Exhibit 10.16
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 June 29, 2001 among LaSalle Bank
National Association, a national banking association ("Bank") and Westell
Technologies, Inc., a Delaware corporation ("WTI"), Westell, Inc., a Delaware
corporation ("Inc."), Westell International, Inc., a Delaware corporation
("WII"), Conference Plus, Inc., an Illinois corporation ("CPI"), and Teltrend,
Inc., an Illinois 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) reduce
the amount available under the revolving line of credit, (ii) modify the
termination date of the revolving line of credit, (iii) induce certain of
Borrower's investors to guaranty a portion of the revolving line of credit by
issuing warrants for the purchase of certain of Borrowers' stock and (iv)
otherwise modify Borrowers' Obligations as provided herein.
C. Bank is willing to so amend the Loan Agreement upon the
terms and conditions set forth herein.
D. 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 The Loan Agreement is hereby amended to reflect that (i)
Xxxxxx Trust and Savings Bank is no longer a Lender; (ii) Bank is the sole
Lender under the Loan Agreement; and (iii) wherever reference is made herein to
"Bank", "Lender" or "Lenders", the parties hereto understand that Bank is meant.
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1.2 The definition of "Borrowing Base" is hereby deleted in
its entirety and replaced with the following:
"means, as at any date the amount thereof is determined and subject to
the other terms of this Agreement, (a) the sum of (i) 85% of the face
value of the Eligible Accounts, less unapplied cash and (ii) the lesser
of (A) 30% of the value of the Eligible Inventory and (B) the Inventory
Borrowing Cap, plus (b) 70% of the Pledged Securities Value (reduced by
any Net Cash Proceeds received in accordance with Section 3.6) minus
(c) the sum of the undrawn face amount of any Letters of Credit
outstanding, unreimbursed draws with respect to Letters of Credit, and
the aggregate outstanding amount of Borrowers' exposure under Permitted
Swap Obligations as determined by Bank."
1.3 The Loan Agreement is hereby amended by adding the
following new definitions to Section 1.1:
"Guarantors" shall mean those parties signatory to the Guaranty.
"Guarantors' Liabilities" shall mean Guarantors' liabilities under the
Guaranty, which shall be limited to $10,000,000.
"Guaranty" shall mean that certain Guaranty dated as of June 29, 2001
delivered by Guarantors to Bank, guaranteeing up to $10,000,000 of the
principal amount of the Obligations.
"Inventory Borrowing Cap" shall mean $9,000,000 as of June 29, 2001,
and shall be reduced by $100,000 on August 1, 2001 and by an additional
$100,000 on the first day of each month thereafter.
"Pledged Securities" means those certain accounts of Guarantors with
Xxxxxxxxx Xxxxxxxx, Inc. the investment securities and cash and other
assets contained therein pledged to secure Guarantors' Liabilities
pursuant to the Securities Pledge Agreement.
"Pledged Securities Value" shall mean the market value of the Pledged
Securities, valued on a daily basis by and in a manner acceptable to
Bank.
"Securities Pledge Agreement" shall mean that certain Securities Pledge
Agreement dated as of June 29, 2001 delivered by Guarantors to Bank.
1.4 The definition of "Loan Documents" is hereby amended by
inserting in the third line thereof after the word "pledges," the word
"guaranties,".
1.5 The definition of "Maximum Revolving Credit Facility" is
hereby
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amended by deleting the amount "$45,000,000" and inserting in its place the
amount "$35,000,000".
1.6 The definition of "Revolving Loan Termination Date" is
hereby amended by deleting the date "August 31, 2003" and inserting in its place
the date "June 30, 2002".
1.7 Section 3.6 of the Loan Agreement is hereby amended by
inserting at the end thereof the following language:
"Upon receipt by Bank of any equity Net Cash Proceeds pursuant to
Section 3.5(a)(ii), each of (a) the Guarantors' Liabilities, (b) the
Pledged Securities Value and (c) the Maximum Revolving Credit Facility
shall be permanently reduced by the amount of such Net Cash Proceeds
received by the Bank."
1.8 The Loan Agreement is hereby amended by adding a new
Section 9.20 as follows:
"9.20 Geneva Property. Borrowers shall deliver to Bank by July
30, 2001, (i) a duly executed Mortgage on the land and building owned
by Teltrend and located at ____________________, Geneva, Illinois, in a
form acceptable to Bank conveying a first priority lien on such
property to Bank and (ii) a title insurance policy acceptable to Bank
and such other related surveys and documents as Bank may request in
connection therewith, acceptable to Bank."
1.9 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 (i) a minimum Fiscal
Year-to-date EBITDA of not less than negative $4,100,000 as of June 30,
2001, of not less than negative $3,500,000 as of July 31, 2001, of not
less than negative $3,700,000 as of August 31, 2001, of not less than
negative $2,700,000 as of September 30, 2001 and of not less than
negative $1,300,000 as of October 31, 2001, and (ii) on each date set
forth below, a minimum EBITDA of not less than the EBITDA set forth
opposite such date set forth below:
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Date EBITDA
---- ------
November 30, 2001 $400,000
December 31, 2001 $2,100,000
January 31, 2002 $3,600,000
February 28, 2002 $6,600,000
March 31, 2002 $9,200,000
April 30, 2002 $13,400,000
May 31, 2002 $16,800,000
June 30, 2002 $19,500,000
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."
1.10 Section 11.3(b) of the Loan Agreement is hereby amended
by deleting it in its entirety and 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 June
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, measured on a rolling twelve-month basis as of the end of
the month ending on such date:
Date Tangible Net Worth
---- ------------------
June 30, 2001 $21,700,000
July 31, 2001 $29,400,000
August 31, 2001 $27,500,000
September 30, 2001 $26,500,000
October 31, 2001 $25,700,000
November 30, 2001 $25,400,000
December 31, 2001 $25,300,000
January 31, 2002 $25,000,000
February 28, 2002 $26,100,000
March 31, 2002 $26,900,000
April 30, 2002 $27,400,000
May 31, 2002 $28,000,000
June 30, 2002 $28,500,000"
1.11 The Loan Agreement is hereby amended by adding a new
Section
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12.13 as follows:
"12.13 Guarantors' Obligations. If Guarantors: (a) fail or
neglect to perform, keep or observe any term, provision, condition,
covenant, warranty or representation contained in the Guaranty, the
Securities Pledge Agreement or any control agreement relating to the
Pledged Securities or (b) fail to pay any of Guarantors' Liabilities
within five business days after the same are due and payable or
declared due and payable."
1.12 Schedule 7.27 to the Loan Agreement is hereby deleted in its
entirety and replaced with Schedule 1.12 attached hereto
SECTION 2 REPRESENTATIONS AND WARRANTIES
To induce Bank to amend the Loan Agreement and grant the
waiver set forth herein, Borrowers jointly and severally represent and warrant
to Bank that:
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 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 Borrowers.
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SECTION 3 FINANCING STATEMENT AUTHORIZATION
Borrowers hereby authorize and consent to the preparation and
filing by Bank of any financing statements, amendments and continuations as may
be necessary, in Bank's sole discretion, to perfect the security interests and
liens granted under the Loan Agreement. Bank may include as a description of
Borrowers' property covered by any financing statements all of Borrowers'
present and future assets or property. This authorization and consent shall
remain in full force and effect and may be relied upon by Bank as long as any of
the Obligations are outstanding.
SECTION 4 CONDITIONS PRECEDENT.
The agreement by Bank to amend the Loan Agreement and grant
the waiver is subject to the following conditions precedent:
4.1 Revolving Note. Execution and delivery by Borrowers of a
Revolving Note in the form of Exhibit A hereto.
4.2 CPI Stock Pledge Agreement Execution and delivery by WTI
of a Stock Pledge Agreement in the form of Exhibit B hereto, pledging WTI's
stock in CPI as security for the Obligations.
4.3 Guaranty. Execution and delivery of a Guaranty in the form
of Exhibit C.
4.4 Securities Pledge Agreement. Execution and delivery a
Securities Pledge Agreement in the form of Exhibit D hereto, securing the
obligations of Guarantors under the Guaranty.
4.5 CPI Stock Certificates. Delivery of CPI Stock Certificate
No. 21 representing 132,250 shares of CPI's stock.
4.6 Account Control Agreement. Execution and delivery of an
Account Control Agreement satisfactory to Bank, providing for the administration
of the securities pledged pursuant to the Securities Pledge Agreement.
4.7 Reaffirmation of Stock Pledge Agreement. 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 E hereto.
4.8 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.
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4.9 Fee. Borrowers shall have paid to Bank a restructuring fee
in the amount of $350,000.
4.10 Borrowers shall have delivered to the Bank each and every
agreement, document, note, release, guaranty, certificate, notice, affidavit,
exhibit, schedule, resolution, legal opinion, assignment, security agreement or
financing statement which the Bank may reasonably request from the Borrowers, in
form and substance satisfactory to Bank, to effect the intent of this Amendment.
SECTION 5 REAFFIRMATION AND ACKNOWLEDGMENT
WTI, Inc., CPI and Teltrend (together, 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 provision 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.
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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.
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 The requirement to raise Second Equity Funds by June 30,
2001 imposed by Section 4 of the Amendment to Amended and Restated Loan and
Security Agreement dated as of April 13, 2001 is hereby waived. This waiver is
limited and shall not constitute a waiver of any other or subsequent requirement
or condition imposed on Borrowers by the Loan Agreement or Loan Documents,
whether of a different or like nature, nor shall it constitute a course of
conduct or dealing.
6.7 Borrowers shall cause to be delivered to Bank within one
week after the date hereof CPI Stock Certificate No. 27 representing 250 shares
of CPI stock.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Borrowers and Bank has 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: /s/ Xxxxxxxx Xxxxxxx
Title: Vice President
WESTELL, INC.
By: /s/ Xxxxxxxx Xxxxxxx
Title: Vice President
WESTELL INTERNATIONAL, INC.
By: /s/ Xxxxxxxx Xxxxxxx
Title: Vice President
CONFERENCE PLUS, INC.
By: /s/ Xxxxxxxx Xxxxxxx
Title: Vice President
TELTREND, INC.
By: /s/ Xxxxxxxx Xxxxxxx
Title: Vice President
Address: 000 Xxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
"BANK" LASALLE BANK NATIONAL ASSOCIATION
By: /s/ Xxxxxx X. Xxxxxxx
Title: Vice President
Address: 000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxxxxxx
