it thereunder without further notice to the
Obligors or any of them and subject to no other conditions precedent.
7. Agreement in the Nature of Forbearance Only. Each Obligor hereby
acknowledges that the Lender's obligations under this Agreement are in the
nature of a conditional forbearance only, and that the Lender has made no
agreement or commitment to modify or extend the Loan Documents or to forbear
beyond the Forbearance Period, and that, upon the termination of the Forbearance
Period, the Lender shall have the immediate and unconditional right to exercise
all of its rights and remedies under the Loan Documents.
8. Termination of the Forbearance Period. The Forbearance Period shall
end on the first to occur of the following (each a "Forbearance Termination
Date"):
a. Breach. A breach by any Obligor of any of the covenants,
representations and/or warranties set forth in this Agreement.
b. New Event of Default. The occurrence of any Default or Event of
Default under any one or more of the Loan Documents other than the
Enumerated Defaults. For avoidance of doubt, a Default or Event of
Default arising or occurring after the date hereof is not an
Enumerated Default even though a prior breach thereof may have
resulted in an Enumerated Default.
c. Creditor Enforcement Action. Any creditor or creditors of any
Obligor take or threaten any enforcement action (i.e., action under
applicable law to foreclose, execute or levy on, collect on, take
possession of or control of, or sell or otherwise realize upon
(whether judicially or non-judicially) or to lease, license or
otherwise dispose of (whether publicly or privately) any assets of
an Obligor or otherwise to exercise or enforce remedial rights with
respect to assets, to xxx one or more of the Obligors, to seek or
obtain a judgment against one or more of the Obligors, or to seek or
commence, or join in the filing of a petition or complaint seeking
insolvency, bankruptcy, receivership, conservatorship or similar
proceedings) that, in the Lender's sole and exclusive judgment,
would materially - interfere with the operation of the business of
the Obligors or the Lender's ability to collect the obligations of
the Obligors.
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d. Representations and Warranties. The breach by the Obligors, or any
or some of them, of any representation or warranty found in this
Agreement or any other Loan Document.
The Obligors agree that a breach of Sections 8a., b., c., or d. of this
Agreement, or a breach of some or all of them, is a Default and an Event of
Default. Upon termination of the Forbearance Period, the Lender's agreement to
forbear shall terminate automatically without further act or action by the
Lender, and the Lender shall be entitled to exercise any and all rights and
remedies available under the Loan Documents and this Agreement, at law, in
equity, or otherwise without any further lapse of time, expiration of applicable
grace periods, or requirements of notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, notice of
intent to foreclose, notice of sale, notice of protest or other formalities of
any kind, all of which are hereby expressly waived by each Obligor.
9. Covenants. Each Obligor covenants, agrees and acknowledges as
follows, intending to be legally bound:
a. Forbearance Fee. The Borrower agrees to pay to the Lender on the
date hereof a fully-earned fee of $10,000 for this Agreement and the
Lender's agreements and forbearance contained herein (after giving
effect to rebates, if any, the "Forbearance Fee").
b. Amendment of Article I Definitions. The Obligors request and agree
to the following permanent changes to Section 1.1 of the Credit
Agreement:
(i) The following definitions are added to Section 1.1 of the
Credit Agreement in appropriate alphabetical order:
"Authenticated" means (a) to have signed; or (b) to
have executed or to have otherwise adopted a symbol, or
have encrypted or similarly processed a Record in whole
or in part, with the present intent of the
authenticating Person to identify the Person and adopt
or accept a Record.
"Daily Three Month LIBOR" means, for any day, the rate
of interest equal to LIBOR then in effect for delivery
for a three (3) month period. When interest is
determined in relation to Daily Three Month LIBOR, each
change in the interest rate shall become effective each
Business Day that Lender determines that Daily Three
Month LIBOR has changed.
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"Record" means information that is inscribed on a
tangible medium or that is stored in an electronic or
other medium and is retrievable in perceivable form.
(ii) Clause (b)(ii)(B) of the definition of "Borrowing Base"
is amended by deleting the dollar amount of "$3,000,000" therefrom
and inserting in lieu thereof the following: "$1,850,000 through
June 19, 2009, $1,700,000 from June 20, 2009 through July 19, 2009,
and $1,600,000 beginning July 20, 2009 and for each reporting period
thereafter";
(iii) The definition of "Interest Period" is deleted in its
entirety;
(iv) The definition of "LIBOR" is amended and restated in its
entirety to read as follows:
"LIBOR" means the rate per annum (rounded upward, if necessary,
to the nearest whole I/16th of one percent) determined pursuant
to the following formula:
LIBOR = Base LIBOR
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100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United
States dollar deposits quoted by Lender for the purpose
of calculating the effective LIBOR Advance Rate for
loans that reference Daily Three Month LIBOR as the
Inter-Bank Market Offered Rate in effect from time to
time for three (3) month delivery of funds in amounts
approximately equal to the principal amount of such
loans. Borrower understands and agrees that Lender may
base its quotation of the Inter-Bank Market Offered
Rate upon such offers or other market indicators of the
Inter-Bank Market as Lender in its discretion deems
appropriate, including but not limited to the rate
offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve
percentage prescribed by the Board of Governors of the
Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D
of the Federal Reserve Board, as amended), adjusted by
the Lender for expected changes in such reserve
percentage during the applicable term of the Revolving
Note.
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(v) The definition of "LIBOR Advance Rate" is amended and
restated in its entirety to read as follows:
"LIBOR Advance Rate" means an interest rate equal to Daily
Three Month LIBOR plus 7.50%, which interest rate shall change
whenever Daily Three Month LIBOR changes.
(vi) The definition of "Maximum Line Amount" is amended by
deleting therefrom the dollar amount of "$11,000,000" and inserting
in lieu thereof a dollar amount of "$6,000,000".
c. Procedures for Line of Credit Advances. The Obligors agree that
Section 2.2 of the Credit Agreement is amended and restated in
its entirety to read as follows:
Section 2.2 Procedures for Line of Credit Advances.
(a) Advances Credited to Operating Account. All Advances ("Fixed
Rate Advances") shall be credited to Borrower's demand deposit
account maintained with Lender (the "Operating Account"), unless
the parties agree in an Authenticated Record to disburse to
another account.
(b) Advances upon Borrower's Request. Borrower may request one
or more Advances on any Business Day. No request for an Advance
will be deemed received until Lender acknowledges receipt, and
Borrower, if requested by Lender, confirms the request in an
Authenticated Record. Borrower shall repay all Advances, even if
the Person requesting the Advance on behalf of Borrower lacked
authorization.
(c) Protective Advances; Advances to Pay Indebtedness Due.
Lender may initiate a LIBOR Rate Advance on the Line of Credit
in its sole discretion for any reason at any time, without
Borrower's compliance with any of the conditions of this
Agreement, and (i) disburse the proceeds directly to third
Persons in order to protect Lender's interest in Collateral or
to perform any of Borrower's obligations under this Agreement,
or (ii) apply the proceeds to the amount of any Indebtedness
then due and payable to Lender.
d. LIBOR Advances. The Obligors agree that Section 2.3 of the
Credit Agreement is amended and restated in its entirety to read
as follows:
Section 2.3 LIBOR Advances.
(a) Each LIBOR Advance shall be funded at the LIBOR Advance Rate
in effect on the Business Day that the Advance is to be made. If
Borrower requests an Advance for delivery of funds on a specific
Business Day, the request shall be made no later than 11:59 a.m.
Central Time on the Business Day on which Borrower wants the
LIBOR Advance to be funded, specifying the principal Advance
amount being requested. Rate Xxxxxx may not be used with respect
to any Advance that utilizes the LIBOR Advance Rate.
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(b) Taxes and Regulatory Costs. The Borrower shall pay the
Lender with respect to any Advance, upon demand and in addition
to any other amounts due or to become due hereunder, any and all
(i) withholdings, interest equalization taxes, stamp taxes or
other taxes (except income and franchise taxes) imposed by any
domestic or foreign governmental authority and related in any
manner to LIBOR, and future, supplemental, emergency or other
changes in the LIBOR Reserve Percentage, assessment rates
imposed by the Federal Deposit Insurance Corporation, or similar
requirements or costs imposed by any domestic or foreign
governmental authority or resulting from compliance by the
Lender with any request or directive (whether or not having the
force of law) from any central bank or other governmental
authority and related in any manner to LIBOR to the extent they
are not included in the calculation of LIBOR. In determining
which of the foregoing are attributable to any LIBOR option
available to the Borrower hereunder, any reasonable allocation
made by the Lender among its operations shall be conclusive and
binding upon the Borrower.
e. Pricing. Floating Rate Advances are no longer available under
Section 2.2 of the Credit Agreement. Existing Advances and any
future Advances shall be LIBOR Advances.
f. Interest. The Obligors agree that Section 2.8(a) of the Credit
Agreement is amended and restated in its entirety to read as
follows:
(a) Interest. Except as provided in Section 2.3,
Section 2.8(c) and Section 2.8(f), the principal amount
of each Advance shall bear interest at the LIBOR
Advance Rate.
g. Prepayment Fees. The Obligors wee that-Section 2.9(f) of the
Credit Agreement is deleted in its entirety, and the following
inserted in lieu thereof: "[omitted intentionally]".
h. Strict Compliance. The Obligors will strictly comply with
Section 2.11(a) of the Credit Agreement and no proceeds of
Collateral shall be retained by any Obligor or deposited to any
accounts other than the Collateral Account and all account
debtors of the Borrower shall be notified in writing that all
payments owed to the Borrower shall be sent to the Lender via
desk-top deposit or to a Lender-controlled lockbox if then
existing (in the case of checks) or by wire transfer to the
Collateral Account (in all other instances). This provision does
not prohibit the Borrower from maintaining, subject to the
restrictions set forth in Section 11 of the Third Amendment to
the Credit Agreement, the Viewpoint Bank deposit account
referred-to therein or depositing a portion of Advances (not to
exceed the amounts described in said Section 11) therein.
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i. No Waiver. The Obligors agree that by making Revolving Advances
the Lender is not waiving any, and retains (subject to the
provisions of this Agreement) all, of its rights under the Loan
Documents and applicable law.
j. Cash Forecast; Etc. The Obligors shall provide to the Lender
projections of cash receipts and disbursements for the Borrower,
including a line item cash forecast for weekly cash
requirements, projected sales, projected inventory positions,
projected loan balances and Availability, on a rolling 4-week
basis ("Cash Forecast") and, not later than the first Business
Day of each week, shall provide to the Lender a compliance
certificate in the same spreadsheet form as the rolling Cash
Forecast, certified as true and accurate, that shows the
comparison of all cash forecast categories with actual levels of
expenditures and revenues generated for the preceding week, and
such other and further reports and financial information as the
Lender may reasonably request plus those that are required under
the Credit Agreement.
k. Projections. The Borrower shall provide to the Lender
projections for the fiscal year ending August 31, 2010 no later
than June 30, 2009, such projections to be in form and detail
satisfactory to the Lender.
1. Temporary Suspension of Quarterly Net Income. The financial
covenant contained in Section 6.2(a) of the Credit Agreement
will be suspended during the Forbearance Period.
m. Monthly Net Income. The Obligors agree that Section 6.2(b) of
the Credit Agreement is amended and restated in its entirety to
read as follows:
(b) Monthly Net Income. The Borrower will not, (i)
during the calendar month ending April 30, 2009, suffer
a Net Loss in excess of $225,000, (ii) during the
calendar month ending May 31, 2009, suffer a Net Loss
in excess of $25,000, (iii) during the calendar month
ending June 30, 2009, suffer a Net Loss in excess of
$100,000, and (iv) during the calendar month ending
July 31, 2009, suffer a Net Loss in excess of $150,000.
In computing the foregoing covenant, the Borrower may
add-back goodwill and amortization expense relative to
"other intangibles" as and when its auditors determine
that those entries should be made and may also
add-back, for the relevant period, the Forbearance Fee.
n. Temporary Suspension of Debt Service Coverage Ratio Covenant.
The financial covenant contained in Section 6.2(c) relating to
minimum Debt Service Coverage Ratio will be suspended during the
Forbearance Period.
o. Capital Expenditures. The Borrower will not incur or contract to
incur Capital Expenditures of more than $30,000 in the aggregate
during the Forbearance Period.
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p. Default Interest. The Obligors acknowledge that the Lender is
entitled to charge and collect interest on the Obligations at
the Default Rate during the Default Period and that the Lender
reserves such right. The Lender agrees not to charge the Default
Rate during the Forbearance Period.
q. Books; Records; Access; Etc. The Obligors will continue to
comply with Section 6.9 of the Credit Agreement and will
continue to cooperate with the Lender, its collateral examiners
and auditors and other agents and will provide each of them with
unfettered access as required by Section 6.9.
r. Continued Compliance. The Obligors acknowledge and agree that
they will, subject to any relevant grace period found in the
Credit Agreement, continue to comply with the provisions of the
Credit Agreement (other than Section 6.2(a) and 6.2(c)),
including all reporting requirements found in Section 6.1
thereof.
s. Reserves. The Obligors acknowledge, consent and agree to the
imposition of a permanent Borrowing Base reserve in the amount
of $233,500 initially established to effect a permanent pay-down
of the outstanding principal balance of the Revolving Note as a
result of the excess funds made available by the refinancing of
the Real Estate Collateral and the Obligors further acknowledge,
confirm and agree that the Lender, in its commercially
reasonable discretion, may from time to time establish and
maintain reserves against the Borrowing Base and otherwise
change the Borrowing Base from time to time in the Lender's
commercially reasonable discretion.
t. Certain Line Reduction and Termination Fees. The Borrower
acknowledges that it has reduced the Maximum Line Amount from
$11,000,000 to $6,000,000 and that pursuant to Section
2.9(e)(ii) of the Credit Agreement the Lender is entitled to
receive a line reduction fee from the Borrower (a "LR Fee")
equal to $100,000. In consideration of the Borrower's agreement
in the next sentence, the Lender agrees to a one-time waiver of
the $100,000 LR Fee otherwise due in connection with this
Agreement. In consideration of the foregoing one-time waiver,
the Borrower acknowledges and agrees that, if the Credit
Facility is terminated or further reduced before December 31,
2010, the Borrower shall pay the Lender on the Termination Date,
in addition to any fees payable under Sections 2.09(e)(ii) and
2.12 of the Credit Agreement, as liquidated damages and not as a
penalty, a fee equal to the difference between the Maximum Line
Amount on the day prior to this Agreement and the Maximum Line
Amount after giving effect to this Agreement times the
percentage stated in Section 2.09(e)(ii)(B).
u. Consultant. The Borrower will continue to engage Huron
Consulting as its turnaround consultant at all times during the
Forbearance Period.
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10. Conditions of Forbearance. The Lender's agreement to forbear from
exercising remedies as a result of the Enumerated Defaults shall, unless waived
by the Lender in the exercise of its sole discretion, be subject to and
conditioned upon each of the following:
a. Execution and Delivery of Documents. The execution and delivery
by all parties hereto of this Agreement and payment of all fees
and expenses incurred by the Lender, including reasonable
attorneys' fees, with respect to the preparation or negotiation
of this Agreement.
b. Corporate Authorization. Receipt by the Lender, in form and
substance satisfactory to the Lender, of resolutions duly
adopted by the boards of directors, members or partners of each
entity Obligor in compliance with the laws of the state of such
Obligor's organization, the charter or organizational documents
of such Obligor, authorizing and directing an officer or
officers (or manager or partner, as applicable) of such Obligor
to execute this Agreement, any and all other documents in
connection therewith to be executed on their part and to do any
and all other things as may be necessary to consummate the
transaction contemplated herein.
c. Cash Forecast. Receipt by the Lender of Borrower's Cash
Forecast, in form and substance satisfactory to the Lender, as
of a recent date.
d. Representations and Warranties. The representations and
warranties of each Obligor contained in the Credit Agreement,
the other Loan Documents and this Agreement being and remaining
true, correct and complete in all material respects.
e. Additional Information. The Lender shall have received such
additional documents, instruments and information as the Lender
or its legal counsel may request.
11. Representations and Warranties of the Obligors. Each Obligor
represents and warrants to the Lender that, as of the date of this Agreement:
a. Organization; No Violations. Each Borrower is duly organized,
validly existing and in good standing under the laws of the
state in which it was organized and formed and qualified to do
business and in good standing in all jurisdictions where such
qualification is necessary. Each Obligor has adequate power to
execute, deliver and perform under this Agreement, and the
execution, delivery, and performance of this Agreement has been
duly authorized by all requisite action and does not violate or
constitute a default or breach under any organizational or
charter documents of such Obligor, any governmental rule or
regulation or any agreement, instrument or document by which
such Obligor or its property is or may be bound and does not
result in the creation or imposition of any lien or encumbrance
upon any property of such Obligor (except any lien or
encumbrance contemplated hereby or granted hereunder).
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b. Pending Litigation. Except for the CMS Liquidating Company
litigation described in the Borrower's Form l0-Q for the period
ending February 28, 2009, each Obligor warrants that it has no
knowledge of any material litigation or other proceeding pending
or threatened against or affecting it, or of any actual or
alleged material default with respect to or violation of any
applicable law, regulation, order or demand or any court or
other governmental authority, and such Obligor agrees that, in
the future, it will immediately advise the Lender in writing
upon learning of any such litigation, proceeding, default or
violation.
c. Validity and Enforceability. This Agreement has been validly
executed and delivered on behalf of the Obligors and constitutes
a valid and binding obligation of the Obligors, enforceable in
accordance with their respective terms.
d. Absence of Default. Other than with respect to the Enumerated
Defaults, no condition is present which presently does or, with
the lapse of time or the giving of notice, or both, would
constitute an Event of Default.
e. Unobtained Authorizations. Except for those which have been
obtained and are in full force and effect, or except as noted
above, no consent, approval, order, license, permit,
certificate, or authorization of, or registration, declaration
or filing with, any regulatory commission, board or other
governmental agency is necessary or required with respect to the
execution, delivery and performance of this Agreement.
f. Solvency of the Obligors. The assets of the Obligors, taken as a
whole, exceed their liabilities and, taken as a whole, they have
sufficient capital to continue to conduct their business and
meet their obligations.
g. Time for Performance is Sufficient. The time periods contained
in this Agreement and the documents executed pursuant hereto
have been agreed to by the Obligors. If the Obligors are unable
to perform their obligations hereunder within such time periods,
no additional time or extension of the time periods provided
herein will enable the Obligors to so perform, and whatever
benefit the Obligors may receive as a result of this transaction
will be realized within the time periods set forth herein and no
other benefit will be realized by the Obligors by any extension
thereof.
h. No Offsets. The Obligors acknowledge that they have no offsets,
counterclaims, or defenses to any of the outstanding obligations
owed to the Lender under the Loan Documents.
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i. Negative Pledge. The Obligors acknowledge that neither they, nor
any Affiliates, may grant or suffer to exist any Lien (other
than Permitted Liens) upon any of their property and assets
without the express written consent of the Lender, such consent
to be given or withheld in the Lender's sole discretion.
12. Compliance With Laws. Until all of the Obligations are repaid in
full, each Obligor covenants and agrees that each Obligor will at all times
comply with all applicable requirements of the laws of the State of Texas and
the United States and with all applicable lawful requirements of any
municipality, county, agency, board or commission created under the laws of the
State of Texas, the United States or of any other duly constituted public
authority; provided, however, that each Obligor shall be deemed in compliance
with this Section 12 so long as it is in good faith contesting any such
requirements by appropriate legal proceedings and so long as the liens and
security interest of the Lender and the priority of same are not endangered.
Each Obligor shall promptly inform the Lender of any such contest and keep the
Lender continuously informed as to the status of any such contest.
13. No Waiver by Forbearance. The Borrower acknowledges and agrees that
the Lender executing this Agreement has done so in its sole discretion and
without any obligation. No waiver by the Lender of any breach by any Obligor of
any of its or his obligations, agreements or covenants hereunder shall be a
waiver of any subsequent breach of any obligation, agreement or covenant, nor
shall any forbearance by the Lender to seek a remedy for any breach be a waiver
by the Lender of its rights and remedies with respect to that or any other
breach. The Borrower hereby ratifies and confirms its obligations under the Loan
Documents.
14. Guarantor's Acknowledgement. By signing below, each Guarantor (a)
consents and agrees to the execution and delivery of this Agreement, (b)
ratifies and confirms its obligations under the Loan Documents to which it is a
party, (c) acknowledges and agrees that its obligations under the Loan Documents
to which it is a party are not released, diminished, impaired, reduced or
otherwise adversely affected by this Agreement, and (d) acknowledges and agrees
that it has no claims or offsets against or defenses or counterclaims to, its
obligations under the Loan Documents to which it is a party.
15. Ratification of Loan Documents/Collateral. The Borrower and each of
the Guarantors waives notice of intent to accelerate, opportunity to cure, and
notice of acceleration with respect to the Enumerated Defaults and any future
Events of Default. The Borrower and each of the Guarantors hereby acknowledge,
ratify, and reaffirm and agree that the Revolving Credit Note, each of the other
Loan Documents and the first priority, perfected liens and security interests
created thereby in favor of the Lender in the Collateral are and shall remain in
full force and effect and binding on Obligors, and are enforceable in accordance
with their respective terms and applicable law. The Borrower and each of the
Guarantors hereby grants the Lender liens and security interests in the
Collateral and acknowledge, ratify, and reaffirm all of the terms and provisions
of the Loan Documents, except as modified herein, which are incorporated by
reference as of the date hereof as if set forth herein including, without
limitation, all promises, agreements, warranties, representations, covenants,
releases, and indemnifications contained therein. The Borrower and each of the
Guarantors hereby acknowledges, ratifies and confirms the Loan Documents and all
of their respective debts and obligations thereunder. Without limitation Aleier
acknowledges its obligations and liabilities under the Alder Guaranty. Without
limitation Cirronet acknowledges its obligations and liabilities under the
Cirronet Guaranty.
14
16. Miscellaneous.
a. Invalid, Illegal or Unenforceable Provisions. In case any
provision of this Agreement or the Loan Documents shall for any
reason be held invalid, illegal or unenforceable in any respect,
this Agreement or the Loan Documents (as the case may be) shall
be construed as if such provision had never been contained
herein; provided, however, that this Agreement and the Loan
Documents will be construed in such a manner so as to enable the
Lender to obtain the practical realization of all benefits and
rights contemplated to be acquired by it thereunder.
b. Controlling Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS,
WITHOUT GIVING EFFECT TO CONFLICT OF LAW PRINCIPLES, AND FEDERAL
LAW. Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under
applicable laws, but if any provision of this Agreement shall be
prohibited by or invalid under such laws, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
c. Amendments. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
d. Materiality. Each and every representation, warranty, covenant
and undertaking on the part of the Borrower herein or of any
Obligors contained in this Agreement is and shall be deemed
material.
e. Actions by Parties: Counterparts. Each Obligor shall execute all
documents and do all things as may reasonably be necessary to
accomplish the object of this Agreement. This Agreement may be
executed by the parties in any number of counterparts originals,
all of which shall constitute a single executed agreement.
Facsimiles of signatures shall be binding and effective as
originals.
f. Consent and Approvals. All consents and approvals on the part of
the Lender may be granted, denied or conditioned as the Lender
may determine appropriate from time to time in its own interest.
All consents and approvals on the part of the Lender hereunder
are for its sole benefit and neither the granting nor
withholding of any of same shall give rise to any duty,
obligation or liability to any Obligor or any other party.
15
g. Performance Through Agents. The Lender may execute powers
hereunder and may perform duties required of it hereunder by or
through attorneys, agents or employees.
h. Term. The provisions of this Agreement shall remain in full
force and effect until the Obligations have been satisfied.
i. Time of Essence. Time is of the essence of this Agreement and
each term, provision and condition hereof, and neither the
acceptance by the Lender of any payment or performance by the
Borrower later than the date due or other than in the manner set
forth herein or therein nor any other action or inaction by the
Lender shall waive or require the Lender to reinstate "time of
the essence".
j. Successors and Assigns. This Agreement is made for the sole
benefit and protection of Obligors and Lender, their successors
and assigns, and no other person or persons shall have any right
of action herein or right to monies hereunder. No person or
persons shall constitute a creditor, third party or incidental
beneficiary hereto or shall be otherwise entitled to any rights
or benefits hereunder. The sole and only relationship existing
or created by this Agreement is and shall be that of bank and
borrower, and no Obligor is and shall be the agent of the Lender
for any purpose. Notwithstanding the foregoing, no Obligor shall
assign its rights or duties hereunder without the consent of the
Lender.
k. Expenses. The Borrower agrees to pay on demand all costs and
expenses of the Lender (including fees, charges and expenses of
counsel for the Lender) in connection with the preparation,
negotiation, execution, delivery and administration of this
Agreement and all other instruments or documents provided for
herein or delivered or to be delivered hereunder or in
connection herewith. In addition, the Borrower agrees to pay,
and save the Lender harmless from all liability for, any stamp
or other taxes which may be payable in connection with the
execution or delivery of this Agreement, the borrowings under
the Credit Agreement and the execution and delivery of any
instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith. All
obligations provided in this Section 16(k) shall survive any
termination of this Agreement and the Credit Agreement.
1. Release. Each Obligor hereby acknowledges, represents, warrants
and agrees that:
(i) None of them has any defense, offset or counterclaim with
respect to the payment of the Obligations or performance of the Loan
Documents, or any other document delivered to the Lender in connection
with any of the foregoing or with respect to any amount owing to the
Lender. To the extent any Obligor has any claims, defense, offset,
counterclaims, causes of action, demands, obligations, remedies, suits,
damages and liabilities (the "Obligor Claims") whatsoever against the
Lender, each Obligor hereby releases, remises, acquits and discharges
the Lender and its predecessors, affiliates, officers, directors,
servants, employees, principals, shareholders, representatives, agents,
attorneys, heirs, successors and assigns (the "Released Lender Parties")
from any and all such Obligor Claims, whether now known or unknown,
suspected or claimed, whether arising under common law, in equity or
under statute, whether vested or contingent, which such Obligor ever had
or now has against the Released Lender Parties which may have arisen at
any time on or prior to the date hereof and which were in any manner
related to the Advances, the Letters of Credit and the Obligations, all
of the business transactions between the parties, any of the Loan
Documents or the enforcement or attempted enforcement by the Lender of
rights, remedies or recourses related thereto;
16
(ii) The Borrower covenants and agrees never to commence
voluntarily and in any way, prosecute or cause to be commenced or
prosecuted against any of the Released Lender Parties any action or
other proceeding based upon any of the Obligor Claims which may have
arisen at any time on or prior to the date hereof and were in any manner
related to any of the Loan Documents;
(iii) The Lender has breached no duty to the Obligors in
connection with the Loan Documents, or otherwise, and the Lender has
fully performed all obligations that it may have, had or now has to the
Obligors; and
(iv) All interest and other charges heretofore accrued and/or
collected by the Lender under the Loan Documents or in connection with
advances of funds or other transactions through the date hereof
involving the Obligors and any or some of them and the Lender and the
method of computing such charges or interest amounts were and are proper
and agreed to by the Obligors.
m. Indemnification. EACH OBLIGOR AGREES TO INDEMNIFY, SAVE, DEFEND
AND HOLD THE LENDER, AND ITS DIRECTORS, AGENTS, EMPLOYEES AND
COUNSEL, HARMLESS FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS,
DAMAGES, LIABILITIES, COSTS OR EXPENSES IMPOSED ON, INCURRED BY
OR ASSERTED AGAINST ANY OF THEM IN CONNECTION WITH ANY
LITIGATION, INVESTIGATION, CLAIM OR PROCEEDING COMMENCED OR
THREATENED RELATED TO THE NEGOTIATION, PREPARATION, EXECUTION,
DELIVERY, ENFORCEMENT, PERFORMANCE OR ADMINISTRATION OF THIS
AGREEMENT, THE CREDIT AGREEMENT, ANY OTHER LOAN DOCUMENTS, OR
ANY UNDERTAKING OR PROCEEDING RELATED TO ANY OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR ANY ACT, OMISSION, EVENT OR TRANSACTION
RELATED OR ATTENDANT THERETO, INCLUDING AMOUNTS PAID IN
SETTLEMENT, COURT COSTS, AND THE FEES AND EXPENSES OF COUNSEL.
TO THE EXTENT THAT THE UNDERTAKING TO INDEMNIFY, PAY AND HOLD
HARMLESS SET FORTH IN THIS SECTION 16(m) MAY BE UNENFORCEABLE
BECAUSE IT VIOLATES ANY LAW OR PUBLIC POLICY, THE OBLIGORS SHALL
PAY THE MAXIMUM PORTION, WHICH THEY ARE PERMITTED TO PAY UNDER
APPLICABLE LAW TO THE LENDER IN SATISFACTION OF INDEMNIFIED
MATTERS UNDER THIS SECTION 16(m). THE FOREGOING INDEMNITY SHALL
SURVIVE THE PAYMENT OF THE OBLIGATIONS AND THE TERMINATION OR
NON-RENEWAL OF THE CREDIT AGREEMENT. PURSUANT TO THE FOREGOING,
THE OBLIGORS SHALL INDEMNIFY, DEFEND, AND HOLD HARMLESS THE
INDEMNIFIED PARTIES FROM ALL CLAIMS, DAMAGES, LOSSES,
LIABILITIES, AND EXPENSES INCURRED OR ASSERTED AS A RESULT,
EITHER IN WHOLE OR IN PART, FROM THE NEGLIGENCE OF ANY OF THE
INDEMNIFIED PARTIES.
17
EACH OBLIGOR, BY SIGNING THIS AGREEMENT, HEREBY ABSOLUTELY AND
UNCONDITIONALLY RELEASES AND FOREVER DISCHARGES THE LENDER, AND ANY AND
ALL PARTICIPANTS, PARENT CORPORATION, SUBSIDIARY CORPORATIONS, AFFILIATED
CORPORATIONS, INSURERS, INDEMNITOR, SUCCESSORS AND ASSIGNS THEREOF,
TOGETHER WITH ALL OF THE PRESENT AND FORMER DIRECTORS, OFFICERS, AGENTS
AND EMPLOYEES OF ANY OF THE FOREGOING, FROM ANY AND ALL CLAIMS, DEMANDS
OR CAUSES OF ACTION OF ANY KIND, NATURE OR DESCRIPTION, WHETHER ARISING
IN LAW OR EQUITY OR UPON CONTRACT OR TORT OR UNDER ANY STATE OR FEDERAL
LAW OR OTHERWISE, WHICH THE OBLIGORS HAVE HAD, NOW HAVE OR HAVE MADE
CLAIM TO HAVE AGAINST ANY SUCH PERSON FOR OR BY REASON OF ANY ACT,
OMISSION, MATTER, CAUSE OR THING WHATSOEVER ARISING FROM THE BEGINNING OF
TIME TO AND INCLUDING THE DATE OF THIS AGREEMENT, WHETHER SUCH CLAIMS,
DEMANDS AND CAUSES OF ACTION ARE MATURED OR UNMATURED OR KNOWN OR UNKNOWN
RELATING TO THE ADVANCES, THE LETTERS OF CREDIT AND THE OBLIGATIONS, ALL
OF THE BUSINESS TRANSACTIONS BETWEEN THE PARTIES, ANY OF THE LOAN
DOCUMENTS OR THE ENFORCEMENT OR ATTEMPTED ENFORCEMENT BY THE LENDER OF
RIGHTS, REMEDIES OR RECOURSES RELATED THERETO.
n. Confidentiality. Except as required by law, the Obligors,
jointly and severally, shall hold in confidence and shall not
disclose to anyone either the form or substance of this
Agreement or any of the other Loan Documents.
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o. No Participation by the Lender. Neither the Lender nor any of
its respective present or former affiliates, servants,
representatives, employees, officers, directors, attorneys or
agents, at any time has directed or participated in, or
attempted to direct or participate in, any of the business
dealings of the Obligors in any capacity other than that of a
creditor and lender.
p. No Oral Agreements. Except for the matters specifically set
forth herein, this Agreement does not alter, amend, modify or
release any right of the Lender or any obligations of the
Obligors in connection with the Loan Documents. By execution of
this Agreement, the Lender is not waiving any principal,
interest, costs or attorneys fees or any other amounts payable
under the documents governing, evidencing or securing the
Obligations. THIS WRITTEN CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. This Agreement
may not be modified orally but only by a written agreement
executed by the Obligors and the Lender and designated as an
amendment or modification of this Agreement.
q. Bankruptcy or Insolvency. Each Obligor hereby agrees that, in
consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration
(including the Lender's forbearance as set forth herein), in the
event any Obligor shall (0 file with any bankruptcy court of
competent jurisdiction or be the subject of any petition under
Title 11 of the U.S. Code, as amended, (ii) be the subject of
any order for relief issued under such Title 11 of the U.S. Code
as amended, (iii) file or be the subject of any petition seeking
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,
insolvency, or other relief for debtors, (iv) have sought or
consented to or acquiesced in the appointment of any trustee,
receiver, conservator, or liquidator, or (v) be the subject of
any order, judgment, or decree entered by any court of competent
jurisdiction approving a petition filed against such party for
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any present or
future federal or state act or law relating to bankruptcy,
insolvency, or relief for debtors, the Lender shall thereupon be
entitled to relief from any automatic stay imposed by section
362 of Title 11 of the U.S. Code, as amended, or otherwise, on
or against the exercise of the rights and remedies otherwise
available to the Lender as provided in the Loan Documents, as
hereby amended, and otherwise provided by law and the Borrower
shall not seek any financing pursuant to Section 364 of Title 11
of the U.S. Code which grants a lender a security interest
senior to the interests of the Lender.
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r. Advice of Counsel. This Agreement has been negotiated at
arms-length and in good faith by the parties hereto. Each
Obligor acknowledges that it has sought the advice of, and have
been advised by, legal counsel of its choice, in connection with
the negotiation of this Agreement, and that each Obligor has
willingly entered into this Agreement with full understanding of
the legal and financial consequences of this Agreement.
s. Loan Document. This Agreement is a Financing Agreement and is
subject to all provisions of the Credit Agreement applicable to
Loan Documents, all of which are incorporated in this Agreement
by reference the same as if set forth in this Agreement
verbatim.
t. Waiver of Jury Trial. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
AND EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR ME TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS
OF THE LENDER IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT
THEREOF.
u. Further Assurances. The Obligors shall execute all additional
documents and do all acts not specifically referred to herein
which are reasonably necessary to fully effectuate the intent of
this Agreement.
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IN WITNESS WHEREOF the parties have executed this Agreement as of the
date first hereinabove written.
LENDER:
-------
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, acting through its
Xxxxx Fargo Business Credit
operating division
By: /S/ XXXXX X. XXXXXX
-------------------
Xxxxx X. Xxxxxx
Vice President
BORROWER:
---------
RF MONOLITHICS, INC.
By: /S/ XXXXXX X XXXXXX III
-----------------------
Name: Xxxxxx X Xxxxxx III
Title: CFO
GUARANTORS:
-----------
ALEIER, INC.
By: /S/ XXXXXX X XXXXXX III
-----------------------
Name: Xxxxxx X Xxxxxx III
Title: Director/VP
CIRRONET INC.
By: /S/ XXXXXX X XXXXXX III
-----------------------
Name: Xxxxxx X Xxxxxx III
Title: Director/VP
21
