EXHIBIT 10-3
AMENDMENT AGREEMENT NUMBER TWO
TO LOAN AND SECURITY AGREEMENT
THIS AMENDMENT AGREEMENT NUMBER TWO TO LOAN AND SECURITY AGREEMENT
(this "Amendment"), dated as of July 3, 2003, is entered into between U.S.
BANK NATIONAL ASSOCIATION ("Bank") and CALIFORNIA AMPLIFIER, INC., a
Delaware corporation ("Borrower"), and amends that certain Loan and Security
Agreement, dated as of May 2, 2002, between Bank and Borrower, as amended by
that certain Amendment Agreement Number One to Loan and Security Agreement,
dated as of April 3 2003, between Bank and Borrower (collectively, the
"Agreement"). All terms which are defined in the Agreement shall have the
same definition when used herein unless a different definition is ascribed
to such term under this Amendment, in which case, the definition contained
herein shall govern. This Amendment is entered into in light of the
following facts:
RECITALS
WHEREAS, as of May 31, 2003, Borrower was not in compliance with the
Fixed Charge Coverage Ratio;
WHEREAS, Borrower has requested that Bank waive the Event of Default
arising from such non-compliance and amend the Agreement (i) by changing the
definition of Fixed Charge Coverage Ratio so that it is calculated on a
rolling four fiscal quarter basis and (ii) by changing the level required
for compliance;
WHEREAS, Bank has agreed to the requested amendments to the Fixed
Charge Coverage Ratio on the condition that Borrower agree, among other
things, to a $3,000,000 reduction in the Maximum Revolving Amount, a
$3,000,000 increase in the minimum amount of Cash and Cash Equivalents that
Borrower must maintain as of the end of each fiscal quarter (unless and
until Borrower achieves a required Fixed Charge Coverage Ratio for two
consecutive fiscal quarters), and to make certain mandatory prepayments of
Term Loan B.
WHEREAS, Bank and Borrower have agreed to amend the Agreement in
accordance with the terms and conditions contained in this Amendment.
NOW, THEREFORE, the parties agree as follows:
1. Amendments. The Agreement is amended as follows:
1.1 The definition of "Fixed Charge Coverage Ratio" contained in
Section 1.1 is deleted in its entirety and is replaced with the
following definition:
"Fixed Charge Coverage Ratio" means, as of the end of the most
recently concluded fiscal quarter of Borrower, the ratio of (i)
EBITDA for the four previous fiscal quarters, minus all income
taxes paid during such period, minus all distributions to
shareholders made during such period, plus all shareholder
investments in Borrower (whether in the form of Subordinated
Debt, capital contributions or otherwise) during such period,
minus unfinanced capital expenditures made during such period;
to (ii) the aggregate amount of all principal payments due and
payable in respect of long term debt by Borrower during such
period, plus all interest payments due and payable by Borrower
during such period. For the purposes of this definition,
mandatory prepayments of principal on Term Loan B which are
required under Section 2.2(b) shall not be deemed to be
"principal payments due and payable in respect of long term
debt."
1.2 The definition of "Maximum Revolving Amount" contained in Section 1.1
is deleted in its entirety and is replaced with the following definition:
"Maximum Revolving Amount" means $10,000,000.
1.3 Effective as of the fiscal quarter of Borrower ending on August 31,
2003, Section 7.20(a) is deleted in its entirety and is replaced with the
following:
(a) Fixed Charge Coverage Ratio. (1) For the fiscal quarters
ending August 31, 2003, and November 30, 2003, a Fixed Charge
Coverage Ratio of not less than 1.10:1.0, measured on a fiscal
quarter-end basis, (2) for the fiscal quarter ending February
29, 2004, a Fixed Charge Coverage Ratio of not less than
1.20:1.0, measured on a fiscal quarter-end basis, and (3) for
the fiscal quarter ending May 31, 2004, and for each fiscal
quarter ending thereafter, a Fixed Charge Coverage Ratio of not
less than 1.25:1.0;
1.4 Effective as of the fiscal quarter of Borrower ending on August 31,
2003, Section 7.20(e) is deleted in its entirety and is replaced with the
following:
(e) Liquidity. Cash and Cash Equivalents of not less than
$11,000,000, measured on a fiscal quarter-end basis during the
term of this Agreement; provided, however, that if Borrower,
subsequent to May 31, 2003, has a Fixed Charge Coverage Ratio
for two consecutive fiscal quarters equal to or in excess of
1.25:1.0, then the amount of Cash and Cash Equivalents required
under the Section 7.20(e) shall be reduced to $8,000,000; and
2. Waiver. Bank hereby waives the Event of Default caused by Borrower's
non-compliance with the Fixed Charge Coverage Ratio covenant set forth in
Section 7.20(a) as of the fiscal quarter ending May 31, 2003.
3. Condition Subsequent. As a condition subsequent to the effectiveness of
this Amendment (the failure by Borrower to so perform shall constitute an
Event of Default), within one hundred twenty (120) days following the date
of this Amendment, Borrower shall make a mandatory prepayment of principal
in connection with Term Loan B in an amount equal to $1,000,000. The
mandatory prepayment of principal hereunder shall be applied to the
installments of principal due on Term Loan B in their inverse order of
maturity. The mandatory prepayment hereunder shall not be deemed to be a
"principal payment due and payable in respect of a long term debt" for the
purposes of calculating the Fixed Charge Coverage Ratio pursuant to Section
7.20(a) of the Agreement.
4. Consent to Sale of Real Property. Bank hereby consents to the sale by
Borrower of the Real Property Collateral located at (i) 000 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxx Xxxxx, Xxxxxxxxx 00000, and (ii) 00000 XX Xxxxxxx, Xxxx Xxxx,
Xxxxxxxxx 00000, each on the condition that promptly upon closing of each
such sale Borrower shall deliver to Bank all of the proceeds from such sale,
net of closing costs, commissions, title insurance premium and other costs
and expenses incurred by Borrower in connection with such sale. The
proceeds of the each sale received by Bank shall be treated as a prepayment
of principal due on Term Loan B and shall be applied to the installments of
principal due on Term Loan B in their inverse order of maturity. The amount
prepaid under this Section 3.2 shall not be deemed to be a "principal
payment due and payable in respect of a long term debt" for the purposes of
calculating the Fixed Charge Coverage Ratio pursuant to Section 7.20(a) of
the Agreement.
5. Representations and Warranties. Borrower hereby affirms to Bank that
all of Borrower's representations and warranties set forth in the Agreement
are true, complete and accurate in all respects as of the date hereof.
6. Costs and Expenses. Borrower shall pay to Bank all of Bank's out-of-
pocket costs and expenses arising in connection with the preparation,
execution, and delivery of this Amendment and all related documents.
7. Limited Effect. Except for the specific amendments contained in this
Amendment, the Agreement shall remain unchanged and in full force and
effect.
8. Counterparts; Effectiveness. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts,
each of which when so executed and delivered shall be deemed to be an
original. All such counterparts, taken together, shall constitute but one
and the same Amendment. This Amendment shall become effective upon the
execution of a counterpart of this Amendment by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
CALIFORNIA AMPLIFIER, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Title: VP Finance & CFO
U.S. BANK NATIONAL ASSOCIATION
By: /s/ Xxxx Xxxxxxxx
--------------------------
Title: Vice President
