FIRST NATIONAL BANK
OF AMERICA
SECOND AMENDMENT TO LOAN AGREEMENT
THIS Amendment to Loan Agreement made this 30th day of June, 2006, by
and between M-TRON INDUSTRIES, INC., a Delaware corporation ("M-TRON"), and
PIEZO TECHNOLOGY, INC., a Florida corporation (collectively, the "Borrowers"),
and FIRST NATIONAL BANK OF OMAHA (the "Bank"), a national banking association
established at Omaha, Nebraska.
WHEREAS, M-TRON has existing term loans with the Bank evidenced by term
note number 2000001751-6 with a due date of April 30, 2007, term note number
2000001751-8 with a due date of October 14, 2007 pursuant to an existing
additional loan agreement with the Bank, which shall remain in full force in
accordance with its terms; and
WHEREAS, M-TRON has an existing revolving line of credit with the Bank
evidenced by revolving note number 2000001751-10 with a due date of May 31, 2007
pursuant to an existing additional loan agreement with the Bank, which shall be
paid in full from the proceeds of the Revolving Note; and
WHEREAS, the Bank is willing to provide such credit facilities to the
Borrowers upon the terms and conditions herein set forth.
WHEREAS, the parties hereto desire to amend the AGREEMENT.
Now, therefore, in consideration of the AGREEMENT, and their mutual
promises made herein, BANK and BORROWERS agree as follows:
1. Terms which are typed herein as all capitalized words and are
not defined herein shall have the same meanings as when described in
the AGREEMENT.
2. Article I Section 1.01 Defined Terms "Borrowing Base"
subsection (b) of the AGREEMENT is hereby amended to read, effective
immediately:
The aggregate of (i) 80% of the Borrowers' current ELIGIBLE
ACCOUNTS (as such term is defined below) on the date reported,
plus (ii) 60% of ELIGIBLE FOREIGN ACCOUNTS with a cap of
$750,000, plus (iii) 50% of the Borrowers' ELIGIBLE INVENTORY
(as defined below) valued at the lower of cost or market. The
term "ELIGIBLE ACCOUNTS means an account owing to the Borrower
and arising in the ordinary course of the Borrowers' business
which meets all of the following specifications at the time it
came into existence and continues to meet the same until it is
collected in full:
(a) The account is due and payable and has been so
not more than ninety (90) days after the invoice date stated
in the applicable invoice or other writing evidencing such
account;
(b) The account is not owing by an account debtor who
has failed to pay ten (10%) or more of the aggregate amount of
its accounts owing to the Borrower within ninety (90) days
after the invoice date stated in the applicable invoice or
other writing evidencing such account;
(c) The account is due and payable from an account
debtor located in the continental United States which is not a
subsidiary or affiliate (under common ownership and /or
control) of Borrower;
(d) The account is not an account due from an
affiliate of the Borrowers' and is not an inter-company
account;
(e) The account is not a credit that is past due 90
days or more;
(f) The account arose from a bona fide, outright sale
of goods by Borrower or from the performance of services by
Borrower and Borrower has possession of and will deliver to
Lender, if requested, shipping and delivery receipts
evidencing shipment of the goods or inventory and, if
representing services, receipts and/or invoices evidencing
that the services have been fully performed for the respective
account debtor;
(g) The account is not subject to any assignment,
claim, lien or security interest of any character created by
Borrower, or claimed under or through Borrower, except the
security interest of Lender, and Borrower will not make any
other assignment thereof or create any further security
interest therein nor permit its rights therein to be reached
by attachment, levy, garnishment or other judicial process;
(h) The account is the valid and legally enforceable
obligation of the account debtor thereunder and is not subject
to any claim for credit, set-off, allowance or adjustment by
the account debtor or any counterclaim, and the account debtor
has not returned any of the goods from the sale of which the
account arose, nor has any partial payment been made thereon;
(i) The account arose in the ordinary course of
Borrower's business, and not notice of the bankruptcy,
insolvency or adverse change in the financial condition of the
account debtor has been received;
(j) The account is not owing by an account debtor for
which Borrower has received or has knowledge of the death or
dissolution of the account debtor, the insolvency, termination
of existence, business failure or disappearance of the account
debtor, the appointment of a receiver for any part of the
property of the account debtor or an assignment for the
benefit of creditors or the filing by or against the account
debtor of a petition under the commencement of any proceeding
under any bankruptcy code or process;
(k) The account is not evidenced by a judgment, an
instrument or chattel paper; and
(l) The account debtor is not an employee of the
Borrower
An account which is at any time an Eligible Account but which
subsequently fails to meet any of the foregoing requirements
shall forthwith cease to be an Eligible Account. The term
ELIGIBLE FOREIGN ACCOUNTS means the account is due and payable
from an account debtor located outside of the continental
United States which is not a subsidiary or affiliate (under
common ownership and /or control) of Borrower and meets the
criteria as stated under ELIGIBLE ACCOUNTS (except section c).
The term ELIGIBLE INVENTORY shall mean Borrower's inventory
which is in good and merchantable condition, is new and not
used, is not obsolete, discontinued or, in the opinion of
Lender, is not otherwise merchantable, and is not slow moving
inventory (slow moving inventory, as defined by the company
would be inventory which has not sold in 360 days after
acquisition and is reserved 50% plus that which has not sold
for 720 days and is reserved 100%), in transit inventory,
consigned goods, inventory located outside of the United
States and inventory covered by and subject to a seller's
right to repurchase or any consensual or nonconsensual lien or
security interest (including, without limitation, purchase
money security interests) in favor of any party other than
Lender. Eligible Inventory shall be valued at the lesser of
cost or present value, determined in accordance with generally
accepted accounting principles in effect at the time of
determination. Any inventory which is at any time Eligible
Inventory but which subsequently fails to meet any of the
foregoing requirements shall forthwith cease to be Eligible
Inventory.
The term "Tangible Net Worth" of the AGREEMENT is hereby
amended to read, effective immediately:
"Tangible Net Worth" means total assets less total liabilities
(but excluding Subordinated Debt existing on the Closing Date,
in an amount of not less than $2,500,000) ...
The term "Working Capital" of the AGREEMENT is hereby amended
to read, effective immediately:
... exercise of its reasonable discretion.) For calculation
purposes for Working Capital and the Current Ratio the BORROWER may reduce
current liabilities by the amount of $1,175,000 which is listed as Federal
Income Taxes Payable on the Balance Sheet.
3. ARTICLE VIII, Section 8.01 Minimum Working Capital is hereby
amended to read effective immediately:
The Borrower M-Tron/PTI will maintain at all times after June
30, 2006, an excess of current assets over current liabilities
of not less than $2,000,000.
4. ARTICLE VIII, Section 8.04 Current Ratio is hereby amended to
read effective immediately:
... At all times after June 30, 2006, the Borrower will
maintain a ratio of current assets to current liabilities of
not less than 1.2 to 1.0.
5. Article I. Section 1.01. Defined Terms "Revolving Loan
Termination Date" (a) of the AGREEMENT is hereby amended to read,
effective immediately:
(a) May 31, 2007,
6. Article II Section 2.12, Repayment of Revolving Note is hereby
amended to read, effective immediately:
2.12 The Revolving Note shall be due and payable on May 31,
2007. Interest only shall be payable monthly on the Revolving
Note. All outstanding principal and interest shall be due and
payable on May 31, 2007.
7. BORROWER certifies by its execution hereof that all of the
representations and warranties set forth in the AGREEMENT are true as
of this date, and that no EVENT OF DEFAULT under the AGREEMENT, and no
event which, with the giving of notice or passage of time or both,
would become such an EVENT OF DEFAULT, has occurred as of execution
hereof, except as disclosed to BANK. All other terms and conditions of
the AGREEMENT not affected or amended by this AGREEMENT, are hereby
ratified and confirmed.
8. GUARANTOR acknowledges and consents to the foregoing
amendment, and agrees and confirms that his separate guarantee of
BORROWER's obligations to BANK are, and continue to be, valid and
binding obligations of GUARANTOR.
9. Except as herein amended, the AGREEMENT continues to be the
valid, binding obligation of BORROWER.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
M-TRON INDUSTRIES, INC. FIRST NATIONAL BANK OF OMAHA
By: /s/ Xxxxx Xxxx By: /s/ Xxxx XxXxxxxxx
------------------------ ---------------------------
Its: Vice President Its: Vice President
PIEZO TECHNOLOGY, INC.
By: /s/ Xxxxx Xxxx
------------------------
Its: Vice President
ACKNOWLEDGED BY GUARANTOR:
XXXXX CORPORATION
By: /s/ Xxxxxx Xxxxx
------------------------
Its: Vice President
