EXHIBIT 10.16
SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of February 8, 2002, is made by and between
VARI-L COMPANY, INC., a Colorado corporation (the "Borrower"), and XXXXX FARGO
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").
Recitals
The Borrower and the Lender are parties to a Credit and Security
Agreement dated as of June 28, 2001 (the "Original Credit Agreement"), as
amended by the First Amendment to Credit and Security Agreement dated as of
September 17, 2001 (as so amended, the "Credit Agreement"). Capitalized terms
used in these recitals have the meanings given to them in the Credit Agreement
unless otherwise specified.
The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:
1. Capitalized terms used in this Amendment which are defined in the
Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the Credit Agreement is
amended by adding or amending, as the case may be, the following definitions:
"Availability" means the difference of (i) the Borrowing Base
and (ii) the sum of (A) the outstanding principal balance of the
Revolving Note and (B) the L/C Amount.
"Borrowing Base" means, at any time the lesser of:
(a) the Maximum Line; or
(b) subject to change from time to time in the Lender's sole
discretion, upon three (3) business days notice to the Borrower, the
sum of:
(i) 80% of Eligible Accounts, plus
(ii) the lesser of (A) 0.00% (zero percent) of
Eligible Inventory or (B) $0.00 (zero dollars).
"Collateral" means all of the Borrower's Accounts,
Receivables, chattel paper, deposit accounts, documents, Equipment,
General Intangibles, goods, instruments, Inventory, Investment
Property, letter-of-credit rights, letters of credit, all sums on
deposit in any Collateral Account, and any items in any
Lockbox; together with (i) all substitutions and replacements for and
products of any of the foregoing; (ii) in the case of all goods, all
accessions; (iii) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed to or used in connection
with any goods; (iv) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering such goods; (v) all
collateral subject to the lien of any Security Document; (vi) any
money, or other assets of the Borrower that now or hereafter come into
the possession, custody, or control of the Lender; (vii) all sums on
deposit in the Special Account; and (viii) proceeds of any and all of
the foregoing.
"Commitment" means the Lender's commitment to make Advances
to, and to cause the Issuer to issue Letters of Credit for the account
of, the Borrower pursuant to Article II.
"Issuer" means the issuer of any Letter of Credit.
"L/C Amount" means the sum of (i) the aggregate face amount of
any issued and outstanding Letters of Credit and (ii) the unpaid amount
of the Obligation of Reimbursement.
"L/C Application" means an application and agreement for
letters of credit in a form acceptable to the Issuer and the Lender.
"Letter of Credit" has the meaning specified in Section 2.17.
"Loan Documents" means this Agreement, the Notes, the Security
Documents and any L/C Application.
"Maximum Line" means $4,000,000, unless said amount is reduced
pursuant to Section 2.10, in which event it means the amount to which
said amount is reduced.
"Obligation of Reimbursement" has the meaning specified in
Section 2.19(a).
"Obligations" means each Note, the Obligation of Reimbursement
and each and every other debt, liability and obligation of every type
and description which the Borrower may now or at any time hereafter owe
to the Lender, whether such debt, liability or obligation now exists or
is hereafter created or incurred, whether it arises in a transaction
involving the Lender alone or in a transaction involving other
creditors of the Borrower, and whether it is direct or indirect, due or
to become due, absolute or contingent, primary or secondary, liquidated
or unliquidated, or sole, joint, several or joint and several, and
including all indebtedness of the Borrower arising under any Loan
Document or guaranty between the Borrower and the Lender, whether now
in effect or hereafter entered into.
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"Revolving Floating Rate" means (i) from the Funding Date to
and including January 31, 2002, an annual rate equal to the sum of the
Prime Rate plus one half of one percent (0.50%) and (ii) from February
1, 2002 to the Termination Date, an annual rate equal to the sum of the
Prime Rate plus one percent (1.00%); which annual rate shall change
when and as the Prime Rate changes.
"Special Account" means a specified cash collateral account
maintained by Xxxxx Fargo Bank West N.A. in connection with Letters of
Credit, as contemplated by Section 2.18.
"Term Floating Rate" means (i) from the Funding Date to and
including January 31, 2002, an annual rate equal to the sum of the
Prime Rate plus one percent (1.00%) and (ii) from February 1, 2002 to
the Termination Date, an annual rate equal to the sum of the Prime Rate
plus two and one half percent (2.50%); which annual rate shall change
when and as the Prime Rate changes.
2. Section 2.3 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 2.3 Payment of Term Note. The outstanding principal
balance of the Term Note shall be due and payable as follows:
(a) (i) Beginning on the first day of the month following each
Term Advance, and on the first day of each month thereafter, to and
including February 2002, in substantially equal monthly installments
equal to an amount sufficient to fully amortize the principal balance
of the Term Note over an assumed term ending on the seventh anniversary
of the date of each Term Advance and (ii) Beginning on the first day of
March 2002 and on the first day of each month thereafter, in equal
monthly installments of $43,434; and
(b) On the Termination Date, the entire unpaid principal
balance of the Term Note, and all unpaid interest accrued thereon,
shall in any event be due and payable."
3. Section 2.4 of the Credit Agreement is hereby amended by changing
the dollar amount in romanette (i) of the first paragraph from $1,500,000 to
$0.00 (zero dollars).
4. Section 2.7 of the Credit Agreement is hereby amended by amending
and restating Section 2.7(b) in its entirety and by adding new Sections 2.7(e)
and (f) to read as follows:
"(b) Unused Line Fee. For the purposes of this Section 2.7(b),
"Unused Amount" means the Maximum Line reduced by outstanding Revolving
Advances and the outstanding L/C Amount. The Borrower agrees to pay to
the Lender an unused line fee at the rate of one quarter of one percent
(0.25%) per annum on the average daily Unused Amount from the date of
this Agreement to and including
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the Termination Date, due and payable monthly in arrears on the first
day of the month and on the Termination Date.
(e) Letter of Credit Fees. The Borrower agrees to pay to the
Lender on the date of the issuance of each Letter of Credit issued
hereunder a fully earned and non-refundable Letter of Credit fee equal
to two and one half percent (2.50%) of the face amount of each Letter
of Credit issued hereunder, plus any processing and administrative
fees.
(f) Letter of Credit Administrative Fees. The Borrower agrees
to pay the Lender, on written demand, the administrative fees charged
by the Issuer in connection with the honoring of drafts under any
Letter of Credit, amendments thereto, transfers thereof and all other
activity with respect to the Letters of Credit at the then-current
rates published by the Issuer for such services rendered on behalf of
customers of the Issuer generally."
5. Section 2.9 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 2.9 Increased Costs; Capital Adequacy. If the Lender
determines at any time that its Return has been reduced as a result of
any Rule Change, the Lender may so notify the Borrower and require the
Borrower, beginning fifteen (15) days after such notice, to pay it the
amount necessary to restore its Return to what it would have been had
there been no Rule Change. For purposes of this Section 2.9:
(a) "Capital Adequacy Rule" means any law, rule, regulation,
guideline, directive, requirement or request regarding capital
adequacy, or the interpretation or administration thereof by any
governmental or regulatory authority, central bank or comparable
agency, whether or not having the force of law, that applies to any
Related Lender, including rules requiring financial institutions to
maintain total capital in amounts based upon percentages of outstanding
loans, binding loan commitments and letters of credit.
(b) "L/C Rule" means any law, rule, regulation, guideline,
directive, requirement or request regarding letters of credit, or the
interpretation or administration thereof by any governmental or
regulatory authority, central bank or comparable agency, whether or not
having the force of law, that applies to any Related Lender, including
those that impose taxes, duties or other similar charges, or mandate
reserves, special deposits or similar requirements against assets of,
deposits with or for the account of, or credit extended by any Related
Lender, on letters of credit.
(c) "Related Lender" includes (but is not limited to) the
Lender, any parent of the Lender, any assignee of any interest of the
Lender hereunder and any participant in the Credit Facility.
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(d) "Return", for any period, means the percentage determined
by dividing (i) the sum of interest and ongoing fees earned by the
Lender under this Agreement during such period, by (ii) the average
capital the Lender is required to maintain during such period as a
result of its being a party to this Agreement, as determined by the
Lender based upon its total capital requirements and a reasonable
attribution formula that takes account of the Capital Adequacy Rules
and L/C Rules then in effect, costs of issuing or maintaining any
Advance or Letter of Credit and amounts received or receivable under
this Agreement or the Note with respect to any Advance or Letter of
Credit. Return may be calculated for each calendar quarter and for the
shorter period between the end of a calendar quarter and the date of
termination in whole of this Agreement.
(e) "Rule Change" means any change in any Capital Adequacy
Rule or L/C Rule occurring after the date of this Agreement, or any
change in the interpretation or administration thereof by any
governmental or regulatory authority, but the term does not include any
changes that at the Funding Date are scheduled to take place under the
existing Capital Adequacy Rules or L/C Rules or any increases in the
capital that the Lender is required to maintain to the extent that the
increases are required due to a regulatory authority's assessment of
that Lender's financial condition.
The initial notice sent by the Lender shall be sent as
promptly as practicable after the Lender learns that its Return has
been reduced, shall include a demand for payment of the amount
necessary to restore the Lender's Return for the quarter in which the
notice is sent, and shall state in reasonable detail the cause for the
reduction in its Return and its calculation of the amount of such
reduction. Thereafter, the Lender may send a new notice during each
calendar quarter setting forth the calculation of the reduced Return
for that quarter and including a demand for payment of the amount
necessary to restore its Return for that quarter. The Lender's
calculation in any such notice shall be conclusive and binding absent
demonstrable error."
6. Section 2.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 2.12 Mandatory Prepayment. Without notice or demand,
if the outstanding principal balance of the Revolving Advances plus the
L/C Amount shall at any time exceed the Borrowing Base, the Borrower
shall (i) first, immediately prepay the Revolving Advances to the
extent necessary to eliminate such excess; and (ii) if prepayment in
full of the Revolving Advances is insufficient to eliminate such
excess, pay to the Lender in immediately available funds for deposit in
the Special Account an amount equal to the remaining excess. Any
payment received by the Lender under this Section 2.12 or under Section
2.10 may be applied to the Obligations, in such order and in such
amounts as the Lender, in its discretion, may from time to time
determine; provided that any prepayment
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under Section 2.10 which the Borrower designates as a partial
prepayment of the Term Note or the CapEx Note, as the case may be,
shall be applied to principal installments of the Term Note or the
CapEx Note, as the case may be, in inverse order of maturity."
7. The Credit Agreement is hereby amended by adding a new Section 2.17
to read as follows:
"Section 2.17 Letters of Credit.
(a) The Lender agrees, on the terms and subject to the
conditions herein set forth, to cause an Issuer to issue, from the
Funding Date to the Termination Date, one or more irrevocable standby
or documentary letters of credit (each, a "Letter of Credit") for the
Borrower's account by guaranteeing payment of the Borrower's
obligations or being a co-applicant. The Lender shall have no
obligation to cause an Issuer to issue any Letter of Credit if the face
amount of the Letter of Credit to be issued would exceed the lesser of:
(i) $250,000 less the L/C Amount, or
(ii) Availability.
Each Letter of Credit, if any, shall be issued pursuant to a
separate L/C Application entered into between the Borrower and the
Lender for the benefit of the Issuer, completed in a manner
satisfactory to the Lender and the Issuer. The terms and conditions set
forth in each such L/C Application shall supplement the terms and
conditions hereof, but if the terms of any such L/C Application and the
terms of this Agreement are inconsistent, the terms hereof shall
control.
(b) No Letter of Credit shall be issued with an expiry date
later than the Termination Date in effect as of the date of issuance.
(c) Any request to cause an Issuer to issue a Letter of Credit
shall be deemed to be a representation by the Borrower that the
conditions set forth in Section 4.2 have been satisfied as of the date
of the request."
8. The Credit Agreement is hereby amended by adding a new Section 2.18
to read as follows:
"Section 2.18 Special Account. If the Credit Facility is
terminated for any reason while any Letter of Credit is outstanding,
the Borrower shall thereupon pay the Lender in immediately available
funds for deposit in the Special Account an amount equal to the L/C
Amount. The Special Account shall be an interest bearing account
maintained for the Lender by Xxxxx Fargo Bank West N.A. Any interest
earned on amounts deposited in the Special Account shall be credited to
the Special Account. The Lender may apply amounts on deposit in the
Special
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Account at any time or from time to time to the Obligations in the
Lender's sole discretion. The Borrower may not withdraw any amounts on
deposit in the Special Account as long as the Lender maintains a
security interest therein. The Lender agrees to transfer any balance in
the Special Account to the Borrower when the Lender is required to
release its security interest in the Special Account under applicable
law."
9. The Credit Agreement is hereby amended by adding a new Section 2.19
to read as follows:
"Section 2.19 Payment of Amounts Drawn Under Letters of
Credit; Obligation of Reimbursement. The Borrower acknowledges that the
Lender, as co-applicant, will be liable to the Issuer for reimbursement
of any and all draws under Letters of Credit and for all other amounts
required to be paid under the applicable L/C Application. Accordingly,
the Borrower shall pay to the Lender any and all amounts required to be
paid under the applicable L/C Application, when and as required to be
paid thereby, and the amounts designated below, when and as designated:
(a) The Borrower shall pay to the Lender on the day a draft is
honored under any Letter of Credit a sum equal to all amounts drawn
under such Letter of Credit plus any and all reasonable charges and
expenses that the Issuer or the Lender may pay or incur relative to
such draw and the applicable L/C Application, plus interest on all such
amounts, charges and expenses as set forth below (the Borrower's
obligation to pay all such amounts is herein referred to as the
"Obligation of Reimbursement").
(b) Whenever a draft is submitted under a Letter of Credit,
the Borrower authorizes the Lender to make a Revolving Advance in the
amount of the Obligation of Reimbursement and to apply the proceeds of
such Revolving Advance thereto. Such Revolving Advance shall be
repayable in accordance with and be treated in all other respects as a
Revolving Advance hereunder.
(c) If a draft is submitted under a Letter of Credit when the
Borrower is unable, because a Default Period exists or for any other
reason, to obtain a Revolving Advance to pay the Obligation of
Reimbursement, the Borrower shall pay to the Lender on demand and in
immediately available funds, the amount of the Obligation of
Reimbursement together with interest, accrued from the date of the
draft until payment in full at the Default Rate. Notwithstanding the
Borrower's inability to obtain a Revolving Advance for any reason, the
Lender is irrevocably authorized, in its sole discretion, to make a
Revolving Advance in an amount sufficient to discharge the Obligation
of Reimbursement and all accrued but unpaid interest thereon.
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(d) The Borrower's obligation to pay any Revolving Advance
made under this Section 2.19, shall be evidenced by the Revolving Note
and shall bear interest as provided in Section 2.6."
10. The Credit Agreement is hereby amended by adding a new Section 2.20
to read as follows:
"Section 2.20 Obligations Absolute. The Borrower's obligations
arising under Section 2.19 shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of
Section 2.19, under all circumstances whatsoever, including (without
limitation) the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit or any other agreement or instrument relating to any Letter of
Credit (collectively the "Related Documents");
(b) any amendment or waiver of or any consent to departure
from all or any of the Related Documents;
(c) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time, against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom
any such beneficiary or any such transferee may be acting), or other
person or entity, whether in connection with this Agreement, the
transactions contemplated herein or in the Related Documents or any
unrelated transactions;
(d) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(e) payment by or on behalf of the Issuer under any Letter of
Credit against presentation of a draft or certificate which does not
strictly comply with the terms of such Letter of Credit; or
(f) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing."
11. Section 4.1 of the Credit Agreement is hereby amended by amending
and restating the introductory paragraph in Section 4.1 and by amending and
restating Section 4.1(r) to read as follows:
"Section 4.1 Conditions Precedent to the Initial Revolving,
Term and CapEx Advances and Letter of Credit. The Lender's obligation
to make the initial Revolving, Term and CapEx Advances or to cause any
Letters of Credit to be issued hereunder shall be subject to the
condition precedent that the Lender shall have received all of the
following, each in form and substance satisfactory to the Lender:
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(r) Payment of the fees and commissions due through the date
of the initial Advance or Letter of Credit under Section 2.7 and
expenses incurred by the Lender through such date and required to be
paid by the Borrower under Section 9.6, including all legal expenses
incurred through the date of this Agreement."
12. Section 4.2 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 4.2 Conditions Precedent to All Advances and Letters
of Credit. The Lender's obligation to make each Advance and to cause
each Letter of Credit to be issued shall be subject to the further
conditions precedent that on such date:
(a) the representations and warranties contained in Article V
are correct on and as of the date of such Advance or issuance of a
Letter of Credit as though made on and as of such date, except to the
extent that such representations and warranties relate solely to an
earlier date; and
(b) no event has occurred and is continuing, or would result
from such Advance or issuance of a Letter of Credit which constitutes a
Default or an Event of Default."
13. Section 6.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 6.12 Minimum Book Net Worth. The Borrower will
maintain, during each period described below, its Book Net Worth,
determined as at the end of each month, at an amount not less than the
amount set forth opposite such period:
PERIOD MINIMUM BOOK
NET WORTH
The month ending January 31, 2002 $ 11,400,000
The month ending February 28, 2002 $ 11,400,000
The month ending March 31, 2002 $ 11,025,000
The month ending April 30, 2002 $ 10,900,000
The month ending May 31, 2002 $ 10,650,000
The month ending June 30, 2002 and thereafter $ 11,025,000"
14. Section 6.13 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 6.13 Minimum Net Income. The Borrower will achieve
during each period described below, Net Income of not less than, or a
Net Loss not greater than (excluding any impact of the settlement of
the private shareholder class actions settled by
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payment by the Borrower of shares of the Borrower), the amount set
forth opposite such period (number appearing between "()" are
negative):
PERIOD MINIMUM NET INCOME
The nine months ending March 31, 2002 ($2,900,000)
The twelve months ending June 30, 2002 ($2,900,000)"
15. Section 6.14 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 6.14 "Intentionally Omitted.""
16. Section 6.15 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 6.15 New Covenants. On or before June 30, 2002, the
Borrower and the Lender shall agree on new covenant levels for Section
6.12, Section 6.13 and Section 7.10 for periods after such date. The
new covenant levels will be based on the Borrower's projections for
such periods and shall be no less stringent than the present levels,
but if the Borrower and the Lender do not agree, the Lender may
designate the required amounts in its sole discretion and the failure
by the Borrower to maintain the designated amounts shall constitute an
Event of Default."
17. Section 7.10 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
"Section 7.10 Capital Expenditures. The Borrower will not
incur or contract to incur Unfinanced Capital Expenditures of more than
(i) $1,000,000 during the period from July 1, 2001 through February 28,
2002; and (ii) $2,000,000 during the period from July 1, 2001 through
June 30, 2002."
18. Section 8.2 of the Credit Agreement is hereby amended by adding a
new Section 8.2(g) to read as follows:
"(g) the Lender may make demand upon the Borrower and,
forthwith upon such demand, the Borrower will pay to the Lender in
immediately available funds for deposit in the Special Account pursuant
to Section 2.18 an amount equal to the aggregate maximum amount
available to be drawn under all Letters of Credit then outstanding,
assuming compliance with all conditions for drawing thereunder."
19. Section 9.6 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:
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"Section 9.6 Costs and Expenses. The Borrower agrees to pay on
demand all costs and expenses, including (without limitation)
attorneys' fees, incurred by the Lender in connection with the
Obligations, this Agreement, the Loan Documents, any Letter of Credit
and any other document or agreement related hereto or thereto, and the
transactions contemplated hereby, including without limitation all such
costs, expenses and fees incurred in connection with the negotiation,
preparation, execution, amendment, administration, performance,
collection and enforcement of the Obligations and all such documents
and agreements and the creation, perfection, protection, satisfaction,
foreclosure or enforcement of the Security Interest."
20. Exhibit D of the Credit Agreement is hereby amended and restated in
its entirety and replaced with Exhibit D attached hereto.
21. No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.
22. Amendment Fee. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $50,000 in
consideration of the Lender's execution and delivery of this Amendment, and in
full satisfaction of any fees which may have otherwise been due and owing to the
date hereof.
23. Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with (i)
payment of the fee described in Paragraph 22 and (ii) such other matters as the
Lender may require, each in substance and form acceptable to the Lender in its
sole discretion.
24. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:
(a) The Borrower has all requisite power and authority to
execute this Amendment and to perform all of its obligations hereunder,
and this Amendment has been duly executed and delivered by the Borrower
and constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
(b) The execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by
any governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate any provision of any
law, rule or regulation or of any order, writ, injunction or decree
presently in effect, having applicability to the Borrower, or the
articles of incorporation or by-laws of the Borrower, or (iii) result
in a breach of or constitute a default under any indenture or loan or
credit agreement or any other agreement, lease or instrument to which
the Borrower is a party or by which it or its properties may be bound
or affected.
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(c) All of the representations and warranties contained in
Article V of the Credit Agreement are correct on and as of the date
hereof as though made on and as of such date, except to the extent that
such representations and warranties relate solely to an earlier date.
25. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.
26. No Waiver. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.
27. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, 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 Borrower has had, now has or
has 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 Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.
28. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under paragraph 22 hereof.
29. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.
XXXXX FARGO BUSINESS CREDIT, INC. VARI-L COMPANY, INC.
By /s/ XXXXXXX X. XXXXXX By /s/ XXXXXXX X. XXXXXXXXXX
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Xxxxxxx X. Xxxxxx Xxxxxxx X. Xxxxxxxxxx
Its: Vice President Its: Vice President of Finance
and Chief Financial Officer
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EXHIBIT D TO
CREDIT AND SECURITY AGREEMENT
COMPLIANCE CERTIFICATE
To: Xxxxxxx X. Xxxxxx
Xxxxx Fargo Business Credit, Inc.
Date: __________________, 200__
Subject: Vari-L Company, Inc.
Financial Statements
In accordance with our
Credit and Security Agreement dated as of June
28, 2001, as amended by (i) the First Amendment to
Credit and Security Agreement
dated as of September 17, 2001 and (ii) the Second Amendment to
Credit and
Security Agreement dated as of February 8, 2002 (as so amended, the "Credit
Agreement"), attached are the financial statements of Vari-L Company, Inc. (the
"Borrower") as of and for ________________, 20__ (the "Reporting Date") and the
year-to-date period then ended (the "Current Financials"). All terms used in
this certificate have the meanings given in the Credit Agreement.
I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition and the results of its operations as of the date
thereof.
Events of Default. (Check one):
[ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.
[ ] The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto is a statement
of the facts with respect to thereto.
I hereby certify to the Lender as follows:
[ ] The Reporting Date does not xxxx the end of one of the Borrower's
fiscal quarters, hence I am completing only paragraph __ below.
[ ] The Reporting Date marks the end of one of the Borrower's fiscal
quarters, hence I am completing all paragraphs below except paragraph __.
[ ] The Reporting Date marks the end of the Borrower's fiscal year,
hence I am completing all paragraphs below.
1. Minimum Book Net Worth. Pursuant to Section 6.12 of the Credit
Agreement, as of the Reporting Date, the Borrower's Book Net Worth was
$____________ which [ ] satisfies [ ] does not satisfy the requirement
that such amount be not less than as set forth in table below:
MINIMUM BOOK
PERIOD NET WORTH
The month ending January 31, 2002 $ 11,400,000
The month ending February 28, 2002 $ 11,400,000
The month ending March 31, 2002 $ 11,025,000
The month ending April 30, 2002 $ 10,900,000
The month ending May 31, 2002 $ 10,650,000
The month ending June 30, 2002 and thereafter $ 11,025,000
2. Minimum Net Income. Pursuant to Section 6.13 of the Credit Agreement,
the Borrower's Net Income (excluding any impact of the settlement of
the private shareholder class actions settled by payment by the
Borrower of shares of the Borrower) for the ________ period ending on
the Reporting Date, was $____________, which [ ] satisfies [ ] does not
satisfy the requirement that such amount be not less than, or such loss
shall not be greater than, $_____________ during such period as set
forth in table below:
PERIOD MINIMUM NET INCOME
The nine months ending March 31, 2002 ($2,900,000)
The twelve months ending June 30, 2002 ($2,900,000)
3. Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement,
for the year-to-date period ending on the Reporting Date, the Borrower
has expended or contracted to expend during the _____ month period
ending _________________, for Capital Expenditures, $__________________
in the aggregate, which [ ] satisfies [ ] does not satisfy the
requirement that such expenditures not exceed $____________ in the
aggregate during such period.
4. Salaries. As of the Reporting Date, the Borrower [ ] is [ ] is not in
compliance with Section 7.17 of the Credit Agreement concerning
salaries.
Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.
VARI-L COMPANY, INC.
By:
-----------------------------------
Its: Chief Financial Officer
