Exhibit 10(a)
Form 10-QSB (3/31/97)
LOAN MODIFICATION AGREEMENT
This Loan Modification Agreement is entered into as of January 15, 1997,
by and between EIP Microwave, Inc. ("Borrower") whose address is 0000
XxXxxxxxxx Xxxxx, Xxxxxxxx, XX 00000, and Silicon Valley Bank ("Silicon")
whose address is 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, XX 00000.
1. DESCRIPTION OF EXISTING INDEBTEDNESS: Among other indebtedness which
may be owing by Borrower to Silicon, Borrower is indebted to Silicon pursuant
to, among other documents, a Loan and Security Agreement, dated March 10,
1992 (including the Schedule thereto), as may be amended from time to
time (the "Loan Agreement"). The Loan Agreement provided for, among other
things, a Credit Limit in the original principal amount of Five Hundred
Thousand and 00/100 Dollars ($500,000.00) (the "A/R Facility"). The A/R
Facility has been modified pursuant to, among other documents, a Loan
Modification Agreement dated November 15, 1996, pursuant to which, among
other things, the Credit Limit was decreased to One Hundred Eighty Five
Thousand and 00/100 Dollars ($185,000.00). Defined terms used but not
otherwise defined herein shall have the same meanings as in the Loan
Agreement.
Hereinafter, all indebtedness owing by Borrower to Silicon shall be referred
to as the "Indebtedness."
2. DESCRIPTION OF COLLATERAL AND GUARANTIES: Repayment of the Indebtedness
is secured by the Collateral as described in the Loan Agreement.
Hereinafter, the above-described security documents and guaranties, together
with all other documents securing repayment of the Indebtedness shall be
referred to as the "Security Documents." Hereinafter, the Security
Documents, together with all other documents evidencing or securing the
Indebtedness shall be referred to as the "Existing Loan Documents."
3. DESCRIPTION OF CHANGE IN TERMS.
A. MODIFICATION(S) TO LOAN AGREEMENT.
1. Notwithstanding anything to the contrary contained in the section
entitled "1.1 Loans", Silicon, in its discretion, will make loans
to the Borrower (the "Loans") in amounts determined by Silicon in
its discretion up to the amount (the "Credit Limit") shown on the
Schedule to this Agreement (the "Schedule").
2. The following modifications pertain to the Schedule to the Loan
Agreement:
a. Modification(s) to Credit Limit.
(1) The first paragraph of the section entitled
"Credit Limit (Section 1.1)" is hereby amended in
its entirety to read as follows:
An amount not to exceed the lesser of: (i)
$500,000.00 at any one time outstanding or (ii) 60%
of the Net Amount of Borrower's accounts, which
Silicon in its discretion deems eligible for
borrowing.
(2) Notwithstanding anything to the contrary
contained in the section entitled "Credit Limit
(Section 1.1)" accounts relating to Marconi
Instruments and accounts relating to and with
respect to which the account debtor is a federal,
state, or local governmental entity shall no longer
be deemed as eligible accounts.
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Exhibit 10(a)
Form 10-QSB (3/31/97)
b. Extension of Maturity Date.
The Maturity Date as set forth in the section entitled
"Maturity Date (Section 5.1)" is hereby deleted and
replaced, effective as of the date hereof, with
"March 5, 1997."
c. Modification of the Financial Covenants.
(1) The Tangible Net Worth and Profitability covenants
as set forth in the section entitled "Financial
Covenants (Section 4.1)" are hereby amended to read
as follows:
TANGIBLE NET WORTH. Borrower shall maintain, on a
monthly basis, beginning with the month ended
September 30, 1996, a tangible net worth of not
less than $1,000,000.00 plus 100% of funded
Subordinated Debt.
PROFITABILITY. Borrower shall be profitable (after
taxes) on a quarterly basis with an allowance for
losses of $135,000.00 for the quarter ended
December 31, 1996 and $105,000.00 for the quarter
ending March 31, 1997.
(2) Notwithstanding anything to the contrary contained
in the definition of "Subordinated Debt",
indebtedness owing by Borrower to the Creditor's
named below, which shall be subordinated to the
indebtedness of Silicon under a subordination
agreement in form specified by Silicon, shall be
included in the Tangible Net Worth for the purposes
of the Financial Covenants:
CREDITORS AMOUNT
--------- ------
Xxxx X. Xxxxxx $300,000.00
J. Xxxxxxxx Xxxxxx $300,000.00
d. Modification to "Other Covenants".
The last sentence in paragraph 2 of the section of the
Schedule to the Loan Agreement entitled "Other Covenants
(Section 4.1)", describing the monthly backlog report
requirement, is hereby deleted.
4. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended
wherever necessary to reflect the changes described above.
5. PAYMENT OF LOAN FEE. Borrower shall pay to Silicon a fee in the
amount of Five Hundred and 00/100 Dollars ($500.00) (the "Loan Fee") plus all
out-of-pocket expenses.
6. NO DEFENSES OF BORROWER. Borrower (and each guarantor and pledgor
signing below) agrees that it has no defenses against the obligations to pay
any amounts under the Indebtedness.
7. CONTINUING VALIDITY. Borrower (and each guarantor and pledgor
signing below) understands and agrees that in modifying the existing
Indebtedness, Silicon is relying upon Borrower's representations, warranties,
and agreements, as set forth in the Existing Loan Documents. Except as
expressly modified pursuant to this Loan Modification Agreement, the terms of
the Existing Loan Documents remain unchanged and in full force and effect.
Silicon's agreement to modifications to the existing Indebtedness pursuant to
this
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Exhibit 10(a)
Form 10-QSB (3/31/97)
Loan Modification Agreement in no way shall obligate Silicon to make any
future modifications to the Indebtedness. Nothing in this Loan Modification
Agreement shall constitute a satisfaction of the Indebtedness. It is the
intention of Silicon and Borrower to retain as liable parties all makers and
endorsers of Existing Loan Documents, unless the party is expressly released
by Silicon in writing. No maker, endorser, or guarantor will be released by
virtue of this Loan Modification Agreement. The terms of this paragraph
apply not only to this Loan Modification Agreement, but also to all
subsequent loan modification agreements.
8. CONDITIONS. The effectiveness of this Loan Modification Agreement is
conditioned upon Borrower's payment of the Loan Fee and receipt by Silicon,
of Subordination Agreements executed by the Creditor's set-forth herein.
This Loan Modification Agreement is executed as of the date first
written above.
BORROWER: SILICON:
EIP MICROWAVE, INC. SILICON VALLEY BANK
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxx
------------------- -------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx Xxxxxxxxx
------------------- -------------------------
Title: President Title: AVP
------------------- -------------------------
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