SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
SECOND
AMENDMENT
TO
THIS
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”)
is
entered into this 21st
day of
August, 2008, by and between SILICON VALLEY BANK (“Bank”),
AIRSPAN NETWORKS, INC., a corporation formed under the laws of the State of
Washington (“US
Borrower”),
and
AIRSPAN COMMUNICATIONS LIMITED,
a
company registered under the laws of England and Wales under company number
03501881 (“UK
Borrower”;
US
Borrower and UK Borrower hereinafter referred to individually and collectively,
jointly and severally, as “Borrower”).
Recitals
A. Bank
and
Borrower have entered into that certain Loan and Security Agreement dated as
of
August 1, 2006, as
amended by that certain First Amendment to Loan and Security Agreement by and
between Bank and Borrower dated as of August 7, 2007
(as the
same may from time to time be further amended, modified, supplemented or
restated, the “Loan
Agreement”).
B. Bank
has
extended credit to Borrower for the purposes permitted in the Loan
Agreement.
C. Borrower
has requested that Bank amend the Loan Agreement to (i) extend the maturity
date, (ii) adjust the Tangible Net Worth financial covenant, and (iii) make
certain other revisions to the Loan Agreement as more fully set forth
herein.
D. Bank
has
agreed to so amend certain provisions of the Loan Agreement, but only to the
extent, in accordance with the terms, subject to the conditions and in reliance
upon the representations and warranties set forth below.
Agreement
Now,
Therefore,
in
consideration of the foregoing recitals and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
1. Definitions.
Capitalized terms used but not defined in this Amendment, including its preamble
and recitals, shall have the meanings given to them in the Loan
Agreement.
2. Amendments
to Loan Agreement.
2.1 Section
2.4 (Fees).
Section
2.4(h) of the Loan Agreement is hereby added in its entirety immediately after
Section 2.4(g) of the Loan Agreement as follows:
(h) Second
Supplemental Commitment Fee.
In
addition to the commitment fee set forth in Section 2.4(a) and the Supplemental
Commitment Fee set forth in Section 2.4(g), a fully earned, non-refundable
supplemental commitment fee (the “Second
Supplemental Commitment Fee”)
of One
Hundred Thousand Dollars ($100,000), due on the Second Supplemental Closing
Date.
2.2 Section
4.1 (Grant
of Security Interest; Termination
of Agreement and Security Interest; Termination Fee).
The
second paragraph of Section 4.1 of the Loan Agreement is hereby amended in
its
entirety and replaced with the following:
This
Agreement may be terminated prior to the Revolving Line Maturity Date by
Borrower, effective three (3) Business Days after written notice of termination
is given to Bank or if Bank’s obligation to fund Credit Extensions terminates
pursuant to the terms of Section 2.1.1(b). Notwithstanding any such termination,
Bank’s lien and security interest in the Collateral shall continue until US
Borrower fully satisfies its Obligations. If this Agreement is terminated prior
to the Revolving Line Maturity Date at Borrower’s election or at Bank’s election
due to the occurrence and continuance of an Event of Default, US Borrower shall
pay to Bank, in addition to the payment of any other expenses or fees
then-owing, (a) all remaining quarterly installments of the Supplemental
Commitment Fee, and (b) a termination fee in an amount equal to (i) one percent
(1.0%) of the Revolving Line if such termination occurs prior to August 1,
2009
or (ii) one half of one percent (0.5%) of the Revolving Line if such termination
occurs on or after August 1, 2009; provided, however, that no termination fee
shall be charged if the credit facility hereunder terminates on the Revolving
Line Maturity Date or is replaced with a new facility from Silicon Valley Bank
or another division thereof. Upon payment in full of the Obligations
and
at
such time as Bank’s obligation to make Credit Extensions has terminated, Bank
shall release its liens and security interests in the Collateral and all rights
therein shall revert to US Borrower.
2.3 Section
6.2 (Financial Statements, Reports, Certificates).
Section
6.2(c) of the Loan Agreement is hereby amended in its entirety and replaced
with
the following:
(c) within
thirty (30) days after the end of each month, deliver to Bank (A) monthly
accounts receivable agings, aged by invoice date, (B) monthly accounts payable
agings, aged by invoice date, and (C) monthly reconciliations of accounts
receivable agings (aged by invoice date), including (i) KKS receivable aging
and
extended term reporting, and general ledger and (ii) Datatell receivable aging
and extended term reporting, and general ledger;
2.4 Section
6.9 (Financial Covenants).
Section
6.9(a) of the Loan Agreement is hereby amended in its entirety and replaced
with
the following:
(a) Tangible
Net Worth.
A
Tangible Net Worth of at least Thirty Million Dollars ($30,000,000) effective
for the quarter ending June 30, 2008 and as of the last day of each fiscal
quarter thereafter, plus an amount equal to the sum of (i) fifty percent (50%)
of quarterly Net Income after the Second Supplemental Closing Date (but not
to
be decreased by fifty percent (50%) of quarterly consolidated net loss, if
any),
(ii) fifty percent (50%) of the proceeds received by Borrower from the sale
of
US Borrower’s capital stock after the Second Supplemental Closing Date and (iii)
fifty percent (50%) of the principal amount of Subordinated Debt incurred by
Borrower after the Second Supplemental Closing Date.
2
2.5 Section
13 (Definitions).
(a) The
following terms and their respective definitions set forth in Section 13.1
are hereby amended in their entirety and replaced with the following:
“Availability
Amount”
is
(a)
the lesser of (i) the Revolving Line or (ii) the Borrowing Base, minus
(b) the amount of all outstanding Letters of Credit (including drawn but
unreimbursed Letters of Credit) plus an amount equal to the Letter of Credit
Reserves, minus
(c) the
FX Reserve, and minus
(d) the
outstanding principal balance of any Advances (including any amounts used for
Cash Management Services).
“Borrowing
Base”
is
(a)
eighty percent (80%) of Eligible Accounts, as determined by Bank from Borrower’s
most recent Transaction Report, plus
at all
times that Borrower has complied with the Contingent Availability Conditions
and
remains in compliance with such Contingent Availability Conditions, (b) the
lesser of (i) sixty percent (60%) of Eligible Inventory (valued at the lower
of
cost or wholesale fair market value) as determined by Bank from Borrower’s most
recent Transaction Report or (ii) Eight Million Dollars ($8,000,000); provided,
however, that Bank may decrease the foregoing percentages in its good faith
business judgment based on events, conditions, contingencies, or risks which,
as
determined by Bank from the results of any audit by the Bank of the Borrower’s
Collateral, may adversely affect Collateral.
“Minimum
Monthly Interest”
means
at any point of determination an amount equal to the applicable interest rate
as
set forth in Section 2.3(a) of this Agreement multiplied by the lesser of (i)
the maximum available Borrowing Base, or (ii) Ten Million Dollars
($10,000,000).
“Revolving
Line Maturity Date” is
December 31, 2009.
(b) Subparts
(b), (c), (d) and (f) of the definition of “Eligible
Accounts”
are
hereby amended in their entirety and replaced with the following:
(b)
Accounts
(other than Accounts owing from KKS and Datatell) that the Account Debtor has
not paid within one hundred twenty (120) days of invoice date;
(c)
Accounts
owing from (i) KKS and Datatell that KKS and Datatell have not paid within
ninety (90) days of the due date;
(d)
Accounts
owing
from an Account Debtor (other than Accounts owing from KKS and Datatell), fifty
percent (50%) or more of whose Accounts owing have not been paid within one
hundred twenty (120) days of invoice date, and Accounts owing from KKS and
Datatell, fifty percent (50%) or more of whose Accounts owing have not been
paid
within ninety (90) days of the due date;
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(f)
Accounts
owing from (i) an Account Debtor, including its Affiliates, whose total
obligations to Borrower exceed twenty-five (25%) of all Accounts (except for
Accounts owing from Nortel, Ericsson and Fujitsu at all times that Borrower
is a
Net Depositor, for which such percentage is fifty percent (50%)) for the amounts
that exceed that percentage, unless Bank approves otherwise in writing; and
(ii)
KKS in excess of Two Million Dollars ($2,000,000) and Datatell in excess of
Four
Million Dollars ($4,000,000), unless Bank approves otherwise in
writing.
(c) The
following terms and their respective definitions are hereby added in
alphabetical order to Section 13.1 of the Loan Agreement:
“Contingent
Availability Conditions”
means
those conditions in which (a) Borrower’s worldwide cash and investments exceeds
Twenty Million Dollars ($20,000,000) as of the last day of the most recently
ended fiscal quarter, and (b) Borrower’s cash and investments maintained at Bank
and Bank’s Affiliates exceeds Fifteen Million Dollars
($15,000,000).
“Datatell”
means
Datatell 0000 xx Xxxxx Xxxx S.A., and any entity that is an Affiliate of
Datatell 0000 xx Xxxxx Xxxx S.A.
“Eligible
Inventory”
means,
at any time, the aggregate of Borrower’s Inventory that (a) consists of raw
materials or finished goods, in good, new, and salable condition, which is
not
perishable, returned, consigned, obsolete, not sellable, damaged, or defective,
and is not comprised of demonstrative or custom inventory, works in progress,
packaging or shipping materials, or supplies; (b) meets all applicable
governmental standards; (c) has been manufactured in compliance with the Fair
Labor Standards Act; (d) is not subject to any Liens, except the first priority
Liens granted or in favor of Bank under this Agreement or any of the other
Loan
Documents and subclauses (b) and (j) of Permitted Liens; (e) is located at
Borrower’s principal places of business, warehouses or manufacturing
subcontractors (or any location permitted under Section 7.2); and (f) is
otherwise acceptable to Bank in its good faith business judgment.
“KKS”
means
KKS-Telecom, and any entity that is an Affiliate of KKS-Telecom.
“Second
Supplemental Closing Date”
means
August 21, 2008.
(d) Each
reference to “DBD” in the Loan Agreement is hereby deleted in its
entirety.
2.6 Compliance
Certificate.
The
Compliance Certificate attached to the Loan Agreement as Exhibit
E
is
replaced in its entirety with the Compliance Certificate attached hereto as
Exhibit
E.
From
and after the date hereof, all references in the Loan Agreement to the
Compliance Certificate shall mean the Compliance Certificate in Exhibit
E
attached
hereto.
4
3. Limitation
of Amendments.
3.1 The
amendments set forth in Section 2,
above,
are effective for the purposes set forth herein and shall be limited precisely
as written and shall not be deemed to (a) be a consent to any amendment,
waiver or modification of any other term or condition of any Loan Document,
or
(b) otherwise prejudice any right or remedy which Bank may now have or may
have in the future under or in connection with any Loan Document.
3.2 This
Amendment shall be construed in connection with and as part of the Loan
Documents and all terms, conditions, representations, warranties, covenants
and
agreements set forth in the Loan Documents, except as herein amended, are hereby
ratified and confirmed and shall remain in full force and effect.
4. Representations
and Warranties.
To
induce Bank to enter into this Amendment, each Borrower hereby represents and
warrants to Bank as follows:
4.1 Immediately
after giving effect to this Amendment (a) the representations and
warranties contained in the Loan Documents are true, accurate and complete
in
all material respects as of the date hereof (except to the extent such
representations and warranties relate to an earlier date, in which case they
are
true and correct as of such date), and (b) no Event of Default has occurred
and is continuing;
4.2 Each
Borrower has the power and authority to execute and deliver this Amendment
and
to perform its obligations under the Loan Agreement, as amended by this
Amendment;
4.3 The
organizational documents of each Borrower delivered to Bank on the Effective
Date remain true, accurate and complete and have not been amended, supplemented
or restated and are and continue to be in full force and effect;
4.4 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, have been duly authorized;
4.5 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not and will not contravene (a) any law or regulation binding
on or affecting Borrower, (b) any contractual restriction with a Person
binding on Borrower, (c) any order, judgment or decree of any court or
other governmental or public body or authority, or subdivision thereof, binding
on Borrower, or (d) the organizational documents of Borrower;
4.6 The
execution and delivery by each Borrower of this Amendment and the performance
by
each Borrower of its obligations under the Loan Agreement, as amended by this
Amendment, do not require any order, consent, approval, license, authorization
or validation of, or filing, recording or registration with, or exemption by
any
governmental or public body or authority, or subdivision thereof, binding on
Borrower, except as already has been obtained or made; and
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4.7 This
Amendment has been duly executed and delivered by each Borrower and is the
binding obligation of each Borrower, enforceable against each Borrower in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors’ rights.
5. Counterparts.
This
Amendment may be executed in any number of counterparts and all of such
counterparts taken together shall be deemed to constitute one and the same
instrument.
6. Effectiveness.
This
Amendment shall be deemed effective upon (a) the due execution and delivery
to
Bank of this Amendment by Borrower, and (b) the due execution and delivery
to Bank of Bank’s Invoice by Borrower, authorizing Bank to debit Borrower’s
account for (i) the Second Supplemental Commitment Fee in the amount of One
Hundred Thousand Dollars ($100,000) due on the date hereof, and (ii)
Bank’s
legal fees and expenses in connection with the negotiation and preparation
of
this Amendment in the amount of Seven Thousand Two Hundred Dollars
($7,200).
[Signature
page follows.]
6
In
Witness Whereof, the
parties hereto have caused this Amendment to be duly executed and delivered
as
of the date first written above.
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BANK
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SILICON
VALLEY BANK
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By:
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/s/
Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx |
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Title:
VP
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US
BORROWER
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AIRSPAN
NETWORKS, INC.
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By:
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/s/
Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx |
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Title:
President and CEO
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UK
BORROWER
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AIRSPAN
COMMUNICATIONS LIMITED
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By:
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/s/
Xxxxx Xxxxx
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Name: Xxxxx Xxxxx |
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Title:
CFO & Director
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STATE
OF
NEW YORK )
COUNTY
OF
NEW YORK )
On
this
day, August 22, 2008, Xxxx Xxxxxxxxxx, personally known to me, appeared before
me and subscribed his name to the foregoing instrument and acknolwedged to
me
that he executed the same for the purposes expressed therein.
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/s/
Xxx Xxxxxxx
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Xxx
Xxxxxxx
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Notary
Public - State of New York
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No.
02PA6095971
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Qualified
in New York County
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My
Commission Expires July 21,
2011
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7
EXHIBIT
E
COMPLIANCE
CERTIFICATE
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TO:
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SILICON
VALLEY BANK
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Date:
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______________ |
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FROM:
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AIRSPAN
NETWORKS, INC.
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AIRSPAN
COMMUNICATIONS LIMITED
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The
undersigned authorized officer of AIRSPAN NETWORKS, INC. and AIRSPAN
COMMUNICATIONS LIMITED (individually and collectively, jointly and severally,
“Borrower”) certifies that under the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”),
(1)
Borrower is in complete compliance for the period ending _______________ with
all required covenants except as noted below, (2) no Event of Default has
occurred and is continuing, (3) all representations and warranties in the
Agreement are true and correct in all material respects on this date except
as
noted below; provided, however, that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified
or
modified by materiality in the text thereof; and provided, further that
those representations and warranties expressly referring to a specific date
shall be true, accurate and complete in all material respects as of such
date,
(4)
Borrower has timely filed all required tax returns and reports, and Borrower
has timely paid all foreign, federal, state, governmental and local taxes,
assessments, deposits and contributions owed by Borrower
except
as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement,
and (5) no Liens have been levied or claims made against Borrower relating
to
unpaid employee payroll or benefits of which Borrower has not previously
provided written notification to Bank. Attached are the required documents
supporting the certification. The undersigned certifies that these are prepared
in accordance with GAAP consistently applied from one period to the next except
as explained in an accompanying letter or footnotes. The undersigned
acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered. Capitalized terms used but not otherwise defined
herein shall have the meanings given them in the Agreement.
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Please
indicate compliance status by circling Yes/No under “Complies”
column.
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Reporting
Covenant
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Required
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Complies
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Monthly
financial statements with
Compliance
Certificate
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Monthly
within 30 days*
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Yes
No
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Annual
financial statement (CPA Audited) + XX
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XXX
within 120 days
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Yes
No
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10-Q,
10-K and 8-K
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Within
5 days after filing with
SEC
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Yes
No
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Transaction
Reports
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Monthly
within 30 days**
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Yes
No
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A/R
& A/P Agings, reconciliations
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Monthly
within 30 days
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Yes
No
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Annual
operating budget and projections
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Annually
no later than 30 days
prior
to year-end
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Yes
No
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Financial
Covenant
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Required
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Actual
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Complies
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Maintain
on a Quarterly Basis:
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Minimum
Tangible Net Worth
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$30,000,000***
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$
__________
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Yes
No
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Maintain
on a Monthly Basis:
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Adjusted
Quick Ratio
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1.00:1.00
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__:1.00
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Yes
No
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Borrowing
Category
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Interest
Rate
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Required
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Actual
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Complies
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Net
Daily Depositor
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Prime
plus 0.00%
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Yes
No
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Daily
Depositor and
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Prime
plus 0.50%
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Yes
No
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(a)
Adjusted Quick Ratio
as
of the last day of each month equal to or greater than
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1.50:1.00
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__:1.00
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Yes
No
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or
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(b)
EBITDA as of the two most recently ended consecutive
fiscal
quarters of greater than
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$750,000
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$
_________
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Yes
No
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Net
Depositor
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Prime
plus 1.00%
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Yes
No
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Net
Borrower
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Prime
plus 1.75%
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Yes
No
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*
except
for the month of January
**
weekly
at
all times that Borrower is a Net Borrower
***
plus
50%
of quarterly Net Income (but not to be decreased by 50% of quarterly
consolidated Net Loss), 50% of new equity and 50% of new Subordinated Debt
raised after the Second Supplemental Closing Date.
The
following financial covenant analyses and information set forth in Schedule
1
attached hereto are true and accurate as of the date of this
Certificate.
The
following are the exceptions with respect to the certification above: (If no
exceptions exist, state “No exceptions to note.”)
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Borrower:
AIRSPAN
NETWORKS, INC.
AIRSPAN
COMMUNICATIONS LIMITED
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BANK
USE ONLY
Received
by: _____________________
authorized
signer
Date:
_________________________
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By:
________________________
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Verified:
________________________
authorized
signer
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Name:
________________________
Title:
________________________
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Date:
_________________________
Compliance
Status: Yes
No
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