AMENDMENT TO
LOAN AND SECURITY AGREEMENT
THIS AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment")
is made as of February 24, 1999 by and between LASALLE NATIONAL BANK, its
successors and assigns ("Bank"), WESTELL TECHNOLOGIES, INC. ("WTI"),
WESTELL, INC. ("Westell"), WESTELL INTERNATIONAL, INC. ("International"),
AND CONFERENCE PLUS, INC. ("CPI"; WTI, Westell, International, and CPI
are collectively referred to herein as "Borrowers").
BACKGROUND
A. Bank and Borrowers are parties to a Loan and Security
Agreement dated as of October 13, 1998 (the "Loan Agreement"), pursuant to
which Bank has made loans and advances to Borrowers.
B. Borrowers have informed Bank that CPI has implemented a stock
option plan (the "Stock Option Plan") pursuant to which it has authorized
the granting of options to purchase up to 6,500 shares in the aggregate of
its common stock to certain of its key employees, and actually granted
6,250 options in accordance with the Stock Option Plan.
C. Borrowers have requested that the parties enter into this
Amendment in order to make certain modifications to the Loan Agreement in
connection with the Stock Option Plan.
D. Borrowers have also informed Bank that they were in violation
of their maximum aggregate year-to-date net loss covenant for the
nine-month reporting period ended December 31, 1998 and have requested that
Bank waive such violation and any Events of Default created thereby, and
have also requested that Bank amend their financial covenants.
E. Bank is agreeable to making such modifications and granting
such waiver on the terms and conditions contained herein.
F. Terms used herein but not defined herein shall have the same
meanings assigned to them in the Loan Agreement.
CLAUSES
NOW, THEREFORE, in consideration of the premises set forth above
and the mutual promises contained in this Amendment, and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, Borrowers and Bank agree as follows:
SECTION 1 Amendments to Loan Agreement. The Loan Agreement is
hereby amended as follows:
1.1 Section 1.1 of the Loan Agreement is hereby amended by
inserting the following new definition in its appropriate alphabetical
position:
"CPI Stock Option Plan" means the plan adopted on November 3,
1998 authorizing the granting by CPI to key employees of up to
6,500 options to purchase CPI's common stock, and shall include
all agreements entered into in connection with the granting of
any option."
1.2 Section 5.16 is hereby amended by inserting the phrase
",except in connection with the Stock Option Plan" in the twenty first line
thereof after the word "Borrower".
1.3 Section 6.1(b) of the Loan Agreement is hereby amended and
restated in its entirety as follows:
"6.1 (b) Financial Covenants. The Borrowers shall maintain:
(i) a maximum aggregate year-to-date (net loss)/ minimum net
income (exclusive of extraordinary income and losses) for the
interim periods ending on the dates set forth below in the
amounts set forth below;
End of Period (Net Loss)/Net Income
3/31/99 ($35,000,000)
6/30/99 ($5,000,000)
9/30/99 ($5,000,000)
12/31/99 ($3,000,000)
3/31/00 $1,000,000
6/30/00 $1,000,000
9/30/00 $2,000,000
12/31/00 $3,000,000
3/31/01 $4,000,000
6/30/01 $1,000,000
9/30/01 $2,000,000
12/31/01 $3,000,000
3/31/02 $4,000,000
6/30/02 $1,000,000
(ii) at all times, a Leverage Ratio of not more than 1.35:1.0,
measured on a monthly basis; and
(iii) at all times, a Current Ratio of not less than 1.45:1,
measured on a monthly basis."
1.4 Section 6.2(e) of the Loan Agreement is hereby amended by
inserting the following at the end thereof: ", and in accordance with the
terms of the Stock Option Plan requiring the redemption by CPI of the
shares of its stock under the circumstances set forth therein".
1.5 Section 6.2 of the Loan Agreement is hereby amended by
inserting the following new Section 6.2(p) at the end thereof:
"6.2 (p) Ownership of CPI. WTI shall at all times own,
beneficially and of record at least fifty-one percent (51%) of
the issued and outstanding stock of CPI."
1.6 Schedule 5.16 of the Loan Agreement is hereby amended and
restated in its entirety in the form of Exhibit A hereto.
SECTION 2 Waiver. Bank hereby waives Borrowers' failure to be in
compliance with their Maximum Aggregate Year-to-Date Net Loss covenant as
of December 31, 1998 as evidenced by a waiver letter dated February 11,
1999, and any Events of Default created thereby solely as of December 31,
1998. This shall be a limited waiver and shall not constitute a waiver of
any subsequent violations whether of a different or like nature, nor shall
it constitute a course of conduct or dealing
SECTION 3 Representations and Warranties. To induce Bank to amend
the Loan Agreement and consider making future loans thereunder, the
Borrowers represent and warrant to Bank that:
3.1 Compliance with Loan Agreement. On the date hereof, Borrowers
are in compliance with all of the terms and provisions set forth in the
Loan Agreement (as modified by this Amendment) and no Event of Default
specified in Section 7 of the Loan Agreement nor any event which, upon
notice or lapse of time, or both, would constitute such an Event of
Default, has occurred.
3.2 Representations and Warranties. On the date hereof, the
representations and warranties and covenants set forth in Sections 5 and 6
of 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 warranties and covenants expressly related to an earlier
date, except as disclosed to the Bank on January 19, 1999 that the
cumulative net loss at December 31, 1998 exceeded $28,000,000 by $2,500,000
due to unanticipated forward pricing of DSL Systems.
3.3 Corporate Authority. Borrowers have full power and authority
to enter into this Amendment, to make the borrowings under the Loan
Agreement as amended by this Amendment, and to incur and perform the
obligations provided for under the Loan Agreement and this Amendment, 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.
3.4 Amendment as Binding Agreement. This Amendment constitutes
the valid and legally binding obligation of Borrowers, fully enforceable
against Borrowers, in accordance with its terms.
3.5 No Conflicting Agreements. The execution and performance by
Borrowers of this Agreement will not (i) violate any provision of law, any
order of any court or other agency of government, or the Articles of
Incorporation or By-Laws of Borrowers, or (ii) violate any indenture,
contract, agreement or other instrument to which any Borrower is a party,
or by which its 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 any Borrower.
SECTION 4 Condition Precedent. The agreement by Bank to amend the
Loan Agreement is subject to the following condition precedent:
4.1 Corporate Authority. Borrowers shall have provided to Bank
certified copies of the unanimous written consent of their Boards of
Directors authorizing the execution, delivery and performance by the
Borrowers of this Amendment and the agreements, instruments and documents
executed in connection herewith.
SECTION 5 General Provisions.
5.1 Except as amended by this Amendment, the terms and provisions
of the Loan Agreement shall remain in full force and effect and are in all
other respects ratified and confirmed.
5.2 This Amendment shall be construed in accordance with and
governed by the laws of the State of Illinois.
5.3 This Amendment may be executed in any number of counterparts.
5.4 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
(whether or not any borrowings under the Loan Agreement as amended shall be
consummated), including, without limitation, the reasonable fees and
expenses 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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IN WITNESS WHEREOF, the Borrowers have caused this Amendment to
be duly executed by their duly authorized officers and Bank has caused
this Amendment to be executed by its duly authorized officer, all as of the
day and year first above written.
WESTELL TECHNOLOGIES, INC.
a Delaware corporation
By:
Title:
WESTELL, INC.
a Delaware corporation
By:
Title:
WESTELL INTERNATIONAL, INC.
a Delaware corporation
By:
Title:
CONFERENCE PLUS, INC.
an Illinois corporation
By:
Title:
LASALLE NATIONAL BANK
By:
Title:
Exhibit A to Amendment
Schedule 5.16
See attached.
