AMENDMENT TO AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
This AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT (this "Amendment") is made as of October 30, 2001, among LaSalle Bank
National Association, a national banking association ("Bank"), and Westell
Technologies, Inc., a Delaware corporation ("WTI"), Westell, Inc., a Illinois
corporation ("Inc."), Westell International, Inc., a Delaware corporation
("WII"), Conference Plus, Inc., an Delaware corporation ("CPI"), and Teltrend,
Inc., a Delaware corporation ("Teltrend," together with WTI, Inc., WII and CPI,
the Borrowers").
BACKGROUND
A. Bank and Borrowers are party to that certain Amended and
Restated Loan and Security Agreement dated as of August 31, 2000, as amended
from time to time (the "Loan Agreement"), pursuant to which Bank has made a line
of revolving credit available to Borrowers, and as security therefor, Borrowers
have granted to Bank a lien on Borrowers' real, personal and intellectual
property.
B. Borrowers have informed Bank that they desire to (i)
purchase certain Equipment from Spectel-Multilink, Inc. on a "purchase money
financing basis," and (ii) engage in certain repurchases of Westell common
stock.
C. Borrowers have also informed Bank that they are currently
in violation of a certain covenant under the Loan Agreement and have requested
that Bank waive the violation specifically identified herein and any events of
default created thereby.
D. Bank is willing to grant such waiver and amend the Loan
Agreement to allow the foregoing upon the terms and conditions set forth herein.
E. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual promises herein contained, and intending to be legally bound hereby, the
parties hereto agree as follows:
SECTION 1 AMENDMENTS TO LOAN AGREEMENT
----------------------------
1.1 Collateral Description Amendment. To comport to
terminology effective in Illinois from and after July 1, 2001 under Revised
Article 9 of the Uniform Commercial Code, the definition of "Collateral" in
Section 1.1 of the Loan Agreement is hereby amended to read as set forth on
Schedule 1.1.
1.2 The Loan Agreement is hereby amended by adding the
following new definition to Section 1.1:
"Spectel Equipment" means the following Equipment (and only that
Equipment):
Two (2) Multilink System 700 audioconferencing bridges @ 1152
ports each. Multilink Serial Numbers 3-210 and 3-207, shipped to CPI at
000 Xxx Xxxxx Xxxxx, Xxxxxxx, Xxxxxxxx 00000 per Westell Purchase Order
#416943. Each System 700 consists of: systems chassis; internal hard
drive; AC Power; redundancy (power supplies, fans, dual LAN); API
support (Scheduler, Moderator, Operator); system software (1152 port
license); BridgeTalk Interface Software; Dialed Number Identification
Service (DNIS); LAN Option; PIN Codes and DRP."
1.3 Section 3.6 of the Loan Agreement is hereby amended by
inserting before the period in the last sentence thereof the following language:
", provided, however, that such Net Cash Proceeds shall not permanently reduce
the Maximum Revolving Credit Facility by more than $10,000,000."
1.4 Section 8.1 of the Loan Agreement is hereby amended by
deleting clause (viii) thereof in its entirety and replacing it with the
following:
"(viii) subject to Section 8.6 and the other provisions of this
Agreement, purchase money Liens on Property acquired in the ordinary
course of business, to finance or secure a portion of the purchase price
thereof, provided that in each case such Lien shall be limited to the
Property so acquired and the liability secured by such Lien does not
exceed either the purchase price or the fair market value of the asset
acquired and, provided further, the aggregate principal amount of the
indebtedness secured by such Liens (other than purchase money Liens on
the Spectel Equipment in favor of Spectel Multilink, Inc.) and the
aggregate principal amount of the indebtedness incurred in connection
with the capital leases set forth in subsection (vii) hereof, does not
exceed $1,000,000 in the aggregate."
1.5 Section 8.12 of the Loan Agreement is hereby amended by
adding the following provisos at the end thereof:
"; provided, that during the period commencing on August 17, 2001 and
ending on Xxxxx 00, 0000, Xxxxxxx may effect "open market" repurchases
of up to $250,000 of Westell common stock so long as no defaults or
Events of Default exist or occur under this Agreement or would be
created by the repurchase; and provided further, that LaSalle will
consider, on a good faith, reasonable basis, future requests by Westell
to allow additional, similar repurchases during the period ending March
31, 2002 of up to $750,000 of Westell common stock in the aggregate."
1.6 Section 11.2 of the Loan Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
"11.2 EBITDA. Borrowers shall have on each date set forth
below, a minimum EBITDA of not less than the EBITDA set forth opposite
such date set forth below (parenthesis denotes negative):
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Date EBITDA
---- ------
10/31/01 ($9,600,000)
11/30/01 ($9,400,000)
12/31/01 ($8,000,000)
1/31/02 ($7,000,000)
2/28/02 ($4,300,000)
3/31/02 ($1,900,000)
4/30/02 $2,400,000
5/31/02 $5,600,000
6/30/02 $8,300,000
EBITDA shall be measured (i) on a Fiscal Year-to-date
basis as of the end of each calendar month for each month through and
including March 2002 and (ii) on a rolling twelve-month basis as of the
end of each calendar month for each month commencing with April 2002
and for each month thereafter."
1.7 Section 11.3(b) of the Loan Agreement is hereby amended by
deleting it in its entirety nd replacing it with the following:
"(b) Tangible Net Worth. Tangible Net Worth, for the purposes
of this Section 11.3(b), will be calculated by including the maximum
amount of the Guaranty as cash of the Borrowers. Commencing with
October 2001, Borrowers shall maintain at all times, measured on a
monthly basis, the minimum Tangible Net Worth set forth opposite such
date set forth below, as of the end of the month ending on such date:
Date Tangible Net Worth
---- ------------------
10/31/01 $20,100,000
11/30/01 $18,800,000
12/31/01 $18,300,000
1/31/02 $17,600,000
2/28/02 $18,000,000
3/31/02 $18,200,000
4/30/02 $18,800,000
5/31/02 $19,400,000
6/30/02 $20,000,000"
SECTION 2 REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Bank to amend the Loan Agreement as set forth above,
Borrowers jointly and severally represent and warrant to Bank that:
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2.1 Representations and Warranties. On the date hereof, the
representations and warranties and covenants set forth in the Loan Agreement (as
modified by this Amendment), are true and correct with the same effect as though
such representations and warranties and covenants had been made on the date
hereof, except to the extent that such representations and warranties and
covenants expressly relate to an earlier date.
2.2 Corporate Authority of Borrowers. Borrowers have full
power and authority to enter into this Amendment, and to incur and perform the
obligations provided for under this Amendment and the Loan Agreement, all of
which have been duly authorized by all proper and necessary corporate action. No
consent or approval of stockholders or of any public authority or regulatory
body is required as a condition to the validity or enforceability of this
Amendment.
2.3 Amendment as Binding Agreement. This Amendment constitutes
the valid and legally binding obligation of Borrowers, fully enforceable against
Borrowers, in accordance with its terms.
2.4 No Conflicting Agreements. The execution and performance
by the Borrowers of this Amendment will not (i) violate any provision of law,
any order of any court or other agency of government, or the Articles of
Incorporation or Bylaws of Borrowers, (ii) violate any indenture, contract,
agreement or other instrument to which Borrowers are a party, or by which any of
their property is bound, or be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under, any such
indenture, contract, agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon any
of the property or assets of Borrowers.
SECTION 3 CONDITIONS PRECEDENT.
--------------------
The agreement by Bank to amend the Loan Agreement is subject
to the following conditions precedent:
3.1 Reaffirmations. Execution and delivery by WTI of a
reaffirmation of that certain Stock Pledge Agreement dated as of August 31,
2000, between WTI and Bank in the form of Exhibit A hereto.
3.2 Corporate Authority. Borrowers shall have provided to Bank
certified copies of the unanimous written consent of their Boards of Directors
in a form reasonably acceptable to Bank authorizing the execution, delivery and
performance by the Borrowers of this Amendment and the agreements, instruments
and documents executed in connection herewith.
3.3 Fee. The Bank shall have received from the Borrowers a fee
of $10,000.
SECTION 4 WAIVER
------
The Bank hereby waives Borrowers' failure to be in compliance
with the EBITDA covenant as of August 31, 2001 and September 30, 2001, and any
Events of Default created
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thereby, solely as of those dates.
The foregoing waiver shall be a limited waiver and shall not
constitute a waiver of any other or subsequent violations of the Loan Agreement,
whether of a different or like nature, nor shall such waiver constitute a course
of conduct or dealing.
SECTION 5 REAFFIRMATION AND ACKNOWLEDGMENT
--------------------------------
WTI, Inc., CPI and Teltrend (collectively, the "Pledgors") are
each party to both (i) a Security Agreement and Mortgage - Trademarks and
Patents and (ii) a Security Interest Agreement - Patents, each dated as of
August 31, 2000 (the "Security Agreements"), pursuant to which Pledgors granted
to Bank a lien on and security interest in certain of Pledgors' patents and
trademarks as described therein. Pledgors hereby expressly reaffirm and assume
all of their obligations and liabilities as set forth in the Security
Agreements, agree that the obligations secured thereby shall include all
obligations of Borrowers to Bank under the Loan Agreement, as amended from time
to time, including this Amendment, and agree to be bound by and abide by and
operate and perform under and pursuant to and comply fully with all of the
terms, conditions, provisions, agreements, representations, undertakings,
warranties, and covenants contained in the Security Agreements, insofar as such
obligations and liabilities may be modified by this Amendment.
SECTION 6 MISCELLANEOUS PROVISIONS.
-------------------------
6.1 To the extent the provisions of this Amendment differ from
or are inconsistent with the terms of the Loan Agreement or any of the Loan
Documents, the provisions of this Amendment shall govern; otherwise, the terms
and provisions of the Loan Agreement shall remain in full force and effect and
are hereby affirmed, confirmed and ratified in all respects. Borrowers ratify,
confirm and affirm without condition, all liens and security interests granted
to Bank pursuant to the Loan Agreement and the Loan Documents, and such liens
and security interests shall continue to secure the obligations and liabilities
of Borrowers to Bank, including but not limited to, all loans made by Bank to
the Borrowers under the Loan Agreement as amended by this Amendment.
6.2 This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois, and the obligations of Borrowers
under this Amendment are and shall arise absolutely and unconditionally upon the
execution and delivery of this Amendment.
6.3 This Amendment may be executed in any number of
counterparts.
6.4 Borrowers hereby agree to pay all out-of-pocket expenses
incurred by Bank in connection with the preparation, negotiation and
consummation of this Amendment, and all other documents related thereto,
including without limitation, the reasonable fees and expense of Bank's counsel,
and any filing fees required in connection with the filing of any documents
necessary to consummate the provisions of this Amendment.
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6.5 On or after the effective date hereof, each reference in
the Loan Agreement or any of the Loan Documents to this "Agreement" or words of
like import, shall unless the context otherwise requires, be deemed to refer to
the Loan Agreement as amended hereby.
6.6 Borrowers acknowledge and agree that any term describing
Collateral in the Loan Agreement or any other Loan Document or in any UCC
financing statement which is susceptible of different scope or meaning,
depending upon which version of the Uniform Commercial Code is used or applied,
shall be given the broadest and most inclusive definition so as to encompass the
greatest amounts, items, descriptions, or types of Collateral. Notwithstanding
the foregoing or any other provision of this Amendment, nothing herein or the
adoption of Revised Article 9 of the Uniform Commercial Code shall be deemed to
expand or increase the items or scope of, or criteria for, or change the
definition of "Eligible Accounts," "Eligible Inventory" or the "Revolving Loan
Borrowing Base". In particular the term "Eligible Accounts" will continue to
exclude Accounts other than those arising from the actual sale of Goods in the
ordinary course of Borrower's business which meet the eligibility requirements
in the definition of "Eligible Accounts."
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IN WITNESS WHEREOF, Borrowers and Bank have caused this Amendment to be
duly executed by their duly authorized officers, all as of the date and year
first above written.
"BORROWERS" WESTELL TECHNOLOGIES, INC.
By: ___________________________________
Title: ___________________________________
WESTELL, INC.
By: ___________________________________
Title: ___________________________________
WESTELL INTERNATIONAL, INC.
By: ___________________________________
Title: ___________________________________
CONFERENCE PLUS, INC.
By: ___________________________________
Title: ___________________________________
TELTREND, INC.
By: ___________________________________
Title: ___________________________________
Address: 000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
"BANK" LASALLE BANK NATIONAL ASSOCIATION
By: ___________________________________
Title: ___________________________________
Address: 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxx
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EXHIBIT A
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REAFFIRMATION OF STOCK PLEDGE AGREEMENT
---------------------------------------
REAFFIRMATION OF STOCK PLEDGE AGREEMENT
This Reaffirmation of Stock Pledge Agreement dated as of
October 30, 2001 (this "Reaffirmation") is entered into between WESTELL
TECHNOLOGIES, INC., a Delaware corporation (herein called the "Pledgor"), and
LASALLE BANK NATIONAL ASSOCIATION (herein called the "Pledgee"), and has
reference to the following facts and circumstances:
A. Pursuant to that certain Amended and Restated Loan and
Security Agreement dated as of August 31, 2000, (herein as amended or modified
from time to time, the "Loan and Security Agreement") between Pledgee and
Pledgor (together with its subsidiaries, Westell, Inc., Westell International,
Inc., Conference Plus, Inc. and Teltrend, Inc. collectively referred to
hereinafter as "Borrowers"), Pledgor granted Pledgee a security interest in its
shares of certain of the Borrowers pursuant to that certain Stock Pledge
Agreement dated as of August 31, 2000 (the "Pledge Agreement").
B. Borrowers desire to enter into an Amendment to the Loan and
Security Agreement dated the date hereof (the "Amendment") pursuant to which
Pledgee will modify the Loan and Security Agreement.
C. Pledgor is financially interested in Borrowers.
D. Pledgor desires that Pledgee enter into the Amendment.
E. Pledgee is willing to enter into the Amendment only upon
the condition that Pledgor execute and deliver this Reaffirmation in favor of
Pledgee.
NOW, THEREFORE, in consideration of the foregoing, Pledgor
hereby agrees as follows:
1. The preambles to this Reaffirmation are hereby incorporated
herein by this reference thereto.
2. Pledgor does hereby expressly ratify, confirm and affirm
without condition, all liens and security interests granted to the Pledgee
pursuant to the Pledge Agreement, and such liens and security interests shall
continue to secure the obligations and liabilities of Borrowers to Pledgee,
including but not limited to, all loans made by Pledgee to Borrowers under the
Loan and Security Agreement and all amendments thereto.
3. This Reaffirmation constitutes the valid and legally
binding obligation of Pledgor, fully enforceable against Pledgor, in accordance
with its terms.
4. This Reaffirmation shall inure to the benefit of Pledgee
and Lenders, their successors and assigns, and be binding upon Pledgor, and its
successors and assigns.
IN WITNESS WHEREOF, the Pledgor has executed this
Reaffirmation on the date above set forth.
WESTELL TECHNOLOGIES, INC.
By: ___________________________
Its: ___________________________
SCHEDULE 1.1
------------
NEW DEFINITION OF COLLATERAL
----------------------------
The word "Collateral" means all personal property and fixtures of the Borrowers,
of any kind or description, tangible or intangible, whether now existing or
hereafter arising or acquired, including, but not limited to, the following (all
of which property, along with the products and Proceeds therefrom, are
individually and collectively referred to as the "Collateral"):
(a) all funds, Deposit Accounts, Instruments, credits, cash, securities,
Investment Property, General Intangibles or other property of any type, of, or
for the account of, the Borrowers now or hereafter coming into the possession,
control or custody of, or in transit to, the Bank or any agent or bailee for the
Bank or any parent, affiliate or subsidiary of the Bank or any participant with
the Bank in the loans to the Borrowers (whether for safekeeping, deposit,
collection, custody, pledge, transmission or otherwise), including all earnings,
dividends, interest, or other rights in connection therewith and the products
and Proceeds therefrom, including the proceeds of insurance thereon; and
(b) all other property of the Borrowers, whether now existing or hereafter
arising or acquired, and wherever now or hereafter located, together with all
additions and accessions thereto, substitutions for, and replacements, products
and Proceeds therefrom, and all of the Borrowers' books and records and recorded
data relating thereto (regardless of the medium of recording together with all
of the Borrowers' right, title and interest in and to all computer software
required to utilize, create, maintain and process any such records or data on
electronic media), identified and set forth as follows:
(i) All Accounts (whether or not Eligible Accounts and
including Health Care Insurance Receivables) and all
Goods whose sale, lease or other disposition by the
Borrowers has given rise to Accounts and have been
returned to, or repossessed or stopped in transit by,
the Borrowers, or rejected or refused by an Account
Debtor;
(ii) All Inventory (whether or not Eligible Inventory)
including raw materials, work in process and
finished goods;
(iii) All Goods (including Goods with Embedded Software),
including, without limitation, Equipment, vehicles,
furniture and Fixtures;
(iv) All General Intangibles, including Payment
Intangibles and Software;
(v) All Investment Property and Deposit Accounts;
(vi) All Chattel Paper, Electronic Chattel Paper,
Instruments, Documents, Letter of Credit Rights,
all proceeds of letters of credit, Supporting
Obligations, notes secured by real estate, and
Commercial Tort Claims;
(vii) All Real Property of the Borrowers; and
(viii) All insurance policies and proceeds insuring the
foregoing property or any part thereof, including
unearned premiums.
Except for the terms "Collateral," "Borrowers," "Real Property," "Eligible
Accounts" and "Eligible Inventory," all capitalized terms used in this
definition of Collateral shall have the meaning given to them in the Uniform
Commercial Code in effect from time to time in the State of Illinois.
