SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
Exhibit 10.1
SECOND
AMENDMENT
TO
This
Second Amendment to Loan and Security Agreement (this “Amendment”) is entered
into as of September 26, 2008, by and between COMERICA BANK (“Bank”) and PROXIM
WIRELESS CORPORATION (“Borrower”).
RECITALS
Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of
March 28, 2008, as it may be amended from time to time, including without limit
by that certain First Amendment to Loan and Security Agreement dated as of
August 13, 2008 (collectively, the “Agreement”). The parties desire
to amend the Agreement in accordance with the terms of this
Amendment.
NOW,
THEREFORE, the parties agree as follows:
1. Exhibit
A to the Agreement is hereby amended by adding or amending and restating the
following defined terms to read in their entirety as follows:
“‘Advances
Cap’ shall have the meaning assigned in Section 2.1(b)(i).”
“‘Base
Cash Amount’ shall initially mean $1,500,000. Commencing on September
30, 2008, and the last day of each fiscal quarter thereafter, the Base Cash
Amount shall permanently increase by an amount equal to the sum of (i) 50% of
Borrower’s quarterly net income for the immediately preceding fiscal quarter, as
determined in accordance with GAAP, consistently applied and (ii) 75% of
Borrower’s New Equity, if any, received during the immediately preceding fiscal
quarter. If there is a loss as of the end of any fiscal quarter, Borrower’s net
income shall be deemed to be $0 for such fiscal quarter for the purpose of
determining Base Cash Amount.”
“‘Foreign
Exchange Sublimit’ means a sublimit for foreign exchange contracts under the
Revolving Line not to exceed $180,000.”
“‘Letter
of Credit’ means a commercial or standby letter of credit or similar undertaking
issued by Bank for the account of Borrower.”
“‘New
Equity’ means cash proceeds received after September 26, 2008 from the sale or
issuance of Borrower’s equity securities.”
“‘Revolving
Line’” means a Credit Extension (inclusive of any amounts outstanding under the
Credit Card Services Sublimit and the Foreign Exchange amount) of up to
$1,800,000.”
2. Section
2.1(b) of the Agreement is hereby amended and restated to read in its entirety
as follows:
“(b) Advances Under Revolving
Line.
(i) Amount. Subject
to and upon the terms and conditions of this Agreement (1) Borrower may request
Advances in an aggregate outstanding amount not to exceed the lesser of (A)
$1,500,000 (the “Advances Cap”) or (B) the Borrowing Base, less any amounts
outstanding under the Credit Card Services Sublimit and the Foreign Exchange
Sublimit, and (2) amounts borrowed pursuant to this Section 2.1(b) may be repaid
at any time prior to the Revolving Maturity Date, at which time all Advances
under this Section 2.1(b) shall be immediately due and payable. Borrower may
prepay any Advances without penalty or premium.
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(ii)
Form of
Request. Whenever Borrower desires an Advance, Borrower will
notify Bank by facsimile transmission or telephone no later than 3:00 p.m.
Pacific time (1:00 p.m. Pacific time for wire transfers), on the Business Day
that the Advance is to be made. Each such notification shall be
promptly confirmed by a Payment/Advance Form in substantially the form of
Exhibit C. Bank is authorized to make Advances under this Agreement,
based upon instructions received from a Responsible Officer or a designee of a
Responsible Officer, or without instructions if in Bank’s discretion such
Advances are necessary to meet Obligations which have become due and remain
unpaid. Bank shall be entitled to rely on any telephonic notice given
by a person who Bank reasonably believes to be a Responsible Officer or a
designee thereof, and Borrower shall indemnify and hold Bank harmless for any
damages or loss suffered by Bank as a result of such reliance. Bank
will credit the amount of Advances made under this Section 2.1(b) to Borrower’s
deposit account.
(iii) Intentionally
Omitted.
(iv) Credit Card Services
Sublimit. Subject to the terms and conditions of this
Agreement, Borrower may request corporate credit cards and standard and
e-commerce merchant account services from Bank (collectively, the “Credit Card
Services”). The aggregate limit of the corporate credit cards and
merchant credit card processing reserves shall not exceed the Credit Card
Services Sublimit, provided that availability under the Revolving Line shall be
reduced by the aggregate limits of the corporate credit cards issued to Borrower
and merchant credit card processing reserves. In addition, Bank may,
in its sole discretion, charge as Advances any amounts that become due or owing
to Bank in connection with the Credit Card Services. The terms and
conditions (including repayment and fees) of such Credit Card Services shall be
subject to the terms and conditions of the Bank’s standard forms of application
and agreement for the Credit Card Services, which Borrower hereby agrees to
execute.
(v) Foreign Exchange
Sublimit. Subject to and upon the terms and conditions of this
Agreement and any other agreement that Borrower may enter into with the Bank in
connection with foreign exchange transactions (“FX Contracts”), Borrower may
request Bank to enter into FX Contracts with Borrower due not later than the
Revolving Maturity Date. Borrower shall pay any standard issuance and
other fees that Bank notifies Borrower will be charged for issuing and
processing FX Contracts for Borrower. The FX Amount shall at all
times be equal to or less than One Hundred Eighty Thousand Dollars
($180,000). The “FX Amount” shall equal the amount determined by
multiplying (i) the aggregate amount, in United States Dollars, of FX Contracts
between Borrower and Bank remaining outstanding as of any date of determination
by (ii) the applicable Foreign Exchange Reserve Percentage as of such
date. The “Foreign Exchange Reserve Percentage” shall be a percentage
as determined by Bank, in its sole discretion from time to time. The
initial Foreign Exchange Reserve Percentage shall be ten percent
(10%).
(vi) Collateralization of
Obligations Extending Beyond Maturity. If Borrower has not
secured to Bank’s satisfaction its obligations with respect to any Credit Card
Services or Foreign Exchange Contracts by the Revolving Maturity Date, then,
effective as of such date, the balance in any deposit accounts held by Bank and
the certificates of deposit or time deposit accounts issued by Bank in
Borrower’s name (and any interest paid thereon or proceeds thereof, including
any amounts payable upon the maturity or liquidation of such certificates or
accounts), shall automatically secure such obligations to the extent of the then
continuing or outstanding Credit Card Services or Foreign Exchange
Contracts. Borrower authorizes Bank to hold such balances in pledge
and to decline to honor any drafts thereon or any requests by Borrower or any
other Person to pay or otherwise transfer any part of such balances for so long
as the Credit Card Services or Foreign Exchange Contracts are outstanding or
continue.”
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3. Section
2.2 of the Agreement is hereby amended and restated to read in its entirety as
follows:
“2.2 Overadvances. If
the aggregate amount of the outstanding Advances plus the aggregate amounts
outstanding under the Credit Card Services Sublimit and the Foreign Exchange
Sublimit exceeds the lesser of the Revolving Line or the Borrowing Base, at any
time, Borrower shall immediately pay to Bank, in cash, the amount of such
excess. In addition, if the aggregate amount of the outstanding Advances exceeds
the lesser of the Advances Cap or the Borrowing Base, less any amounts
outstanding under the Credit Card Services Sublimit and the Foreign Exchange
Sublimit, at any time, Borrower shall immediately pay to Bank, in cash, the
amount of such excess.”
4. Section
6.2(a) of the Agreement is hereby amended and restated to read in its entirety
as follows:
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“(a)
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Within
20 days after the last day of each month, Borrower shall deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer in
substantially the form of Exhibit D hereto, together with aged listings by
invoice date of accounts receivable and accounts payable and a Pass
Through Reports (re Distributors) in form and substance acceptable to
Bank.”
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5. Section
6.7(a) of the Agreement is hereby amended and restated to read in its entirety
as follows:
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“(a)
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Minimum Cash. A
balance of Cash (excluding the sum of (a) the aggregate amount
of all Advances outstanding as of such date of determination, (b) the
Credit Card Sublimit and (c) the Foreign Exchange Sublimit) at Bank of not
less then the Base Cash Amount, to be maintained at all times and tested
daily.”
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6. Exhibits
D and E to the Agreement are hereby deleted and replaced with Exhibits D and E
attached hereto.
7. Borrower
agrees to deliver, or cause to be delivered to Bank, on or before October 10,
2008, an Affirmation of Subordination Agreement, duly executed by Milfam II L.P.
and Xxxxx X. Xxxxxx III.
8. The
parties hereto acknowledge and agree that Bank chose not to enforce the
mandatory permanent reductions of and payments under the Revolving Line in the
aggregate amount of $1,500,000, as set forth in that certain First Amendment to
Loan and Security Agreement dated as of August 13, 2008 between Bank and
Borrower, and the Bank hereby waives any Defaults or Events of Default that may
exist or have occurred due to those payments not being made. This waiver is
specific as to content and time, shall be limited precisely as written, and
shall not constitute a waiver of any other current or future Default or Event of
Default or breach of any covenant contained in the Agreement.
9. No
course of dealing on the part of Bank or its officers, nor any failure or delay
in the exercise of any right by Bank, shall operate as a waiver thereof, and any
single or partial exercise of any such right shall not preclude any later
exercise of any such right. Bank’s failure at any time to require
strict performance by Borrower of any provision shall not affect any right of
Bank thereafter to demand strict compliance and performance. Any
suspension or waiver of a right must be in writing signed by an officer of
Bank.
10. Unless
otherwise defined, all initially capitalized terms in this Amendment shall be as
defined in the Agreement. The Agreement, as amended hereby, shall be
and remain in full force and effect in accordance with its respective terms and
hereby is ratified and confirmed in all respects. Except as expressly
set forth herein, the execution, delivery, and performance of this Amendment
shall not operate as a waiver of, or as an amendment of, any right, power, or
remedy of Bank under the Agreement, as in effect prior to the date
hereof.
11. Borrower
represents and warrants that the Representations and Warranties contained in the
Agreement are true and correct as of the date of this Amendment, and that,
except as set forth in the waiver letter
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agreement
between Borrower and Bank to be executed in connection with this Amendment, no
Event of Default has occurred and is continuing.
12. As
a condition to the effectiveness of this Amendment, Bank shall have received, in
form and substance satisfactory to Bank, the following:
(a) this
Amendment, duly executed by Borrower;
(b) a
Certificate of the Secretary of Borrower with respect to incumbency and
resolutions authorizing the execution and delivery of this
Amendment;
(c) a
nonrefundable amendment fee in the amount of $6,300, which may be debited from
any of Borrower’s accounts;
(d) all
reasonable Bank Expenses incurred through the date of this Amendment, which may
be debited from any of Borrower’s accounts; and
(e) such
other documents, and completion of such other matters, as Bank may reasonably
deem necessary or appropriate.
13. This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one
instrument.
[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.
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PROXIM
WIRELESS CORPORATION
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By: /s/ Xxxxxx
Xxxxxxx
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Title: President
and CEO
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COMERICA
BANK
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By:
/s/ Xxx
Xxxxxxx
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Title: Vice
President
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